    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

                    ADVANCING COAL RESEARCH AND DEVELOPMENT
                           FOR A SECURE ENERGY FUTURE

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

                                    HEARING

                                   BEFORE THE

                           SUBCOMMITTEE ON ENERGY AND
                                  ENVIRONMENT

                  COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                   __________

                           THURSDAY, OCTOBER 13, 2011

                                   __________

                               Serial No. 112-45

                                   __________

     Printed for the use of the Committee on Science, Space, and Technology

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

                                    _____

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                  COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                        HON. RALPH M. HALL, Texas, Chair
    F. JAMES SENSENBRENNER, JR.,         EDDIE BERNICE JOHNSON, Texas
        Wisconsin                        JERRY F. COSTELLO, Illinois
    LAMAR S. SMITH, Texas                LYNN C. WOOLSEY, California
    DANA ROHRABACHER, California         ZOE LOFGREN, California
    ROSCOE G. BARTLETT, Maryland         BRAD MILLER, North Carolina
    FRANK D. LUCAS, Oklahoma             DANIEL LIPINSKI, Illinois
    JUDY BIGGERT, Illinois               GABRIELLE GIFFORDS, Arizona
    W. TODD AKIN, Missouri               DONNA F. EDWARDS, Maryland
    RANDY NEUGEBAUER, Texas              MARCIA L. FUDGE, Ohio
    MICHAEL T. McCAUL, Texas             BEN R. LUJAN, New Mexico
    PAUL C. BROUN, Georgia               PAUL D. TONKO, New York
    SANDY ADAMS, Florida                 JERRY McNERNEY, California
    BENJAMIN QUAYLE, Arizona             JOHN P. SARBANES, Maryland
    CHARLES J. ``CHUCK'' FLEISCHMANN,    TERRI A. SEWELL, Alabama
        Tennessee                        FREDERICA S. WILSON, Florida
    E. SCOTT RIGELL, Virginia            HANSEN CLARKE, Michigan
    STEVEN M. PALAZZO, Mississippi       VACANCY
    MO BROOKS, Alabama
    ANDY HARRIS, Maryland
    RANDY HULTGREN, Illinois
    CHIP CRAVAACK, Minnesota
    LARRY BUCSHON, Indiana
    DAN BENISHEK, Michigan
    VACANCY
                                     ------

                     Subcommittee on Energy and Environment

                       HON. ANDY HARRIS, Maryland, Chair
    DANA ROHRABACHER, California         BRAD MILLER, North Carolina
    ROSCOE G. BARTLETT, Maryland         LYNN C. WOOLSEY, California
    FRANK D. LUCAS, Oklahoma             BEN R. LUJAN, New Mexico
    JUDY BIGGERT, Illinois               PAUL D. TONKO, New York
    W. TODD AKIN, Missouri               ZOE LOFGREN, California
    RANDY NEUGEBAUER, Texas              JERRY McNERNEY, California
    PAUL C. BROUN, Georgia
    CHARLES J. ``CHUCK'' FLEISCHMANN,
        Tennessee
    RALPH M. HALL, Texas                 EDDIE BERNICE JOHNSON, Texas

                                C O N T E N T S

                                October 13, 2011

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

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

                               Opening Statements

    Statement by Representative Andy Harris, Chairman, Subcommittee
      on Energy and Environment, Committee on Science, Space, and
      Technology, U.S. House of Representatives......................    16
        Written Statement............................................    17

    Statement by Representative Brad Miller, Ranking Minority Member,
      Subcommittee on Energy and Environment, Committee on Science,
      Space, and Technology, U.S. House of Representatives...........    18
        Written Statement............................................    20

                                   Witnesses:

    Mr. Scott Klara, Deputy Director, National Energy Technology
      Laboratory
        Oral Statement...............................................    23
        Written Statement............................................    25

    Ms. Janet Gellici, Chief Executive Officer, American Coal Council
        Oral Statement...............................................    37
        Written Statement............................................    38

    Mr. Nick Akins, President, American Electric Power
        Oral Statement...............................................    44
        Written Statement............................................    46

    Mr. David Foerter, Executive Director, Institute of Clean Air
      Companies
        Oral Statement...............................................    54
        Written Statement............................................    57

    Mr. Stu Dalton, Senior Government Representative-Generation,
      Electric Power Research Institute
        Oral Statement...............................................    62
        Written Statement............................................    63

                 Appendix I: Answers to Post-Hearing Questions

    Mr. Scott Klara, Deputy Director, National Energy Technology
      Laboratory.....................................................    88

    Ms. Janet Gellici, Chief Executive Officer, American Coal Council   107

    Mr. Nick Akins, President, American Electric Power...............   110

    Mr. David Foerter, Executive Director, Institute of Clean Air
      Companies......................................................   112

    Mr. Stu Dalton, Senior Government Representative-Generation,
      Electric Power Research Institute..............................   117

                    ADVANCING COAL RESEARCH AND DEVELOPMENT
                           FOR A SECURE ENERGY FUTURE

                                  ----------

                           THURSDAY, OCTOBER 13, 2011

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

        The Subcommittee met, pursuant to call, at 2:22 p.m., in
    Room 2318 of the Rayburn House Office Building, Hon. Andy
    Harris [Chairman of the Subcommittee] presiding.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Harris. The Subcommittee on Energy and Environment
    will come to order. Good afternoon. Welcome to today's hearing
    entitled, ``Advancing Coal Research and Development for a
    Secure Energy Future.'' In front of you are packets containing
    the written testimony, biographies, and truth in testimony
    disclosures for today's witness panel.
        I now recognize myself for five minutes for an opening
    statement.
        I want to welcome everyone to this afternoon's hearing on,
    ``Advancing Coal Research and Development for a Secure Energy
    Future.''
        According to the Department of Energy, coal delivered 45
    percent of America's electricity supply in 2010, totaling 22
    quadrillion BTUs of energy. This output is expected to grow an
    additional 25 percent by 2035. Dependence on coal is similar
    outside the U.S., representing 40 percent of global electricity
    generation.
        Coal delivers plentiful, affordable, and reliable
    electricity to millions of homes and businesses every day. It
    provides power to the industrial and manufacturing sectors that
    drive our economic engine. Rarely, however, has a beneficial,
    life-improving resource upon which we depend so heavily been so
    maligned.
        Despite steadily improving efficiency and significantly
    cleaner processes, coal suffers from a reputation that leads
    many to think wrongly that we would be better off without it.
        This animus seems to be at an all-time high. In recent
    weeks, this Committee has spent considerable time examining the
    pending onslaught of regulations aimed at energy producers but
    particularly at coal energy producers. The review has
    highlighted the immense challenges facing the coal sector in
    light of EPA's dogged and scientifically questionable efforts
    to order major changes to our electric generation system.
        The widespread negative impact of EPA's forthcoming
    regulations are acknowledged even at senior levels of the Obama
    Administration. An analysis by the Federal Energy Regulatory
    Commission found that 40 gigawatts of coal-fired power
    generation could be forced into retirement, and that ``could
    have drastic consequences for many parts of the country.''
    Similarly, DOE Deputy Assistant Secretary for Fossil Energy Jim
    Wood has estimated that EPA rules could force up to 70
    gigawatts of coal offline, adding:
        ``Number one, electric rates are going to go up. Number
    two, whether or not construction jobs in the green industry are
    created, I think there are virtually no manufacturing jobs that
    are likely to be created from the replacement of coal. Three,
    transmission grid stability is likely to emerge as a major
    issue, both because of the shutdowns and because of the
    intermittency of renewables.''
        The impact of Administration policies on electricity prices
    and coal plant shutdowns should come as no surprise. On the
    campaign trail in 2008, then candidate Obama said openly and
    clearly that his regulatory regime would bankrupt coal
    companies and necessarily cause electricity prices to
    skyrocket.
        Fortunately, the President's wildly expensive vision for
    cap and trade was also wildly unpopular with the American
    people and, in fact, soundly rejected by Congress.
        These concurrent events, the death of cap and trade and
    EPA's bonanza of new air regulations, beg the fundamental
    question before us at today's hearing. Does it make sense for
    DOE to continue to focus its $400 million R&D effort almost
    exclusively on carbon capture and sequestration, particularly
    in light of the need for and potential of advanced technologies
    to significantly increase coal utilization efficiency and thus
    benefit the environment?
        This exclusive focus certainly doesn't make sense to me.
    Considering that DOE's goal is to find carbon capture and
    sequestration technology that ``only'' increases electricity
    costs by 30 percent, I have to question whether we should be
    investing taxpayer dollars on a technology that likely never
    will be commercially viable in the absence of carbon
    constraints that Congress has already rejected. Perhaps instead
    of exclusively pursuing what appears to be an expensive and
    inefficient technology, we could facilitate the development of
    technologies with greater thermal efficiency that could achieve
    lower pollutant emissions.
        To this end, I look forward to hearing witness
    recommendations on potential coal technology R&D opportunities
    that are not currently being addressed by DOE and how best to
    prioritize those opportunities within the current budget
    environment. I also hope to learn more about the status of,
    outlook for, and lessons learned from the $3.4 billion in
    Stimulus-funded coal sequestration, CO2
    sequestration demonstration projects.
        I now yield back the balance of my time and recognize Mr.
    Miller for his opening statement.
        [The prepared statement of Mr. Harris follows:]
                   Prepared Statement of Chairman Andy Harris
        I want to welcome everyone to this afternoon's hearing on Advancing
    Coal Research and Development for a Secure Energy Future.
        According to the Department of Energy, coal delivered 45 percent of
    America's electricity supply in 2010, totaling 22 quadrillion BTUs
    (``quads'') of energy. This output is expected to grow an additional 25
    percent by 2035. Dependence on coal is similar outside the U.S.,
    representing 40 percent of global electricity generation.
        Coal delivers plentiful, affordable, and reliable electricity to
    millions of homes and businesses every day. It provides power to the
    industrial and manufacturing sectors that drive our economic engine.
    Rarely, however, has a beneficial, life-improving resource upon which
    we depend so heavily been so maligned.
        Despite steadily improving efficiency and significantly cleaner
    processes, coal suffers from a reputation that leads many to think--
    wrongly--that we'd be better off without it.
        This animus seems to be at an all-time high. In recent weeks, this
    Committee has spent considerable time examining the pending onslaught
    of regulations aimed at energy producers. The review has highlighted
    the immense challenges facing the coal sector in light of EPA's
    dogged--and scientifically questionable--efforts to order major changes
    to the electric generation system.
        The widespread negative impact of EPA's forthcoming regulations are
    acknowledged even at senior levels of the Obama Administration. An
    analysis by the Federal Energy Regulatory Commission (FERC) found that
    40 gigawatts of coal-fired power generation could be forced into
    retirement, and that ``could have drastic consequences for many parts
    of the country.'' Similarly, DOE Deputy Assistant Secretary for Fossil
    Energy Jim Wood has estimated that EPA rules could force up to 70
    gigawatts of coal offline, adding:

        ``Number one, electric rates are going to go up. Number two,
    whether or not construction jobs in the green industry are created, I
    think there are virtually no manufacturing jobs that are likely to be
    created from the replacement of coal. Three . . . transmission grid
    stability is likely to emerge as a major issue, both because of the
    shutdowns and because of the intermittency of renewables.''

        The impact of Administration policies on electricity prices and
    coal plant shutdowns should come as no surprise. On the campaign trail
    in 2008, President Obama said openly and clearly that his regulatory
    regime would bankrupt coal companies and necessarily cause electricity
    prices to skyrocket.
        Fortunately, the President's wildly expensive vision for cap-and-
    trade was also wildly unpopular with the American people, and soundly
    rejected by Congress.
        These concurrent events--the death of cap and trade and EPA's
    bonanza of new air regulations--beg the fundamental question before us
    at today's hearing: does it make sense for DOE to continue focusing its
    $400 million coal R&D effort almost exclusively on carbon capture and
    sequestration (CCS), particularly in light of the need for, and
    potential of, advanced technologies to significantly increase coal
    utilization efficiency and benefit the environment?
        This exclusive focus certainly doesn't make sense to me.
    Considering that DOE's goal is to find CCS technology that ``only''
    increases electricity costs by 30 percent, I have to question whether
    we should be investing taxpayer dollars on a technology that likely
    never will be commercially viable in the absence of carbon constraints
    that Congress has already rejected. Perhaps instead of exclusively
    pursuing what appears to be an expensive and inefficient technology, we
    could facilitate the development of technologies with greater thermal
    efficiency that could achieve lower pollutant emissions.
        To this end, I look forward to hearing witness recommendations on
    potential coal technology R&D opportunities that are not currently
    being addressed by DOE, and how best to prioritize those opportunities
    within the current budget environment. I also hope to learn more about
    the status of, outlook for, and lessons learned from the $3.4 billion
    in Stimulus-funded CCS demonstration projects.
        I yield back the balance of my time and recognize Mr. Miller for
    his opening statement.

        Mr. Miller. Thank you, Mr. Chairman. In this Congress, my
    colleagues on the other side of the aisle pound the drum on a
    handful of themes they believe are consistent with conservative
    dogma expressed in phrases like ``regulation kills jobs,''
    ``climate change is an unproven theory,'' ``government
    shouldn't pick winners and losers.'' But, just repeating
    something over and over does not really make it true. This
    hearing gives us an opportunity to put a finer point on those
    issues.
        First, to have a stronger economy we do not have to
    sacrifice cleaner air and a healthier and more productive
    workforce. We will hear from Mr. Foerter--is that a correct
    pronunciation--okay--the often-ignored perspective from the
    side of the power industry that designs, manufactures, and
    installs pollution control equipment.
        Second, when it comes to DOE programs on emerging clean
    energy technology: solar, geothermal, electric vehicle,
    batteries, smart grid, efficient technologies, bio-based fuels,
    and all the things that may one day make for a cleaner and more
    sustainable energy economy, my Republican colleagues do not
    hesitate to cry foul at any federal support that they consider
    to be an inappropriate government intrusion into the energy
    marketplace. To them these are mature industries in which free
    market forces alone should push the frontiers of innovation,
    and the Department of Energy investments in research just crowd
    out what the private sector would otherwise do.
        They say it is not the job of government to pick winners
    and losers, and they say that government should never pick
    winners and losers except sometimes. New renewable and
    efficient technologies do not warrant government support, they
    say, but conventional energy industries do. When it comes to
    the most established and powerful industries in the world, the
    same free market principles that my colleagues relentlessly
    espouse apparently have no place.
        More important I have some issues or some questions about
    the manner in which this Committee conducts its hearings. We--
    the reason we do these hearings, we have legislative hearings,
    is to develop a factual record to support the decisions that
    Congress has to make, and we need reliable, factual
    information.
        Last week my colleagues on the other side of the aisle
    accused me of behaving inappropriately when I asked a witness
    about his financial interests, the extent to which his income
    was derived from the industry whose interests were at the
    center of that hearing.
        I ask those questions because that is the kind of
    information that is necessary to evaluate anyone's testimony. I
    think legislators should take a cue from the courts that have
    for centuries recognized the importance of that information in
    evaluating a witness's testimony. The questions I asked were
    fundamental to our legal system, the federal rules of civil
    procedure required that expert witnesses disclose any
    compensation they get for their testimony not just in court but
    outside of court. Those rules and principles are in place
    because that information about financial interest is relevant
    and essential to evaluating testimony and reaching a sound
    decision.
        Mr. Chairman, it is not accusing a witness of lying to say
    they had a financial interest, but it may create a bias. It may
    color how they see the world, how they see the facts, and we
    are entitled to know that. We are entitled to know that as
    Congress, and the American people are entitled to know that,
    and this is an issue that I have raised from the first meeting
    of this Committee. I raised questions about the financial
    disclosure form, the truth in testimony form, and whether that
    adequately discloses financial interest. Chairman Hall assured
    me then that he would work with me. Mr. Rohrabacher, a Member
    of this Subcommittee, said that I could use my five minutes of
    questioning to raise those issues, and I said I would rather
    use my five minutes to ask about the substance of witnesses'
    testimony, not about their financial interest.
        I later wrote a letter along with Ms. Edwards to Chairman
    Hall about working with us on financial disclosures, and he
    wrote back and said that upon reflection he decided that the
    disclosures were perfectly fine, but I could use my five
    minutes to ask about those financial interests. And then last
    week I did, and leading the attack were Mr. Rohrabacher and Mr.
    Hall, Chairman Hall, the very Members who had said I should use
    my five minutes to inquire about witnesses' financial interest.
        I do not plan today to ask those questions orally in my
    five minutes, but I will submit questions for the record,
    written questions afterwards, and in future hearings I may well
    ask questions about financial interests in my five minutes
    orally, but I intend to make it my practice to ask those
    questions after the hearing in questions for the record.
        And with that I yield back my time. It was one second when
    I said that.
        [The prepared statement of Mr. Miller follows:]
                Prepared Statement of Ranking Member Brad Miller

