[Senate Hearing 111-652]
[From the U.S. Government Publishing Office]
S. Hrg. 111-652
CARBON CAPTURE AND SEQUESTRATION LEGISLATION
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
RECEIVE TESTIMONY ON CARBON CAPTURE AND SEQUESTRATION LEGISLATION,
INCLUDING S. 1856, S. 1134, AND OTHER DRAFT LEGISLATIVE TEXT
APRIL 20, 2010
Printed for the use of the
Committee on Energy and Natural Resources
U.S. GOVERNMENT PRINTING OFFICE
61-699 PDF WASHINGTON : 2010
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC
COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
BYRON L. DORGAN, North Dakota LISA MURKOWSKI, Alaska
RON WYDEN, Oregon RICHARD BURR, North Carolina
TIM JOHNSON, South Dakota JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana SAM BROWNBACK, Kansas
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
ROBERT MENENDEZ, New Jersey JOHN McCAIN, Arizona
BLANCHE L. LINCOLN, Arkansas ROBERT F. BENNETT, Utah
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
EVAN BAYH, Indiana JEFF SESSIONS, Alabama
DEBBIE STABENOW, Michigan BOB CORKER, Tennessee
MARK UDALL, Colorado
JEANNE SHAHEEN, New Hampshire
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
McKie Campbell, Republican Staff Director
Karen K. Billups, Republican Chief Counsel
C O N T E N T S
Barrasso, Hon. John, U.S. Senator From Wyoming................... 5
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Brownstein, Mark S., Deputy Director, Energy Program,
Environmental Defense Fund..................................... 40
Casey, Hon. Robert P., Jr., U.S. Senator From Pennsylvania....... 2
Castle, Anne, Assistant Secretary for Water and Science,
Department of the Interior..................................... 13
Hilton, Robert, on Behalf of Ms. MacNaughton, CB, Senior Vice
President, Power and Environmental Policies, Alstom Power...... 29
House, Kurt Zenz, Ph.D., President, C12 Energy Research Fellow,
Markowsky, James, Assistant Secretary for Fossil Energy,
Department of Energy........................................... 6
Murkowski, Hon. Lisa, U.S. Senator From Alaska................... 4
Vann, Adam S., Legislative Attorney, American Law Division,
Congressional Research Service................................. 47
Yamagata, Ben, Executive Director, Coal Utilization Research
Responses to additional questions................................ 63
CARBON CAPTURE AND SEQUESTRATION LEGISLATION
TUESDAY, APRIL 20, 2010
Committee on Energy and Natural Resources,
The committee met, pursuant to notice, at 10:03 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Jeff
Bingaman, chairman, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
The Chairman. OK, why don't we go ahead?
Welcome everyone today. I thank the witnesses who are
testifying before the committee on these bills. This is a
hearing on S. 1856 and S. 1134, as well as a legislative
discussion draft proposed by Senators Rockefeller and
These bills each focus on important issues associated with
the deployment of commercial carbon dioxide capture and
storage, CCS technologies. S. 1856 focuses on the issue of pore
space ownership in the subsurface below Federal lands. S. 1134
focuses more broadly on CCS research, development, and
demonstration related generally to clean coal power generation.
The draft legislation aims to accelerate the commercial
viability of CCS technologies and methods by supporting
commercial-scale demonstrations of integrated CCS technology
The topic of reducing greenhouse gases, particularly carbon
dioxide emissions, remains of great concern to this committee
and to myself. Carbon capture and storage holds promise as one
means that can be used to mitigate global climate change, while
still allowing the use of fossil fuels at electricity-
generating plants and industrial facilities.
With discussions centered on coal use in a carbon-
constrained world, integrated carbon capture and storage
systems may present the most immediate solution for continued
use of coal and other carbon-intensive fuels while not
contributing further to carbon dioxide emissions and global
Last May, I introduced S. 1013. That was legislation that
focused on reducing some of the uncertainty for CCS project
developers by providing an indemnity program for the first 10
early mover commercial-scale CCS projects. We had a hearing in
this committee that received testimony not just on that bill,
but also on the issues that are being discussed today,
particularly on pore space ownership.
S. 1013 did make it through the committee process. It is
now part of the larger energy bill that we have reported from
this committee. However, much work still needs to be done to
scale up CCS technologies to meet the level of carbon
reductions that are needed to mitigate the effects of climate
Earlier this year, President Obama announced he would begin
charting a path toward a cleaner future for coal use by
initiating the Interagency Task Force on Carbon Capture and
Storage. The task force, which is co-chaired by one of our
witnesses today--Dr. Markowsky from the Department of Energy--
is working to develop a plan to overcome the barriers to
widespread cost-effective deployment of CCS within 10 years.
We look forward to hearing more about what that task force
has identified as challenges for CCS deployment, also to how
we, as members of this committee, can work with the
administration to address and overcome some of those
I would like to begin by welcoming the original bill
sponsors who have come to speak to us today. Senator Casey is
here to speak on the issue of S. 1134, and Senator Barrasso,
who is, of course, a valued member of this committee, will
introduce his and talk about his bill, S. 1856.
So, Senator Casey, why don't you go ahead and tell us
anything we need to know about your proposed legislation?
Senator Casey. Thank you very much, Chairman Bingaman and
The Chairman. Excuse me, I'm sorry. Senator Murkowski needs
to give an opening statement here before we call on you.
Senator Murkowski. Mr. Chairman, I respect the fact that we
have conflicting schedules. So if Senator Casey needs to move
to another committee hearing this morning, I would certainly be
happy to defer my opening to allow you to give yours, if you
STATEMENT OF HON. ROBERT P. CASEY JR., U.S. SENATOR FROM
Senator Casey. Thank you very much. Chairman and Ranking
Member Murkowski, I appreciate the courtesy.
Senators Barrasso, Bunning, and Burr as well, thank you for
I wanted to talk briefly--and it will be brief, I know we
have other witnesses here--about the bill that I introduced, S.
1134, the Responsible Use of Coal Act of 2009.
The bill provides the Department of Energy's National
Energy Technology Laboratory with the funding needed to
accelerate research, development, and demonstration and,
ultimately, the deployment of carbon capture and storage
technology and other critical advanced coal power generation
technology needed to respond to climate change. Further, the
bill would position the United States as the world leader in
CCS technology development and export, creating the potential
for thousands of new clean energy jobs.
Climate change is one of the most complex and challenging
imperatives that our Nation and even the world has ever faced.
We need to move forward in crafting legislation that will
reduce greenhouse gas emissions, encourage the use of renewable
power, and create clean energy jobs.
As we move forward, we must do so in a manner that will
ensure our energy security and protect our industries from so-
called ``carbon leakage'' and help get our economy back on
track and enable us to continue to benefit from our most
abundant, affordable energy resource, and that is coal. Today,
coal provides over half of the Nation's electricity. It helps
keep American homes, businesses, factories, airports, schools,
and hospitals humming and creates millions of good-paying jobs
across all sectors of the economy.
Further, much of the world depends upon coal. Large
economies like China and India are increasingly relying upon
coal to power them into the 21st century.
While the use of coal in the United States has more than
tripled since 1970, emissions of sulfur dioxide, nitrogen
oxide, and particulate matter from power plants have been
dramatically reduced, reduced, as the power industry deploys
technologies for capturing these pollutants. This illustrates
how advanced technology has allowed coal to remain a critical
component of the Nation's energy strategy in the face of ever-
increasing environmental requirements.
However, the continued use of coal in the United States and
abroad is facing its toughest challenge ever. That is how to
use this abundant resource without having a negative impact on
Coal combustion is the largest source of CO2
emissions, both domestically and globally. Therefore, the
technology needs to be developed that can cost effectively
capture and store or reuse the CO2 emitted by the
coal-fired plants and large industrial sources of greenhouse
gases. My bill, S. 1134 supports the continued research,
development, and demonstration of CCS technology being carried
out by the Department of Energy's National Energy Technology
Just quick highlights of the bill. First of all, the bill
would promote the continued large-scale commercial
demonstration and, ultimately, the deployment of the most
promising integrated CCS systems.
Second, the bill would promote the continued research and
development of advanced pre-combustion, oxy-combustion, and
post combustion CO2 capture technology and
geological storage concepts in order to drive down costs,
increase performance, and foster innovation. It is critical
that in addition to the commercial demonstration of current CCS
technology, we continue to develop and advance new CCS ideas
and concepts through a robust research and development program
in order to continue to lower the cost of CO2
capture and storage.
Next, the bill will promote the continued research and
development of other coal power generation technologies,
including gasification, combustion turbines, fuel cell, and
Next, the bill will promote the export of U.S. CCS
technology to those countries such as China and India, which
rely upon coal as their dominant energy source, ensuring that
the United States is the leader in developing and exporting
clean coal technologies and taking advantage of thousands of
new clean energy jobs such as this industry would create.
I should point out that a critical outcome of the
implementation of this bill will be the data necessary to
support the creation of a framework to address the liability
and long-term stewardship of commercial geological
CO2 storage operations. Such a framework was
introduced last year by Senator Enzi and I in the Carbon
Storage Stewardship Trust Fund Act of 2009.
Let me close by saying that I applaud the work of this
committee and your committee's efforts in particular to
recognize the important role that coal plays in driving our
economic engine every day. I look forward to working with you
to move forward legislation that will accelerate the research,
development, demonstration, and deployment of CCS and advanced
I appreciate this opportunity, and I appreciate the
willingness of the ranking member to allow me to jump ahead of
the line. It doesn't happen very often in Washington, but we
Thank you, Mr. Chairman.
The Chairman. All right. Thank you very much for your
statement. Unless any member has a question, we will allow you
to get on to your other responsibilities.
Senator Murkowski, why don't you go ahead with any
statement you have?
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR
Senator Murkowski. Thank you, Mr. Chairman.
I am pleased to be able to provide that opportunity to
Senator Casey, and I look forward to Senator Barrasso speaking
to his legislation as well.
Mr. Chairman, you mentioned in your opening comments our
bipartisan energy bill that we moved through this committee
sometime ago. I have stated before that I would like to see us
take this up, debate it on the floor, and move it to the
But hearings like this remind us that there is always more
that we can do in this committee and to provide an opportunity
to hear from agencies and stakeholders about the progress that
we have made. I think we will be getting some of that this
I think CCS is a perfect example. Its applications are
broad, including enhanced oil recovery, cement mixtures, or
merely underground injections for the sake of climate. It can
be applied to a number of fossil feedstocks, but of course,
coal-fired projects appear to be the most promising to start
Carbon sequestration is the newest entrant into how we mark
the difference between regular coal and clean coal. Over the
years I think that that definition of clean coal, how we define
it, has shifted and perhaps dramatically. Where once it meant
that particulate sulfur dioxide, mercury, and other emissions
had been reduced, it now means we must separate and sequester
the carbon building blocks of the fuel itself. It makes sense
to ask more of a fuel that is already so cheap, so abundant,
particularly in light of what we are seeing with our changing
Our recent experience has shown what a complicated endeavor
carbon sequestration can be and the need for the responsible
policies to promote it. Attempts to deploy this technology have
raised questions about everything from liability and
infrastructure to chemical reactions and ownership of pore
We have made strides in many of these areas, but hopefully,
today's hearings will help us advance just a little bit
further. Ultimately, it is my hope that coal can be used not
just more cleanly, but more broadly as well. We have some great
opportunities through gasification for expanding the
application of this abundant domestic resource to make America
more secure from an energy standpoint.
We know that Senator Dorgan is well aware of these
opportunities, as his State hosts the only facility to convert
coal into synthetic natural gas there in North Dakota. That
project makes a number of valuable commodities and sequesters
much of its carbon dioxide emissions through the enhanced oil
In my State, we have a project that is being looked at by
Cook Inlet Region, Inc. This is looking at avoiding the need to
mine coal seams altogether with a technology called in situ
gasification. This process could provide synthetic gas to power
a 100-megawatt generating plant, bring a whole new supply of
electricity to the region for economic development, and we are
very intrigued about the prospects.
So the goalposts are moving for coal, but I think that we
can keep up with it. I am glad to see both the Interior and
Energy Departments here this morning. These contributions from
your departments are essential if we are going to succeed in
making the best possible use of our domestic coal reserves.
Whether it is coal and carbon sequestration, rare earths or
green technologies, or nuclear power and a stable supply of
uranium, it is essential that agencies coordinate so that their
policies do not conflict with one another. So I am also glad
that we are going to have a second panel this morning of
experts and stakeholders about the progress that can be made in
advancing carbon sequestration as quickly as possible.
Again, I would like to thank the sponsors of the
legislation that we will have here before us this morning, and
I just appreciate their good work in moving this forward.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Barrasso, do you want to give us a short
introduction as to your legislation, and then we will go to the
STATEMENT OF HON. JOHN BARRASSO. U.S. SENATOR
Senator Barrasso. Thank you very much, Mr. Chairman.
I welcome the witnesses. As we have heard from Senator
Casey and Senator Murkowski, coal is an essential part of
America's energy future. Right now, half of the electricity in
the United States comes from coal.
Coal is affordable, abundant, and reliable. Most
importantly, coal is an American energy resource, and America
cannot afford to leave stranded its most abundant, commercially
viable energy resource.
Coal creates American jobs. It generates revenues for
Federal, State, and local governments, and it enhances
America's energy security.
So to make commercial-scale carbon sequestration a reality,
we must provide the legal and the regulatory framework to do
so. We must address the long-term liability. I want to thank
Chairman Bingaman for his leadership on the liability issue. I
am an original co-sponsor of the chairman's bill.
I introduced legislation clarifying pore space ownership
under the Federal surface estate. Determining pore space
ownership is a key aspect of creating the legal framework that
is needed for carbon sequestration.
Addressing these questions is essential to ensuring the
long-term viability of coal. That is why I have introduced S.
1856, the Federal pore space ownership legislation, which
essentially defines pore space as the subsurface space of any
size that can be used to store carbon dioxide or other
substances. It clarifies that the Federal Government owns the
pore space below Federal land.
So, with that, Mr. Chairman, I want to thank the witnesses.
I look forward to their testimony and have some questions after
The Chairman. Thank you very much.
Our first panel here, as I have mentioned, is made up of 2
officials--Jim Markowsky, who is the Assistant Secretary of
Fossil Energy in the Department of Energy, and Ann Castle, who
is the Assistant Secretary for Water and Science in the
Department of the Interior. We appreciate both of them being
Dr. Markowsky, why don't you start, and we will hear from
you. Then, Anne Castle, we will hear from you.
STATEMENT OF JAMES MARKOWSKY, ASSISTANT SECRETARY FOR FOSSIL
ENERGY, DEPARTMENT OF ENERGY
Mr. Markowsky. Thank you, and good morning, Mr. Chairman
and members of the committee.
I appreciate the opportunity to appear before you today. I
will be addressing the congressional interest in CCS as
demonstrated by bills introduced by Senators Casey, Barrasso,
and the legislative action drafted by Senators Rockefeller and
As you consider these proposals and the issues they seek to
address, I believe it would be beneficial to update you on the
Office of Fossil Energy's program to advance CCS technology.
Our CCS program is boosted by receiving $3.4 billion for CCS
through the Recovery Act. This is complemented by $600 million
from our CCPI program.
Our CCS program primarily focuses on coal now, which
provides nearly half of the U.S. electric generation. But CCS
will be required for both coal- and gas-fired systems to meet
long-term CO2 reduction goals. Our research is
focused chiefly on the technical and economic challenges to
commercially deploy CCS technologies for use in electric power
generation and also industrial facilities.
We have 4 key areas in our coal program, and that is
developing technologies for global competitive CO2
capture; establish long-term basis for geological storage and
CO2 reuse; improve efficiency of both existing and
new coal-based power plants, which directly reduces the
CO2 emissions and reduces the requirement for
capture and storage and also reduces coal use; computer
modeling and simulation from the molecular level to the
integrated plant level, along with geological reservoir
Right now, we are pursuing large-scale demonstrations of
the current first-generation CCS technologies. We are
partnering with industry to build large-scale CCS demonstration
facilities to gain invaluable experiences with integration of
the CCS operations into power generation facilities and
industrial plants by 2015.
We have 3 major programs. The first is our Clean Coal Power
Initiative 3, which is a coal-based power generation for CCS
with CO2 storage and beneficial uses, such as EOR.
The next is our FutureGen program, and we have been working
with our FutureGen Alliance and currently reviewing the
continuation application for moving this project forward. We
also have solicitations that we are reviewing for our
industrial CCS program, and we are currently reviewing those
applications with the intent of making final selections in June
of this year.
From these programs, we anticipate having 8 to 10 large-
scale CCS demonstration facilities operational in the 2015
timeframe. First-generation CCS costs are very high. Post
combustion typically increases COE by--cost of electricity by
70 to 80 percent. Pre-combustion typically will increase that
by 30 percent.
To drive down the costs of CCS, we are pursuing in parallel
with the first-generation technology demonstrations, research
and development to increase the power plant efficiency and
develop advanced second-generation technologies. These include
advanced carbon capture on retrofit of coal power plants, which
will increase the efficiency and reduce the cost penalty by
approximately one-third that of noncapture configurations.
Advanced gasification increases the efficiency advantage by
3 percentage points and, again, reduces the cost penalty by a
third. Ultra supercritical steam cycle, where we are looking at
temperatures of upwards of 1,300 degrees where currently we
have 1,100 degrees, efficiency advantage of over 3 percentage
points and, again, a cost reduction of approximately one-third
of the penalty.
Oxy-combustion, we are looking at that also, where you are
burning pulverized coal in an atmosphere of oxygen where the
combustion products are primarily CO2 with some
water, and the cost penalty there is only a third to a quarter.
We envision a new round of advanced CCS demonstrations in
the 2015 timeframe, which will position commercial deployment
of advanced technologies in the post 2020 timeframe.
We are getting to the cost-effective deployment that will
require broad-based public and private collaboration on
investment. With regard to storage, we are pursuing carbon
storage with our seven regional partnerships. We have made
great progress. These partnerships are involved in 43 States
with basically 50 stakeholders.
We have made great strides in capturing this, but there are
some obstacles to commercial deployment. That is why the
President in February this year initiated the Interagency Task
Force on CCS, the first-ever Government-wide task force to
develop a comprehensive Federal strategy to address the
barriers to CCS and also achieve cost-effective deployment
technologies within 10 years.
As you mentioned, Mr. Chairman, I serve as the co-chair
with EPA. We are holding our first public meeting this month,
this coming month.
We have had excellent cooperation. We are making great
strides, and we envision having a report to the President in
August of this year to overcome the barriers.
In conclusion, I would like to just say that we are moving
forward with CCS, the critical aspect of this technology to
ensure environmentally and commercial sound use of fossil fuels
including coal. But a viable national CCS approach will be
possible only with development of a national set of definitive
policies and incentives that reward technology development and
encourage investment in CCS.
I applaud the efforts of this committee and members for
taking a leadership role in addressing these issues in a timely
fashion. I also look forward to working with Congress to forge
a pathway to a viable and effective implementation of CCS and
ensure a sound, secure energy future.
With that, Mr. Chairman, I would be happy to answer any
questions the committee might have.
[The prepared statement of Mr. Markowsky follows:]
Statement of James Markowsky, Assistant Secretary for Fossil Energy,
Department of Energy
on s. 1856 and s. 1134
Thank you Mr. Chairman and members of the Committee. I appreciate
this opportunity to meet with you this morning to discuss carbon
capture and storage (CCS) legislation before the Committee.
While this hearing is focused specifically on S. 1856, a bill to
amend the Energy Policy Act of 2005 to clarify policies regarding
ownership of pore space, introduced by Sen. John Barrasso (R-WY);
S.1134, the Responsible Use of Coal Act of 2009, introduced by Senator
Robert Casey (D-PA); and CCS legislative text drafted by Senators John
D. Rockefeller (D-WV) and George V. Voinovich (D-OH), I would like to
take this opportunity to provide an overview of the United States
Department of Energy (DOE), Office of Fossil Energy's Clean Coal
Research Program and how our Research, Development and Demonstration
Program is directly relevant to the legislation being discussed at this
Interagency Task Force on Carbon Capture and Storage
Before I discuss the Office of Fossil Energy's Clean Coal Research
Program, I would like to briefly mention the recently announced White
House Task Force on Carbon Capture and Storage. On February 3, 2010,
President Obama issued a Presidential Memorandum titled ``A
Comprehensive Federal Strategy on Carbon Capture and Storage.'' This
memorandum establishes an Interagency Task Force on Carbon Capture and
Storage, consisting of fourteen Executive Departments and Federal
Agencies, which are tasked with developing a comprehensive and
coordinated Federal strategy to speed the commercial development and
deployment of clean coal technologies. The co-chairs of the Task Force
are DOE and the Environmental Protection Agency (EPA).
The Task Force is charged with proposing a plan to overcome the
barriers to the widespread, costeffective deployment of CCS within 10
years, with a goal of bringing 5 to 10 commercial demonstration
projects online by 2016. Ultimately comprehensive energy and climate
legislation that puts a cap on carbon will provide the largest
incentive for CCS because it will create stable, long-term, market-
based incentives to channel private investment in low-carbon
technologies. The Task Force plan will explore incentives for
commercial CCS adoption and address any financial, economic,
technological, legal, institutional, social, or other barriers to
deployment. The Task Force will consider how best to coordinate
existing administrative authorities and programs, including those that
build international collaboration on CCS, as well as identify areas
where additional administrative authority may be necessary. The co-
chairs will report progress periodically to the President through the
Chair of the Council on Environmental Quality.
As the Department's delegate and co-chair of this Task Force, I am
diligently working with representatives of EPA to assemble the proposed
plan within 180 days of the release of the Memorandum.
clean coal research program
The Office of Fossil Energy's (FE) Fossil Energy Research and
Development Program creates public benefits by enhancing U.S. economic,
environmental, and energy security. The program carries out three
primary activities: (1) managing and performing energy-related research
that reduces market barriers to the environmentally sound use of fossil
fuels; (2) partnering with industry and others to advance fossil energy
technologies toward commercialization; and (3) supporting the
development of information and policy options that benefit the public.
The FE Clean Coal Research Program--administered by the Office of
Clean Coal and implemented by the National Energy Technology
Laboratory--supports DOE's overall mission to achieve national energy
security in an economic and environmentally sound manner. In the Coal
Program, there are four key priorities: 1) developing technologies for
globally competitive carbon dioxide (CO2) capture for power
plants and industrial sources, 2) establishing the basis for long-term
geologic storage and CO2 reuse, 3) improving the efficiency
of both existing and new coal-fired power generation plants, and 4)
implementing computer modeling and simulation to accelerate the
Research and Development (R&D) path from discovery to commercialization
and reduce costs.
Currently, we are pursuing the demonstration of first generation
carbon capture and storage technologies with existing and new power
plants and industrial facilities using a range of capture technologies
and storing CO2 in a variety of geologic formations. The
goal is to have five to ten large-scale demonstrations in operation by
2016. In parallel, to drive down the costs of CCS as a potential
climate change mitigation technology, the FE Coal Program is pursuing
R&D to increase base power plant efficiency and thereby reduce the
amount of carbon dioxide that has to be captured and stored per unit of
electricity generated. FE is developing a spectrum of technologies to
evolve coal into a low-carbon energy source that is economically
competitive in 2020 and beyond.
There are a number of technical and economic challenges that must
be overcome before cost-effective CCS solutions can be implemented to
address climate change. Funding from the American Recovery and
Reinvestment Act (Recovery Act) is helping to address these challenges.
The Recovery Act provided an additional $3.4 billion for FE R&D to
expand and accelerate the commercial deployment of CCS technology. The
experience gained from both the capture and storage demonstrations
funded by the Recovery Act will be a critical step toward achieving
widespread, cost-effective deployment of CCS. In addition to the
Recovery Act projects, the core research, development and demonstration
activities that leverage public and private partnerships will support
the goal of broad, cost-effective CCS deployment in the post-2020
Core Research and Development Activities
The Clean Coal Research Program is comprised of core research and
development activities and major demonstration programs. The Program is
further enhanced through the CCS activities authorized under the
DOE provides a worldwide leadership role in the development of
advanced coal technologies. We are moving aggressively to address new
challenges associated with the reduction of greenhouse gas emissions as
a climate change mitigation strategy. In partnership with the private
sector, efforts are focused on maximizing efficiency and performance,
while minimizing the costs of new CCS technologies. Improving the
efficiency of CCS systems will help address pollutant emissions
reduction, water usage, and carbon emissions. The Program strives to
enable dramatic reductions in emissions and to improve technologies
applicable to current and future fossil energy plants and industrial
facilities so they can cost effectively meet emerging requirements for
an economically secure and environmentally sound energy future.
The following CCS-enabling R&D activities support the development
of technologies that can then be tested for commercial readiness in our
demonstration programs. These R&D activities provide the supporting
technology basis for all CCS development.
Carbon Sequestration--The Department's Sequestration program
focuses on the key technology challenges that confront the wide-scale
industrial deployment of CCS. These challenges are being addressed
through industry/government cooperative research on cost-effective
capture technologies; monitoring, verification, and accounting
technologies to assess permanence of storage; permitting issues;
liability issues; public outreach; and infrastructure needs. Developing
low-cost pre-combustion capture technologies and establishing the
technical basis for carbon sequestration will lead to a decrease in the
atmospheric release of CO2, thus allowing us to use our
domestic fossil fuel resources responsibly by reducing their impacts on
global climate change.