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Harris. Thank you very much, Mr. Miller. I will
    just urge you to take a look at the witness list, and it is not
    hard to figure out that if someone is the president of American
    Electric Power, they are probably employed by them, and if
    someone is from the American Coal Council which represents coal
    producing companies, they are probably employed by them.
        So with regards to this particular----
        Mr. Miller. And----
        Chairman Harris. Excuse me. With regards to this particular
    panel I think it is pretty clear.
        Mr. Miller. Perhaps with respect to this panel and that is
    why I don't plan to ask questions, but we earlier had a witness
    who listed his occupation as a professor at the University of
    Houston. Upon questioning, his salary at the University of
    Houston is $1 a year, and he makes $1 million a year as a
    consultant to the very industries whose interests were at issue
    in that hearing.
        Chairman Harris. And again, I don't know about the past.
    This panel it is pretty clear, and you know, as a physician,
    you know, if somebody wants to know about obstetric anesthesia,
    they are going to have to get someone, you know, they might
    consult with me because you have to go to someone who actually
    does it to be an expert on it as you can imagine. So a lot of
    times it is pretty transparent, and I think it is pretty
    transparent today.
        But if you have any questions about that, of course, please
    submit them, and thank you.
        If there are Members who wish to submit additional opening
    statements, your statements will be added to the record at this
    point.
        At this time I would like to introduce our witness panel.
    Our first witness is Mr. Scott Klara, Deputy Director of the
    National Energy Technology Laboratory. Mr. Klara has over 25
    years of engineering and management experience that spans a
    broad spectrum of technology areas including electric power
    generation, advanced separation processes, coal conversion
    processes, and simulation systems analysis.
        Our second witness will be Ms. Janet Gellici, Chief
    Executive Officer of the American Coal Council. Prior to her
    work with the ACC she served as Communications Director of the
    Colorado School of Mines Management Institute and is Public
    Information Director of the Western Governors' Association.
        Our third witness will be Mr. Nick Akins, President of
    American Electric Power. From 2006 to 2010, he was Executive
    Vice President for generation responsible for all generation
    activities of AEP's approximately 40,000 megawatts of
    Generation resources. Previously he was President and Chief
    Operating Officer for Southwestern Electric Power Company,
    serving 439,000 customers in Louisiana, Arkansas, and Northeast
    Texas.
        Next we have Mr. David Foerter, Executive Director,
    Institute of Clean Air Companies. He has several decades of
    experience advising the public and private sector on
    environmental legislation, policy, rules, and technology issues
    with a focus on air pollution control for stationary and mobile
    sources. He is also currently a member of EPA's Clean Air Act
    Advisory Committee and the Deputy of Commerce's Environmental
    Technologies Trade Advisory Committee.
        And our final witness today will be Mr. Stu Dalton, Senior
    Government Representative for Generation of the Electric Power
    Research Institute. He joined EPRI in 1976, focusing on
    SO2 control and later led this area for 20 years,
    additionally working on integrated emission controls for NOx,
    mercury, and particulates. Before joining EPRI Mr. Dalton
    worked at Pacific Gas Electric evaluating new generation
    options, coal gasification and conventional coal, refuse
    biomass firing, and NOx control refits--retrofits.
        Thank you all for appearing before the subcommittee today.
    As our witnesses should know, spoken testimony is limited to
    five minutes each, after which Members of the Committee will
    have five minutes each to ask questions, but we do have your
    complete written testimony in front of us.
        With that I now recognize our first witness, Mr. Scott
    Klara, Deputy Director of the National Energy Technology
    Laboratory.

    STATEMENT OF MR. SCOTT KLARA, DEPUTY DIRECTOR, NATIONAL ENERGY
                         TECHNOLOGY LABORATORY

        Mr. Klara. Thank you, Chairman Harris and Members of the
    Subcommittee. I appreciate the opportunity to discuss the
    Department of Energy's coal research and development
    activities.
        DOE continues to play a leadership role in the development
    of clean coal technologies. The Clean Coal Research Program is
    designed to enhance our energy security and reduce
    environmental concerns over the future use of coal by
    developing a portfolio of revolutionary clean coal
    technologies.
        The Clean Coal Program in partnership with the private
    sector is focusing--focused on maximizing efficiency in
    environmental performance while minimizing the cost of these
    new technologies. In recent years the program has been
    restructured to focus on clean coal technologies with carbon
    capture and storage. The program pursues the following two
    strategies. The first strategy is capturing and storing
    greenhouse gases, while the second strategy is improving the
    efficiency of fossil energy systems.
        The first strategy aims to eliminate the concerns over the
    emissions of greenhouse gases from fossil-fueled energy
    systems. The second strategy seeks to improve the fuel-to-
    energy efficiency of these systems, thus reducing the pollutant
    emissions, water usage, and carbon emissions on a per-unit
    energy basis. Collectively, these two strategies form the Clean
    Coal Program within the Department of Energy.
        More specifically, the Clean Coal Program is addressing the
    key technical challenges that confront the development and
    deployment of these technologies through research on such
    things as cost-effective capture technologies, monitoring
    verification and accounting technologies to ensure permanent
    storage, permitting issues, and the development of advanced
    energy system. Research is focused on technology options, for
    example, that dramatically lower the cost of capturing carbon
    dioxide from these fossil-fueled energy systems. This research
    can be categorized into three pathways: what we call post-
    combustion, which is pretty much standard PC technology, pre-
    combustion, which is emerging gasification technology, and oxy-
    combustion.
        Another facet of the Clean Coal Program is the regional
    carbon sequestration partnerships that were created in 2003.
    The partnerships were designed to address a range of issues
    associated with the geologic storage of carbon dioxide. The
    Clean Coal Program has been performing capture and storage
    field tests focused on things like monitoring verification,
    accounting, and other aspects of geologic storage for many
    years. And the seven regional carbon sequestration partnerships
    are critical to this effort. These partnerships represent more
    than 400 unique organizations in 43 states and four Canadian
    provinces. Together the partnerships form a network of
    capability, knowledge, and infrastructure that we believe will
    help enable geologic storage technology to play a role in
    future energy strategies.
        These partnerships represent regions encompassing 97
    percent of coal-fired CO2 emissions, 97 percent of
    industrial CO2 emissions, 96 percent of the total
    land mass of the United States, and essentially all the
    geologic storage sites which could be potentially available for
    geologic storage.
        The success of the Coal Program also hinges upon whether
    these technologies get deployed, and what we use for that is
    we--the Clean Coal Program relies on commercial scale
    demonstrations to help industry understand and overcome
    technology issues such as start up, component integration,
    early learning, commercial experience, et cetera, and some of
    the panelists here have experience working with us in these
    various programs.
        Another aspect, important aspect of the Clean Coal Program
    is what we call CO2 utilization. The program
    recognizes that technologies such as mineralization, chemical
    conversion to useful products, algae production, enhanced oil
    recovery, and enhanced coalbed methane recovery could play an
    important role in pushing the technologies forward.
        Other than enhanced oil recovery, the CO2
    reduction potential of these technologies is often limited due
    to such factors as cost and market saturation of salable
    byproducts, but even so these approaches are logical first-
    entry candidates for validating this emerging technology.
        So in conclusion, today nearly three out of every four
    coal-burning power plant in this country is equipped with
    technologies that can trace its roots back to the DOE Program.
    For example, NOX control, SOX control,
    particulate matter control and mercury control as we go
    forward. These efforts helped accelerate the production of
    these cost-effective compliance options to address these legacy
    environmental issues associated with coal use.
        Additionally, as I mentioned, these utilization
    technologies are logical first market entry candidates to help
    get the technology commercially ready. Enhanced oil recovery
    particularly of the CO2 utilization options will be
    the dominant option into the near future and has a lot of
    potential as I have indicated in my testimony.
        I applaud the efforts of this Committee and the Members to
    take on these important industry--these important issues and
    look forward to responding to questions when we get to the Q
    and A. Thank you.
        [The prepared statement of Mr. Klara follows:]
    Prepared Statement of Mr. Scott Klara, Deputy Director, National Energy
                             Technology Laboratory