Essential to these objectives are the Regional Carbon Sequestration
Partnerships (RCSP). The Partnerships are a central piece of our CCS
research efforts that develop the knowledge base and infrastructure for
the wide-scale deployment of geologic storage technologies. The
Partnerships address key infrastructure issues related to permitting,
pore space (underground reservoir) ownership, site access, liability,
public outreach, and education. The Partnerships also conduct field
tests across the United States to characterize the geographic
differences in fossil fuel use, potential storage sites, and different
regional approaches to addressing CCS. The Partnerships encompass all
of the geologic storage sites in the country that are potentially
available for carbon sequestration. The Regional Partnerships represent
more than 350 unique organizations in 43 States, three Native American
Indian Nations, and four Canadian Provinces.
Innovations for Existing Plants (IEP)--The IEP program develops low
cost, efficient technologies to reduce CO2 emissions from
new and existing pulverized coal-fired power plants. The program
focuses on advanced post-combustion ultra-supercritical steam cycle,
oxy-combustion, and CO2 compression technologies in direct
response to the priority placed on addressing the existing and new
coal-fired power plants. Dramatic cost and energy penalty reductions
for carbon capture are essential for broad deployment of existing plant
CCS retrofits, both domestically and in developing economies.
Advanced Integrated Gasification Combined Cycle (IGCC)--Advanced
IGCC technology utilizes a pre-combustion pathway to convert coal or
other carbon-containing feedstocks into synthesis gas, a mixture
composed primarily of carbon monoxide and hydrogen used as fuel for
power generation. We are developing advanced gasification technologies
to meet the most stringent environmental regulations and to facilitate
the efficient capture of CO2 for subsequent sequestration.
Gasification plants are complex systems that rely on a large number of
interconnected processes and technologies. Advances in the current
state-of-the-art, as well as development of novel approaches, are
required to make these systems affordable and reliable for commercial
deployment. The program continues to focus on developing the next
generation technology in gasification systems related to fuel flexible
gasifiers, coal feed systems, high temperature contaminant removal,
revolutionary oxygen supply technology, and CO2 capture
technologies. Specifically, we are targeting improvement in IGCC that
could yield up to a 5 percentage point efficiency gain while reducing
the system cost. These added improvements are targeted toward allowing
IGCC to be deployed as a competitive option in the post-2020 time frame
by reducing the cost of future systems and improving their reliability.
Fuels--The Fuels program is focused on reducing technology barriers
for the reliable, efficient and environmentally friendly conversion of
coal to hydrogen for utilization in advanced IGCC systems. Efforts for
hydrogen production focus on generation at the plant for large-scale,
central power applications and exclude transportation. Activities
include support for the bench-scale development of hydrogen separation
technologies and components.
Fuel Cells--Fuel cell systems when coupled with coal gasification
for large scale power generation hold great potential for leapfrog
advances in efficiency. Fuel cells also produce very low emissions, are
modular in nature, and can be scaled to almost any deployment size. The
ultimate goal of the program is to develop large (>100 MW) fuel cell
power systems that produce electric power from coal using integrated
coal gasification and CO2 separation processes that capture
at least 90 percent of the CO2 emissions. The program is
driving to reduce the cost of fuel cell technology by an order of
magnitude compared to current technology and enable low-cost fuel cells
scalable to MW class ultra-clean systems with potential for up to 60
percent electrical efficiency for central power generation.
Advanced Turbines--The Advanced Turbine program consists of a
portfolio of laboratory and field R&D projects focused on performance-
improvement technologies with great potential for increasing efficiency
and reducing emissions and costs in coal-based applications. Future
gasification based power systems outfitted with CCS will require high
efficiency hydrogen turbines. Hence, the current focus of the Advanced
Turbine program is the combustion of pure hydrogen fuels in greater
than 100 MW size gas turbines and the compression of large volumes of
CO2. The Advanced Turbines program aims to improve the
firing temperature and throughput of the next generation of combustion
turbines for coal-based integrated gasification combined cycle power
systems that capture and sequester CO2.
Advanced Research--The Advanced Research Program is a bridge
between basic research and the development and deployment of innovative
systems capable of creating highly efficient and environmentally benign
electricity and power. The objective of the program is to support
development of critical enabling components that provide cross cutting
benefits across the entire coal research program. Example developments
that are being pursued include high temperature materials for ultra-
supercritical plants, enabling efficiency increases up to 3 percentage
points for coal-fired plants, revolutionary sensors and controls, and
advanced computing/visualization techniques. The Advanced Research
Program will continue to push revolutionary advances in efficiency
improvements, computational analyses and projects aimed at a greater
understanding of the physical, chemical, and thermo-dynamic barriers
that currently limit the use of coal and other fossil fuels.
Additionally in FY 2011, a multi-lab partnership will be initiated
to develop a comprehensive, integrated suite of computational models
for accelerating the development of carbon capture technologies. The
scientific underpinnings of the suite of models will ensure that
learning from successive generations of a technology or learning from
even competing technologies is maximized. The simulation-based
confidence will reduce the risk in incorporating multiple innovative
technologies into a new plant design, thereby significantly reducing
the development cycle required to move novel technologies to
Demonstrations at Commercial-Scale
Program success will ultimately be judged by the deployment of
emerging technologies into the marketplace. Both technical and
financial challenges associated with the deployment of new advanced
coal technologies must be overcome in order to achieve success in the
marketplace. Commercial-scale demonstrations help the industry
understand and overcome component integration and start-up performance
issues, and by reducing technology and economic risk, improve the
opportunity for private financing and investment for subsequent plants.
The Department is implementing large-scale CCS projects through the
Large-Scale Sequestration Field Tests being performed by the Regional
Partnerships; the Clean Coal Power Initiative (CCPI); and FutureGen.
Large-Scale Sequestration Field Tests--A central piece of our CCS
research is DOE's field test program, which is being implemented
through the Regional Carbon Sequestration Partnerships. This field test
program reflects the geographic differences in fossil fuel use and
potential storage sites across the United States and targets the use of
regional approaches in addressing CCS. The Partnerships encompass
essentially all the geologic storage sites in the country that can
potentially be available for carbon sequestration. It is important to
note that the non-Federal cost share for the field test program is
greater than 35 percent, which is a key indicator of industry and other
partner interests leading to the success of this program. Each
partnership is focused on a specific region of the country with similar
characteristics relating to CCS opportunities and needs.
The Development Phase (Phase III) of the Regional Partnerships is
focused on large-scale field tests of geologic carbon sequestration up
to 1 million metric tons of CO2 per year, and addresses the
liability, regulatory, permitting, and infrastructure needs of these
projects. The Partnerships have brought an enormous amount of
capability and experience together to work on the challenge of
In FY 2011, several of the nine large-scale RCSP CO2
injection projects are scheduled to begin injecting CO2 for
large volume (1 million tons/year) geologic storage tests. Most of the
large-scale field tests will have completed the first stage of the
projects consisting of site selection and characterization, National
Environmental Policy Act (NEPA) review, pre-injection monitoring, and
permitting. One project will have concluded its injection of about 2
million tons of CO2 and will be conducting post injection
monitoring at the site. These large-volume injections are needed to
demonstrate that the formations selected for storage have the
capability and capacity to store CO2 from coal-based energy
systems and industrial facilities.
Clean Coal Power Initiative--The mission of the Clean Coal Power
Initiative (CCPI) is to enable and accelerate the deployment of
advanced carbon capture and storage (CCS) technologies to ensure clean,
reliable, and affordable electricity for the United States. The CCPI is
a cost-shared partnership between the government and industry to
develop and demonstrate advanced coal-based power generation
technologies at the commercial scale.
CCPI demonstrations address the reliability and affordability of
the Nation's electricity supply from coalbased generation. CCPI
demonstrations will meet technical requirements set forth in the Energy
Policy Act of 2005. By enabling advanced technologies to overcome
technical risks involved with scale-up and bringing them to the point
of commercial readiness, CCPI accelerates the development of both
advanced coal generation technologies and the integration of CCS with
both new and existing generation technologies. The CCPI also
facilitates the movement of technologies into the market place that are
emerging from the core research and development activities.
FutureGen--The FutureGen Project intends to conduct novel large-
scale testing to accelerate the deployment of a set of integrated
advanced coal gasification-based electric power production technologies
linked with CCS. This project would be the first of its kind to store
CO2 in a deep saline geologic formation. The Department is
currently reviewing the renewal application submitted by the FutureGen
Alliance on March 19, 2010.
the american recovery and reinvestment act
The primary goals of the FE Recovery Act Program are to:
Demonstrate CCS technology to reduce greenhouse gas
emissions from the electric power and industrial sectors of our
Become the world's leader in CCS science and technology.
Implement projects to support economic recovery by creating
new jobs in pursuit of a secure energy future.
Recovery Act projects will leverage federal funding, stimulate
private sector investment, accelerate delivery of CCS technology, and
demonstrate the integration of coal-based energy systems and industrial
processes with capture and permanent storage of CO2 in
geologic formations. Recovery Act projects are logical extensions of
several important, ongoing Clean Coal Research Program baseline
The FE Recovery Act R&D Program is comprised of five components,
with the following specific objectives:
Expand and Extend Clean Coal Power Initiative Round 3
(Expand CCPI-3)--Accelerate integrated CCS demonstrations by
expanding and extending the opportunity for several additional
CCS electricity generation demonstrations for both new and
existing plants under DOE's ongoing CCPI-3 competition.
Industrial Carbon Capture and Storage--Expand DOE's focus of
CCS on advanced coal power systems to industrial CCS
Geologic Sequestration Site Characterization--Accelerate the
comprehensive characterization of large-volume geologic
reservoirs, thus augmenting existing data under the Regional
Carbon Sequestration Partnerships.
Geologic Sequestration Training and Research--Develop the
next generation of scientists and engineers by expanding
ongoing training and research efforts conducted primarily
through the University Coal Research and Historically Black
Colleges and Universities programs.
Carbon Capture and Storage--Provide a fully integrated,
advanced coal gasification-based power plant with utility-scale
CCS technology capable of safely and permanently storing
1million metric tons of CO2 per year.
To date, there have been over 90 projects awarded, including the
following most recent announcements:
On October 2, 2009, Secretary Chu announced the first round
of funding from $1.4 billion from the Recovery Act for the
selection of projects that will capture CO2 from
industrial sources for storage or beneficial use. The first
phase of these projects will include approximately $21.6
million in Recovery Act funding and $22.5 million in private
funding for a total initial investment of about $44.1 million.
The remaining Recovery Act funding will be awarded to the most
promising projects during a competitive phase two selection
On November 6, 2009, DOE issued a cooperative agreement with
Hydrogen Energy California LLC to build and demonstrate a
hydrogen-powered electric generating facility, complete with
CCS, in Kern County, California.
On March 9, 2010, U.S. Secretary of Energy Steven Chu
announced that a project with NRG Energy has been selected to
receive up to $154 million, including funding from the Recovery
Act. The post-combustion capture and sequestration project will
demonstrate advanced technology to reduce CO2
emissions and will assist with enhanced oil recovery efforts
from a nearby oil field.
On March 12, 2010, DOE announced the award of a cooperative
agreement to Summit Texas Clean Energy, LLC, for the Texas
Clean Energy Project to design, build, and demonstrate an
integrated gasification combined cycle electric generating
facility, complete with co-production of high-value products
and carbon capture and storage.
On March 12, 2010, DOE announced the award of a cooperative
agreement to American Electric Power for the Mountaineer
Commercial-Scale CCS Project to design, construct, and operate
a system that will capture and store CO2 at an
existing coal-fired power plant.
Recognizing that climate change is a global issue that requires a
global response, DOE plays an active leadership role in an
international initiative known as the Carbon Sequestration Leadership
Forum (CSLF). The CSLF is a voluntary climate initiative of developed
and developing nations that, collectively, account for 75 percent of
all anthropogenic carbon dioxide emissions. It is currently comprised
of 24 members, including 23 countries and the European Commission.
Formed in 2003, the CSLF marshals intellectual, technical, and
financial resources from all parts of the world to support atmospheric
stabilization of carbon dioxide concentrations, the long-term goal of
the United Nations Framework Convention on Climate Change. Members are
dedicated to collaboration and information sharing in developing,
demonstrating, and fostering the worldwide deployment of multiple
technologies for the capture and long-term geologic storage of carbon
dioxide at low costs. Additionally, the CSLF is committed to
establishing a companion foundation promoting legislative, regulatory,
administrative, and institutional practices for safe, verifiable long-
In addition to the CSLF, the Department is currently cooperating
with numerous countries through bilateral agreements and multilateral
activities to identify areas of collaboration in promoting and
developing clean fossil energy technologies internationally.
CCS technologies can play a key role as we transition to the clean
energy economy of the future. However, cost-effective commercial
deployment of CCS can only occur in parallel with the development of a
national set of definitive policies that encourage technology
development and reward investments in and capital formation around
improved carbon performance. Passing comprehensive energy and climate
legislation that puts a price on carbon will provide the long-term,
market-based incentives to channel private investment into CCS and
other low-carbon technologies. Time is of the essence. The
Administration wants to see comprehensive legislation sent to the
President this year.
Addressing the barriers to CCS deployment requires a systems-based
approach that includes not only site evaluation, characterization and
selection, but also rules for short-, medium-, and long-term liability.
Market driven CCS deployment will also require infrastructure for
CO2 transportation and storage and the development of a
uniform set of measurement, validation and accounting standards,
practices, and procedures. Finally, whatever structure is created must
encompass the input of a broad range of stakeholders.
CCS and other clean coal technologies can play a critical role in
mitigating CO2 emissions under many potential future carbon
stabilization scenarios. The DOE program has put us on a path toward
ensuring that the enabling technologies will be available to effect
broad CCS deployment within a decade. Continued U.S. leadership in
technology development and future deployment is important to the
cultivation of economic rewards and new business opportunities both
here and abroad.
I applaud the efforts of this Committee and its Members for taking
a leadership role in addressing these timely and significant issues. I
would be happy to respond to any questions from members of the
The Chairman. Thank you very much.
Ms. Castle, why don't you go right ahead, please?
STATEMENT OF ANNE CASTLE, ASSISTANT SECRETARY FOR WATER AND
SCIENCE, DEPARTMENT OF THE INTERIOR
Ms. Castle. Mr. Chairman, Senator Murkowski, members of the
committee, thank you for asking me to be here today to address
As you mentioned, Mr. Chairman, I am the Assistant
Secretary for Water and Science at the Department of the
Interior. With me is Tim Spisak from the Bureau of Land
Management. Tim is the Deputy Assistant Director for Minerals
and Realty Management.
Interior will defer to the Department of Energy on S. 1134,
as that bill addresses activities within DOE's purview.
Under Secretary Salazar's leadership, the Department of the
Interior has made addressing global climate change one of its
highest priorities, and a key component of working on climate
change is mitigating the impact of carbon dioxide through
measures like geologic carbon sequestration in permeable rock
S. 1856 would ensure that the ownership of any subsurface
pore space located below a Federal surface estate would be
vested in the Federal Government. Interior supports the goal of
this bill to clarify policies regarding ownership of pore
space. We support having clear rules in place before, not
after, disputes arise.
But we would like to discuss with the committee some
concerns that we have related to pore space ownership,
including what we think are very important liability concerns,
where the Federal Government manages the subsurface mineral
estate but does not own the surface, the split estate
At the Department of the Interior, our land and water
managers are already confronting the impact of climate change.
Reduced snowpack is leading to decreased recharge of
groundwater aquifers. We are seeing increased stress on surface
water systems and public water supplies. We are seeing reduced
river flows that impact temperature and depth and spawning
environment for fish. Our scientists are also noting changes in
the abundance and distribution of species, including changes to
Interior's land managers and scientists have on-the-ground
expertise in areas that are critical to developing and managing
carbon capture and storage. The department is sharing its
expertise with our partner agencies as a contributor to the
President's Task Force on Carbon Capture and Storage, and the
task force, as Mr. Markowsky explained, is working on a
coordinated Federal strategy to speed the commercial
development of clean coal technology.
The Bureau of Land Management is entrusted with the
multiple-use management of 253 million acres of surface land.
But BLM also manages 700 million acres of subsurface mineral
estate where the surface owners could be BLM, could be other
Federal agencies like the Forest Service, sometimes the States,
and sometimes the surface is in private ownership. That Federal
mineral estate includes 57 million acres where the Feds own the
minerals and the surface estate is privately owned.
BLM worked with other Federal agencies to submit a report
to Congress last May that was required by the Energy
Independence and Security Act, and it addressed a wide variety
of issues related to geologic carbon sequestration. In addition
to experience administering large-scale mineral leasing
programs, BLM has the real estate expertise and an existing
framework for issuing rights-of-way that could serve future
needs for carbon dioxide pipelines on public lands.
We believe that BLM's existing authorities could facilitate
future carbon sequestration demonstration projects, but we also
think that a more explicit statutory authority would be
desirable. Again, we would like to discuss this further with
The United States Geological Survey contributes to better
scientific understanding of our natural resources, and as part
of its mission, USGS also conducts assessments of energy
resources like oil and natural gas both in the U.S. and around
the world. USGS is currently finalizing the methodology for a
national assessment of carbon dioxide storage capacity in oil
and gas reservoirs and saline formations. USGS is also going to
play an important role in recommending geologic criteria that
could be incorporated into a set of best practices for geologic
The Department of the Interior supports the goal of S. 1856
to provide certainty regarding the ownership of pore space.
Connecting pore space to surface ownership is a codification of
what has been called the ``American rule.''
We do have concerns about the split estate situations that
are not explicitly addressed in the bill. There are long-term
liability questions that could arise if the private entity
holding the surface rights sequesters carbon dioxide in the
pore space but then is unable to manage the CO2
CO2 is a leasable mineral. The bill addresses
the ownership of the storage space, but not necessarily what is
in the storage space, what is stored there. So the department
would like to work with this committee to address those issues.
Interior believes that carbon capture and sequestration can
play a significant role in reducing the long-term effects of
carbon emissions, and we would like to work with the committee
on these critical efforts to mitigate the impact of climate
Thank you for asking for the department's views, and I am
available to answer your questions at the appropriate time.
[The prepared statement of Ms. Castle follows:]
Prepared Statement of Anne Castle, Assistant Secretary for Water and
Science, Department of the Interior
on s. 1856 and s. 1134
Mr. Chairman and Members of the Committee, thank you for the
opportunity to discuss S. 1856, a bill to amend the Energy Policy Act
of 2005 to clarify policies regarding the ownership of pore space, and
S. 1134, the Responsible Use of Coal Act. The Department of the
Interior defers to the Department of Energy on S. 1134 as the scope of
the bill is limited to activities within the Department of Energy.
I am Anne Castle, the Department of the Interior's Assistant
Secretary for Water and Science. I am accompanied by Tim Spisak, the
Bureau of Land Management (BLM) Deputy Assistant Director for Minerals
and Realty Management. Under Secretary Salazar's leadership, the
Department of the Interior has made addressing global climate change
among its highest priorities. A key component to addressing climate
change is mitigating the impact of carbon dioxide through energy
conservation, clean renewable energy, and measures such as geologic
carbon sequestration into permeable rock pore spaces.
S. 1856 would ensure that the ownership of any subsurface pore
space located below a Federal surface estate would be vested in the
Federal Government. The Department of the Interior supports the goal of
S. 1856 to clarify policies regarding ownership of pore space. We
support having clear rules in place before, not after, disputes over
property rights arise. However, we would like to discuss with the
Committee concerns related to pore space ownership on split estate
lands--including important liability concerns--where the Federal
government manages the subsurface mineral estate but not the surface.
Climate Change Impacts & the Department of the Interior
At the Department of the Interior, our land and water and wildlife
managers are already confronting the impacts of climate change. Reduced
snowpack is leading to decreased recharge of groundwater systems,
increasing stress on surface water supplies and public water systems,
and reducing river flows that impact temperature, depth, and other
characteristics of spawning environments for fish. Our Arctic parks and
refuges are seeing some of the earliest impacts of climate change.
Melting sea ice threatens marine mammals as well as coastal
communities, and thawing permafrost can destabilize buildings, roads,
and facilities--disrupting the structural basis of large regions of
Our scientists are also noting changes in the abundance and
distribution of species, including changes to migration patterns; the
expansion of pests and invasive species; increased vulnerability to
wildland fire and erosion; and an overall reduction in carrying
capacity. Many of the iconic wildlife species that the Department
manages from the Arctic to the Everglades will see their habitat
threatened by global climate change.
To assure that our climate change adaptation strategies are
grounded in sound science, Secretary Salazar has created a new climate
change strategy for the Department through Secretarial Order #3289
(September 14, 2009): ``Addressing the Impacts of Climate Change on
America's Water, Land and Other Natural and Cultural Resources.'' This
Order establishes a new Department-wide strategy to address climate
change, with an emphasis on climate change science, adaptation, and
This Order identifies geologic carbon sequestration as a key
component in the Department's climate change mitigation program--the
Carbon Storage Project. The Order identifies the U.S. Geological Survey
(USGS) as the lead agency in administering the Department's Carbon
Storage Project, and the USGS will work closely with the BLM and
external partners to enhance carbon storage in geologic formations
consistent with the Department's responsibility to provide
comprehensive, long-term stewardship of its resources.
The Role of the Bureau of Land Management & the U.S.
As the Nation's largest land manager, the BLM is entrusted with the
multiple-use management of 253 million acres of surface land. The
agency also administers 700 million acres of sub-surface mineral estate
of which the surface owners are Federal agencies, states, or private
entities. This Federal mineral estate includes 57.2 million acres
underlying a privately-owned surface (split estate). The USGS collects,
monitors, analyzes, and provides scientific understanding about natural
resource conditions, issues, and problems. As part of its mission, the
USGS also conducts assessments of energy resources such as oil and
natural gas of the United States and the world. Because of this
expertise and experience, the USGS is conducting a national assessment
of the carbon dioxide storage capacity in oil and gas reservoirs and
saline formations. The USGS is currently finalizing the methodology for
this national assessment.
The Department diligently executes its responsibilities to make our
Nation's energy resources available in an environmentally-sound manner.
Within the framework of a transparent public process, we carefully
consider habitat, groundwater, air and other resources; mitigate
impacts through best management practices, stipulations and conditions
of approval; and balance development with other uses across the
landscape. All of these considerations remain consistent as the
Department contemplates its role in the use of the public lands to
sequester carbon dioxide. Additionally, the Department's bureaus have
the expertise and experience needed to effectively implement carbon
sequestration programs, from the identification of areas appropriate
for storage to the deployment of leasing programs.
The BLM's existing administrative and regulatory framework could
facilitate future carbon sequestration demonstration projects. However,
clearer statutory authority specific to carbon sequestration may be
desirable in some areas in order to move more effectively in
implementing commercial-scale storage on Federal lands. The
Administration is currently reviewing these issues, including whether
additional legislation is desirable, as part of the White House Task
Force on Carbon Capture and Storage. Issues that we are currently
discussing include the most appropriate mechanism for longer term
storage of carbon dioxide (leasing, rights-of-way, or other methods),
the nature and term of the agreements, and how other uses such as
future energy and mineral extraction, other subsurface resources, and
other surface uses that the BLM may authorize could affect longer term
storage, and liability. We look forward to reporting back to the
Committee on the results of the Task Force's work in the near future.
In addition to experience in administering large-scale mineral
leasing programs, the BLM has the realty expertise and an existing
framework for issuing rights-of-way on public land that could serve
future needs for carbon dioxide pipelines across public lands. Other
programmatic and land management expertise, such as the BLM's
experience in evaluation of potential environmental impacts of
projects, will facilitate this effort. In addition, the USGS will play
an important role in recommending geologic criteria that could be
incorporated into a set of ``best practices'' for geologic site
A number of challenges will need to be addressed moving forward,
and we must make use of current information to inform future
discussions. For example, the Department has the results of research at
international non-Enhanced Oil Recovery (EOR) sites at which large
quantities of carbon dioxide have been injected for as long as 12
years. These sites have operated safely and shown no sign of leakage.
However, the carbon storage contemplated for the primary purposes of
sequestration may be for longer terms and larger quantities. We believe
that the DOI land managers and scientists who are on-the-ground have
expertise to offer on monitoring carbon dioxide sequestration, and we
are working with our partner agencies to share their expertise.
Carbon Capture & Sequestration (CCS)
Geological storage of carbon dioxide in subsurface rocks involves
injection of carbon dioxide into the pore space of permeable rock
units. This principle operates in all types of potential geological
storage formations such as oil and gas fields, deep saline water-
bearing formations, or coal beds. Most of the potential carbon dioxide
storage capacity in the United States is in deep saline formations.
The current atmospheric carbon dioxide concentration is
approximately 380 parts per million and rising at a rate of
approximately 2 parts per million annually, according to data collected
since 1959 by NOAA at the Mauna Loa observatory in Hawaii and the most
recent information from the Intergovernmental Panel on Climate Change
(IPCC). The 2005 IPCC Special Report on Carbon Dioxide Capture and
Storage concluded that in emissions reductions scenarios striving to
stabilize global atmospheric carbon dioxide concentrations at targets
ranging from 450 to 750 parts per million, the global storage capacity
of geologic formations may be able to accommodate most of the captured
carbon dioxide. However, the extent to which this storage capacity is
economically viable depends on the price of carbon. Also, geologic
storage capacity may vary widely on a regional and national scale. A
more refined scientific and operational understanding of geologic
storage capacity is needed to address these knowledge gaps.