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Harris. Thank you very much, Mr. Klara.
        I now recognize our second witness, Ms. Janet Gellici,
    Chief Executive Officer of American Coal Council, and I just
    ask you to take just 15 seconds to describe the American Coal
    Council so that Mr. Miller understands where you are coming
    from.
        Ms. Gellici. Sure.
        Chairman Harris. Thank you.

       STATEMENT OF MS. JANET GELLICI, CHIEF EXECUTIVE OFFICER,
                         AMERICAN COAL COUNCIL

        Ms. Gellici. Thank you. My name is Janet Gellici. I am CEO
    of the American Coal Council. The ACC represents coal industry
    interests from the hole in the ground to the plug in the wall,
    so we represent companies that include coal producers,
    transporters, and consumers of coal.
        I would like to frame my remarks today based on two facts.
    First, we have more coal in the United States than any other
    country in the world, which means we have access to a 200-year
    supply of affordable, reliable domestic energy.
        Second, we have some of the most admirable and lofty
    environmental goals of any nation on this planet. There are two
    facts here. They are not at odds. It is not a matter of picking
    one over the other. What we need is to bridge these two facts,
    and that bridge is technology. Other nations are investing
    heavily in building cleaner coal plants and in increasing their
    use of coal resources. Here in the United States 44 percent of
    our electricity comes from coal, but rather than upgrading
    existing plants or building new clean ones, U.S. utilities are
    planning to shut down their coal plants.
        Projected retirements are now on the order of 50 to 100
    gigawatts, representing 15 to 30 percent of our current coal
    generation. These retirements are due in large part to an
    inability to meet environmental regulatory requirements. They
    will likely result in higher costs to consumers and
    manufacturers and the potential to lead to generation
    shortfalls.
        So we are imposing more environmental regulations on coal
    consumers, but we seem unwilling to commit the resources needed
    to actually achieve those objectives. There is an interesting
    conundrum going on here. Over the past few years our efforts to
    enact environmental regulations have actually been hampered by
    the lack of viable technology. The development and
    commercialization of technologies will actually help us
    facilitate environmental rulemaking.
        You know, if we were to set down rules for our kids and did
    not provide them with the time, training, and tools to follow
    those rules, we would be called bad parents. Imposing
    regulatory objectives without providing the time, training, and
    technologies to meet them is just bad governance.
        The good news is that we do have a history of success in
    meeting environmental objectives through RD&D efforts. We have
    installed advanced emission controls on 75 percent of U.S. coal
    plants and achieved an average of 90 percent reduction in
    criteria pollutant emissions. The National Academy of Sciences
    reports that federally-funded RD&D provides a public benefit
    that well exceeds the cost of RD&D, including much needed job
    creation.
        We need to focus our RD&D coal efforts going forward in
    four areas: advanced energy systems, carbon capture and
    storage, water use technologies, and demonstration projects. I
    have addressed these in detail in my written testimony but
    would like to highlight a few points.
        Advanced energy systems can increase the thermal efficiency
    of power plants from today's average of 33 percent up to 40
    percent or more, and with each two percent increase in
    efficiency we can reduce the cost--we can reduce fuel use and
    CO2 emissions by five percent. So more R&D will
    obviously advance technologies that can help us achieve these
    levels of efficiency in environmental gains, and this can be
    done both at existing plants and at new power plants. In fact,
    I believe we can extend the life of our current low-cost power
    plants in ways that are economic and environmentally sound.
        One way to do that is through the use of engineered coal
    fuels. These are technologies that can be applied prior to
    combustion that clean coal. They help remove pollutants, and
    they improve the heat rate of coal so we don't have to burn as
    much.
        Now, I understand that given the uncertainty in Congress
    right now that there will be any climate legislation passed in
    the near future, it might be tempting to curtail funding for
    carbon capture and storage. The reality is that while
    greenhouse gas legislation may not be eminent, greenhouse gas
    regulation is proceeding, and we need the technologies to meet
    those long-term needs.
        To be successful RD&D funding needs to be stable and
    consistent. Curtailing CCS program technologies could have
    potentially negative gains, could negate the gains that we have
    had up to this point in time.
        I get at least three to four calls a month from inventors
    and entrepreneurs who think they have the be-all solution to
    reducing CO2 emissions and coal plant emissions, and
    I don't know where to send these people. I suggest they go to
    DOE or NETL, and they tell me they have already done that.
    There is no interest there, there is no money, and they are
    probably not all viable technologies, but I often hang up the
    phone wondering if I have just hung up the phone on the next
    inventor of penicillin for the global warming issues.
        So we have a lot of coal, we have admirable environmental
    goals, and I think we have a lot of innovators out there ready
    to shine. I don't think the responsibility for effective
    regulation ends once we publish the rule in the Federal
    Register.
        So I look forward to your questions.
        [The prepared statement of Ms. Gellici follows:]
       Prepared Statement of Ms. Janet Gellici, Chief Executive Officer,
                             American Coal Council

    Introduction

        This statement is submitted on behalf of the American Coal Council
    (ACC), a trade association dedicated to advancing the development and
    utilization of American coal as an economic, abundant, secure and
    environmentally sound fuel source. The ACC
    (www.americancoalcouncil.org) represents the interests of 170 U.S. coal
    suppliers, coal consumers and coal transportation companies. We
    represent the coal industry from the hole in the ground to the plug in
    the wall. The ACC welcomes the opportunity to present a perspective on
    how to advance coal research and development to ensure our nation's
    energy needs are met in an economic and environmentally sound manner.