Energy Security & Independence Act of 2007(EISA)/Pore Space
Section 714 of the EISA directed the Secretary of the Interior to
submit a report to Congress containing a recommended framework for
geological sequestration on public lands. Through the BLM, and in
coordination with the USGS, the EPA, the DOE, and other appropriate
agencies, the Department fulfilled this mandate with its May 13, 2009,
report, Regulatory Framework for Geologic Carbon Sequestration on
Public Land. This report addressed a wide variety of issues related to
geologic carbon sequestration and helps inform our response to the
legislation before the committee.
The report also included a discussion of pore space ownership.
Section (6) of the report notes that Interior Board of Land Appeals
(IBLA) rulings have recognized the ``American Rule,'' which holds that
subsurface pore space is the property of the surface owner. Various
state governments are considering legislation that would establish the
``American Rule'' as state law. Wyoming enacted such a law in 2008;
Montana and North Dakota enacted similar legislation in 2009.
The Department supports the concepts of S. 1856, which consists of
two key provisions. The first, Section (1)(b), clarifies that the
subsurface pore space is the property of the Federal Government in
cases where the Federal Government is the surface landowner
(codification of the ``American Rule''). The second key provision,
Section (1)(d), establishes the mineral estate as the dominant interest
when in competition for priority with a pore space interest. Section
1(d) presents questions related to how mineral interests and those with
interests in storing carbon dioxide in the pore space would intersect.
In following the American Rule, S. 1856 provides that the Federal
government would own the pore space when it owns the surface interests.
While not addressed in the bill, the American Rule would also hold that
a private surface owner would own the pore space if the surface/
subsurface estate is split between the private surface owner and the
Federal mineral estate. In the case of approximately 57 million acres
of land where the estate is split between a private surface owner and
the Federal mineral estate, the private surface owner's pore space
interest could present long-term liability questions. We can foresee a
situation where a private entity holding split estate surface rights
sequesters carbon dioxide in the pore space but then finds itself in a
position of not being able to manage the carbon dioxide or bear its
liability in perpetuity. It remains unclear who would be liable for the
carbon dioxide in these situations. Questions also remain as to whether
carbon dioxide, which is a leasable mineral when naturally occurring on
Federal lands, could be considered part of the mineral estate when
transported onsite, injected, and stored long-term. The Department
would like to engage in discussions with the Committee concerning these
The Department of the Interior believes that carbon capture and
sequestration can play a significant role in reducing the long-term
effects of carbon emissions. The Department of the Interior looks
forward to continuing to work with the Committee on the critical work
of mitigating the effects of climate change.
The Chairman. Thank you both very much.
Let me start. We will just do 5-minute rounds here. Let me
just start with you on the issue you have been talking about,
Ms. Castle. I gather from your testimony, you say that the bill
provides the Federal Government would own the pore space when
it owns the surface interest. I think that is pretty clear.
Then you go on to state that the fact that the bill does
not make the Federal Government the owner of the pore space
when it owns the mineral estate, as distinct from the surface
estate. So I am not clear. Does the department have a position
as to whether it wants to own the pore space in circumstances
where it owns the mineral estate, but not the surface?
Ms. Castle. No, sir. I am sorry if our testimony was not
clear on that point.
We do support the codification of the American rule, that
connects the ownership of the pore space to the ownership of
the surface estate. What we have concerns about is the
situation where the Federal Government owns the mineral
interest, but somebody else owns the surface and, therefore,
owns the pore space.
The Chairman. Right.
Ms. Castle. Because of the concerns about long-term
liability, if the surface owner isn't able to manage properly
that sequestered CO2. So that is the issue we would
like to address. We are not suggesting that the pore space
ownership should be associated with the mineral estate.
The Chairman. I guess I am just a little unclear. If I am a
surface owner, and the Federal Government has retained the
mineral estate, and I am being told now that I own the pore
space below the surface, what legal right do I have with regard
to that pore space if the Federal Government has retained the
mineral estate and perhaps leased that out to someone else?
Ms. Castle. As I understand it, Senator, the bill would
make the mineral estate dominant over the ownership of the pore
space. But I think that you are raising good questions about
the interaction between the owner of the surface, who is
utilizing the pore space for sequestration, and the owner of
the mineral interest.
As I mentioned, CO2 is a leasable mineral. So
once you put it in the ground, it is not clear who has the
ownership to it, whether it is the surface owner or the mineral
rights owner. So those are the kinds of things that we think
could benefit from a dialog with the committee, with the
benefit of the experience that BLM has had in these split
The Chairman. So your view is we don't yet know whether we
ought to codify the American rule, or we do know that we ought
to codify the American rule? That is the part I am not clear
Ms. Castle. The department does support the codification of
the American rule. The legislation, S. 1856, could benefit from
additional clarification of those interactions in a split
The Chairman. OK. I am not sure that I am still very clear
on this. But let me ask you, Dr. Markowsky, one issue is these
large-scale projects that you are standing up. I think you said
you will have 8 to 10 of those by 2015----
Mr. Markowsky. That is correct.
The Chairman [continuing]. In operation. That is one of the
things that is a priority. You also, I gather here, have basic
research going on with regard to carbon capture and storage.
Could you just elaborate a little on what the Office of Science
is doing in that area with regard to this basic research?
Mr. Markowsky. Yes, thank you.
We are working closely with the Office of Science. What we
identified actually last year, when we knew that we were going
to have a high cost for the first-generation post combustion
capture using the mean systems that are available now and
chilled ammonia and the various types of means, we got together
with the Office of Basic Science and started looking at
advanced capture techniques.
This is advanced sorbents, solvents, and ionic type of
fluids that could capture the CO2 with very little
energy and then be regenerated again with very little energy
needed, which is the key thing. Because what you want to do is
capture the CO2, and then you are going to take that
CO2 outside the flow stream, and you are going to
release it with either a pulse of energy or something and then
recirculate the solution that is capturing the CO2.
So we are working closely with them. They are doing
research on various types of sorbents and solvents along with
us, and the tie is that they know what our needs are, and we
have a very tight timeframe. We are also working with ARPA-E,
the other organization we have. They have solicitations out for
So, actually, we have got 3 entities within DOE that are
focusing very heavily on advanced capture and post combustion
The Chairman. Thank you very much.
Senator Murkowski. Thank you, Mr. Chairman.
Dr. Markowsky, I would like to ask you about the 2009
stimulus funds that DOE received. It is my understanding that
there was $3.4 billion that went for CCS, and it included
funding for industrial applications, for R&D, a third round of
Clean Coal Power Initiative selections. According to DOE's Web
site, we have just less than a third of the money that has been
awarded over the last 15 months, it is my understanding that
just $16 million, or about 0.5 percent, has actually been
So my question to you this morning is what exactly is
happening with these fossil energy accounts? What are the hold-
ups? Is DOE on track to be spending these stimulus dollars? We,
of course, had all hoped that these would be targeted, timely,
and temporary. I mean, it doesn't look like anything is getting
out the door.
Mr. Markowsky. Thank you for that question, Senator
What we have is really large-scale demonstration projects
in 3 areas with the CCPI program we have, with the industrial
CCS, and also FutureGen. Initially, we sent out solicitations,
and then we reviewed them, and we selected 4 programs under
CCPI-3. We are right now down-selecting the programs under the
industrial CCS solicitation, and we are also working with the
So we are positioned to make these awards and begin
detailed engineering. The earlier work was very preliminary
engineering, which we call ``feed,'' which is a very, very low
level of expenditures. But we are on track to obligate moneys
in all 3 of those programs by September of this year. Then
after we make the awards for detailed design and construction,
we will have a ramp-up of expenditures, and then we are on
target for the 2 major programs to have those expenditures
completed when they come online in 2015.
Senator Murkowski. Can you give me some parameters? You say
that you will have these expenditures out there. How much are
you looking to get out the door?
We said wanted shovel-ready projects, don't get me wrong,
we want to encourage the advancement in the CCS. But it doesn't
sound to me like you are able to expedite much of this in a
manner as which we had intended.
Mr. Markowsky. Yes. The shovel-ready projects, when you
come with a large-scale CCS program, and many times these are
new facilities, and it typically takes about a year to get all
the preliminary work done and 3 years for construction and
There is a ramp-up of expenditures during that period of
time, and that is what you are seeing now. This first year is a
slow ramp-up and where just very, very small amount of money is
being expended. But in the next quarter, we are going to be
starting to ramp up with detailed engineering. Then next year,
in the spring and summer, we are going to be breaking ground on
these projects, and that is when the large expenditures will
begin, when you order and pay for the large equipment.
Senator Murkowski. I mentioned in my opening comments about
a project that is being considered in Alaska with utilizing the
in situ gasification, where we can extract from the coal seams
without digging a mine. Does the Department of Energy
anticipate providing any assistance, financial or otherwise, to
project developers in this area?
I would ask you, Ms. Castle, whether from a scientific
perspective, do you have the information that you need to take
a position on in situ gasification? If you can indicate whether
we have financial assistance coming and then from the science
Mr. Markowsky. Thank you again, Senator.
We have not received any requests for participation in the
programs. The in situ and underground gasification concept, we
had been exploring that in DOE early on in the 1980s. We have
had some misfortunes because it wasn't understood exactly how
that process works. Now there is a number of programs being
pursued in China, Australia, India, and as you mentioned, in
It is a technology that has applications in a particular
type of seam that typically is unmineable, and there is
attractive benefits in those kind of seams. But we have not
been approached for participation in that particular project or
Senator Murkowski. Ms. Castle, on the science?
Ms. Castle. Senator, I don't know that we have enough
information currently in order to be able to take a position on
the feasibility of the in situ gasification.
Senator Murkowski. Will you let me----
Ms. Castle. I think----
Senator Murkowski. Let me just make sure that--this is a
process that has been around for a considerable period of time.
Are you suggesting that we just haven't looked at it from a
U.S. perspective, or when you say you don't have the
information, what specifically are you lacking?
Ms. Castle. I think that you were asking for--I was
thinking that you were asking for our position on the specific
project in Alaska?
Senator Murkowski. No. Just whether or not from a
scientific perspective you think that the in situ process for
gasification is one that is sound and we should be pursuing,
whether through incentives or just allowing for facilitation?
Ms. Castle. Let me just say that I don't have sufficient
information to answer that question, and if I could answer it
for the record, I would be happy to do that.
Senator Murkowski. Thank you.
Thank you, Mr. Chairman.
The Chairman. Senator Dorgan.
Senator Dorgan. Mr. Chairman, thank you very much.
I apologize for being late, but I have read your testimony
and appreciate both of you being with us today.
The American Recovery and Reinvestment Act, that was passed
by Congress last year, included $100 million in funding that I
secured for projects for the beneficial use of carbon. I mean,
there are a couple of different ways to deal with carbon. One
is carbon capture and sequestration through geologic means,
which is a way to address it as a bridge to continuing to use
coal in the future.
Another way is to find beneficial uses for carbon, and we
had a witness at one point before the Senate Energy and Water
Appropriation Subcommittee that said to think of carbon as a
product and that we should find beneficial uses for carbon.
There are beneficial uses, such as enhanced oil recovery, which
is a beneficial use that also sequesters the carbon.
But I want to ask you, let me hold just for a moment. It
The Chairman. Why don't--I know. Yes. Did someone send for
Senator Dorgan. Dr. Barrasso is----
The Chairman. Oh, Dr. Barrasso has gone.
The Chairman. OK, I think we are OK to go ahead. Why don't
you continue with your question, Senator Dorgan?
Senator Dorgan. All right. Thank you.
I was talking about carbon capture and sequestration and
also beneficial uses for carbon. It seems to me that in order
to provide the funding for the full potential of these
technologies and to be able to use coal in the future in a
different way, it is going to require a substantial amount of
money. The question is how do we raise money for carbon capture
and sequestration and beneficial use technologies in
appropriation cycles? My guess is probably not very easily in
the regular appropriation cycle in the future.
So it has been supported that there be a small wires charge
universally applied that would raise the kind of funding
necessary. I would like to ask for the department's assessment
of a wires charge approach.
Mr. Markowsky. Thank you for that question, Senator.
I think when you look at large-scale demonstrations, the
one thing that you would like to have is the predictability of
funding for them. As I mentioned before, these programs
typically take a number of years. Besides a solicitation, you
are going to take 4 to 5 years to go through the engineering,
permitting, engineering design, and construction. So it is good
to have a basis that you will be able to fund those on a
So the department would support any program that provides a
certainty of funding for large-scale demonstration programs.
Senator Dorgan. My sense is that we are not going to have
an energy future without the use of coal, but the use of coal
has to be substantially different than the way we have used
coal in the past. I understand that reducing carbon emissions
in a very significant way is important, but my concern is that
we make sure that we have targets and timetables as well as the
funding for the scientific inquiry that occurs from now until
then so that we can continue to use coal in a very different
I do think that the science and technology are going to
unlock many, many opportunities. I think probably all of us on
this committee could describe a half a dozen proposals out
there that people are working on that they insist represent
Now, not all of them will be the answer, but there are some
approaches out there that if we can scale up and demonstrate at
commercial scale are going to allow us to use coal in a very
different way. This committee spends a lot of time working on
other energy policy issues, such as renewable energy, which I
strongly support, among other issues, but the question is with
50 percent of the electricity coming from coal, how do we
manage to continue to use coal in the future?
Now I think Senator Murkowski mentioned the Dakota
Gasification plants in North Dakota, we have one of the only
applications where we take coal and turn it into synthetic
natural gas. They were going to build a good number of those
plants many decades ago, and now it sits on the northern
They turn coal into synthetic natural gas, put it in a
pipeline, and move it around the rest of the country. They
capture 50 percent of the CO2 and put that in a
pipeline and move it to the oil fields of Alberta, Canada,
where they use the CO2 to enhance oil recovery.
So it is a project from which we can learn a lot, it seems
to me. You can have beneficial uses for CO2. But I
just come back to the pointthat we really do need to have an
adequate stream of funding over a number of years, perhaps 10
and 20 years, to unlock the science and the technology which
will allow us to understand how to capture and sequester carbon
and to use it for beneficial uses.
That is why we put $3.4 billion in the economic Recovery
Act to invest in a range of CCS projects. But that is just a
start because it is going to cost much more than that. Do you
have estimates of what you expect is needed over the next 20
years, either of you, in terms of the funding requirements?
Mr. Markowsky. We have not developed those estimates at
Senator Dorgan. But if there is a proposal--I happen to
favor a proposal for a wires charge in order to raise that
funding. Senator Rockefeller has a proposal. Senator Voinovich,
I believe they have a joint proposal. I happen to think it
makes some sense to do that.
You are saying the department and the administration would
look favorably upon any reasonable approach that begins to
accumulate the funding necessary for these investments?
Mr. Markowsky. No, I think that is correct. I think we know
that if we are going to continue with the second-generation
technologies I mentioned and demonstrate those, and of course,
after you do that, you are probably going to be doing advanced
research to keep pushing that envelope.
It is going to require a certainty when you talk about
large-scale demonstration and to entice investors to
participate in that, a certainty of funding. So any kind of
mechanism that gives you a certainty of funding certainly would
be very positive.
Senator Dorgan. If I might just ask one quick question, are
you as excited about beneficial use as I am? I think the
potential of beneficial use is very substantial.
Mr. Markowsky. I am. Matter of fact, you mentioned the $100
million. We have 12 proposals, and we are going to be looking
at those, and we are going to down-select those to maybe 6 or
8, and we have got some exciting prospects in it--algae with
various chemicals, actually making a fuel from it, making a
cement product from it. So there is a lot of potential besides
EOR. It is a shame to store that product because you spend a
lot of money capturing it, and you have got to find a way to
really use that beneficially.
Senator Dorgan. Thank you very much.
The Chairman. Senator Bunning.
Senator Bunning. Thank you, Mr. Chairman.
First of all, I would like to thank both you and Senator
Murkowski for holding this hearing. Several weeks ago, I, along
with Senators Barrasso and Bayh, sent a letter to the committee
outlining the importance of having a hearing on clean coal and
the technologies surrounding carbon capture. That was a letter
we sent to you.
While the focus of this hearing is not coal, carbon capture
and sequestration will play an enormous role in reducing
CO2 emissions from coal. So while this is not
specifically a coal hearing, I am approaching it from the
perspective of how this technology can help us with the use of
this critical resource.
Coal is incredibly important to my State, Kentucky. The
industry provides over 60,000 jobs, including about 15,000 coal
miners. Those numbers show just how vital coal is to the State
of Kentucky. If I did not keep that in mind, I would not be
doing a very good job representing the people of Kentucky.
However, besides just jobs in my State, coal is essential
to the American energy needs. As it has been stated before, it
provides about 50 percent of the country's electricity. No
matter what some might say or try to do, coal will not just go
away. It is a clean, abundant, and domestic source of energy.
In fact, coal makes up about 94 percent of the known energy
reserves found in the United States of America, 94 percent,
compared to 4 percent of natural gas and 2 percent for crude
oil. Thus, we have to live with coal and find a way to use it
that meets our long-term environmental standards.
Carbon capture and sequestration can help us do that. That
is why in the stimulus package, we put $3.4 billion and $600
million to be used to discover ways to capture carbon, CCS
technology that you are supposed to be figuring out a way to
spend. Sixteen million dollars in over a year and 4 months, in
my opinion, is not acceptable.
We all know how difficult it is to build out, but if you
don't get the people to build out with in hand, you never
accomplish the goal that you set out to do. Certainly, the
Congress put $4 billion in that stimulus package. I think there
is a bright future for CCS, but if we don't--Dr. Markowsky, if
we don't do it and do it quickly and do it right, it isn't
going to happen.
I have dealt with the Energy Department now for 12 years
here in the Senate and 12 years in the House of
Representatives. If there is one thing I have found out, they
don't do things very fast. So I am asking you, begging you, to
get underway and get this technology perfected. We have got
people spending billions of dollars in the private sector to do
what the Department of Energy has been given $4 billion to do.
Just in 2 places--one in Owensboro, Kentucky, one in
Paducah, Kentucky--we are trying to do exactly what Ms. Castle
has said. We have a dispute. The Government doesn't own the
surface, but they want to sequester the carbon underneath, and
we have a dispute whether they can do it or whether they can't
It is in the Illinois basin in southern Illinois, and the
Paducah plant wants to liquefy coal and also bring natural gas
and aviation fuel out of that same coal. But they have to
capture, and we guaranteed them to capture over 90 percent of
the CO2. I am asking you, please get those projects
underway because we are not going to be able to diverse quickly
enough from coal to produce enough energy for this country to
run on and stay competitive with those that are not using
sequestration of CO2.
In China and India, they are laughing at us as a country.
They are laughing at us because they told us they are not going
to do any carbon capture and sequestration. They are going to
continue to burn coal as we used to.
So, please, I am asking you to speed up and do it properly.
The Chairman. Did you want to make any comment in response?
Mr. Markowsky. Yes, if I may? Yes, I can appreciate the
frustration of both Senator Murkowski and yourself, Senator
Bunning. But I can assure you I have spent 30 years of my life
engineering, designing, and building power plants and the other
10 of the 40 years pursuing power plants. So I am a fellow who
likes to build power plants. I am pushing that.
In parallel with that, we are advancing the technology
because I don't think we should sit on a technology. We are
advancing that. We are looking at advanced technologies, the 4
that I identified, because I think beside demonstrating these
technologies, which are critical to integrate CCS into 2 types
of concepts--electric power production and the various
industrial facilities--we need to get that culture going.
But we need to accelerate that technology and develop the
next round of technologies. We are looking at computer
simulation to basically help us push that even faster. We have
got a major effort in simulating power plant components and
systems to accelerate the deployment of CCS.
We are pushing it, sir, and I will continue doing that.
Senator Bunning. We are going to keep your feet to the
fire. I know this committee will.
The Chairman. All right. Senator Barrasso.
Senator Barrasso. Thank you very much, Mr. Chairman.
Ms. Castle, thanks so much for your comments and for your
support of what I am trying to accomplish with S. 1856. I
completely understand the concerns that you have raised when
the surface area is not owned by the Federal Government, what
the mineral rights are and some of the additional issues that
you have raised.
I would say I am committed to working with you to take that
next step, and I would hope that you would work with my office,
as well as the committee and the chair and the minority side as
well, in coming to solutions because some of the key points
that you have raised are not addressed by this legislation.
Specifically now, looking at carbon capture and
sequestration on public lands right now, I think you are
receiving applications for projects. Could you tell me how you
are handling those applications to move ahead with projects for
carbon capture and sequestration?
Ms. Castle. We are receiving applications for site
characterization. That is the first step to ensure that
geologically the sites are suitable for this kind of effort.
Those applications are currently being processed by the Bureau
of Land Management, pursuant to their authority for rights-of-
way under the Federal Land Policy and Management Act.
Senator Barrasso. Do you think Title V of the Federal Land
Policy and Management Act provides you the necessary authority
to issue permits then for long-term commercial-scale carbon
Ms. Castle. Senator Barrasso, as I mentioned, we have some
concerns that it would be--because of the scale and the
financial investment required for a commercial long-term
sequestration project, we think that it would be beneficial to
have more explicit authority. We are operating under the
authority of the Mineral Leasing Act and FLPMA. Those are from
1920 and 1976, respectively.
Carbon sequestration was not contemplated when those laws
were enacted. So we think that to deal with the issues that we
can see arising in connection with long-term CCS, that it would
be desirable to have more explicit authority.
Senator Barrasso. Thank you.
As this goes forward, I don't know what kind of public
participation you are expecting then in the permitting process,
guidelines that the department would follow when it comes to
the project's notification of adjacent property owners and
things like that. Have you given some thought as to what would
be needed as this goes on?
Ms. Castle. That has been discussed, and there is a process
for dealing with public notification and comment within the
Bureau of Land Management. I can't provide you with the
details. I would be happy, though, to answer that question in
writing for the record.
Senator Barrasso. I have some additional questions for you
to answer in writing. I don't want to go through all of them
and take your time. We have a second panel as well.
Is the process of permitting these projects on Federal land
consistent not just across your department, but also with, say,
other land management agencies? Not just the Department of
Interior, but also with the Forest Service and the Department
of Agriculture, are you working with others?
Ms. Castle. Yes, sir. Certainly, in connection with Carbon
Capture and Storage Task Force, those are issues that are being
considered by all of the 14 agencies that are involved there.
The BLM is the agency charged with responsibility for
management of the entire Federal mineral estate. So that
encompasses a mineral estate owned by the Forest Service and
various other Federal agencies.
Senator Barrasso. So then I can look forward to working
with you and with the committee as we go forward to address
some of the additional concerns that you have raised today?
Ms. Castle. Yes, sir.
Senator Barrasso. Thank you.
Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Let me switch subjects and take the occasion of you being
here, Dr. Markowsky, to ask about another subject that is in
your jurisdiction there. That relates to the Strategic
Petroleum Reserve and the product reserve that we have proposed
as part of the bill that we have reported out of our committee.
I think we have got another hurricane season on the
horizon, and I would just be interested in your thoughts as to
whether we are doing what we need to do to prepare for that as
far as maintaining supplies of refined product in areas that
might be affected by hurricanes?
Mr. Markowsky. Thank you for that question, Senator.
Last year, we embarked on a study to scope out the
desirability of a refined product reserve similar to SPRO. That
was somewhat inconclusive. We looked at just 2 events this
year. We embarked on a more definitive study looking at the
probabilistic nature of hurricanes to try to come up with a
cost benefit. We hope to have a study completed by June.
But what we are doing, essentially, last year we looked at
the consequences of the prior hurricanes, and we saw that we
needed to harden the systems, the refineries, and the
pipelines. What the refineries have done is they have elevated
their electrical switch gear to ensure that they will not be
damaged by water intrusion.
We have worked with the local utilities to set up a
priority to restore refineries and also pipeline pumping
stations and tank farms along the 2 continental and plantation
pipelines. They have diesel-powered generators to help the
pumping facility. So we feel that we are in good shape.
We looked again this year to look at possible options to
procure what we call ``tickets,'' options for refined products.
We looked at all the commercial tankage. It is full. There is
just no available excess tankage. They are maintaining their
refined products of gasoline and diesel at a maximum capacity.
So the way we would take a look at it, we have got the
refined products there. We have got to make sure that we get
electric power to it when we have a disruption. At SPRO, we are
mobilizing. We have diesel generators at Bayou Choctaw. In case
refineries need crude and we are out of power, we have got
diesel-powered pumps that will be able to pump water into our
caverns to extrude the oil to move in the pipeline.
So I think we are as prepared as we can at this point,
The Chairman. Thank you very much.
Let me just see if Senator Murkowski had additional
questions for this panel.
Senator Murkowski. Just one last question, Mr. Chairman.
This relates to the level of coordination between the
Department of Energy and the Department of the Interior.
I mentioned in my opening statement that it is important
that we work together to move these policies. When we talk
about the location of energy infrastructure and how we are
going to move this CO2 through pipeline to the
storage points, the question would be to both of you how your
agencies are dealing with this as an issue, how you are
coordinating with other Federal agencies to clarify the roles
so the project developers know? Then further, whether or not
the current state of the CO2 pipeline regulation is
sufficient? Does it need further clarification? Do we need to
endorse any pending legislation that is out there? Can you give
me a little bit of status on how we move the CO2?
Mr. Markowsky. Thank you for that question, Senator
We have those 2 issues on our table with the CCS task
force, both the pipeline issue and also who regulates the
pipeline. Right now, we have got just under 4,000 miles of
CO2 pipelines, extensive network now, and there are
projections of tens of thousands of miles of pipeline. So the
issue of who is going to regulate that, which now is not clear.
It is an issue that is being studied.
Also the issue of basically putting in pipeline, the safety
and acquisition. We hope to have that--we will have that report
ready when the task force submits a report to the President in
Senator Murkowski. In August?
Mr.. Markowsky. Yes.
Senator Murkowski. OK.
A final question then is whether or not, and Senator Dorgan
mentioned the beneficial uses of CO2, should
CO2 that is clearly a valued commodity for enhanced
oil recovery, should that be treated the same way as
CO2 that would be sequestered? Is there any reason
to treat them differently?
I mean, one is used to enhance the oil product. The other,
we are basically just storing. Do we look at them differently
from a regulatory perspective?
Mr. Markowsky. We are looking at that issue in terms of the
regulations with respect to storage. There is an issue in terms
of there has been extensive amount of CO2 injected
for enhanced oil recovery, and there are need for regulations
for geological sequestration. That is an issue that is being
worked on with EPA----
Senator Murkowski. Is the task force also looking at this
Mr. Markowsky. The task force is working on that, but EPA
is also looking at that with respect to injection and
monitoring. They hope to have a rule--they are going to have a
rule out by the end of this year.
Senator Murkowski. Ms. Castle.
Ms. Castle. As I understand it, Senator, I mean,
CO2 is a fungible commodity, but the difference with
sequestration is the injection at pressure, and that generates
different impacts, different issues. So the regulatory
structure may be different as a result. But as Dr. Markowsky
says, that is one of the issues that is being addressed by the
Senator Murkowski. Thank you, Mr. Chairman.
The Chairman. Senator Dorgan.
Senator Dorgan. Let me just make one final point, and it
relates to something that Senator Bunning said. I think many
share the urgency that he feels about moving ahead.
Yet I think it is also important to understand this is not
formula funding that you have been given. The $3.4 billion is
funding for which you are going to select some very large
projects that will be consequential, and it is very important
that these projects be carefully selected so that they are able
to accomplish what we want to accomplish. So I want you to do
it as quickly as we can, but I want you to do it right. I know
Senator Bunning would want the same thing.
But it is easier to get formula funding out the door. I
understand that. When we provide formula funding, we would
expect that to move out the door. But this $3.4 billion is
designed to support some very significant, new, cutting-edge,
large projects. I understand the concern from the Senator from
Wyoming, that a small percent has gone out the door at this
point. But having said all that, all of us want you to not only
do it well and do it quickly, but to do it right.
Mr. Markowsky. If I could just mention some of the things
we are doing? In CCPI-3, we selected 2 gasification projects,
somewhat different. One produces hydrogen for electric power
generation and also a product, and the second one basically
will be co-production of urea, again using state-of-the-art
gasification technology, which I still call ``first
We also have selected 3 post combustion projects, which
have different post combustion technologies. That is critical
that we operate those in an integrated fashion. However, I feel
that we need to accelerate the development of that to go to the
next generation, which is going to have significant cost
On the industrial sector, we are looking at cement kilns.
We are looking refineries. So we are looking at the spectrum of
post capture-type of technology.
Senator, I believe, given the technology we have, we are
covering the nature of the industry that we need to cover to
get the integrated information to take the next step.
Senator Dorgan. Each of these necessarily will be fairly
Mr. Markowsky. Yes.
Senator Dorgan. That is why making a mistake on one could
be very costly for the American taxpayer. So you have a great
opportunity with this money that comes from the Recovery Act,
and all of us want you to use this in a very significant way to
develop the answers that we need as we move forward to
determine what is the bridge to be able to use coal in the
Mr. Markowsky. That is our objective, sir.
The Chairman. Thank you both very much for your excellent
Why don't we go ahead and go to the second panel at this
Let me introduce the second panel as they are coming
forward to the witness table. Robert Hilton is vice president
of power technologies. He is at Alstom Power here in
Washington. Mark Brownstein is Deputy Director of Energy
Programs with the Environmental Defense Fund. Adam Vann, who is
legislative attorney with the American Law Division of CRS,
Congressional Research Service. Ben Yamagata, who is the
executive director of the Coal Utilization Research Council.
Kurt House, who is the chief executive officer with C12 Energy
in Cambridge, Massachusetts.
So we very much appreciate all of you being here. Why don't
we start with you, Mr. Hilton, and just go right across the
table hear, and each of you take about 5 minutes. We will
include your full statements in the record as if read. But if
you could make the main points that you think we need to
understand, that would be very helpful.
STATEMENT OF ROBERT HILTON, ON BEHALF OF MS. MACNAUGHTON, CB,
SENIOR VICE PRESIDENT, POWER AND ENVIRONMENTAL POLICIES, ALSTOM
Mr. Hilton. Thank you. Good morning.
I would like to thank Chairman Bingaman and Ranking Member
Murkowski, as well as the entire committee, for this
opportunity to address these issues on CCS.
Alstom is a global leader in the world of power generation
and transportation infrastructure. We employ more than 81,000
people in 70 countries, including 6,000 full-time permanent
employees in 47 States in the United States That number
virtually doubles when you include workers hired for specific
We are proud of our growth in the U.S., highlighted by our
nearly $300 million investment in a new turbine manufacturing
facility in Chattanooga, Tennessee, and a new wind
manufacturing facility in Amarillo, Texas.
Alstom is a leader in the field of CCS with 12 pilots,
demonstrations, and commercial-scale plants in operation or
design and construction. We are proud to be partnering with AEP
in operating what is thought to be the only real project
capturing and storing significant quantities of CO2
from an existing power plant, namely the Mountaineer plant.
Alstom is commercializing 3 capture technologies, and these
will be available commercially by 2015 is the target. All of
these technologies can be retrofitted to the existing fleet.
We are here to talk specifically about 3 bills under your
consideration. The first of these is the draft bill by Senators
Rockefeller and Voinovich. Alstom strongly supports this bill.
We believe the funding structure and mechanism proposed in the
draft will achieve the targeted number of plants which the
industry, the administration, and Congress have deemed
necessary for successful implementation of commercial-scale
Alstom suggests a revision to the restrictions on funding.
Alstom has been a leader in technology development and
commercialization throughout its history. We have brought many
technologies to the marketplace. The experience has led us to
be wary of upfront prescriptive sizing definitions for funding.
For instance, with over 50 years experience in the air
pollution control area, we know that plants validated at the
200 to 300 megawatt level for post combustion CCS are fully
adequate for unlimited deployment on full industry-wide
application. Other technologies like oxy-fired boilers will
take larger demonstrations.
We need to allow for demonstrations at the 100 to 300
megawatt level on key applications such as CCS applied to gas
turbines, an application that will be critical under any
scenario if we are to reach our goals in 2030 and 2050. Too
much attention has been focused on identifying CCS with coal.
The application of CCS to all fossil fuels, particularly
natural gas, will be absolutely critical to meet these
We reiterate that Alstom sees the Rockefeller-Voinovich
draft as a critical and comprehensive bill to support the
commercialization of CCS. The Responsible Use of Coal Act
provides a necessary additional dimension to the Rockefeller
and Voinovich draft. Our commitment to innovation means that
the technology we are commercializing today may well not be the
ultimate and optimal solutions in the future.
The Rockefeller-Voinovich bill is valuable for addressing
the near-term commercialization opportunities. But the Casey
bill is also valuable in providing support for several levels
of the next-generation technology, which our country's power
system will need.
Alstom urges that consideration be given also to broadening
the bill to include all fossil fuels, not just coal. As we
stated earlier, we need CCS to be applied to all fossil fuels,
gas as well as coal, as well as other industrial processes.
Finally, Alstom also S. 1856, sponsored by Senator
Barrasso, as addressing an important prerequisite for making
CCS a commercial reality. We will have accomplished nothing if
we commercialize the capture technology and have not addressed
the ultimate disposition of the CO2.
Alstom would also take this opportunity to urge the
committee to consider measures in energy legislation to
incentivize the industry to upgrade and improve the efficiency
of the existing fleet on the supply side. The fact is we will
need to continue to rely on coal and gas plants for a large
part of our generation well into the future. We need these
plants to continue to run as optimally as possible.
Upgrading the efficiency of the existing fleet will prolong
its life, provide us breathing space to make the needed
investments in replacement plants, compensate for load growth
and load loss resulting from additional controls, and finally,
reduce carbon emissions on a massive scale. One estimate has
upgrading the existing fleet reducing CO2 by as much
as 12 percent, a huge step toward our goal, and all this
technology is now available.
Last, I would reiterate a call made by Alstom and a broad
section of business, labor, environmental, and other
organizations for Congress to pass climate legislation that
preserves and creates jobs, enhances energy security, and
enables the U.S. to contribute the clean technology leadership
that the world needs. To those who would question how soon CCS
will be available, Alstom is on record as saying 2015.
All of these bills are important steps in that direction
and deserve support on their own merit. However, absent the
certainty that can only come from a broad legislative and
regulatory framework making clear a price for CO2,
businesses will not make the substantial investments needed to
support CCS and other innovative technology options.
We thank the committee for the opportunity to comment.
[The prepared statement of Ms. MacNaughton follows:]
Statement of Joan MacNaughton, Senior Vice President, Environmental
Policies, Alstom Power
Good morning. My name is Joan MacNaughton. I hold the position of
Senior Vice President responsible for Power and Environmental Policies
for Alstom Power. I would like to thank Chairman Bingaman and Ranking
Member Murkowski as well as the entire Committee for this opportunity
to address these key issues on Carbon Capture and Sequestration (CCS).
Alstom is a global leader in the world of power generation and
transportation infrastructure that sets the benchwork for innovative
and environmentally friendly technologies. More than 50% of the power
plants in the United States have Alstom equipment, and 25% of the
world's electricity is generated on Alstom equipment. Alstom has the
world's largest service business devoted to the maintenance of power
generation equipment and is the world's largest air pollution control
Alstom employs more than 81,000 people in 70 countries, and had
sales of $26.7 billion in 2008-2009. In the U.S., Alstom employs
approximately 6,000 full time permanent employees in 47 states. That
number virtually doubles when you include workers hired for specific
projects. We are very proud of our growth in the U.S., highlighted by
our nearly $300 million investment in a new steam turbine manufacturing
facility in Chattanooga, TN that will open in a few months; and our
proposed new factory for wind manufacturing facility at Amarillo,
Alstom has a broad portfolio of power generation technology
options: including coal, oil, natural gas, wind, hydro, and nuclear.
Based on this diversity of offerings, Alstom has been promoting its
strategy of ``Clean Power Today''. We are clear we will need a balance
of all these technologies to reach our goals for carbon, both on
technical and economical grounds. Significant pillars of our program
are rapid and successful deployment of non-CO2 sources of
generation, namely nuclear and renewables; reduced CO2
emissions through more efficient generation; and the capture of
CO2 from fossil fuel powered generation (CCS).
Alstom is a leader in the field of CCS with 12 pilots,
demonstrations, and commercial scale plants in operation or design and
construction worldwide. We are proud to be partnering with AEP in
operating what is thought to be the only real project capturing and
storing significant quantities of CO2 from an existing power
plant, namely the Mountaineer Plant in West Virginia.
Alstom is commercializing three capture related technologies:
chilled ammonia, advanced amine, and oxy-firing, with the focus on
having the first of these technologies commercially available in 2015.
All of these technologies can be retrofitted to existing power plants.
We are here today to specifically address three bills under
consideration by the Committee on the subject of CCS.
The first of these is the draft bill by Senators Rockefeller and
Voinovich. Alstom strongly supports this bill. We believe the funding
structure and mechanism proposed in the draft will achieve the targeted
number of plants which the industry, the Administration, and Congress
have deemed necessary for successful implementation of commercial scale
Alstom would offer the following comments as an enhancement to the
draft bill. We recommend that industry groups representing carbon
capture technology suppliers be added to either the Partnership Council
or the Technical Advisory Committee or both. Including these key voices
would provide important expertise as an input to the decision process.
Alstom also suggests a revision to the Restrictions on funding.
Alstom has been a leader in technology development and
commercialization throughout its history. We have brought many
technologies to the market place. This experience has led us to be wary
of upfront prescriptive size definitions for funding. The size of
demonstration required will vary according to technology type. For
instance, with over 50 years experience in the air pollution control
area, we know that plants validated at the 200-300 MW level for post-
combustion CCS are fully adequate for unlimited deployment on full
industry wide application. But other technologies such as oxy-fired
boilers will require larger demonstrations because of technical factors
related to boiler design. On the other hand, we need to allow for
demonstrations at the 100MW--300MW level on key applications such as
CCS applied to gas turbines-an application that will be critical under
any scenario if the world is to reach the levels of reduction proposed
for 2030 and 2050. Too much attention has been focused on identifying
CCS with coal. The application of CCS to all fossil fuels, particularly
natural gas, will be absolutely critical to meet the ultimate future
emission reduction goals of 50% and 80%. We therefore suggest that the
restriction of funding for the size range 100MW--300MW be removed. If
the goal is to ensure adequate funding for larger scale demonstrations
needed across the broad range of technologies, perhaps the Bill should
stipulate the attainment of that goal in the remit given to the
Partnership Council and the Technical Advisory Committee.
We reiterate that Alstom sees the Rockefeller/Voinovich draft as a
critical and comprehensive bill to support the commercialization of
CCS. We strongly welcome it and urge the committee to move forward with
such legislation, and to do so without delay if we are to build a whole
new industry and roll out CCS on the scale required by 2030.
Senate Bill 1134, ``The Responsible Use of Coal Act of 2009''
sponsored by Senator Casey, provides a necessary additional dimension
to the Rockefeller/Voinovich draft. Our commitment to innovation means
that the technology we are commercializing today may well not be the
ultimate or optimal solution in the future. Alstom has extensive
experience with technology development across different fuels. We are
clear that technology and cost reduction in power generation in any
field will only be achieved by innovation and the continued funding of
research, development and demonstration at a significant scale. The
Rockefeller/Voinovich bill is valuable for addressing the near term
commercialization opportunities. But the Casey bill is also valuable in
providing support for several levels of the next generation technology
which our country's power system will need. Like many technology
developers, Alstom is already exploring several additional
revolutionary technologies for CCS in addition to those which are
nearer to market. Again, however, Alstom urges that consideration be
given to broadening the bill, to include all fossil fuels and not just
coal. As we stated earlier, we will need CCS to be applied to all
fossil fuel power generation, gas and coal, as well as to other
industrial processes. Technical break-throughs in one fuel may well be
applicable to others in the case of CCS. This bill would provide
support for those future technologies and accordingly Alstom sees this
portion of the bill, widened to include other fuels as well as coal, as
an essential component of the wider strategy for meeting the goals of
emission reduction through CCS.
Finally, Alstom also sees Senate Bill 1856 sponsored by Senator
Barrosso as addressing an important prerequisite for making CCS a
commercial reality. We will have accomplished nothing if we
commercialize the capture technologies and have not addressed the
ultimate disposition of the CO2 captured. The approach to
pore ownership on Federal lands in the Barrosso bill is an important
step towards dealing with storage issues, and Alstom welcomes inclusion
of such legislation in the developing CCS strategy and legislative
portfolio. We would also point out that there are other excellent
examples both from individual States and from the European Union which
could be considered within this context.
Alstom would also take this opportunity to urge the Committee to
consider measures in energy legislation to incentivise the industry to
upgrade and improve the efficiency of the existing fleet on the supply
side. Our electricity needs are set to grow--even if we attain the
ambitious levels of improvement in efficiency on the demand side which
we and many experts believe are necessary. Nor can we meet these
growing needs just from increased use of renewables and nuclear,
valuable though both these sources will be for meeting emission
reduction targets. The fact is we will need to continue to rely on coal
and gas plants for a large part of our generation. And we need these
plants to continue to run as optimally as possible. Upgrading the
efficiency of the existing fleet will prolong its life; provide us
breathing space to make the needed investments in replacement with new
plant; compensate for load growth and load loss resulting from
additional controls; and finally, reduce carbon emissions on a massive
scale. Improving efficiency means more megawatts from each ton of
fossil fuel, thus contributing to improving our security of fuel supply
as well as ensuring better continuity of electricity supply. One
estimate has the upgrading of the existing fleet to reduce carbon
emissions potentially by as much as 12% from the reported current
baseline--a huge step towards our goals. More importantly, implementing
efficiency upgrades now actually significantly reduces the levels of
CO2 reduction needed in future years. And, best of all, the
technology already exists today, at proven commercial scale.
Lastly, I would reiterate previous calls made by Alstom and a broad
cross section of business, labor, environmental, and other
organizations for Congress to pass climate legislation that preserves
and creates jobs, enhances energy security, and enables the US to
contribute the clean technology leadership that the world needs. The
technologies exist to make such policies achievable. To those who
question how soon CCS will be available, we say, drawing on experience
from our extensive demonstration program,that Alstom is on record as
having the capture process commercially available in 2015. All of these
bills are important steps in that direction and deserve support on
their own merit. However, absent the certainty that can only come from
a broad legislative and regulatory framework making clear a price for
CO2, businesses will not make the substantial investments
needed to support CCS and other innovative technology options.
Such investments risk being held back by current uncertainties over
the policy framework. By passing practical and well targeted measures
such as are contained in these three Bills, the Congress will kick
start the creation of a whole new industry, creating hundreds of
thousands of high quality jobs and preserving many others in the coal
mining industry. As the rest of the world increasingly puts these
policies in place, with huge investments in low carbon technologies,
for America not to do so would put American competitiveness and
prosperity at risk. It cannot be right to let current uncertainties
persist, and that is why we at Alstom support these pieces of
legislation which we hope will move the country and the industry closer
to the goal of a competitive and thriving low carbon economy.
We thank the Committee for this opportunity to comment.
The Chairman. Thank you very much.
Mr. Yamagata, go right ahead.
STATEMENT OF BEN YAMAGATA, EXECUTIVE DIRECTOR, COAL UTILIZATION
Mr. Yamagata. Mr. Chairman, Ranking Member Murkowski, and
members of the committee, my name is Ben Yamagata. I am the
executive director of the Coal Utilization Research Council. A
list of our membership is included with my written statement.
I thank you for the opportunity to discuss Title II of
draft legislation offered for comment by Senators Rockefeller
and Voinovich. At the outset, let me express our support for
the 5-title draft legislation that Senators Voinovich and
Rockefeller have distributed for comment.
While CURC members differ with specific elements of the
draft, I want to emphasize that this proposal, in its entirety,
is the most comprehensive and far-reaching initiative yet
proposed to address the variety of issues related to the
successful widespread introduction of CCS technology.
With my allotted time, let me make 4 points. First, coal
will be used around the world in the foreseeable future. Let me
give you some metrics. We emit about 2 billion tons of
CO2 annually from the U.S. power sector and some 6-
plus billion from the entire U.S. economy.
China emits 5.6 billion tons annually just from the energy
sector alone. Left unabated, that number is projected to rise
to 16.2 billion by 2050. China is building the equivalent of
one new commercial power plant every week. China is both the
largest user of coal in the world, as well as the larger
emitter of CO2.
To achieve a greater than 80 percent reduction in
CO2 emissions by 2050, given the projected use of
coal globally, CCS is imperative. We can't be successful with
the climate issue without successfully using CCS.
If we are forced to do so, that is without using CCS,
according to the International Energy Agency, it will cost at
least 90 percent more, nearly doubling the cost to achieve the
level of reductions proposed by mid century.
Second, the pieces of CCS are available, but we have yet to
integrate all of those pieces into a demonstrated operating
whole, at least in the utility sector. Moreover, with our
current technology and with the lack of economies of scale, CCS
We estimate, as does DOE and others, that the
CO2 capture systems can add a third more cost to a
power plant when installed, retrofits even more, including
parasitic use of the power from those plants. That is why
financial incentives right now are so important.
President Obama recently reiterated a commitment to make
sure that 5 to 10 CCS projects are demonstrated and operational
by 2016. While welcomed, this is also not enough, especially
with respect to the storage of carbon dioxide in deep saline
The National Research Council, an arm of the National
Academy of Sciences, the Secretary of Energy's National Coal
Council, and many others have concluded that many more CCS
projects beyond the numbers cited by the President will be
required. It is important to note that in order to ensure
completed demonstrations by 2016, projects must be underway. We
must act now.
Most significant, in our judgment, we are nowhere near the
level of financial commitment needed to get a sufficient number
of projects underway and completed before 2025 or 2030, let
alone 2020. This leads me to the third point. That is general
comments about the provisions of Title II of the draft proposal
set forth by Senators Rockefeller and Voinovich.
While we have significant concerns about several features
of the Title II proposal, again, we are grateful for this
important initiative. I outlined in my written statement and
attachments some of our principal areas of concern. In the
interest of time, let me simply state the wires charge by which
industry and its customers would self-finance CCS
demonstrations would--excuse me, is an important element of the
proposal. We prefer the provisions that were included in the
House-passed H.R. 2454 program to the program that has been
detailed in the Senators' draft.
We are further concerned that several CURC members that
have CCS projects underway or under consideration will not be
eligible for the incentives in the proposed bill as a result of
the recommended size of the project criteria. Also, there is a
need to clarify eligibility to ensure that both regulated and
unregulated electric utilities will qualify.
We believe that funding incentives for public power
utilities needs to be added. Finally, we need assurances that
the funds collected from ratepayers will be available.
Realistically, that cannot be assured through the annual
All of these issues, in my judgment, are eminently fixable.
We look forward to working with the Senators and this committee
to address these concerns.
Fourth and finally, the other 4 titles of the draft
legislation presented by Senators Rockefeller and Voinovich
must also be addressed. CURC has recommended a 5-point program
similar in many respects to that proposed by the Senators.
We believe that each element of the program must be acted
upon. No single element alone is enough. We ask for the
consideration by this committee and other committees with
pertinent jurisdiction that you consider and act upon all the
elements of the Senators that they are proposing.
To effectively address CO2 emissions while
continuing use of this country's most abundant fossil fuel, CCS
is imperative. It will be expensive. Patience must be
exercised. We cannot succeed without Government assistance, but
also we cannot succeed without CCS.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. Yamagata follows:]
Prepared Statement of Ben Yamagata, Executive Director, Coal
Utilization Research Council (CURC)
On behalf of the membership of the Coal Utilization Research
Council (CURC) I thank the Committee for this opportunity to testify on
Title II of draft legislation distributed by Senator Jay Rockefeller
and Senator George Voinovich on March 20.
The CURC is an organization of major U.S. coal producers, electric
utilities that rely upon coal to generate electricity, major equipment
manufacturers, state governments and academic institutions. A
membership list is attached (See: Attachment 1).
Title II of the Senators' draft would authorize the establishment
of a twenty gigawatt demonstration and early commercial deployment
program focused upon carbon capture and sequestration (CCS) technology.
CURC supports the concepts in this proposed legislation and we look
forward to working with the Senators and also with this Committee and
others to refine this draft proposal prior to introduction.
As requested by Committee staff, this testimony focuses
specifically upon title II of the draft legislation related to
incentives for a 20 gigawatts CCS ``pioneer plants'' program.
II. Summary of the important points in this written statement:
Four key elements of CURC's testimony:
1. To insure that CCS technology is effective and
affordable and to achieve these goals within the mid-century
timeframe being discussed for CO2 reductions we must
begin the Rockefeller/Voinovich title II program NOW.
2. The scope of the proposed title II program is broad (20
GWs) and will be expensive (as much as $40 billion over a 20+
year period). The National Academy of Sciences, the Senator
Byron Dorgan ``Pathways'' initiative comprised of a large and
diverse cross-section of interests, including NGOs, industry,
academia, as well as the International Energy Agency and many
others have concluded that a large-scale CCS demonstration-
deployment program is essential to the rapid commercialization
of CCS. More importantly the IEA has concluded that the
successful deployment of CCS could reduce overall costs of
reductions by up to 97%!
3. CURC supports the concepts of title II of the draft
legislation and recommends several modifications to the draft
Consideration of an electric utility industry-led
accelerated CCS demonstration program similar in scope and
administration to the ``wires charge'' authorization included
as section 114 of H.R. 2454 in lieu of the 10 GW special
funding program proposed in the Senators' draft. While the
approaches to a fee on electricity consumption to finance a CCS
demonstration program differ and CURC's electric utility
members, in particular, have agreed upon the program included
in H.R. 2454, the CURC fully endorses the concept of such a
fee-based program to support the demonstration of CCS
particularly if the program insures that there will be a
diversity of CCS technologies demonstrated. This diversity of
options will provide industry with the ability to choose which
option is most favorable to a particular circumstance.
The draft legislation sets forth eligibility
criteria based, in part, upon the size of demonstration
projects. As currently drafted this criterion would eliminate
from eligibility certain CCS projects now under consideration.
The size limitation must be adjusted. CURC has offered a
different size of project criteria which we believe retains the
objectives of the proposed program while still insuring that
large-scale demonstration projects will qualify. We urge the
substitution of this modified size standard.
Clarification of language in the draft proposal to
insure that all of the proposed financial incentives are
available to a specific project (e.g. project should be
eligible for investment as well as production tax credits) and
also to include subsidized bond financing and or tax grant
options for not-for-profit public power and electric
cooperative utilities not otherwise eligible for the proposed
4. Finally, Congress is encouraged to adopt the
``comprehensive'' carbon management program for coal as
reflected in the Rockefeller/Voinovich discussion draft. Each
title of the Senators' discussion draft is vitally important,
in the judgment of CURC members, to successful widespread
commercial deployment of CCS.