    Coal is Vital to U.S. Economy

        Our nation's domestic coal resources are critical to our economic
    well being, to ensuring our energy reliability and security, and to
    meeting our environmental goals. Today, coal generates nearly 44% of
    our nation's electric power; 36 states obtain at least 25% of their
    electricity from coal and 26 states obtain at least 45% of their
    electricity from coal. The Energy Information Administration (EIA)
    forecasts that U.S. coal generation will increase by 25% between 2009
    and 2035, with coal's share of the total generation mix remaining
    steady at 43% in 2035. \1\
    ---------------------------------------------------------------------------
        \1\ U.S. Energy Information Administration, Annual Energy Outlook
    2011.
    ---------------------------------------------------------------------------
        U.S. coal provides low-cost electric power and price stability
    compared with other fuel resources. Between 2000 and 2009, natural gas
    prices ranged from $3.10/million Btu (mm Btu) to $12.41/mm Btu. During
    that same time period, coal never exceeded $2.28/mm Btu. Those states
    that rely on coal for a majority of their electric power are the states
    that have the lowest cost of electricity for their residents and
    industries.
        High energy costs disproportionately impact low income and fixed
    income families. In 2001, the 50% of U.S. households making less than
    $50,000/year spent an average of 12% of their after tax income on
    energy costs. Today, those families are now spending 20% of their
    household income on energy expenses. \2\
    ---------------------------------------------------------------------------
        \2\  Eugene M. Trisko, Esq. for American Coalition for Clean Coal
    Electricity, January 2011.
    ---------------------------------------------------------------------------
        Industrial consumers are more likely to be price responsive than
    any other customer group. There is a strong correlation between the
    cost of electricity and the number of manufacturing jobs in the United
    States. Between 2000 and 2008, industrial electric prices increased
    from 4.6 cents/kWh to 7.2 cents/kWh. Over that same time period,
    manufacturing jobs decreased from 17.3 million to 13.4 million. \3\
    Low-cost electricity directly contributes to the competitiveness of
    America in international markets.
    ---------------------------------------------------------------------------
        \3\ Shively & Ferrare 2008 Enerdynamics.
    ---------------------------------------------------------------------------
        Studies show that new coal plants create more construction and
    permanent employment jobs than any other electric generation options.
    Coal jobs created per billion dollars invested equal 9,166, versus
    7,640 for natural gas and 1,053 for wind generation. One recent study
    details the prospective loss of 1.24 million jobs as a result of new
    coal power plants NOT being built. The National Mining Association
    report details how the Sierra Club's ``Beyond Coal'' campaign has
    targeted for destruction 116,872 permanent jobs and an additional 1.12
    million construction jobs represented by the proposed power plants that
    have been prevented from being built. \4\
    ---------------------------------------------------------------------------
        \4\  Energy Ventures Analysis, ``Employment Impacts Associated with
    Electric Generation Options'' for National Mining Association,
    September 2011.
    ---------------------------------------------------------------------------
        The U.S. has 29% of the world's recoverable coal reserves--more
    than any other nation. Our nation has a 200 year supply of coal at
    current annual production rates of about one billion tons. Globally,
    coal is the fastest growing fuel source. World coal consumption is
    projected to increase 50% from 139 quadrillion BTUs in 2008 to 209
    quadrillion BTUs in 2035. U.S. coal suppliers expect to take a greater
    role in international markets, welcoming the opportunity to contribute
    to improvements in our nation's balance of trade. In 2010, U.S. coal
    exports were up 36%, from 60 million tons in 2009 to 81 million tons in
    2010. The forecast for 2011 coal exports is in the range of 100-105
    million tons. \6\
    ---------------------------------------------------------------------------
        \6\ Cloud Peak Energy presentation, ACC Coal Market Strategies
    Conference, August 23, 2011 & Fitch Ratings, U.S. Coal Producers
    Outlook, August 17, 2011.
    ---------------------------------------------------------------------------
        The growing demand for clean energy technologies for the world's
    emerging economies will also provide U.S. technology transfer and
    export opportunities if we are willing to invest now in clean coal
    technology research development and deployment (RD&D). While other
    nations are increasing their use of coal resources and their
    installation of clean coal power plants, U.S. utilities are shutting
    down their coal facilities. Currently, 23 GW of coal power generation
    is slated to be shuttered in the next decade. Projected retirements are
    on the order of 56-101 GW, representing 15-30% of current coal power
    generation capacity. These retirements are due primarily to an
    inability to meet environmental regulatory requirements at reasonable
    costs within acceptable rate structures, as well as to economic demand
    destruction, aging fleet attrition and competition from natural gas
    fuels.
        Meeting national environmental objectives continues to be coal's
    greatest challenge, a challenge that has been in the past and can be in
    the future addressed with technology applications. Significant progress
    has been made over the past 3-4 decades to reduce air emissions. Since
    1970, coal use has increased 183% while criteria pollutant emissions
    have decreased 90% on average, including NOx reductions of
    82%, SO2 reductions of 88% and PM10 reductions of 96%. \7\
    ---------------------------------------------------------------------------
        \7\ ``Benefits from Investments in Advanced Coal Technology,'' Coal
    Utilization Research Council, National Mining Association, Edison
    Electric Institute, et. al. fact sheet attached hereto.
    ---------------------------------------------------------------------------
        The U.S. cannot achieve its economic, energy security and
    environmental objectives without coal and the advancement of clean coal
    technologies.

    Opportunities to Advance the Use of Coal

        The benefits of clean coal technology include cleaner air, reduced
    pollution, increased energy efficiency, support for U.S. manufacturing,
    increased U.S. exports, enhanced national security and job creation.
    The role of the Federal government in RD&D is to develop technology
    options that can benefit the public good. The U.S. Department of
    Energy's Fossil Energy group carries out high-risk, high-value RD&D
    that can:

          Accelerate the development of new energy technologies
    beyond the pace that would otherwise be dictated by normal market or
    regulatory forces.

          Expand the slate of beneficial energy options beyond
    those likely to be developed by the private sector on its own.

          Produce revolutionary ``breakthrough'' technologies that
    achieve environmental, efficiency and/or cost goals well beyond those
    currently pursued by the private sector.

        Federally funded RD&D provides public benefits in excess of the
    cost of RD&D. A National Academy of Sciences report noted that the
    economic benefits in real dollars provided by Fossil Energy research
    between 1986 and 2000 equaled $7.4 billion versus an investment by DOE
    of $4.5 billion. \8\ The study noted that 600,000 jobs were created in
    the U.S. power equipment industry, resulting from the more than 700
    patents awarded through the Fossil Energy research program. Between
    2000 and 2020, investments in coal RD&D are expected to create nearly
    1.2 million jobs, with an average of 60,000 jobs created on an annual
    basis. \9\
    ---------------------------------------------------------------------------
        \8\ National Academy of Sciences, ``Energy Research at DOE, Was It
    Worth It? Energy Efficiency and Fossil Energy Research 1978 to 2000.''
    2001.
        \9\ ``Benefits of Investments in Clean Coal Technology'' Management
    Information Services Inc., October 2009. Prepared on behalf of The
    American Coalition for Clean Coal Electricity.
    ---------------------------------------------------------------------------
        DOE's clean coal technology programs have resulted in over 30
    successfully completed projects; more than 20 of the technologies have
    achieved commercial success, including the installation of advanced
    pollution controls on 75% of U.S. coal plants at one-half to one-tenth
    the cost of older systems. A detailed overview of DOE Fossil Energy
    RD&D technology achievements since the 1970s is attached. \10\
    ---------------------------------------------------------------------------
        \10\ ``Benefits from Investments in Advanced Coal Technology''-
    Fact Sheet Coal Utilization Research Council, et. al.
    ---------------------------------------------------------------------------
        Given the success of the Fossil Energy RD&D program in terms of
    economic and environmental benefits realized, it is disturbing that
    investments in clean coal technology are not supported at levels
    commensurate with other energy resources. A recent study by the U.S.
    Energy Information Administration (EIA) estimated the value of federal
    support for direct expenditures, tax expenditures, R&D funding, and
    loans and loan guarantees for various energy resources. It noted that
    in FY2010, renewable energy resources, which produce less than 5% of
    U.S. power generation, received 45% of Federal electricity production
    incentives. Coal, which produced 46% of U.S. electricity in 2010,
    received just 10% of Federal electricity production incentives. \11\
    ---------------------------------------------------------------------------
        \11\ ``Direct Federal Financial Interventions and Subsidizes in
    Energy in FY2010'' U.S. Energy Information Administration, July 2011.
    ---------------------------------------------------------------------------
        During the past several years, the primary focus of DOE's coal RD&D
    program has been on Carbon Capture and Storage (CCS). The coal industry
    supports continued RD&D in this area. The U.S., however, faces
    additional energy and environmental challenges that would benefit from
    collaborative coal RD&D by the government and private sector. These
    challenges are more immediate than CCS.
        There needs to be a greater balance between support for CCS
    initiatives and those for other coal RD&D projects that can advance
    coal generation efficiency and enhance environmental compliance.
        Our environmental rulemaking and legislative efforts of the past
    few years have been hampered, in part, by the lack of economic,
    commercial and technologically viable solutions. Environmental
    regulations need to be supported by technologies that enable industry
    to meet target objectives in a timely and economic manner. The
    development of viable technologies will facilitate the establishment of
    regulations to help us achieve our environmental objectives.
    Regulations and technology development go hand in hand.
        It is counterproductive to decrease Federal investment in coal RD&D
    at a time when our nation needs low-cost electricity to support our
    citizens and industries, at a time when we need all available means to
    increase the competitiveness of America's goods in the international
    marketplace and at a time when the security of domestic energy sources
    is a high priority.
        Current programs should be maintained and additional resources
    appropriated to ensure utility and industrial compliance with both an
    increasing number of environmental regulations and increasingly strict
    targets for environmental objectives. We continue to impose more
    environmental regulations on coal consumers but seem unwilling to
    commit more resources to actually achieving those objectives. This is
    akin to setting ground rules for our children but not providing them
    with the tools and training to be able to obey the rules we set.
        Why are we so amazed that coal generators are shutting down their
    power plants because they can't meet environmental objectives? Why are
    some folks gleeful about that? Where is the satisfaction in having our
    nation's largest electric power providers shut their doors, stop
    producing low-cost electricity, fire their employees, and still not
    reach our environmental objectives?
        There can be only one conclusion--that the real objective is not to
    reduce emissions--that we are really not concerned with meeting
    environmental objectives. It would appear that other agendas are in
    play here, agendas to eliminate coal generation from our energy
    portfolio simply because it is based on coal.
        DOE's recently released Quadrennial Technology Review (QTR) notes
    that the U.S. needs to be a leader in the development of a clean energy
    economy and that ``our challenge is to provide electric power in
    environmentally responsible ways that strengthen U.S. competitiveness
    and protect the climate.'' These objectives can clearly be met through
    the use of our nation's vast domestic coal resources in conjunction
    with the advancement of clean coal technologies.
        DOE has a proven track record of facilitating the development of
    clean coal technologies that are cost-effectively reducing emissions
    today and hold much promise for continuing to yield similar stellar
    results in the future. Going forward, we need to focus our RD&D efforts
    on:

          Carbon Capture and Storage

          Advanced Energy Systems

          Engineered Coal Fuels

          Water Use Technologies

          Clean Coal Power Initiative Demonstration Projects

    Coal RD&D Priorities

        From an historical perspective, DOE's early clean coal technology
    programs focused on advancing technologies that would achieve
    reductions in criteria pollutants regulated under the Clean Air Act
    (CAA) and Clean Air Act Amendments (CAAA), including SO2,
    NOx and particulate matter. Following many years of RD&D,
    much success was achieved in reducing these emissions.
        We should keep in mind that it was only a few short years ago when
    the pendulum of DOE funding swung toward advancing carbon management
    technologies. This was in response to the anticipation of legislation
    and regulations for greenhouse gas (GHG) management and to the
    increasing international focus on reducing CO2. GHG
    regulations are proceeding and so should these technology development
    efforts--even though U.S. GHG legislation is not imminent.
        It takes substantial time to develop and deploy new technologies--
    on the order of 10-20 years. We should anticipate a continued need for
    CO2 management technologies and stay the course. It is
    difficult to turn technology development initiatives off and on and
    still make cost-effective progress. If we shutter CCS or the Clean Coal
    Power Initiative (CCPI) efforts today and decide in a few years to
    resurrect them, we will be faced with the prospect of starting all over
    again at ground zero, negating any earlier gains.
        To be successful, RD&D funding needs to be stable and continuous. A
    funding interruption or extreme swings of the funding pendulum are an
    inefficient use of Federal funds.
        We should avoid the knee jerk impulse to pull back CCS technology
    development efforts as we refocus on addressing more near-term
    regulations for energy efficiency improvements and compliance with
    stricter criteria emissions targets. We should also keep in mind that
    CCS stands for ``carbon capture and storage'' not ``coal capture and
    storage.'' Development of CCS technologies is not a coal-only program.
    Our fossil energy colleagues in the natural gas industry will
    ultimately benefit from CCS developments as well.
        Carbon Capture & Storage Priorities - Given the current uncertainty
    that Congress will pass climate legislation in the near term, it would
    seem easy to dismiss RD&D funding for CCS. In reality, however, the
    U.S. EPA is regulating GHG emissions and industry is currently being
    tasked with meeting compliance objectives for CO2 reduction.
    It is, therefore, imperative that RD&D funding support continue. A ``no
    regrets'' approach to advancing technologies for carbon capture, carbon
    storage and carbon utilization today, will ensure that industry can
    meet current EPA regulations as well as prospective future legislation.
        This longer-term technology need must, however, be balanced with
    RD&D funds to pursue more immediate and near-term environmental
    objectives with advanced energy technologies. While much work has been
    done in this area and ASTM code certification is certainly needed to
    advance commercialization, there still remains opportunities for
    advances in monitoring and control technologies for advance combustion
    systems. These technologies can help us produce coal-based electricity
    more cleanly and more cost effectively. They also have the added
    collateral benefit of reducing CO2 when integrated with CCS
    applications. Additionally, there may be broader applications for high-
    temperature, high-pressure materials outside of coal generation, e.g.,
    in the aircraft industry.
        Advanced Energy Systems Priorities- Advanced technologies are
    needed to enhance the thermal efficiency of power plants, which today
    operate at an average efficiency of about 33%. Power engineers can
    replace our aging coal plants with new clean plants exceeding 40%
    thermal efficiency. This can be achieved in two ways:

        1.  Advances in energy systems for new plants including:

             The development and application of high-pressure,
    high-temperature materials in boilers and steam turbines for new
    supercritical and ultra-supercritical power plants. These high
    performance materials would enhance the efficiency of power plants and
    reduce emissions of criteria pollutants and GHG emissions.

             Oxy-firing systems that replace combustion air in coal
    power plants with pure oxygen to greatly reduce emissions.

             Integrated Gasification Combined Cycle (IGCC) systems
    which advance efforts to capture carbon.

             Advanced turbine systems that can enhance plant
    efficiency and help meet the demands of IGCC plants with high levels of
    CO2 capture.

             Fuel conversion systems that facilitate the production
    of liquid transportation fuels from coal and biomass.

        2.  Efficiency upgrades and heat rate improvements for both
    existing and new plants. New Source Review (NSR) constraints have
    curtailed efforts to achieve efficiency improvements. A leading
    combustion systems engineer, Richard Storm, PE, CEO, Storm Technologies
    notes that we can achieve a 3-5% efficiency improvement at existing
    plants by upgrading turbine rotors, installing new high capacity boiler
    feed pumps and higher efficiency air heaters and ductwork, and by
    upgrading boilers, condensers and feed water heaters. \12\
    ---------------------------------------------------------------------------
        \12\ Richard F. Storm, ``What can be done to improve the Thermal
    Performance of the existing coal fleet?'', EPRI Heat Rate Conference,
    January 2011.
    ---------------------------------------------------------------------------
        Storm notes that operations and maintenance improvements could
    potentially increase heat rates up to 750 Btu/kWh and achieve fuel
    savings of $2 million or more. Payback on a $5 million investment would
    take two years. Capital projects that have a potential to trigger NSR
    are deemed by industry to be very risky. Better clarity, and
    potentially guarantees, are needed on what upgrades will not trigger
    NSR.
        Also of note is that capital investments to improve thermal
    efficiency often compete with non-optional investments for
    environmental compliance and other energy projects that offer high
    returns on investment. While not a direct DOE RD&D funding need
    consideration, these operations and maintenance improvements can
    provide interim compliance with environmental requirements as we work
    toward longer term solutions. Efficiency gains in the existing coal
    power generation fleet can offset significant amounts of
    CO2, setting a more achievable bar for us to overcome with
    advanced technologies.
        Engineered Coal Fuels Priorities- DOE's National Energy Technology
    Laboratory (NETL) has noted that `` . . . increasing the average
    efficiency [of power plants] from 32.5% to 36% reduces U.S. greenhouse
    gases by 175 MMmt/year, or 2.5% of total U.S. GHG emissions in 2008.''
    \13\ At NETL's February 2010 Technical Workshop (``Improving the
    Thermal Efficiency of Coal-fired Power Plants in the United States''),
    industry and government representatives identified more than 50
    opportunities to improve thermal efficiency. One of these opportunities
    included the ``use of low-grade heat for coal drying''--an example of
    numerous Engineered Coal Fuels technologies available or under
    development today to improve heat rate, advance power plant efficiency
    and reduce emissions with prior-to-combustion treatments of coal.
    ---------------------------------------------------------------------------
        \13\ ``Improving the Efficiency of Coal-fired Power Plants for Near
    Term Greenhouse Gas Emissions Reductions.'' DOE/National Energy
    Technology Laboratory, April 16, 2010, DOE/NETL-2010/1411.
    ---------------------------------------------------------------------------
        Engineered Coal Fuels (ECF) provide an opportunity to extend the
    life of existing low-cost power plants in an economic, environmentally
    sound manner. Given the current state of our economy and waning
    competitive position in world markets, now is not the time to be
    shuttering low-cost power plants. As noted earlier, low-cost
    electricity supports domestic industries and manufacturing jobs,
    advances the competitiveness of the U.S. in international markets and
    provides for the well being of our nation's citizens.
        ECFs treat and enhance coal prior to combustion, resulting in the
    following benefits:

          Reduced Fuel Consumption - increasing energy content by
    30% results in less coal used.