III. Why Coal and CCS technology?
Coal is an important contributor to the U.S. and global energy
mixes. In the U.S., coal provided 23% of total energy consumption in
2008, according to the DOE Energy Information Administration. About 90%
of coal in the U.S. goes to electric power generation, and that coal
generates about half of our electricity. Globally, coal is about 27% of
total energy consumption and 40% of electricity generation. Coal use in
the U.S. has been relatively constant for several years, and is
expected to remain so in the future, but globally coal has been the
fastest growing fuel form for the past decade, in total Btu's. EIA
projects that 94% of growth in global coal use between 2006 and 2030
will be in non-OECD countries. Much of that growth will be in China,
which currently uses about three times as much coal as the U.S. and is
building approximately one new coal-based power station every week of
Coal provides, and will continue to provide, reliable and low cost
energy and power to billions of people around the world. But, to
address the continued and growing need for coal we must address the
carbon dioxide emissions that result from coal use. CURC is absolutely
confident that given sufficient time and financial assistance
technology will be available to address the CO2 emissions
resulting from the use of all carbon-based fuels, including coal and
In the U.S., coal contributes about 31% of total emissions of
greenhouse gases, according to EPA's latest inventory. That figure is
exceeded only by petroleum (35%). Without a significant reduction in
emissions from all fossil fuels, including coal, we have no chance of
meeting those legislative goals demanded by some like an 83% reduction
in GHG emissions by 2050. For coal, the only practical ways of
achieving such results are to either not use it, or to apply CCS
technology. Given the economic and energy security contributions of
using coal, and the clear certainty that the developing nations will
continue and expand their use of coal, CCS appears to be the more
realistic choice. Others have reached this same conclusion. You may
recall the oft-quoted statement by former U.K. Prime Minister Tony
Blair: ``The vast majority of new power stations in China and India
will be coal-fired. Not `may be coal-fired'; will be. So developing
carbon capture and storage technology is not optional, it is literally
of the essence.'' In the International Energy Agency's analysis of GHG
mitigation options (Energy Technology Perspectives, 2008) the IEA
concluded that a scenario including the assumption that CCS was
available and effective was 97% cheaper than a scenario without CCS.
IEA has concluded that: ``CO2 capture and storage for power
generation and industry is the most important single new technology . .
The importance of CCS might best be explained when described in the
context of the various paths that must be pursued to achieve what the
Intergovernmental Panel on Climate Change (the IPCC) has concluded as
necessary reductions in global greenhouse gas (GHG) emissions of 50-85%
below current rates by 2050 in order to limit warming to 2-2.4 C. In
2008, the International Energy Agency published its analysis of
measures needed to achieve a 50% decrease below current GHG emission
rates by 2050.\1\ *Figure ES.2 (below), taken from that report,
summarizes the report's findings.
\1\ Energy Technology Perspectives, 2008, International Energy
Agency, OECD, 2008.
* Figure has been retained in committee files.
IV. What is the Current Status of CCS?
Most of the major components needed for CCS have been used
commercially. They have not, however, ever been combined on a
commercial scale power plant anywhere in the world. With respect to
storage technology, we have extensive experience in the U.S. with
enhanced oil recovery, which retains a large portion of the
CO2 injected to produce additional crude oil, but there are
only a handful of projects globally that are injecting large quantities
of CO2 into the largest potential ``sink'' for
CO2: deep saline geological formations (essentially porous
rocks saturated with brackish water, a mile below the earth's surface).
The USDOE has two relevant demonstration programs underway--the
Regional CO2 Sequestration Partnerships program, focused on
storage of CO2; and, the Clean Coal Power Initiative (CCPI),
focused on integrated power plant capture and storage projects. In
addition, the FutureGen project, an integrated gasification combined
cycle (IGCC) equipped with carbon capture and storage technologies,
hopefully, will be fully underway with completion of construction and
initial operation by 2015. This first-of-a-kind project will capture
and sequester one and one-half million tons of CO2 annually.
It is important to note that if all the ongoing projects go
forward, and that is always an uncertainty, in 2016 we will have
experience with two saline storage projects and four, or more other
power plant and industrial projects that have the goal of
CO2 capture and storage in EOR formations, and they are
important, especially for deploying CCS in the near-term--but they will
not give us needed experience with saline storage which is necessary
for unlocking the greater potential of CO2 storage in deep
My point is not one of complaint about the current demonstration
program--it is the most advanced and aggressive in the world.My point
is that this is not enough to launch a program critical to the world's
future in the time frames discussed by the President and in proposed
legislation. This level of undertaking is further explained and
amplified by others including the following:
1. America's Energy Future, a recent report by the National
Research Council, concluded that 15-20 CCS projects totaling 10
gigawatts (GW) of capacity were needed in the next decade, in
order to accommodate broad deployment of CCS in the time
thereafter. The NRC report said, ``A failure to demonstrate the
viability of these technologies [both CCS and advanced nuclear
systems] during the next decade would greatly restrict options
to reduce the electricity sector's CO2 emissions
over succeeding decades. The urgency of getting started on
these demonstrations to clarify future deployment options
cannot be overstated.'' [emphasis added]
2. The total number of projects and scope of demonstrations
recommended by the National Research Council study is generally
consistent with the conclusions drawn by CURC. Our members have
carefully examined the need for a variety of CCS demonstrations
to address both technical and financial issues of uncertainty
and concluded that it will be necessary to support as much as
15 gigawatts of CCS-related capacity. Importantly, this does
not need to be electricity generation only. Indeed, many of the
early, commercial-scale projects utilizing coal or petroleum
coke will convert those fossil fuels to a useful energy product
like substitute natural gas (SNG). And, these projects will
also capture CO2 emissions. However, at least five
gigawatts-equivalent of the CCS projects must have as a part of
the demonstration the storage of captured CO2 into
deep geologic formations. We cannot emphasize enough the
importance of gaining the handling, storage, verification and
monitoring experience that will come with this type of
3. Finally, over the period of several months last year a
group of environmental organizations, industry organizations,
experts from academia and technology providers convened under
the auspices of Senator Byron Dorgan (known as the Dorgan
``Pathways'' initiative) to determine if they could agree upon
the need for and amounts of financial support required to
encourage the rapid development and deployment of CCS
technology. That diverse group of interests was able to achieve
some agreement over the need to support CCS deployment and most
important, agreed that large amounts of government assistance
was essential to early success of CCS (a brief description of
the ``Pathways'' project and conclusions are attached to this
written statement* as Attachment 2). Much of the financial
requirements and timing for CCS development contemplated by the
``Pathways'' participants are reflected in two titles of the
draft proposal of Senators Rockefeller and Voinovich.
* Attachment has been retained in committee files.
These analyses suggest a much more aggressive target than that set
by the Obama Administration, and greatly exceeds activity now underway.
It is important to recognize that time is of the essence on moving
forward with this work.
V. What is our Analysis of the Draft Rockefeller and Voinovich
Committee staff suggested that I focus my remarks on Title II of
draft legislation released for comment by Senators Rockefeller and
Voinovich on March 20, 2010. The primary obstacle to more activity
demonstrating CCS technology is money. Title II of the Senators' draft
proposes to address this issue by taking the money from two sources.
Under Subtitle A of Title II, the first 10 gigawatts of CCS-equipped
capacity would be funded by utilities which use fossil energy to
produce electricity. A small fee placed on those utilities, and based
on their total generation by each fossil fuel, would provide a pool of
about $2 billion per year for 10 years, or $20 billion altogether. The
second 10 gigawatts of CCS-equipped capacity are governed by Subtitle B
and would be eligible for a production tax credit for captured and
stored CO2, loan guarantees, and an investment tax credit
funded from general tax revenues. Hence, Title II proposes a practical
solution to the greatest problem in getting more demonstration units
built in the near term. It has identified a source of funds. In CURC's
activities in this area, it has become clear that industry will support
the general concept of a ``wires charge'' to pay for the initial
demonstration program, and to pay the private sector share of both that
program and the taxpayer-assisted program. Finally, if the IEA's cost
projections are even close to correct, electricity consumer and
taxpayer support of these Pioneer projects will be rewarded with
electric power which is much less expensive than it would otherwise be,
if and when a climate program reaches its more aggressive stages.
The Subtitle A funds would be administered by DOE and used to pay a
production subsidy, in dollars per ton of CO2 captured and
stored (or converted). Projects with higher %-capture, or earlier in
time, would get a higher rate per ton. The details of how much the
subsidy would be for specific projects or overall are not prescribed in
the draft. The goal of the program is to provide incentives for at
least 10 GW of CCS-equipped capacity.
Subtitle B of Title II provides for amendment of the internal
revenue code to:
Extend the current Section 45Q production tax credit to any
eligible unit placed in service prior to January 1, 2017. The
credit amounts to either $10/ton or $20/ton of CO2
captured and stored, with the amount depending on whether the
storage in associated with EOR or saline formations, for the
first 10 years of unit operation with CCS.
Provide $20 billion in loan guarantees for up to 10
gigawatts of new and retrofit units with CCS is authorized by
an amendment to Section 1704 of EPACT-2005.
Provide that units eligible under Section 1704 may also
elect to receive a 30% Investment Tax Credit for the
incremental cost of the CCS systems (but not for the basic
power plant or industrial process unit).
Key Issues of Concern to CURC
We applaud Senators Rockefeller and Voinovich for taking a
leadership position on the advancement of this critical technology. In
my view, this is the most constructive legislative package supporting
CCS yet offered, in terms of its ability to generate additional
demonstration facilities NOW. However, there are several issues that
require modifications prior to introduction (See: attachment 3 for a
comparison of the provisions proposed in the draft legislation by
Senators Rockefeller and Voinovich and recommendations, very similar to
section 114 of H.R. 2454, that CURC has previously provided).
The first, and foremost, is the structure of the section 201
program, the ``Carbon Capture and Sequestration Early and Effective
Deployment Fund Act of 2010'' which includes the assessment of a fee on
electricity consumption by certain customers.\2\ Simply stated, we
believe that the program initially considered and adopted in the House-
passed climate bill related to an industry-funded demonstration
program, the so-called ``Boucher wires charge'' more clearly reflects a
suitable structure. I have taken the liberty of attaching a CURC-
prepared document that compares the provisions of the draft legislation
to provisions that CURC supports. There are immense possibilities in
the Senators' draft legislation to address our concerns and CURC and
our members stand ready to offer further, detailed views in this
\2\ A structural issue which has been raised regarding the Draft
Discussion is the exclusion of residential electricity users from the
lines charge assessment. These customers constitute about one-third of
electricity use, so their exclusion raises the fee significantly for
the remaining customers (commercial and residential electricity users).
Under this construction, the fee could reach burdensome levels,
particularly for the manufacturing sector, which is struggling to
survive in the current recession. The basic principle of minimizing the
fee per payer by having a large base of inclusion is defeated if a
large segment of the potential payers are excused from the assessment.
I would urge the authors of the draft proposal and this Committee
carefully reconsider the issue of ``who pays'' in order the spread the
cost impacts across all electricity ratepayers.
It is significant that electric utilities, both regulated and non-
regulated, as well as the association of state utility regulators
(NARUC) have agreed upon the level of fees to be assessed on all
utility customers as well as the administration of the demonstration
program. That agreement was reflected in the CCS demonstration program
included in H.R. 2454, section 114. The Rockefeller-Voinovich
discussion draft substantially alters critical elements of section 114.
In addition to conforming the amount of fees to be levied and the
customer base that would be asked to provide funds for the
demonstration program to H.R. 2454, the Committee and Senators
Rockefeller and Voinovich must retain a mechanism that will ensure that
the funds collected for the program be available only to the program
and that they not be subject to an annual appropriations process that
immediately draws into question whether funds will be available from
one appropriations cycle to the next.
Second, we are very concerned that the eligibility requirements to
participate in either the 10 gigawatt demonstration program, funded by
the assessments on electricity consumption, or the 10 gigawatt pioneer
plant or ``first mover'' program that provides a variety of tax and
other financial incentives to early commercial scale projects, are
overly restrictive. Indeed, several of our members currently engaged in
first of a kind CCS-related projects have reported that their project
will not qualify for the proposed programs. We assume that is not the
intent of the senators to exclude these projects that will pioneer the
needed experience with CCS technology.
Specifically, section 205 (i) and section 252 (c) of the draft set
forth two different size criteria for CCS projects to be eligible for
the Title II programs. We urge that these criteria be identical and
that qualifying criteria be premised upon the assumption that the size
of the project, once successfully completed, will enable that
technology to thereafter be replicated at commercial scale in some
instances or scaled-up in other instances to thereafter operate at full
commercial scale. This size standard will be different based upon the
technology involved but industry and the Department of Energy, we
believe, could easily determine standards to define commercial scale
and also determine if a given project will demonstrate a technology
that can be subsequently constructed at full commercial scale. To
account for a variety of circumstances and technologies CURC has
recommended that the size standard include an absolute size of at least
200 MWs or equivalent of nameplate capacity to account for CCS
retrofits for a portion of very large power plants or at least 20
percent of the total nameplate generating capacity to encompass smaller
projects. Again, the goal of the Title II program should be to focus on
the pioneer plants that constitute the first generation of CCS projects
that will operate in commercial settings. Also with respect to
eligibility it is important that all electric utilities, those that are
regulated and those operating in deregulated markets, have
opportunities to access the variety of financial incentives. Equally
true, CURC supports changes to Title II that will insure that public
power entities are also eligible for funding under the programs.
In addition, subtitle III of the draft bill provides a tax credit
under new section 45R of the Internal Revenue Code for 62 GWs of
capacity that are installed with CCS systems. Although very supportive
of this provision, we have one major concern with an ambiguity with the
eligibility requirement. Specifically, the requirement can be read to
require the capture and sequestration of at least 65% of the total
CO2 emissions from the entire unit. For the same reasons
already noted above, the application of capture levels to the entire
will be infeasible at the larger-sized existing coal-fired units and,
in such cases, only a portion of the flue gas will be treated by CCS
technology. For this reason, CURC recommends that the 65% capture level
be measured based on the capture levels achieved by the treated portion
of the flue gas, instead of all of the flue gas from the unit. This
approach is consistent with how the CCS bonus allowance program is
administered under the Kerry-Boxer bill.
VI. The Need for a Comprehensive Carbon Management Program for Coal
The CURC strongly supports the comprehensive nature of the draft
legislation proposed by Senator Rockefeller and Senator Voinovich.
While we have not commented upon other elements of their proposal we
note the importance of their initiative in seeking to address the
issues that our membership considers of upmost importance to the
successful development and, thereafter, widespread commercial
deployment of CCS.
Finally, while we have not commented, in this written statement
upon the other titles of the draft legislation proposed by Senator
Rockefeller and Senator Voinovich, CURC wishes to state its support for
these important titles, as well. There are modifications that we would
recommend and we look forward to working with those senators, as well
as this and other jurisdictional committees of the Congress to modify
this important proposal. We thank you for the opportunity to provide
The Chairman. Thank you very much.
STATEMENT OF MARK S. BROWNSTEIN, DEPUTY DIRECTOR, ENERGY
PROGRAM, ENVIRONMENTAL DEFENSE FUND
Mr. Brownstein. Thank you, Mr. Chairman, Ranking Member
Murkowski, members of the committee.
I am pleased to testify on behalf of the 700,000 members of
the Environmental Defense Fund. Since 1967, EDF has linked
science, economics, and law to create practical solutions to
society's most urgent environmental problems.
There is no more urgent environmental problem facing our
world today than global climate change. A changing climate will
have significant disruptive effects on our economy and the
environment. Current methods of energy production are a major
source of the pollution causing climate change. They have
brought us great prosperity, but that prosperity is not
Fortunately, there is a bright economic future for the
United States in a low-carbon, clean energy technologies. EDF's
energy program is singularly focused on accelerating our
Nation's transition to this bright future. The work of this
committee is critically important to achieving that bright
future, and we are happy to do all that we can to work with you
to achieve it.
EDF strongly believes that the most important thing we can
do to accelerate our Nation's transition to a low-carbon, clean
energy economy is to put a price on carbon. Unless and until
there is an economic reason to avoid dumping greenhouse gas
pollution into the environment, advanced new technologies that
excel at delivering clean, low-carbon energy will sit on the
shelf. There simply will be no market for them.
A price on carbon, however, by itself, will not achieve
everything that we would like to achieve in the timeframe we
would like to achieve it. Limited efforts to remove economic
stumbling blocks or clarify legal or regulatory relationships
are, in fact, required.
We also need to chart a new course for coal. Coal-fired
power plants are the single largest source of carbon dioxide
pollution in our Nation today, and current methods of coal
production and use place a heavy and unacceptable burden on
public health and the environment.
However, while we might wish it were otherwise, coal will
likely play an important role in our economy--and the economy
of many other industrial nations--for many years to come.
Therefore, the challenge is to develop and deploy technologies
and strategies that can substantially reduce or prevent the
worst consequences of coal production and use. Carbon capture
and storage is critical to the future of coal.
As a technical matter, CCS is ready to begin commercial
deployment today. All of the necessary technologies exist. What
is missing is the market driver to cause companies put the
pieces together and invest in deploying them.
Beyond this, what is needed is a clear legal framework for
securing subsurface rights for geologic storage of
CO2, a well-defined liability regime, and judicious
use of subsidies to accelerate the learning curve on CCS
deployment and development. On this point, we are encouraged by
the work of Senators Rockefeller and Voinovich, as well as the
proposal made today by Senator Casey.
When taken in context with the work that the House of
Representatives has already done on this matter, we see a real
consensus forming on how to move forward with CCS. Based on the
history of other technologies, we fully expect that the costs
of CCS deployment will come down, and project development will
But we caution as CCS develops, specific attention needs to
be paid to the importance of proper site selection and proper
site operations. Geologic sequestration is not something that
can be done just anywhere, casually, or with limited skill. It
requires sophisticated preparation, execution, and oversight by
both the companies and regulators involved.
Government's work with industry should be specifically
targeted at helping to further develop the appropriate
analytical and monitoring tools and rigorous procedures for
achieving this objective.
Finally, as to Senator Barrasso's bill, we understand it to
be clarifying basic principles of common law as it pertains to
Federal property, and we support that.
EDF appreciates the opportunity to provide testimony on
carbon capture and storage, looks forward to working with the
committee on CCS in the context of comprehensive climate and
energy legislation targeted at accelerating our Nation's
transition to a clean, low-carbon energy economy.
[The prepared statement of Mr. Brownstein follows:]
Prepared Statement of Mark S. Brownstein, Deputy Director, Energy
Program, Environmental Defense Fund
Mr. Chairman, I am pleased to testify before the Senate Energy and
Natural Resources Committee on behalf of the 700,000 members of the
Environmental Defense Fund. Since 1967, EDF has linked science,
economics and law to create practical solutions to society's most
urgent environmental problems.
There is no more urgent environmental problem facing our world
today than global climate change. A changing climate will have
significant disruptive effects on our economy and our environment.
Current methods of energy production are a major source of the
pollution causing climate change. They have brought us great
prosperity, but this prosperity is not sustainable. Fortunately, there
is a bright economic future for the United States in a low carbon,
clean energy economy. EDF's Energy Program is singularly focused on
accelerating our nation's transition to this bright future. The work of
this committee is critically important to achieving this bright future,
and we are happy to do all we can to assist you in your work.
EDF strongly believes that the most important thing we can do to
accelerate our nation's transition to a low carbon, clean energy
economy is to put a price on carbon through federal climate and energy
legislation. Unless and until there is an economic reason to avoid
dumping greenhouse gas pollution into the environment, advanced new
technologies that excel at delivering clean, low carbon energy will sit
on the shelf. There simply will be no market for them. A price on
carbon creates that market, and will stimulate innovation and
investment in a wide array of new clean energy technologies and clean
energy services, at a scale and pace that only the private sector can
At the same time, we know that a price on carbon, by itself, will
not achieve everything we would like to achieve in the timeframe we
need to achieve it. Sometimes limited efforts to remove economic
stumbling blocks, or clarify legal or regulatory relationships are
required. The bills that are the topic of this hearing today highlight
The bills before this Committee today deal with largely with the
challenge of charting a new course for coal. We will not get to where
we need to go in terms of dramatically reducing greenhouse gas
pollution and substantially reducing the current environmental foot
print of our energy economy by continuing on a business as usual path
with coal. Coal fired power plants are the single largest source of
carbon dioxide pollution in our nation today, and current methods of
coal production and use place too often place a heavy and unacceptable
burden on public health and the environment.
At EDF, we recognize that coal will likely play an important role
in our economy--and the economy of many other industrial nations--for
many years to come. Therefore, the challenge is to develop and deploy
technologies and strategies that can substantially reduce or prevent
the worst consequences of coal production and use. Carbon capture and
storage is critical to the future of coal, and indeed, over the long
term, natural gas as well.
Geologic sequestration of carbon dioxide is feasible under the
right conditions. It has been successfully demonstrated in a number of
field projects, including several large, ``commercial'' scale projects.
In 2005, the IPCC Special Report on Carbon Capture and Storage
concluded that the fraction of carbon dioxide (CO2) retained
in ``appropriately selected and managed geologic reservoirs'' is likely
to exceed 99 percent over 1000 years.
The IPCC also concluded that the local health, safety, and
environmental risks of CCS are comparable to the risk of current common
activities such as natural gas storage, enhanced oil recovery, and deep
underground storage for acid gas, if there is ``appropriate site
selection based on available subsurface information, a monitoring
programme to detect problems, a regulatory system and the appropriate
use of remediation methods to stop or control CO2 releases
if they arise.'' The IPCC and others with geology expertise have also
noted that the risk of leakage will tend to decrease with time.
As a technical matter, CCS is ready to begin commercial deployment
today. All of the necessary technologies exist. What is missing is the
market driver to cause companies put the pieces together. As stated
earlier, this comes with a price on carbon.
But beyond this, what can help accelerate the development and
deployment of CCS technologies is a clear legal framework for securing
subsurface rights for geologic storage of CO2, and judicious
use of federal dollars to accelerate the learning curve on CCS
development and deployment. The bills proposed by Senator Barraso and
Senator Casey make important contributions in this regard.
Based on the history of other technologies, we fully expect that
the costs of CCS deployment will come down and project development will
become routine. As we understand it, the intent of Senator Casey's bill
is that the federal government, through the Department of Energy's
National Energy Technology Lab (NETL) in Pittsburgh, should be a full
partner with industry in identifying those strategies and practices
that will yield the best results in terms of safe, effective, and
efficient capture and storage of CO2 pollution from coal. We
support this objective.
As government and industry do this work, we strongly advise that
specific attention needs to be paid to the importance of proper site
selection and proper site operations. Geologic sequestration is not
something that can be done just anywhere, casually, or with limited
skill. It requires sophisticated preparation, execution, and oversight
by both the companies and regulators involved.
In particular, one of the most important objectives in assuring the
safe, successful geologic sequestration of CO2 is assuring
that formation fluids--the brines pre-existing in the sandstone
formations where the CO2 is to be stored ? are not driven
out of the underground storage area and into an underground source of
drinking water. NETL, in its partnerships with industry, will want to
make sure that projects are identified and engineered in such a way
1) there are confining zones of sufficient quality and
lateral extent to confine both displaced formation fluids and
2) there is a definition of ``zone of elevated pressure''
that is designated to guard against either CO2 or
formation fluids being driven into a drinking water supply;
3) there is high quality modeling of both the injected
CO2 plume and the displaced formation fluids;
4) where necessary, there is monitoring of ground water
quality and any geochemical changes above the confining zone;
5) there are remedial response plans in the event problems
appear to be developing.
We would add that NETL's work with industry should be specifically
targeted at helping to further develop the appropriate analytical and
monitoring tools and rigorous procedures for achieving the objectives
As to Senator Barraso's bill, it is essential that any federal
legislation attempting to clarify pore space ownership on federal
property not disrupt long-standing rules of property. Clear and
predictable property rules are the cornerstones of free and functioning
markets. It is our understanding that Senator Barrasso's bill is
modeled after pore space legislation enacted by the Wyoming Legislature
for Wyoming, and that the purpose of Wyoming's legislation was to
clarify Wyoming's rules in relation to past deeds and future
transactions, without fundamentally changing the long-standing
relationship between surface and subsurface rights in the state.
Assuming this is the case, we support Senator Barraso's efforts to
accomplish a similar purpose for federally owned pore space on federal
For further consideration of the pore space ownership issue, I
recommend to the committee a paper* authored by Ian Duncan and Jean
Philipe Nicot, of the Bureau of Economic Geology, Jackson School of
GeoSciences, University of Texas, Austin, and my colleague, Scott
Anderson of EDF's Austin, Texas office, a copy of which is attached to
* Attachment has been retained in committee files.
EDF appreciates the opportunity to provide testimony on these two
important pieces of legislation, and we look forward to working with
Senator Casey, Senator Barrasso, Chairman Bingaman and the rest of the
Committee to advance CCS in the context of comprehensive climate and
energy legislation targeted at accelerating our nation's transition to
a clean, low carbon energy economy.
The Chairman. Thank you very much.
STATEMENT OF KURT ZEN HOUSE, PH.D., PRESIDENT, C12 ENERGY
RESEARCH FELLOW, MIT
Mr. House. Chairman Bingaman, Ranking Member Murkowski, and
members of the committee, thank you for the opportunity to
appear before you today to discuss the science, the economics,
and the industrial development of carbon dioxide capture and
It is a great honor to be able to provide this committee
with my perspective as a scientist and as an entrepreneur
working in this field.
For context, I will provide you with a brief description of
my activities in this area. In 2008, I received my Ph.D. in
geoscience from Harvard University, where my doctoral research
focused on the physics and chemistry of CO2 in the
subsurface, as well as on chemical processes designed to
convert CO2 into stable carbonate minerals. Since
then, I have been a research fellow at MIT, and I have started
a company to do CCS that is backed by some of the most well-
respected venture capitalists in the world.
In my testimony, I will make 4 points related to CCS. My
first and most important point is that CCS is an essential for
addressing greenhouse gas emissions, while simultaneously
maintaining a robust and affordable energy supply for the
Nation. America's coal and natural gas reserves contain nearly
4 times the energy content of Saudi Arabian oil. But without
the large-scale deployment of CCS, it is arithmetically
impossible for us to use those reserves while simultaneously
making significant cuts in our greenhouse gas emissions.
Furthermore, the existing industrial infrastructure of
CO2-emitting facilities represents well over $1
trillion of invested capital. But again, it is impossible to
make meaningful cuts in our CO2 emissions without
either dismantling the majority of that invested capital or by
My second point is that geology matters. The importance of
getting the geology right is an issue that I actually think has
not received proper attention to date. The geologic and
geophysical communities have developed tremendous expertise in
understanding the behavior of buoyant fluids in the subsurface.
From this expertise, we can make rigorous assessments of the
sequestration capability of specific geologic formations.
Long-term storage reliability is a concern of CCS, and
indeed, there are many places in which trying to do CCS would,
in fact, be a bad idea. But there are also many locations where
CO2 can be permanently stored.
It is important for the viability of the industry that
regulatory agencies establish processes to certify specific
formations as actual sequestration fields. Wyoming and Montana
have addressed this well by developing in-State processes by
which the boards of oil and gas conservation can certify
candidate storage sites.
My third point is that the CCS industry will only advance
if the relevant stakeholders are appropriately included in each
project. Strong stakeholder opposition can kill any energy
For example, it is crucial that existing mineral rights
owners, as well as land owners who we believe own the surface--
own the pore space by precedent, be appropriately communicated
with and, if necessary, compensated for by developers at an
early development stage of CCS storage projects.
I have significant experience working with such
stakeholders on early stage projects, and with the appropriate
ground work, it is my that CCS has been welcomed in these
communities as an industry similar to that of oil and gas that
is both safe as well as compatible with multiple uses of the
My final point is that the major hurdle for moving CCS
forward is the difficulty associated with securing finance in
an uncertain regulatory environment. This committee can
accelerate the CCS industry by addressing CCS legal issues to
minimize unnecessary risk and, importantly, by providing
financial incentives for early stage CCS projects. Senator
Barrasso's bill reduces one item of risk by explicitly
reinforcing on public lands the common-law precedent that a
storage space belongs to surface estate, and we support this
The key to jump-starting the CCS industry, however, is the
passage of incentives for first mover projects. The wind
industry, for example, installed just 1 megawatt of wind power
in 1996, but it installed over 10,000 megawatts last year, and
that growth has been driven almost entirely by State-level
renewable portfolio standards and Federal-level production tax
So a similar set of incentives for CCS, such as the
CO2 storage tax credit discussed by Senator
Rockefeller and others, would accelerate the rate of CCS and
result in meaningful cuts in CO2 emissions.
So, in conclusion, I would just reiterate that given the
appropriate geology, we have the technology as well as the
industrial know-how to do CCS today. If, however, we fail to
provide the appropriate financial incentives for doing CCS or
if we fail to bring stakeholders onboard with early stage CCS
projects, then the industry will not grow. If the CCS industry
does not grow, then we will be unable to make meaningful cuts
in our CO2 emissions, or we will be forced to
dismantle our country's significant base of CO2-
emitting industrial facilities.
As such, I urge the committee to move forward with the
relevant legislation, and I look forward to your questions.
[The prepared statement of Mr. House follows:]
Prepared Statement of Kurt Zenz House, Ph.D., President, C12 Energy
Research Fellow, MIT
Chairman Bingaman, Ranking Member Murkowski, and Members of the
Committee, thank you for the opportunity to appear before you today to
discuss the science, the economics, and the industrial development of
carbon dioxide (CO2) capture and storage, (commonly
abbreviated to CCS). I consider it a great honor to be able to provide
this committee with my perspective as a scientist and as an
entrepreneur working in this field.
For context, I will provide you with a brief description of my
activities related to this area. In 2008, I received my Ph.D. in
Geoscience from Harvard University, where my doctoral research focused
on the physics and chemistry of CO2 in the subsurface as
well as on a variety of chemical processes designed to convert
CO2 into stable carbonate minerals. Since then, I have been
a research fellow at MIT, where I have continued to study the behavior
of CO2 that has been injected into the subsurface, and I
have started a venture capital backed company that is working on
several early stage CCS projects.
In my testimony, I will make five points regarding CCS. These five
points support the central conclusion that without CCS, it will be
extremely difficult make significant and affordable cuts in greenhouse
gas emissions, while maintaining a secure and reliable supply of energy
for the nation.
The first and most important point that I wish to make is that CCS
is essential for addressing greenhouse gas emissions, while
simultaneously maintaining a robust and affordable energy supply.
America's coal and natural gas reserves contain nearly 4 times the
energy content of Saudi Arabian oil; but, without the large-scale
deployment of CCS, it is arithmetically impossible for us to use those
reserves-neither the coal nor the natural gas, and certainly not both-
for productive purposes, while simultaneously making significant cuts
in our greenhouse gas emissions. Furthermore, the existing industrial
infrastructure of CO2 emitting facilities (e.g., power
stations, refiners, chemical plants, etc.) represents well over
$1Trillion of invested capital; but again, it is arithmetically
impossible to make stated cuts in our CO2 emissions without
either dismantling the majority of that installed capital or by doing
Let me give an example to illustrate. The wind industry-which is
doubtless a success story in the energy sector over the past decade-
currently displaces approximately 50MT of CO2 per year.\1\
Retrofitting just six large coal power stations to capture 90% of their
CO2 would have the same impact. In short, CCS can enable
both the productive use of America's prodigious energy reserves and the
continued use of its CO2 emitting infrastructure, while
simultaneously decreasing our greenhouse gas emissions.
\1\ American Wind Energy Association, 2010.
The second point is that the technology to do CCS is here today.
There is a persistent notion that the technology for doing CCS is still
years away. That notion is false. Thanks to the portability of the
technology from the multi-trillion dollar oil, gas, and chemical
industries, we know how to separate CO2 from mixed gas
streams; we know how to move CO2 in pipelines; and we know
how to inject and store CO2 safely in the proper geologic
structures. Indeed, essentially every aspect of the CCS process is
currently being performed at scale in some industrial process.
That is not to say that CCS will be easy; but it is to say that the
project risks are not fundamentally technological. Rather, the primary
project risks involve getting complicated systems integration correct
and importantly, being able to secure finance for large scale CCS
investments in an uncertain regulatory environment. Systems integration
and complex engineering are great strengths of American industry; while
coping with uncertain regulations can be done-but only at unnecessarily
My third point is that geology matters. The importance of getting
the geology right is an issue that I believe has not received proper
attention to date. The geologic and geophysical communities-including
oil & gas operators-have developed tremendous expertise in
understanding the behavior of buoyant fluids in the subsurface. From
this expertise, we can make rigorous assessments of the sequestration
capability of specific geologic formations. The sequestration
capability of a given geologic formation depends on (1) the rate at
which CO2 can be safely injected into the formation and (2)
the ability of the formation to safely confine the injected
CO2 to a well defined zone.
Safety remains a major concern of the American public with respect
to CCS, and there are many places in which trying to store
CO2 would be a very bad idea; but there are also many
locations where CO2 can be safely and permanently stored. It
is important for the viability of the industry that regulatory agencies
establish processes to certify specific formations as sequestration
fields. The Montana State legislature has done this very well by
developing a unitization process by which the state's Board of Oil &
Gas Conservation will certify candidate sequestration sites. In my
opinion, state agencies such as that are well-equipped to handle this
process and should be encouraged to do so.
My fourth point is that the CCS industry will only advance if all
the relevant stakeholders are appropriately included in each project.
Strong stakeholder opposition can and will kill any energy project. As
such, it is crucial that existing owners of mineral rights as well as
land owners be appropriately communicated with and compensated at an
early development stage of any CO2 storage project. I have
significant experience working with such stakeholders on early stage
CCS projects in several different communities. Through this experience,
I have found that face-to-face discussion and honest negotiation have
been very effective in getting the relevant stakeholders onboard.
Indeed, with the appropriate groundwork, CCS has been broadly welcomed
in these communities as an industry similar to oil & gas production or
natural gas storage that is both safe as well as compatible with
multiple land uses such as ranching, farming, and recreation.
Furthermore, the geologic structures being targeted for CO2
sequestration are often in the vicinity of existing oil & gas
activities, but if managed properly, the CCS project can occur
symbiotically with these activities.
My final point is that the major hurdle for moving CCS projects
forward is the difficulty associated with financing large industrial
projects in an uncertain regulatory environment. This committee can
significantly accelerate the CCS industry by addressing CCS-specific
legal items to minimize unnecessary risk, and-more importantly-by
providing a set of financial incentives for early stage CCS projects.
Senator Barrasso's bill reduces one item of risk by explicitly
reinforcing, on public lands, the common-law precedent that storage
space belongs to surface owners; and Senator Rockefeller's bill
provides valuable startup funds for RD&D.
The key to jump starting the CCS industry, however, is the passage
of a set of financial incentives for first mover projects. The US wind
industry, for example, installed 1 MW in 1996 and over 10,000MW last
year, and that growth has been driven almost entirely by a combination
of state-level renewable portfolio standards and federal-level
production tax credits. A similar set of incentives, such as the
CO2 storage tax credit proposed by Senator Rockefeller and
others, would dramatically accelerate the rate of CCS adoption in the
In conclusion, I would like to reiterate that given the appropriate
geology, we have the technology as well as the industrial know how to
do CCS today at power-plant scale. If, however, we fail to either
provide the appropriate financial incentives for doing CCS, or if we
fail to bring stakeholders on board with each CCS project, then the
industry will not grow in the US. And, if the US CCS industry does not
grow rapidly, then we will either be unable to make meaningful cuts in
our CO2 emissions, or we will be forced to dismantle our
country's significant installed base of CO2 emitting
industrial facilities. Furthermore, we will be constrained from
responsibly harnessing America's prodigious fossil fuel reserves.
Thank you, and I look forward to your questions.
The Chairman. Thank you very much.
STATEMENT OF ADAM S. VANN, LEGISLATIVE ATTORNEY, AMERICAN LAW
DIVISION, CONGRESSIONAL RESEARCH SERVICE
Mr. Vann. Mr. Chairman, members of the committee. My name
is Adam Vann, legislative attorney for the Congressional
CRS is pleased to be afforded the opportunity to discuss
the committee's consideration of legislation related to carbon
capture and sequestration or, if you prefer, carbon capture and
In testimony today, CRS is addressing a legal issue
associated with CCS projects--who owns or controls the
subsurface pore space where carbon dioxide would be sequestered
Of particular concern is whether the property rights to
this subsurface pore space are conveyed any time mineral rights
are conveyed. Mineral rights, of course, are an interest in
something that is generally subsurface.
As you know, S. 1856 addresses this very issue with respect
to Federal lands. It is important to do so because of the many
instances in which the mineral rights on Federal lands are
leased to private entities.
Most existing legal instruments related to subsurface
property rights, including mineral right leases, do not
specifically address ownership and control of pore space. So in
order to determine who holds the relevant property rights, one
must interpret the language found in such legal instruments and
ascertain how it might apply to subsurface pore space to be
used for CCS.
Traditionally, property law issues are addressed by State
law. So CRS has analyzed relevant State common law precedent in
similar or analogous situations involving subsurface property
Based on this analysis, a detailed review of which can be
found in CRS's written testimony submitted to this committee,
it is the opinion of CRS that the vast majority of relevant
case law suggests that subsurface pore space is not conveyed in
typical mineral rights agreements--and that would include
mineral rights leases on Federal lands--but instead would
remain with the grantor or holder of the surface rights in most
CRS believes it is likely that even absent any legislation,
a court would find that the holder of the surface rights, the
Federal Government in the case of Federal lands, rather than
the holder of the minerals rights, would have the relevant
property interest in pore space for purposes of any CCS
S. 1856 declares in part that ``the ownership of any
subsurface pore space located below a Federal surface estate
shall be vested in the Federal Government.'' Thus, it is the
opinion of CRS that S. 1856 is in line with the current
understanding of the law of the United States regarding
subsurface pore space.
This rule of property law, stating that pore space is not
conveyed along with mineral rights, has been referred to as the
``American rule.'' Other legal commenters have stated that this
American rule would likely be the majority rule in the States.
It is, indeed, the opinion of CRS that this rule would likely
be adopted in virtually every American jurisdiction.
Indeed, 3 States have enacted legislation declaring that in
the absence of specific conveyance to the contrary, subsurface
pore space is vested with the owner of the surface estate, and
reportedly there are similar bills being considered in 2 other
States as well.
Now a vesting ownership of subsurface pore space in Federal
lands in the Federal Government should not prove controversial
vis-a-vis mineral rights lease holders. There is language in S.
1856 that CRS wishes to flag as a potential ambiguity.
S. 1856 declares that ownership of the subsurface pore
space is ``vested in the Federal Government.'' However, that
ownership is not limited by the bill to cases in which the
Federal Government has conveyed mineral rights, but covers
subsurface pore space in all Federal surface estates.
This could prove problematic where the Federal Government
may have conveyed a subsurface property of interest other than
mineral rights such that the recipient might be able to claim
that the conveyance did transfer an interest in the subsurface
pore space. In such cases, S. 1856 could be considered a taking
of the property of the grantee who had previously held this
particular subsurface property interest such that the grantee
would need to be justly compensated, pursuant to the takings
clause of the Fifth Amendment.
Another potential ambiguity is the provision in S. 1856
concerning the applicable law in construing conveyances that
have occurred or will occur prior to the enactment date of the
bill. This is the phrase that begins, ``All conveyances of
Federal land executed before the date of enactment of the
section shall be construed in accordance with the provisions of
This provision may not apply to a claim seeking
compensation for a taking of a subsurface property right. The
reason for that is that this type of claim would depend on the
applicable law at the time of the conveyance, not at the time
the claim was brought. Also, this language concerning the
applicable law might not have the intended effect because it
applies only to ``ownership interests.''
Mineral rights and other subsurface interests can be and
often are conveyed as leases or other property interests that
may potentially not be considered ``ownership interests.'' The
applicability of the specified language in S. 1856 to these
interests may be unclear.
Mr. Chairman, that concludes my prepared statement, and I
would be happy to answer any question that you or other members
of the committee might have. CRS looks forward to working with
the members and staff on this issue in the future.
[The prepared statement of Mr. Vann follows:]
Prepared Statement of Adam S. Vann, Legislative Attorney, American Law
Division, Congressional Research Service
Mr. Chairman and Members of the Committee: My name is Adam Vann. I
am a Legislative Attorney with the American Law Division of the
Congressional Research Service at the Library of Congress, and I thank
you for inviting me to testify today regarding the Committee's
consideration of legislation related to emerging carbon capture and
sequestration (or, as it is sometimes called, carbon capture and
storage) technology. For purposes of this testimony, I will refer to it
as ``CCS.'' My testimony will focus on legal issues related to CCS
technology; specifically, concerns over who maintains ownership and
control over the ``pore space'' in which the carbon dioxide would be
stored or sequestered under most of the emerging CCS models.
At the outset, I should note that as an attorney, my testimony will
be limited to legal issues related to CCS, including pore space
ownership and control. I cannot speak to technological, economic, or
other policy concerns related to CCS. I am certain that my colleagues
at this hearing or my fellow Congressional Research Service analysts
can ably field any such inquiries. Furthermore, my testimony will not
cover other legal issues commonly discussed in the context of CCS
technology, including, among others, problems related to potential
difficulty obtaining liability coverage and concerns related to
trespass of adjacent property.\1\ My testimony will be confined to
pending legislation and issues associated with ownership of subsurface
\1\ For further discussion of several legal issues related to CCS
technology, see CRS Report R41130, Legal Issues Associated with the
Development of Carbon Dioxide Sequestration Technology, by Adam Vann,
James E. Nichols, and Paul W. Parfomak. See also Philip M. Marston and
Patricia A. Moore, From EOR to CCS: The Evolving Legal and Regulatory
Framework for Carbon Capture and Storage, 29 Energy L.J. 421, 475
CCS technology is among the many proposals to address concerns over
the impact of carbon dioxide emissions from man-made sources on the
environment. Unlike most other proposals, CCS technology is not
intended to reduce the quantities of these emissions; rather, it would
capture these emissions at their source and ``sequester'' or ``store''
them at sites with the appropriate geologic characteristics.\2\ Any
entity wishing to operate a CCS facility must therefore own or control
the pore space in which the carbon dioxide would be sequestered or
stored. However, since CCS technology is not yet in existence and was
not even considered until recently, most existing legal instruments
related to property rights do not address ownership and control of pore
space, and to the best of my knowledge, none of them refer to ownership
and control of pore space for purposes of sequestration or storage of
carbon dioxide. Therefore, in order to determine who holds the relevant
property rights, we must interpret the language found in such legal
instruments and ascertain how it might apply to pore space to be used
for CCS. In doing so, we can look to interpretations of courts who have
reviewed similar or analogous property rights disputes.
\2\ For further information on geologic aspects of emerging CCS
technology, see CRS Report RL33801, Carbon Capture and Sequestration
(CCS), by Peter Folger.
Traditionally, property law issues are handled at the state level.
Indeed, most of the analogous disputes regarding subsurface ``pore
space'' to date have been handled under state law, and presumably would
be handled under state law going forward. These disputes, and
subsequent actions by some state legislatures, have produced what I
will refer to as the ``majority rule'' that holders of mineral rights
do not, merely by virtue of these rights, have ownership or control of
subsurface pore space. However, to the extent that CCS projects might
take place on lands owned or controlled by the United States,
determinations of pore space ownership and control become an issue for
the federal government. S. 1856 recognizes this federal role and, as I
understand it, attempts to resolve the issue going forward by declaring
that ``[t]he ownership of any subsurface pore space located below a
Federal surface estate shall be vested in the Federal Government,''
unless conveyed along with the surface estate or previously severed
from the surface ownership.\3\
\3\ S. 1856.
S. 1856, if enacted, would govern subsurface pore space rights on
Federal lands going forward. However, if any aspect of the bill or
similar language results in a transfer of existing subsurface rights of
a private entity to the Federal government, that private entity would
be entitled to just compensation under the Fifth Amendment of the
United States Constitution.\4\ Therefore, it is worthwhile to consider
whether any private entity aside from the owner of surface rights might
be able to claim ownership of, or control over, the relevant subsurface
rights. The most obvious candidate would be the owner of ``mineral
rights'' on/under the Federal land in question, as mineral rights are,
generally speaking, rights to something that is subsurface.
\4\ The Fifth Amendment to the U.S. Constitution provides in part
that ``private property [shall not] be taken for public use, without
The Majority Rule: Pore Space Control Does Not Transfer
with Mineral Rights
In order to determine: (1) the extent to which S.1856 would deviate
from the current understanding of subsurface property interests under
state and federal law; and (2) whether holders of mineral rights or
other property interests might be entitled to just compensation for
loss of their interest in the pore spacepursuant to S. 1856, we must
look at both state and federal common law and currently existing
statutes and regulations.
It is the opinion of CRS that the vast majority of relevant case
law suggests that a reviewing court would likely find that the pore
space that would be used in CCS is not conveyed with mineral rights,
but rather in most cases would remain with the holder of the surface
rights. The vast majority of legal precedent suggests that the property
owner, not the holder of mineral rights, would have the relevant
property interest in pore space for purposes of any CCS project.
Indeed, most legal experts who have studied this issue have reached a
similar conclusion.\5\ In the case of Federal land on which the mineral
rights are leased, this means that, although the holder of the mineral
rights would of course have certain rights that must be considered in
using the property, the Federal government would have ownership of, and
control over, the pore space that would be used for CCS. Experts have
cited to a number of common law decisions in support of this
\5\ See, e.g., Owen L. Anderson, Geologic CO2
Sequestration: Who Owns the Pore Space? 9 Wyoming L. Rev. 97 (2009);
Ian J. Duncan, Scott Anderson and Jean-Philippe Nicot, Pore Space
Ownership Issues for CO2 Sequestration in the U.S., GHGT-9
Energy Procedia, Elsevier V.1 p. 4427-4430 (2009); Philip M. Marston
and Patricia A. Moore, From EOR to CCS: The Evolving Legal and
Regulatory Framework for Carbon Capture and Storage, 29 Energy L.J.
421, 475 (2008).
An instructive precedent to consider from the federal court
jurisprudence is Emeny v. United States.\6\ In Emeny, the United States
Court of Claims\7\ was tasked with deciding whether the United States
had acquired the right to store helium gas within a pore space
formation on a certain property when the terms of the government's
lease with the owner of the pore space were limited to the sole purpose
of mining and operating for oil and gas.
\6\ 412 F.2d 1319 (1969) (Emeny).
\7\ The U.S. Court of Claims was the original court in which claims
against the United States were tried. The U.S. Court of Claims was
abolished in 1982. The court's trial-level jurisdiction was transferred
to the U.S. Court of Federal Claims and its appellate jurisdiction to
the U.S. Court of Appeals for the Federal Circuit.
The plaintiffs in Emeny owned a tract of land in Texas which
contained significant deposits of helium gas. The plaintiffs granted to
a private gas company ``oil and gas leases covering a total of
approximately 217,000 acres of land, including the area which contains
the Bush Dome.''\8\ The United States eventually obtained these oil and
gas leases from the private oil company, along with the remaining
mineral rights that had been reserved by the plaintiffs, and
compensated the respective parties accordingly.\9\ However, in the
lease with the United States, the plaintiffs expressly reserved for
themselves the surface of the leased lands, ``including any such
structure that might be suitable for the underground storage of
`foreign' or `extraneous' gas produced elsewhere.''\10\
\8\ Emeny at 1321. According to the court's opinion, the Bush Dome
``is a closed geological structure, or underground dome, in which
gaseous substances can be stored ... The potential storage capacity of
the Bush Dome is in excess of 52 billion standard cubic feet of gas.''
Id. at 1321.
\9\ Id. at 1321-1322.
\10\ Id. at 1323.
Pursuant to the lease agreement, the United States commenced
operations to extract the helium contained within the Bush Dome, and
continued to do so for approximately three decades until the Bush Dome
was empty. After the Bush Dome was emptied, the United States sought to
store helium gas produced elsewhere inside of the now empty pore
space.\11\ The plaintiffs argued that they were entitled to just
compensation for the government's use of the Bush Dome as a helium
storage facility because pursuant to the language of the lease
agreement, the government only had a right to extract the gas contained
within the pore space and no right to use the pore space for storage of
helium gas produced elsewhere.
\11\ Id. at 1322.
After a consideration of Texas common law, the court in Emeny
agreed with the plaintiffs that the government's property interest did
not include the right to use the pore space for gas storage, and
ordered the United States to pay the plaintiffs just compensation for
its use of the Bush Dome as a helium storage facility. According to the
court, ``[t]here is no reasonable basis on which the rights granted to
the [United States] in the . . . oil and gas leases could be construed
as including the right to bring to the premises and store there gas
\12\ Emeny at 1323.
The West Virginia courts reached a similar conclusion in Tate v.
United Fuel Gas Company.\13\ In Tate, the highest court in West
Virginia addressed the question of pore space ownership once the
minerals contained therein had been extracted. The owner of the land
deeded the land to another man, but expressly reserved to himself the
``oil, gas . . . and all minerals . . . underlying the surface of the
land.''.\14\ The new owner then deeded the surface estate to Virgil
Tate, subject to the same exceptions in the original deed, including
the reservation of the mineral estate for the original owner. After
extracting all of the oil from the pore space, the original owner
eventually leased his remaining mineral rights to the defendant, United
Fuel Gas Company. United Fuel Gas Company then used this mineral rights
property interest to store gas produced elsewhere in the empty pore
\13\ 71 S.E.2d 65 (1952) (Tate).
\14\ The pertinent language of the deed stated that ``[t]he oil,
gas and all minerals . . . underlying the surface of the land hereby
conveyed are expressly excepted and reserved from the operation of this
deed . . . it being under-stood [sic] that the term `mineral' as used
herein does not include clay, sand, stone, or surface minerals except
such as may be necessary for the operation for the oil and gas and
other minerals.'' Tate at 67-68.
Plaintiff Tate, the owner of the land subject to the underground
property interest leased to United Fuel Gas Company, asserted that the
lease between the original owner and United Fuel Gas Company which gave
United Fuel the ``remaining'' mineral rights was invalid, since the
original owner/holder of the mineral rights only had a right to extract
the contents of the subsurface estate, not the right to use the pore
space for other purposes. The Supreme Court of West Virginia agreed
with Tate and held that the express reservation of mineral rights only
granted to the original owner/mineral rights holder (and his lessee,
United Fuel Gas Company) a right to exploit the gas and minerals
contained within the pore space, not a right to use the pore space
itself for the storage of gas produced elsewhere.\15\
\15\ Id. at 72.
According to Tate, the owner of the mineral rights likely would not
have the right to the use or lease the pore space for carbon dioxide
capture and sequestration, unless the owner of the surface estate
expressly allows the owner of mineral rights to use the pore space.
This conforms with what is referred to here as the ``majority rule''
(and others have called the ``American rule'') that pore space is not
conveyed with a standard conveyance of mineral rights.\16\
\16\ Some legal writings have referred to this rule as the
``American rule.'' This terminology is used in contrast with the
``English rule'' that the mineral rights owner retains the right to the
subsurface space even after the minerals have been extracted.