          Decreased Emissions of Criteria Pollutants - reductions
    of SO2 (10-80%), NOx (10-50%) and mercury (15-
    99%).

          GHG Reductions - increasing combustion efficiency by 2-4%
    results is a 5-10% reduction in CO2 emissions.

          Increased Capacity - increased power output and improved
    heat rate enable higher capacity utilization and efficiency at the
    point of combustion.

        ECFs represent low capital cost investments for utility and
    industrial companies--an operations and maintenance expense versus an
    intensive capital investment. Stricter pending regulations on
    SO2, NOx, PM, mercury and HAPs are driving the
    need for some of these more near-term solutions. There is a vital role
    here for government to take assisting with the deployment of these
    technologies through testing and evaluation. This type of a role for
    government dovetails with the following recommendation from the QTR:

            ``The Department [of Energy] needs a professional group that
    can integrate the major functions of technology assessment and cost
    analysis, program planning and evaluation, economic impact assessments,
    industry studies, and energy and technology policy analysis.''

        A facility with the capability to test a broad range of
    temperature, pressures, coals and methods would provide an opportunity
    for companies that have developed advanced combustion systems and
    engineered coal fuels technologies to verify the benefits and economics
    of their solutions. It would provide an objective, third party
    evaluation that would benefit all stakeholders, including industry,
    policy makers and the environmental community.
        In the case of Engineered Coal Fuels, we should also undertake RD&D
    of coal/biomass fuels that can be used in the existing coal generation
    fleet without significant power plant modification. DOE has committed
    to fund coal/biomass development of coal gasification applications.
    Extending the application to the existing coal fleet for purposes of
    advancing coal/biomass applications would provide a near-term solution
    to meeting environmental regulations.
        Water Priorities- Water RD&D is critical for all energy
    technologies, not just coal but nuclear, solar and natural gas as well.
    We need to devote RD&D funding into technologies that can help us
    reduce water consumption and increase reuse of water discharge.
        A sole focus on basic engineering research will not advance
    commercial technology to the marketplace. The CCPI demonstration
    program needs to be continued and adequately funded. Previous lack of
    funding for demonstration projects resulted in what has become well
    known as ``The Valley of Doom''--a future in which no new coal
    generation facilities are being planned to be built in the U.S.
        Clean Coal Power Initiative (CCPI) Priorities- The Administration
    has not requested funding for large-scale demonstration projects for
    three years now. Demonstration programs are critical for the
    commercialization of advanced coal, Engineered Coal Fuels and CCS
    technologies, including the FutureGen project which has received
    funding through the Recovery Act.
        DOE's proposal to increase the use of computer modeling has
    benefits in terms of reducing the amount of time and money to develop,
    demonstrate and deploy new technologies. But at some point, we need to
    build something to see how it actually works in real life. Modeling
    cannot replace the value of practical demonstrations. Demonstration
    projects validate the reality of technology applications and confer a
    higher level of understanding, knowledge and acceptance of new
    technologies. Computational modeling should be supported only to the
    extent that it does not come at the expense of funding other RD&D and
    demonstration activities.
        Additionally, the $187 million rescinded from the AEP Mountaineer
    Project should be reallocated for future demonstration projects.
        Going forward, RD&D funding should focus on advancing higher
    efficiency technologies, reducing capital costs associated with these
    advanced technologies and increasing the commercial availability of
    technology solutions. These efforts will help us achieve greater
    reductions in criteria pollutants, as well as CO2 and other
    greenhouse gases.

    Appended Materials:

          ``Benefits from Investments in Advanced Coal Technology''
    - Fact Sheet Coal Utilization Research Council, et. al. http://
    www.coal.org/userfiles/file/
    FINAL%20Benefits%20of%20Investment%20in%20Coal%20RD&D.pdf

          ``Retrofit Programs Increase Generation Efficiency and
    Decrease CO2 Emissions'' - National Coal Council Fact Sheet.
    http://www.nationalcoalcouncil.org/Documents/Advanced--Coal--
    Technologies.pdf

          ``Engineered Coal Fuels Fact Sheet'' - American Coal
    Council http://www.americancoalcouncil.org/associations/10586/files/
    pre-combustion--Apr--2011.pdf

        Chairman Harris. Thank you very much.
        I now recognize our third witness, Mr. Nick Akins,
    President of American Electric Power.