Another case that reached a similar conclusion is U.S. v. 43.42
Acres of Land.\17\ In this case, a federal district court had to
determine whether the surface owners, mineral owners, or both should
receive compensation from the government for land acquired for the
construction of an underground crude oil storage tank.\18\ One
defendant owned the land under which a crude oil storage tank was to be
constructed. The other defendant owned the rights to the minerals that
needed to be extracted to construct the underground storage tank. The
United States intended to construct this storage tank by extracting the
salt contained inside of the subterranean geological structure and then
using the evacuated underground formation as a storage area.\19\ Both
defendants claimed an exclusive right to be compensated by the United
States for its taking of the property pursuant to the Energy Policy and
\17\ 520 F. Supp. 1042 (1981) (Acres).
\18\ In his opinion, Judge Veron writes, ``Simply stated, the issue
to be decided by this court is: who is entitled to be compensated for
the value of the hole in the ground to be created by construction of
the underground storage cavern[:] the land owners or the mineral
owners?'' Acres at 1043.
\19\ The process by which crude oil reservoirs are created was
described in Acres:
\20\ 42 U.S.C. Sec. 6249(a)-(f).
Toutilize the subsurface for the extraction of brine and the
creation of storage facilities[,] a well is drilled so as to penetrate
the salt formation. Water is forced into the formation through the
well, the salt is withdrawn as brine, and a cavity is left in the salt
mass because of gradual dissolving of the salt and a resulting erosion
by the leaching process. The jug shaped cavity, or `jug[,]' formed by
this leaching is used for the storage of hydrocarbons. A jug is 100
feet or more in depth, with capacity for storing over a million barrels
of one of the various hydrocarbons. A thick barrier of salt must be
retained around each jug to form a satisfactory wall for the
containment of the stored product.
Acres at 1043.
Since Acres was a case of first impression under Louisiana law, the
court considered common law authority from other jurisdictions to
inform its opinion, and concluded that `` . . . the general rule in
common law . . . provides that, after the removal of minerals, the
opening left by the mining operations belongs to the land owner by
operation of law.''\21\ Since the minerals had not yet been removed
from the pore space by the United States and since the resulting pore
space needed to be used by the United States for crude oil storage, the
court ordered the United States to compensate both the landowner and
the mineral rights owner.\22\
\21\ Acres at 1045.
\22\ ``[Owners of a mineral servitude] have no right to claim
compensation for the value of the cavern to be created by removal of
the salt. They should be compensated only for the value of the right to
explore for and reduce to possession the minerals on the land in
question. [The] land owners . . . own all remaining rights in the land,
and they are entitled to be compensated for the underground storage
value of the land.'' Id. at 1046.
Although the question of compensation was the primary focus of the
court in Acres, the determination that both the surface and mineral
estate owners should be compensated by the government was based on the
rationale that the mineral estate owner has an interest in the minerals
contained within a pore space, while the surface estate owner retains
an interest in the pore space itself.\23\ While virtually all authors
and scholars have concluded that the case law clearly favors a rule
attaching pore space ownership and control to the surface estate or
remaining estate over the holder of mineral rights, some have noted
that the precedent is far from unanimous.\24\ Two cases commonly cited
in support of the argument that a mineral rights conveyance also
conveys ownership and control of pore space are Mapco v Carter\25\ and
Central Kentucky Natural Gas Co. v. Smallwood.\26\
\23\ Id. at 1045.
\24\ See, e.g., Elizabeth J. Wilson and Mark A. Figueiredo,
Geologic Carbon Dioxide Sequestration: An Analysis of Subsurface
Property Law, 36 Environmental L. Rev. 10114 (2006).
\25\ 808 S.W.2d 262 (Tex. 1991) (Mapco).
\26\ 252 S.W.2d 866 (Ky. 1952) (Smallwood).
In Mapco, multiple parties had interests in the surface and mineral
rights of a parcel of land in Texas. As a result of a previous court-
ordered partition, the surface and mineral rights were divided among
the various co-owners. Despite the fact that the co-owner Mapco only
possessed a minority interest in the mineral rights in addition to the
surface rights, Mapco decided to extract and sell the salt contained
beneath its portion of the partitioned land without the consent of the
other co-owners.\27\ When the salt was completely extracted, Mapco
``plugged'' the empty cavern with concrete and abandoned it, thereby
rendering it unusable as storage space for gas or petroleum
\27\ Mapco at 267.
\28\ Id. at 268-269.
Ultimately, the Court of Appeals of Texas ordered Mapco to
compensate the co-owners of the mineral rights because, as mineral
rights co-owners, they were also entitled to an amount of the proceeds
from Mapco's sale of the salt equal to their respective interests in
the partitioned land.\29\ The court held that under Texas law, ``this
interest in minerals is an interest in real property. Thus, the fee
mineral owners retain a property ownership, right and interest after
the underground storage facility . . . had been created.''\30\
\29\ Id. at 278-279.
\30\ Id. at 274-75.
This result suggests that mineral rights are not merely a right to
extract the minerals in question and an ownership right in said
minerals, but also grant an ownership right in the subsurface formation
left behind. However, in the opinion of CRS, this fact pattern may be
distinguished from any hypothetical claim that mineral rights include
an interest in subsurface pore space. In Mapco, the subsurface storage
area was created by the excavation of the mineral. In contrast, pore
space contemplated for use in CCS technology is naturally occurring,
not created by the mineral extraction. Furthermore, the storage area in
Mapco was actually comprised of the mineral in question (salt). Again,
this would presumably not be the case with respect to pore space used
In Central Kentucky Natural Gas v. Smallwood,\31\ the property
owner executed an ``oil and gas production and storage lease''
conferring the right to drill for oil and gas and to store gas of any
kind regardless of source in the subsurface.\32\ The lessee did not
produce any gas, but gas that was removed from wells on adjacent lands
in the area was stored under the surface and rentals were paid. The
lessee paid the lessor only half of the rental fees, under the
assumption that the rentals should be paid to the holder of the mineral
rights, not the surface rights (the lessor had retained a 50% interest
in the minerals).\33\ The lessor claimed that the rent should be paid
solely to him, as the owner of the surface estate and thus the
subsurface formations in which the gas was stored.\34\ The court ruled
in favor of the lessee, finding that the stored gas was equivalent to
``native'' gas and that therefore revenue therefrom was attributable to
the owner of that gas, i.e. the holder of the mineral rights.\35\
\31\%2 S.W.2d 866 (Ken. 1952) (Smallwood).
\33\ 33 Id. at 867.
\35\ Id. at 867-868.
However, the court's decision was based solely on the
classification of the stored gas as equivalent to the native gas. In
fact, the court clarified that ``[i]n reaching the conclusion that we
reach, it is not necessary to determine whether the cavern or strata
from which a mineral has been removed becomes the property of the
mineral or surface owner.''\36\ Indeed, the court references the
``English rule'' that subsurface spaces are owned by the mineral rights
holder and then notes that ``[t]he general rule in the United States
seems to be otherwise.''\37\ Thus, Smallwood does little to establish
precedent contrary to the ``majority rule'' or the ``American rule.''
\36\ Id. at 868.
Finally, it should be noted that some states have enacted
legislation establishing default rules for pore space ownership and
control. Three states have enacted relevant legislation: Montana, North
Dakota, and Wyoming. In each of these states, the state legislature
decreed that the surface owner, not the mineral rights owner, is the
owner of the pore space to be employed in CCS technology.\38\ Further,
in the two states that are currently considering relevant legislation
(Michigan and New York), the pending legislation reportedly would also
declare that pore space does not belong to the mineral rights holder
but remains with the surface estate.\39\
\38\ Mont. Code Ann. Sec. 82-11-181(3); N.D. Cent. Code Sec. 47-
31-03; Wyo. Stat. Ann. Sec. 34-1-152(a).
\39\ Southern States Energy Board, ``Carbon Capture and
Sequestration Legislation in the United States of America,'' March
2010, available at http://www.sseb.org/documents/CCSLegMatrixshort.pdf
It is worth pausing briefly to consider why this ``majority rule''
or ``American rule'' has been so widely adopted. There is a general
principle in property law that any property right not expressly
conveyed is retained by the owner or grantor.\40\ Accordingly, courts
have tended to interpret limited property grants (like mineral rights)
from a fee simple owner narrowly, with the fee simple owner retaining
all property rights not explicitly granted in the document. Thus, a
grant of mineral rights would grant only what is explicitly granted in
the ``four corners'' of the document. In the case of federal mineral
rights leases, the conveying language usually is something similar to
this: ``This lease is issued granting the exclusive right to drill for,
mine, extract, remove and dispose of all the oil and gas (except
helium) in the lands described . . . together with the right to build
and maintain necessary improvements thereupon.''\41\
\40\ See, e.g., Davis v. Peavy-Moore Lumber Co., 144 S.W.2d 878,
880 (Tex. 1940).
\41\ U.S. Department of the Interior, Bureau of Land Management,
Form 3100-11 (October 2008): Offer to Lease and Lease for Oil and Gas.
CRS has also reviewed several other lease forms dating back to 1984,
and all of them contain substantially similar language.
Courts would thus likely be inclined to find that anything not
explicitly mentioned, e.g. subsurface pore space or similar formations,
would not be transferred, but would remain with the grantor, as the
cases described above illustrate.
Given the aforementioned, S.1856 probably would not disrupt the
current understanding of the ownership rights of the Federal government
and mineral rights leaseholders in subsurface pore space, at least in
the context of mineral leases. The latest draft of the bill that CRS
has seen would establish that, as a rule, subsurface pore space below a
surface estate owned by the Federal government would be owned by the
Federal government. With respect to mineral leases, this is clearly in
line with the ``majority rule'' or ``American rule'' that appears to
have been adopted by virtually every court (and every state
legislature) that has considered the question, as described in detail
above; although, of course, no court has yet ruled on this issue with
respect to use of subsurface pore space for CCS. Similarly, by
establishing that ``a conveyance of the surface ownership shall include
the conveyance of the Federal pore space in all strata below the
surface of the Federal land'' unless previously reserved,\42\ the bill
effectively clarifies that the application of the ``majority rule'' or
``American rule'' extends not just to exclude subsurface pore space
from mineral rights conveyances, but in fact to attach such rights to
the surface estate.
\42\ S. 1856
However, aspects of S. 1856 could prove controversial in other
respects. First, the declaration that ownership of the subsurface pore
space is ``vested in the Federal Government'' is not limited to cases
in which the Federal Government has conveyed mineral rights, but in
fact covers all Federal surface estates. This could prove problematic
where the conveyances are for a property interest other than mineral
rights, in which the grantee might be able to claim that the subsurface
pore space was conveyed. In such cases S. 1856 might trigger a
requirement that the grantee be justly compensated, as discussed in
more detail below. Indeed, the testimony to this point should only be
considered applicable to the extent that the property interests in
question are mineral rights on the one hand, and the remaining estate
on the other. The rights and obligations of any other conveyances would
need to be considered on a case by case basis.
Another concern is the statement concerning the ``applicable law''
in construing conveyances prior to the enactment date of S. 1856. The
provision would likely not be applicable to a claim seeking
compensation for the ``taking'' of a subsurface property right under
the terms of S. 1856, as such a claim would depend on the applicable
law at the time of the conveyance, as discussed in more detail below.
Also, the language might prove troubling because it applies only to
``ownership'' interests. Mineral rights and other subsurface interests
can be, and often are, conveyed as leases or other property interests
that may not be considered ``ownership'' interests. The applicability
of this language to those interests may be a concern.
If S. 1856 is enacted, and subsequently it is determined that a
private party previously had a property interest in the subsurface pore
space located below a Federal surface estate, such a finding would not
likely invalidate the enacted law. Instead, the party would likely be
entitled to just compensation pursuant to the ``Takings Clause'' of the
Fifth Amendment to the U.S. Constitution.
A takings claim resulting from S. 1856 or similar legislation would
likely be in the form of a ``physical/appropriations'' takings
claim.\43\ Indeed, ``[t]he paradigmatic taking requiring just
compensation is a direct government appropriation or physical invasion
of private property.''\44\ Thus, in the case of a hypothetical loss of
a real property interest in subsurface pore space, there is little
question that the interest represents ``property'' that would require
just compensation. The main question, therefore, would be whether S.
1856 or similar legislation would in fact divest a real property
interest from any potential party.
\43\ For a more detailed discussion of the Takings Clause, the
various types of Takings claims, and the applicable legal standards,
see CRS Report RS20741, The Constitutional Law of Property Rights
``Takings''. An Introduction, by Robert Meltz.
\44\ Lingle v. Chevron USA, Inc., 544 U.S. 528, 537 (2005).
As explained in detail above, a mineral rights holder on Federal
lands would have difficulty arguing that the mineral rights interest
included a property interest in the subsurface pore space. Therefore,
it is unlikely that a party that holds only a mineral rights lease on
Federal lands would have a compensable Takings claim as a direct result
of S. 1856 or similar legislation. However, the expansive language in
S. 1856, which preempts any claim to subsurface pore space property
rights located below a Federal surface estate, is more likely to create
a compensable taking. The Federal government grants leases, easements
and rights of way, and other real property interests on (and under)
Federal lands in many forms and for many purposes. It is not possible
to conduct a comprehensive review of all such property interests.
However, the possibility exists that some of these may encompass an
interest in subsurface pore space (in whole or in part). If such a
property interest does exist, the party holding the interest may well
be entitled to Takings compensation upon the passage of S. 1856 or
similarly worded legislation.
Also, it should be noted that this taking analysis addresses only
potential physical/appropriations takings claims; that is, a claim that
the legislation results in the loss of a real property interest in the
subsurface pore space. Consideration of ``regulatory'' or other takings
claims, in which the aggrieved party would argue that the law or
regulation results not in a total loss of a property interest but
rather in the reduction of the value of a property interest that the
party continues to hold, are outside the scope of this testimony.
However, the language in S. 1856 does provide that ``[n]othing in this
section alters any laws or case law in existence on the date of
enactment of this section relating to the rights belonging to, or the
dominance of, the mineral estate.'' This language may provide
additional assurance to those concerned that mineral rights on Federal
lands might be taken. Also, S. 1856 does not authorize CCS projects or
any other activity. It simply attempts to classify ownership interests
in real property. Because it does not authorize new activity, it likely
would not, by itself, give rise to any regulatory or other partial
As described above, S. 1856 likely would not represent a
significant deviation from the current understanding of the real
property rights associated with ownership and control of the subsurface
pore space that would likely be employed in CCS technology. Common law,
legal scholars, and state legislatures have, for the most part, agreed
that subsurface pore space is owned and controlled by the holders of
surface rights, not mineral rights. As a result, this legislation, or
similar legislation, would likely not result in a compensable takings
claim from a holder of mineral rights on Federal lands. However, there
are some concerns about the breadth of the language in S. 1856 and
potential takings of property interests other than mineral rights.
Mister Chairman, that concludes my prepared statement. I would be
happy to answer any questions that you or other Members of the
Committee might have, and I look forward to working with all Members
and staff of the Committee on this issue in the future.
The Chairman. Thank you all for your excellent testimony.
Let me ask a few questions. Dr. House, let me start with
you. I guess I would just be interested in any thoughts you
could give us as to the challenges involved in acquiring access
to lands for CCS projects when the lands are public versus when
the lands are private.
I mean, what is the current circumstance that exists in
that regard? Is it possible to acquire or to pursue projects
where you have public ownership of the land as well as private
ownership today, or is one easier than the other?
Mr. House. That is an excellent question, Senator.
The best way to think about it, I guess, from our
experience is private transactions are very effective, very
efficient. Sort of independent negotiations between private
entities can occur quickly and fast, and all the interests are
clear. So, in many cases, that is the best way to go to
identify sequestration potential that is owned for which the
surface right and, if possible, the mineral right is well
understood, and you can sign leases and move forward.
There is a geologic and geographic complexity that comes
into account when you go specifically in the Mountain West
regions, where the Federal Government owns tremendous amounts
of land, and that land tends to be checkerboarded. It literally
looks like a checkerboard if you look at sections and townships
So you can go and sign all the appropriate legal documents
with all the appropriate private entities, but if you were to
inject CO2 in wells drilled even on the private
lands, the CO2 would flow in the subsurface as it
does in the appropriate geologic structure underneath, in some
cases, some of the checkerboarded public lands.
So the public lands, if the surface is State public
ownership, then they own the pore space there. So, you would
need public--you would need a lease from the Government to
complete that sequestration project.
So, for that reason, I think there is, unfortunately, in
the basically west of the Mississippi, it would be very, very
difficult to do projects without some degree of sort of public
lands involvement, although, in many cases, a majority of the
ownership can be private.
Now the situation changes when you get into the Midwest
regions where there is very little Federal lands, and most of
the lands are State lands, as well as private lands, in which
case there are many projects in which you could go forward with
entirely private leases.
The Chairman. Let me ask, and I haven't really studied
this. But if the Federal Government owns the surface and the
subsurface of land, why wouldn't the Federal Government want to
retain the ability to lease the surface, lease the minerals,
and lease the pore space in 3 separate transactions? Wouldn't
that be the most beneficial thing from the point of view of the
taxpayer or the Federal Government?
Mr. House. Yes, absolutely. Excellent point. So in the case
where the Federal Government has what we call ``fee simple''
land, which means they own everything, which does occur in many
places, then they would own the surface lands. They own the
mineral estates, and then they own the pore space. So they
could sign both mineral extraction leases, as well as
CO2 storage leases.
There are geologic situations in which that could be
incredibly beneficial. So let me give you an example. If there
are, say, there is oil deposits in shallow stratigraphic
layers. So say 500 meters deep you have oil. Then maybe at 800
meters deep or 1,000 meters deep you have natural gas. Then
maybe at 2,000 meters deep you have what we call a basal
sandstone, or a reservoir layer that doesn't involve any
In that case, you could actually have 3 different leases.
You could have an oil operator removing the oil. These would be
stacked vertically. You could have a gas operator removing the
gas. You could have a sequestration operator injecting
CO2 beneath both of those operations all in a very
symbiotic way. That would be a tremendously efficient use of
sort of space, if you think about it.
The Chairman. Let me just ask one other question. Then my
time is up. I am just concerned if we adopt or codify the so-
called American rule, are we, on behalf of the Federal
Government, giving up the ability to separately lease the pore
space in land where we have already leased the surface?
Mr. House. If the Federal Government--yes, that is true. I
mean, if the American rule is sort of considered the law of the
land through the courts or through the legislature, then,
indeed, in a case where the Federal Government would own the
mineral rights, but not the surface rights, they would not have
the right to lease the pore space. The private owner of the
surface would, in fact, have that right.
It is important to note 2 things, though. First, from the
point of view of the sequestration industry, that is not
necessarily a bad thing. I mean, the lease can be signed with
the Government, and the lease can be signed with private
entities. In many cases, it is faster to sign them with private
Then the second point is that, and this is extremely
important, is that if it appears pretty strong that the mineral
estate, in precedent, the mineral estate has sort of a
superiority, which means that a sequestration operator could
not develop a site, even if they got a lease from a private
owner, that would damage a mineral estate property.
So you couldn't, in other words, inject CO2 into
a natural gas reservoir if the physical activity of doing it
would sort of weaken the value or diminish the value of the
natural gas. So you can only go forward with the operation if
you could show in a scientific way that the operations of the
sequestration occurs in a separate geologic stratum and would
not negatively impact the natural gas reserve.
The Chairman. Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman.
I am pleased that all of you on the panel this morning have
indicated that you believe that CCS is essential. If we are
going to get to that low-carbon future, clean energy future, we
have to figure out how we make CCS a reality.
So there were at least 3 of us here this morning who
expressed a level of frustration with the stimulus funds, $3.4
billion, that is directed to help facilitate it and just about
0.5 percent that has moved forward at this point in time. So we
are frustrated, but I would have to imagine that you all are
doubly frustrated that it is not moving quicker. But hopefully,
we will see something on that.
Dr. House, you mentioned that we have to get the geology
right, and I would think that this is something that, again, we
need to know and understand with a little bit more certainty.
There was an issue over in Germany, I guess this was last
summer, where there was some local opposition to a
demonstration project there. Apparently, instead of
sequestering underground due to opposition from the local
residents, they apparently wound up venting the carbon dioxide
into the atmosphere rather than storing it beneath the ground.
Instead of ``not in my backyard,'' it is ``not under my
I don't know whether we have seen any opposition rising to
even the concept of CCS and the concerns. Senator Barrasso,
from Wyoming, has been dealing with this for years. But I think
this is one of the instances where when we do our homework
correctly and we identify where those appropriate geologic
deposits are, then the concerns that some may have, that would
be unfounded because you have repositories that allow for a
level of safety and security.
This is a general question, and I will throw it out to all
of you on the panel. Are we seeing or do you foresee any
resistance to CCS here in the United States? What kind of
educational effort do we need to give people a level of
security or comfort that this is a process that we know and
Mr. Hilton, if you want begin?
Mr. Hilton. Senator Murkowski, if I could clarify one
thing? On that project in Germany, the resistance wasn't to the
Senator Murkowski. OK.
Mr. Hilton. The resistance was actually to a bad plan by
the utility who elected to truck the CO2 through the
small villages, and that is what the people objected to.
Senator Murkowski. Okay.
Mr. Hilton. It wasn't the pipeline. It was trucking. So
they were OK with putting it in the ground. They were OK with
it being captured, but the method of transportation wasn't well
Senator Murkowski. That is an important aspect of it. I
appreciate you pointing it out.
Mr. Hilton. What we have been doing is, for instance, at
Lacq, where we take a pipeline and go to depleted gas fields,
the people of Lacq are extremely encouraged. Part of that is
putting the deal together, if you will.
Senator Murkowski. Right.
Mr. Hilton. Basically, TOTAL offered them back the
royalties that they got when they used to have gas in the
field, and this made the town extremely happy. Everybody is
very happy with pipelines and that.
So your point is very well taken. It is education. It is
understanding that this is not a risky proposition, that we
understand sequestration. We understand pipelines, and we
understand capture and getting the public to accept that. It is
an educational process because this is something they don't
know a great deal about.
So I think we as an industry have to do that and get the
proper I will say information in front of people, to have their
confidence in what we are doing. But as I said, so far, we
haven't run into, at least in any of the projects Alstom has
been involved with, any opposition. We do know there was
opposition in Rotterdam, but that was directly under the town
and you know----
Senator Murkowski. Mr. Yamagata, on behalf of the Coal
Utilization Research Council, is this an issue that you
Mr. Yamagata. It is. It is, Senator. It is an issue that we
have spent a great deal of time trying to deal with other than
to echo the points that Mr. Hilton has made, and that is that
it is very much an education process. The flip side of that
being a numby-like reaction, and that comes mostly, I think,
with not understanding what the technology is or what we are
capable of doing.
Another point worth mentioning I think is just the enormous
potential for deep storage even in the North American
continent. Let me just give you a couple of examples. This
comes from Battelle and DOE. Between 2050 and 2100, you would
project about 330 gigatons of CO2 that would
otherwise be emitted. If you think about, that is 6 gigatons
per year now.
The repositories, if you will, in the North American
continent just in saline formations alone is something on the
order of 3,600 gigatons. So, number 1, we have plenty--we
believe we have plenty of storage capability. So that is
probably not the issue if we do it right.
I do think, in sum, that the real issue here is education.
Don't be flip about this because you will get the other side,
the numby side of it. It will take the efforts of industry and
Government to educate land holders and others on the safety of
what we are trying to do here.
Senator Murkowski. Let me ask you, Mr. Brownstein, because
within the environmental community, I think EDF has taken a
position that is somewhat different than some of the other
organizations. You have stated that you believe CCS is
Is this an issue where we need to ensure that there is
sufficient education and understanding about the process and
the safety and security?
Mr. Brownstein. There is no question, Senator, that
education is critically important. This is an issue that
members of the committee, those of us on the panel are very
used to discussing.
We have become very conversant with the technology and how
it works. To the average American, this is something very new.
So, there is a lot of work that needs to be done to educate the
public about what the technology is and what the process is for
doing this correctly.
But let me also say 2 other things. First of all, it
becomes incredibly important that, in fact, we do do it
correctly. That requires good rules to be in place so it is
very clear to operators what is expected of them. It becomes
incredibly important to have good regulatory oversight.
Both on the industry and the regulator side, we need to
make sure that we have well-trained people. Investment in good
education for geologists and engineers and making sure that
they are part of this becomes incredibly important. We need to
have qualified people.
The last thing that I would suggest is that I personally
believe that some of the resistance to CCS goes to the larger
question of the role of coal. In that regard, I believe that
the coal industry and the utilities that depend on coal have a
particular responsibility to make sure that if we are to move
forward with continuing to use coal as part of our energy
economy that we really are looking at the entire value chain
and that we are doing everything that we can not only with
regard to CO2, but also how we mine it, how we deal
with the waste and so on, to do it as environmentally
responsible as absolutely possible.
Senator Murkowski. I thank the members of the panel.
Thank you, Mr. Chairman.
The Chairman. Thank you all very much. I think it has been
good testimony and a good hearing. We appreciate your input.
Oh, I am sorry. Senator Barrasso, I didn't see you come
back in. Go ahead if you have any questions.
Senator Barrasso. Thank you, Mr. Chairman.
I had some constituents from Wyoming who were visiting, and
I went to the library to visit with them. But I was trying to
listen to some of the answers.
Mr. Hilton, if I could, your company, Dr. House's company,
I mean, you are at the forefront of carbon sequestration. You
are going to make this a reality. You will be on the ground
doing that. Obviously providing legal certainty is critical,
and you are addressing that.
In Wyoming, over half of the land is owned by the Federal
Government. As I think Dr. House mentioned, we have some of the
work done on the geology. I believe we have some of the best
geologic structures and the best geology for long-term carbon
When you are out there selecting potential sites for long-
term carbon storage, can you give us a little bit of your
thought process on Federal land versus private land and how you
make some of those decisions?
Mr. Hilton. Normally, Alstom does not do sequestration. We
basically do the capture portion. But I think the key issue is
going to be where the plan is, obviously. I mean, you are east
of the Mississippi, you are on private property.
It is going to be a question of transportation. What is it
going to cost us, and how difficult is it going to be to put
pipeline to get to places where you really have choice? I think
that is really going to be the core issue, the ease of that.
I do think, just to comment on something that was said
earlier, private--sequestration on private land will be quite
complicated. If you look at the facility that we are involved
with at Mountaineer, there are 2,000 private land owners
immediately around the plant. To get mineral rights or to get
pore space from all, if necessary, 2,000, it is going to be a
very complicated issue, and it is going to be a very difficult
That is why we are encouraged by seeing some States start
to alter their view of ownership of pore space. I think it is
absolutely critical, and it is something that has to happen to
make this happen.
Senator Barrasso. Dr. House, did you want to comment on
that in terms of your making financial decisions and
Mr. House. Yes, absolutely. Certainly, we look at geology,
``geology geology,'' so to speak. Because the geology really
does matter in terms of the reliability and the permanency of
the storage. So that is critical. Obviously, proximity to
sources is important, and then who owns--the complexity of the
sort of legal access required is also important.
I would add, and this also goes to something Senator
Murkowski asked earlier about sort of public acceptance. In our
experience, people view these as oil and gas transactions, as
things they are familiar with, as things they understand.
It is an industrial operation. It happens in the
subsurface. It doesn't have a great surface impact. So it is
compatible with ranching or farming, et cetera. These leases
are happening in very big, large ways, and so I actually think
it is a very tractable thing and something that we are
I think there has been some discussion of police action
around pore space, and I actually would--that really scares me,
to be honest with you. I think if there was a broad attempt at
sort of national eminent domain, that would create a million
enemies immediately, whereas if it is their resource and if it
is an arm's length negotiation between private entities, then
they become associated with the project. They are invested in
the project. They want it to go forward.
They can benefit from it, as opposed to some sense that
their assets are being stolen and that their homes are being
put at risk. So I think maintaining, as your bill does, that
the pore space goes to surface estate I think is the right
Senator Barrasso. Mr. Vann, following up on Senator
Bingaman's question earlier, would S. 1856 preclude the Federal
Government from leasing the surface and leasing the subsurface?
Mr. Vann. I don't think so, no.
Senator Barrasso. Yes, I agree.
Mr. Vann. In the case in which it owns both? No, I don't
Senator Barrasso. OK. So it wouldn't. Then in instances of
private surface ownership and Federal mineral ownership, to me,
S. 1856 does not apply. So there would be no impact?
Mr. Vann. I agree. It is not relevant.
Senator Barrasso. Thank you.
Thank you, Mr. Chairman.
The Chairman. Again, thank you all very much. I think it
has been a useful hearing.
That will conclude our hearing.
[Whereupon, at 12:01 p.m., the hearing was adjourned.]
Responses to Additional Questions
Responses of Mark S. Brownstein to Questions From Senator Bingaman
Question 1. Your written testimony discusses some important issues
with adequate site characterization and maintenance of geological
sequestration sites. Do you feel that the current direction of the DOE
CCS regional partnership's research projects adequately address the
sequestration component of CCS?
Answer. DOE's CCS regional partnerships are providing a useful
forum for developing and implementing pilot projects that will help
commercialize carbon capture and storage (CCS) processes and
technologies. Of particular importance is that partnerships are taking
place in several regions across a wide variety of geologies. This is
important because the viability of CCS will vary across geologies, with
some geologic formations being more suitable for sequestration than
others, and some proving unsuitable at all. Going forward, increased
priority should be given to characterizing the geology of various
regions, particularly where the costs and technical challenges of
sequestration are likely to be relatively higher. In addition, there is
an ongoing need for public outreach and education, with a particular
focus on environmental regulators and public utility commissioners,
both of whom will require current and complete information to be able
to assess the environmental and economic viability of CCS projects,
Question 2. Your testimony did not discuss the draft legislation
proposed by Senators Rockefeller and Voinovich that would provide
substantial funding for commercial deployment efforts of CCS
technologies. Does EDF have an opinion on this draft legislation? We
would appreciate your thoughts and/or comments on that legislative
Question 3. Can you provide a brief comparison of coal/CCS
incentives in ACELA, ACES and Rockefeller/Voinovich and indicate the
preferred approach from EDF's perspective?
Answer. Questions 2 and 3 are interrelated; and so, below, we
combine our answers to those questions.
The most important difference between the approaches to CCS
commercialization taken in the Rockefeller/ Voinovich discussion draft
and those taken in HR2454, the American Clean Energy and Security Act,
is that the Rockefeller/Voinovich provisions are designed to operate
independently of an energy policy that places a cap on greenhouse gas
It should be recognized at the outset that, without a mechanism
that places a price on CO2 emissions and that creates a
market for avoiding those emissions, even the bestdesigned policies and
programs are unlikely to result in broad deployment of CCS
technologies. Without a price on carbon, there is simply no economic
reason to do CCS.
That critical point aside, the Rockefeller/Voinovich draft in many
ways reflects an emerging consensus on the key policy pathways that are
needed in order to support development, commercialization and broad-
scale deployment of carbon capture and sequestration technologies at
Both Rockefeller/Voinovich and HR2454 create early deployment
programs that would operate for 10 years and fund CCS projects with
revenue collected from utility ``wires charges.'' Utility assessments
would be based on the fossil-fuel generation mix of each utility, with
the assessments under Rockefeller/Voinovich set at levels to bring in a
total of approximately $2 billion annually and assessments under HR2454
set to generate approximately $1 billion annually. The Rockefeller/
Voinovich draft states that the program should, to the maximum extent
practicable, deploy projects capturing emissions from at least 10 GW of
This is in contrast to a more limited approach established under
S.1462, the American Clean Energy Leadership Act. Under S.1462, DOE
would provide technical and financial support to no more than 10 CCS
demonstration projects, with the key support mechanism being the
indemnification of the 10 project operators from liabilities that may
arise from the projects. The question of how to best address risk
management is addressed below in our response to question #4. So, here
we will focus on the major differences between Rockefeller/ Voinovich
and HR2454, neither of which address the liability question.
The Rockefeller/Voinovich draft builds off the CCS early deployment
program established in HR2454 (which in turn was taken from Rep.
Boucher's HR1689). Under both versions, new entities are established to
administer the program--including the approval of projects and
disbursement of funds. Under HR2454 this entity, the Carbon Storage
Research Corporation, is made up of utility associations and public
interest groups and operates as an arm of EPRI.
This structure raises governance questions, in that private
entities are given full authority over the management and use of funds
raised from electricity consumers for a public purpose. Rockefeller/
Voinovich deftly resolves this issue by creating an entity, the CCS
Program Partnership Council, made up of largely the same industry and
public-interest actors but over which DOE maintains an important
oversight role. The Council would review and recommend projects for
financial assistance, but awards would ultimately be made by the
Program Manager, who is appointed by the Secretary of Energy. In this
way, the Rockefeller/Voinovich draft strikes a balance by relying on
industry expertise to provide direction over the investments while
making public officials accountable for final funding decisions.
The other key difference between the two approaches is the size of
the programs. As mentioned, Rockefeller/Voinovich would raise $2
billion annually for 10 years; and HR2454 would raise half that amount.
The question of whether it makes sense to double the size of the early
deployment program, as originally negotiated with industry, rests
largely on two issues: 1) concerns over consumer impacts, and 2) the
efficacy of the commercial deployment programs contemplated in both
Rockefeller/Voinovich and HR2454.
Clearly, doubling the costs imposed on electricity consumers--
relatively minor though those costs may be for any given ratepayer--is
a proposition that will be given close scrutiny. Under both
Rockefeller/Voinovich and HR2454, 60% of state public utility
commissions must approve the early deployment program before it can be
established and utility assessments can commence. Ever conscious of
consumer rate impacts, it's conceivable that the difference between a
$1 billion and $2 billion annual program may be enough to cause a
significant number of PUCs to balk.
However, because Rockefeller/Voinovich is appears to be designed to
operate in the absence of a price on carbon pollution, the success of
the overall CCS deployment program becomes all the more dependent on
funds generated from mandatory charges placed on consumers in the early
deployment program--as opposed to the incentivebased mechanisms used to
promote CCS development under the subsequent commercial deployment
program. So, in this sense, doubling the size of the early deployment
program almost becomes a necessity under Rockefeller/Voinovich.
Commercial Deployment Program
Both Rockefeller/Voinovich and HR2454 establish commercial
deployment programs that take effect as the early deployment programs
wind down. HR2454 incentivizes broad deployment of CCS by providing
emission allowances for tons of CO2 captured and
sequestered, with bonus amounts given on a sliding scale for higher
rates of capture and sequestration. The program is broken into two
tranches, with the first 6 GW of capacity using CCS being guaranteed
the bonus allowances and the next 66 GW of CCS being eligible for
allowances under a reverse auction or other method.
Rockefeller/Voinovich mimics this structure, incentivizing the
first 10 GW of CCS through loan guarantees and a 30% tax credit on the
incremental costs associated with adding CCS technology to a project.
For the next 62 GW of capacity, Rockefeller/Voinovich provides slide-
scaling tax credit for tons sequestered, with higher amounts given for
higher rates of capture. The Rockefeller/Voinovich approach can be seen
as an elegant way of devising a similar structure to achieve similar
ends as those contemplated in the HR2454 commercial deployment
program--and doing so without the having the benefit of emission
allowances as a resource to fund incentives. However, we are mindful of
the difficult budgetary environment in which Congress currently
operates and have concerns about whether the program would be fully
funded to achieve its optimal ends.
In contrast, done within the context climate/energy legislation
that caps and places a price on carbon, the CCS commercial deployment
program could go forward under a revenueneutral approach that has both
the benefit of being able to use emission allowance values to subsidize
CCS deployment and a long-term price signal that will broadly
incentivize industry to invest in CCS deployment.
Standards for New Coal-Fired Power Plants
Both Rockefeller/Voinovich and HR2454 set CO2 emission
limits for new-coal fired power plants. Rockefeller/Voinovich requires
plants that are initially permitted before 2020 to achieve a
CO2 emission limit that reflects a 50% reduction from the
carbon content of the fuel by the time there is 10 GW of CCS capacity
in operation or by 2030 at the latest (or possibly later if a DOE
report required under the legislation determines that CCS won't be
commercially available until later).
Rockefeller/Voinovich is silent on what happens with plants that
are initially permitted from 2020 onward. Presumably this question will
be addressed as the bill authors further refine their discussion draft.
HR2454 requires plants that are initially permitted by 2020 to
achieve a 50% reduction in CO2 emissions by the time there
is 4 GW of CCS capacity in operation or by 2025 at the latest (with EPA
being given authority to extend the deadline). Plants initially
permitted from 2020 onward must achieve a 65% emission reduction upon
EDF prefers the approach taken under HR2454, as it is more
reflective of the standards recommended by the U.S. Climate Action
Partnership in its ``Blueprint for Legislative Action.'' The blueprint
presents consensus recommendations that were negotiated among a broad
group of industry and environmental stakeholders and, as such, is
provides a solid representation of what is both technically and
Finally, we would note that Rockefeller/Voinovich could benefit
from the addition of language directing relevant federal agencies to
develop a national strategy, including the promulgation of necessary
rules, to address legal and regulatory barriers to CCS deployment and
to ensure that CCS activities are held to standards that will be fully
protective of public health and the environment. In particular, we
would highlight the importance of developing strong standards for
assessment and selection of geologic sequestration sites.
Language to this effect is included in HR2454. The coal working
group lead by Senator Carper also produced national strategy language,
which was included in S.1733, the Clean Energy Jobs and American Power
Act, by Senators Kerry and Boxer.
Question 4. There have been many proposals introduced recently by
various stakeholder groups concerning CCS liability and indemnity
programs, what is EDF's opinion on how liability and indemnity should
be addressed? Is there any one preferred approach?
Answer. For the past several months, EDF has been in a dialogue
with Southern Company, Duke Energy, Zurich and a variety of other
environmental and business stakeholders on the question of CCS
liability and indemnity. From the start, the working assumptions of
this dialogue have been:
1) that the best legal liability regime for CCS is one that
ultimately place the full cost of CCS liability insurance and
remediation costs firmly in the private sector and assures that
individual developers will remain responsible for their
2) at the outset of CCS commercialization, when there is a
lack of operational experience and data upon which the private
sector risk management services (e.g., insurance markets) can
develop accurate actuarial data, a certain amount of limited
government support will be necessary to facilitate CCS
3) whatever federal government support is offered, it should
be structured in a way that facilitates development of a
commercial market for liability and risk management services.
We believe the first two assumptions are broadly reflected in S.
1462, and our ideas are intended to build on this work. Our goal is to
develop a risk management program for early deployment of CCS, and an
infrastructure maintenance program for CCS site post closure. In
summary fashion the ideas we have developed to date would attempt to
achieve the following:
1) Limited relief provided to CCS sites. Site operators take
on ``first dollar'' liability on a per site, per-occurrence
basis up to a certain amount. Then each site must contribute to
an industry pool, also on a-per site, per-incident basis. Then
the government assumes a portion of liability beyond the
industry pool up to a fixed amount for each site. Any remaining
liability beyond the government's share reverts back to the
site operator. The earlier a CCS site commences operation
(i.e., in which tranche it is located), the more assistance it
2) To be eligible for this program, the project developer of
a proposed CCS sites apply to the Secretary of Energy to enter
into a cooperative agreement. The Secretary is not compelled to
enter into any cooperative agreements, thus placing the burden
on the applicant to justify its project to the Secretary.
Eligibility will depend in part on meeting underwriting
criteria that are established for other sites participating in
3) The program is limited. The Secretary can enter into
cooperative agreements until a maximum of 40 GW of generating
capacity in the United States is equipped with CCS. This
equates to 12% of today's coal capacity. The Secretary is
required to halt entering into new cooperative agreements,
after 15 GWs of capacity (roughly 5% of current coal capacity)
have been enrolled in the program, and at that point must
undertake a review and determine that that the program is
working and still needed to support commercialization of CCS.
4) Participants in the program, as a condition of receiving a
cooperative agreement, to agree to pay into a trust fund to
cover post-closure infrastructure maintenance and monitoring,
measurement and verification costs associated with sites in the
program. The trust fund will be funded through a fee per ton of
carbon dioxide injected at a site participating in the risk
management program. The draft authorizes the Secretary of
Energy to recognize a Carbon Sequestration Management Authority
(CSMA) to collect and manage the funds. The CSMA will not be a
government entity, nor will the funds be government funds.
5) Establish a mechanism to deal with `orphan' sites. Collect
a 5-10 cent per ton fee from all CCS sites, regardless of
whether they are participating in the risk management program,
to cover remediation, infrastructure maintenance, and
monitoring, measurement, and verification for sites where no
responsible entity remains with the obligation and financial
ability to perform such activities. Our ideas stand in contrast
to other proposals that would relieve CCS site owners of all
liability once closure of a site is achieved. We believe
proposals that contain such blanket liability relief create the
risk of moral hazard by offering the promise that at some point
in the future, the site would become the sole responsibility of
a third party.
EDF, and its partners welcome the opportunity to discuss these
ideas with the committee.
Response of Robert Hilton to Question From Senator Bingaman
Question 1. In your written testimony, you mentioned the need to
broaden the scope of CCS deployment to other fossil fuels and
industrial processes. Is Alstom partnering with any non-coal types of
CCS projects at present? If so, could you please elaborate?
Answer. To achieve the targets for GHG CO2 emissions set
forth in draft legislation (e.g. Waxman Markey) of 50% in 2030 and 83%
in 2050, we will need to place CCS on power generation from all types
of fuel, particularly natural gas plants. Depending on the evolution in
the next months and years with plant permitting, all studies show CCS
on gas as critical. So far, this need for demonstration has been
substantially ignored in decisions on public funding.
Alstom has seen the need and has a series of demonstrations aimed
at fuels and applications other than coal. We are currently operating a
5Mw Chilled Ammonia Process demonstration pilot at E.On's Karlshamn
Plant in Sweden. This unit is running on oil as the fuel for the
boilers. We developed the program on the concept that the unit would
later be moved to a combined cycle natural gas power plant located
We currently have under construction a 40MW Chilled Ammonia Process
demonstration plant at the Mongstad refinery in Norway. This project is
funded by the TCM Consortium made up of Statoil (refinery owner),
Gassnova and Shell. The CCS plant will initially operate on a combined
cycle natural gas plant and then on flue gas from a refinery catalytic
cracker unit. The Norwegian Parliament is expected to take an
investment decision on the plant in 2014.
Alstom also had a contract with ADM under the Industrial ARRA work
from the Department of Energy at its plant in Decatur, IL for our
advanced amine technology. However, we have completed the phase I study
and, due to uncertainty of legislation, ADM has elected not to proceed
with the phase II implementation of the CCS.
We continue to look for additional non-coal opportunities but
uncertainty of the regulatory/legislative process for CO2
control combined with no available government funding for the
foreseeable future has essentially frozen the demonstration
As we all know, the presumed goals mentioned above can only be
achieved by application of CCS on all fuels, and with a wide deployment
in the early 2020's. For that to be feasible requires a significant
level of projects built and operational by 2015 or 2016 at the latest.
This would provide the demonstration experience necessary to give
industry the confidence to deploy and the suppliers of technology the
confidence to make commercial offers. Without government subsidies this
will not happen and under the current budgets for DOE there will be no
more than the 5-6 commercial scale demonstration projects currently in
design. Congress needs to act based on the legislation under the
purview of the Energy and Natural Resources Committee review to fund a
broad spectrum of demonstrations now.
Response of Kurt Zenz House to Question From Senator Bingaman
Question 1. Can you elaborate on how you have been working to
acquire private lands? Has that process of securing legal access to
lands for CCS projects been any more or less challenging for public
lands than for private lands? If so, could you please highlight any
potential issues or challenges that you may have encountered?
Answer. It was an honor to testify to your committee, and I would
like to request that you and your committee encourage the Secretary of
the Interior to issue an interim CO2 capture and storage
(CCS) policy to help clear the path for industrious American
entrepreneurs to invest in site characterization and eventually
sequestration site construction. By expeditiously issuing such a
policy, through which the study and commercial development of carbon
sequestration sites involving federal lands can happen, the Department
of Interior (DOI) will help to realize President Obama's stated goal of
having CCS commercially deployed within 10 years.
I have been studying the physics, chemistry, and geology of CCS for
nearly 7 years as an academic and as an entrepreneur. From this
experience, I am confident that public lands will be part of many of
the best carbon sequestration sites in the country, and as such there
is a need for land management policy which balances the benefits of
moving quickly to characterize those lands against the risks of making
inadequately informed public commitments regarding new commercial
activity on the land.
Fortunately, existing federal policy under the Federal Land Policy
Management Act (FLPMA) provides the DOI with the necessary authority to
act promptly and appropriately. Specifically, FLPMA authorizes DOI and
other relevant agencies to expeditiously grant site characterization
rights to private developers, while the granting agency withholds full
authorization of any development rights until costs, benefits, and
local impacts are fully evaluated. This type of two-step protocol has
been applied to wind power development as well as to other emerging
The use of such a process will enable carbon sequestration site
developers to invest the tens of millions of dollars necessary for site
testing and environmental analysis, and it will give those developers
the confidence that if the resource is proven-and the public benefits
justify the inclusion of public land in further development-then, the
developers will have the opportunity to recoup their substantial
investment. By advancing this process, the DOI will enable rapid
investment in the early stage development work as well as public
confidence that the appropriate care will be taken such that the public
interests to be comprehended and evaluated.
In all CCS projects, acquiring the legal access to the geologic
reservoir is an essential first step. As I mentioned previously, my
company is dedicated to making CCS an integral part of our nation's
low-carbon, affordable, and reliable energy future. We are working in
more than half a dozen different states, and our development work is
financed 100% by private investors.
As I said in my testimony, private transactions are often the
preferred route for resource development projects because they can be
executed quickly and because the interests of relevant parties can be
addressed through direct and private negotiation. In addition to
private lands, federal and state lands are essential to the development
of CCS projects in the United States because significant portions of
private land in the Mountain West region are checker-boarded with
federal land. Although regulatory clarity regarding development rights
on public lands would speed up development, the type of uncertainty
involved in the usual FLPMA two-step grant is manageable.
For the past year, the Bureau of Land Management (BLM) has been
conducting an internal policy review. Recently, this policy review
appears to have been slowed down by two legal questions that, in the
opinion of experienced legal experts, are settled law.
The first question involves the BLM's authority under the FLPMA to
lease lands for CO2 sequestration. Indeed, the Department of
Interior (DOI) does have the authority to allow a broad range of energy
development activities on Federal lands, including carbon
sequestration, under the FLPMA (See the first attached legal opinion).
The Congressional Research Service testimony to your Committee on April
20th agrees significantly with this conclusion.
The second legal question that BLM appears to be considering is
whether or not CO2 that is sequestered on public lands
becomes a natural mineral that the BLM can then lease for extraction.
This question is not as central to the development of the industry as
the first question, but again, it appears to be a settled question. The
majority rule codified by statute in many states and previously
recognized by BLM for natural gas storage, provides that the storage
operator retains title to injected gas (See the second attached legal
opinion). Because ownership of injected gas remains with the storage
operator, BLM would not have authority to grant third parties the right
to produce injected carbon dioxide. Although this rule was developed
with ownership of valuable minerals such as natural gas in mind, in the
context of CO2 it guarantees that responsibility continues
to reside with the storage operator. That is that liability-and the
asset-belongs to the operator.
I believe strongly that (1) CCS is an essential element of any
strategy that has the goal of simultaneously making significant cuts in
greenhouse gas emissions, while maintaining a robust and affordable
energy supply, and (2) the CCS industry can only grow if land and
mineral owners are appropriately brought into all projects. As the
largest landowner in the country, the Federal government should move
quickly to ensure that it does not become an obstacle to the creation
of carbon sequestration projects ready to serve the public good.
Responses of James Markowsky to Questions From Senator Bingaman
Question 1. Just last week, as I understand, the U.S. government,
led by our Trade and Development Agency, signed an agreement to help
design the first large-scale IGCC power plant in China. With U.S.
government assistance, General Electric Energy will work in cooperation
with the Chinese to develop the configuration and design parameters for
this cutting-edge CCS-ready facility. Is the Department of Energy
involved in that project, or others like it, in China and other rapidly
Answer. The Department of Energy is not involved in the IGCC
project or any others like it in any rapidly emerging economies.
In 2007, NEIL provided technical oversight for a $2 million IGCC
feasibility study, without CCS, in India funded by the U.S. Agency for
International Development (USAID). This study resulted in a recommended
gasification technology as being the most commercially ready for a
large-scale (100-MW) demo project using typical high-ash coals.
Subsequently, during the U.S.-Indo Energy Dialogue in 2007 in New
Delhi, DOE committed to participating on an IGCC Task Force with
India's Ministry of Power, NTPC Ltd., and Bharat Heavy Electricals,
Ltd. (BHEL). The IGCC Task Force will be discussed during a meeting of
the Power & Energy Efficiency Working Group in New Delhi, in early May
Question 2. Please describe the efforts being taken to ensure that
water rights and water quality will be protected in connection with
development of policies and technology relating to carbon capture and
Answer. The DOE is working through the Regional Carbon
Sequestration Partnerships and its 30 field projects to demonstrate
that underground sources of drinking water (USDWs) will not be
adversely impacted by CO2 injection operations and long term
storage. Sixteen of these projects have completed their injections, and
three are currently injecting CO2 in deep saline formations,
depleted oil fields, and deep unmineable coal seams. All of these
projects are permitted under the U.S. EPA's underground injection
control (UIC) permitting process which is designed to protect USDWs. To
date, all of these projects have demonstrated that CO2
injection into geologic formations is a secure and safe technology to
mitigate greenhouse gas emissions. The DOE is also working through the
Partnerships' field projects and several NGOs to address water rights
and pore space issues. These field projects are all required to obtain
leases for mineral, water, and/or pore space rights prior to project
operations. The DOE is also working to address these issues through the
interagency task force on CCS and engaging with stakeholders from
industry and the states to better understand issues regarding water
rights and water quality.
[Responses to the following questions were not received at
the time the hearing went to press:]
Questions for Anne Castle From Senator Barrasso
Question 1. Public participation is a key part of the permitting
process. What guidelines does the Department follow when it comes to
carbon storage projects on public land?
Question 2. Is notice given to adjacent property owners, mineral
leaseholders, and people with surface use permits?
Question 3. Federal lands are managed by various agencies within
the federal government. There are different statutory chapters that
apply to each agency and that cover different aspects of federal land
management. Are the processes for reviewing, permitting, and overseeing
carbon storage projects on federal land consistent across the various
land management agencies within the Department of the Interior?
Question 4. S. 1856 makes clear that the mineral estate is
dominant. Under existing law and regulations, how does the Department
ensure carbon storage on public lands does not impact existing mineral
Question 5. Concerns have been raised regarding carbon
sequestration's impact on ongoing mining activities. Mining lease
holders use underground mining spaces as part of the ventilation system
as mining continues. Does the Department recognize that these
underground cavities are part of the mineral lease as long as mining
Question 6. Would S. 1856 impact the Department's rules in this