                STATEMENT OF MR. NICK AKINS, PRESIDENT,

                        AMERICAN ELECTRIC POWER

        Mr. Akins. Good afternoon, Chairman Harris, Ranking Member
    Miller, and distinguished Members of the Subcommittee on Energy
    and Environment. Thank you for inviting me here today and for
    this opportunity to offer the views of AEP on advancing
    research and development for a secure energy future.
        We applaud your efforts to examine DOE coal research and
    development activities to ensure that coal fuel generation
    remains an important part of this Nation's energy mix. AEP has
    a long track record of accomplishments with the demonstration
    of cutting-edge technologies.
        In May of this year AEP successfully concluded a
    demonstration of the world's first integrated CO2
    capture and storage project at an existing coal-fired power
    plant using Alstom's chilled ammonia process, a 20 megawatt
    scale carbon capture and storage project captured and
    permanently sequestered nearly 40,000 tons of CO2 in
    deep saline reservoirs from our Mountaineer Power Station in
    West Virginia. That was such an important accomplishment that
    AEP has hosted visitors in the thousands from every continent
    around the globe.
        AEP also teamed with DOE to demonstrate the same
    technologies at commercial scale. While funding challenges
    caused the project to be suspended following the first project
    phase, we now have the engineering design for a carbon capture
    and storage facility that includes extensive geologic
    characterization and a solid cost estimate. Robust and
    affordable choices for CCS will not be available in the market
    if the technology is not demonstrated. We believe DOE should be
    bolstered in their efforts to develop viable and affordable
    technology solutions.
        AEP's Turk Power Plant in Southwest Arkansas represents
    America's first deployment of ultra-supercritical technology, a
    new high-efficiency design that uses less fuel to produce each
    megawatt hour of electricity. This plant will go commercial in
    mid 2012, and will result in a substantial performance
    improvement over today's conventional sub-critical design. The
    Turk Plant's efficiency is more than 11 percent greater than
    the typical sub-critical coal power plant. Other advanced
    technologies deployed at Turk will compound the benefits of
    higher efficiency resulting in significantly lower emissions.
        This is another case of advanced technology making coal
    usage cleaner and more efficient. AEP has also completed front
    end engineering designs for Integrated Gasification Combined
    Cycle, IGCC technologies, as well.
        The above examples illustrate that my company stands firmly
    behind technology advancement. The DOE has shown its
    effectiveness in advancing technology to commercial readiness,
    and AEP's recent partnership with DOE resulted in meaningful
    and important knowledge. In fact, some of DOE's project
    management processes have been so effective that AEP has
    adopted them on other major projects. This has truly been a
    collaborative relationship.
        Of greatest concern to me as I consider leading AEP through
    unprecedented challenges is the recent regulatory actions of
    the EPA. We strongly support the Clean Air Act and continued
    reduction emissions from our power plants, however, AEP
    believes that the current regulatory track being pursued by the
    EPA will have damaging impacts on the reliability of our
    Nation's electric system as well as broad or negative
    employment and economic implications. Together CSAPR, the
    Utility MACT, Clean Air Visibility Rule, Coal Combustion
    Residuals Rule, and Cooling Water Intake Structures Rule will
    require very large capital investments on a timeline that can
    only be described as unrealistic.
        Among AEP's most pressing concerns include infeasible
    compliance deadlines, unprecedented capital expenditures,
    abrupt and significant power plant retirements, electric grid
    reliability problems, and very high electricity rate increases.
    We believe that a more reasonable approach to energy and
    environmental policy is needed and is discussed in greater
    detail in my written testimony.
        DOE is in a unique position to be a part of the solution
    and should serve as a trusted advisor to the EPA in the
    rulemaking process. They have the well-informed authority to
    evaluate the electric power generation system and grid
    stability and security risks and can assess the timelines
    needed to deploy technology at the broad scale required under
    EPA's Program.
        In summary, continued research, development, and
    demonstration must be supported and is essential to solving the
    complex problems of energy security, climate change, and
    environmental compliance. We must do more than simply call for
    it. Private industry must complete their commercial plant
    demonstrations, and our country must devote adequate financial
    and technological resources to this enormous challenge. AEP is
    committed to being a part of this important process and helping
    achieve the best outcome at the most reasonable cost and
    timelines possible.
        Thank you again for this opportunity to share these views
    with you.
        [The prepared statement of Mr. Akins follows:]
                  Prepared Statement of Mr. Nicholas K. Akins,
                       President, American Electric Power
        Chairman Harris, Ranking Member Miller, and distinguished Members
    of the Subcommittee on Energy and Environment of the House Science,
    Space and Technology Committee, thank you for inviting me here today. I
    appreciate this opportunity to offer the views of American Electric
    Power (AEP) on advancing coal research and development for a secure
    energy future.
        My name is Nick Akins, and I am the President of American Electric
    Power. Headquartered in Columbus, Ohio, we are one of the nation's
    largest electricity generators--with more than 38,000 megawatts (MW) of
    generating capacity--and serve more than five million retail consumers
    in 11 states in the Midwest and South Central regions of our nation.
    AEP's generating fleet employs diverse fuel sources--including coal,
    nuclear, hydroelectric, natural gas, oil, and wind power. But of
    particular importance for the Committee Members here today, AEP is the
    largest consumer of coal in the United States and, as a result, our
    company is an industry leader in developing advanced coal-fueled
    electrical generation and emission reduction technologies, including
    carbon capture and storage (CCS) and ultra-supercritical pulverized
    coal (USCPC) technology.
        I am here today to discuss AEP's experience with our CCS projects
    and the development of the USCPC technology through the construction of
    the J.W. Turk Plant. In addition, I will highlight the near term
    challenges to new technology development associated with the recently-
    announced EPA regulations.

    AEP'S LEADERSHIP IN TECHNOLOGY DEVELOPMENT

        AEP has a long and proud history as a leader in our industry for
    the development and deployment of new technologies. The first high- and
    extra-high voltage transmission lines at 345 kilovolt (kV) and 765 kV
    were developed by AEP and serve as the framework for our interstate
    transmission system. AEP was among the first to develop large central
    station power plants and to deploy more efficient supercritical
    generating technologies. AEP recently celebrated its centennial by
    reflecting on its century of firsts.
        Most recently, we have built upon this history of innovation by
    focusing our efforts on new clean coal technologies. These technologies
    will enable AEP and our industry to meet the challenge of reducing
    greenhouse gas emissions while optimizing the use of our nation's
    plentiful indigenous coal resources. As concepts for effective CCS from
    coal-fueled facilities are being talked about and debated around the
    globe, AEP has been on the cutting edge with an aggressive plan to
    commercialize advanced CCS technology. With the announcement of its
    successful completion in May of this year, AEP demonstrated the world's
    first integrated CO2 capture and storage project at an
    existing coal-fired power plant. Based on Alstom's chilled ammonia
    process, a 20-MW-scale CCS product validation facility at our 1,300-
    megawatt Mountaineer Power Plant in New Haven, West Virginia
    permanently sequestered nearly 40,000 tonnes of CO2 in deep
    saline reservoirs located 1.5 miles beneath the surface. Just as we
    were winding down that enormously successful demonstration, AEP and DOE
    were in the final stages of a commercial-scale engineering study of the
    same technologies. As a result, we now have a robust front-end
    engineering design for a CCS facility that includes extensive geologic
    characterization and a solid cost estimate.
        In addition to CCS technology, construction currently is underway
    in southwest Arkansas on the 600-megawatt J.W. Turk Plant that will
    employ new ultra-supercritical coal-fired generating technology. Ultra-
    supercritical technology uses high steam pressure and temperature to
    increase operational efficiency. The Turk Plant represents a new
    generation of power plant design that uses less fuel to produce each
    megawatt hour of electricity. This means that all emissions, including
    sulfur dioxide (SO2), nitrogen oxides (NOx),
    mercury, and carbon dioxide (CO2), will be lower than
    conventional coal-combustion processes per unit of electricity
    produced. Once operational, the Turk Plant will be the first commercial
    scale ultra-supercritical plant to operate in the United States.
        AEP also has pursued the development of Integrated Gasification
    Combined Cycle (IGCC) technology. IGCC represents a major breakthrough
    in efforts to improve the environmental performance of coal-based
    electric power generation. IGCC technology integrates two proven
    processes--coal gasification and combined cycle power generation--to
    convert coal into electricity more efficiently and cleanly than any
    existing uncontrolled power plant. IGCC also has the potential to be
    equipped with carbon capture technology at a lower capital cost and
    with less of an energy penalty than traditional power plant designs,
    but only after the carbon capture technology has been proven at a
    commercial scale. We still strongly endorse the advancement of this
    technology in the future.

    AEP'S EXPERIENCE WITH CCS AT MOUNTAINEER

        As noted previously, AEP recently completed a CCS validation
    project at our Mountaineer Power Plant using Alstom's chilled ammonia
    process. This recently completed project treated approximately 20 MW,
    or 1.5 percent, of the total plant flue gas flow. The CCS validation
    project was privately funded by AEP and partners, started capturing
    CO2 in September 2009, and initiated CO2
    injection in October 2009. The project was designed with the capability
    of capturing and storing approximately 100,000 metric tons of CO2
    annually. Captured CO2 from the project was injected through
    two onsite wells into two geologic formations (Rose Run and Copper
    Ridge) located approximately 1.5 miles below the plant site. The
    project also included three deep wells for direct monitoring of
    geologic conditions and assessing the suitability of the geologic
    formations for future storage. Consistent with the Underground
    Injection Control (UIC) Class V Permit, AEP continues to monitor these
    wells. The project supplied data to support the design and engineering
    of the commercial-scale CCS demonstration at the Mountaineer facility
    and thereby has laid the technical groundwork to enable
    commercialization of complex technology. Without these demonstrations,
    there is no chance that CCS will become robust and commercially viable
    at a reasonable cost for end users of electric power.
        The CO2 capture system proposed for the Mountaineer
    commercial-scale demonstration project is similar to the Alstom
    chilled-ammonia system operated at the initial validation project, but
    at approximately 12 times the scale. As with the initial validation
    project, the process uses an ammonia-based reagent to capture CO2
    and isolate it in a form suitable for geologic storage. The captured
    CO2 stream is cooled and compressed to a supercritical
    (liquid-like) state for pipeline transport to the injection well sites.
    The process is designed to remove approximately 90 percent of the
    CO2 from the 235 MW slipstream of flue gas.
        Subsurface geological investigations of the Mountaineer site and
    surrounding sub-region were conducted during 2010-2011 and built on a
    large amount of work done at the site over the last eight years under
    two separate projects. First, from 2002 to 2007, the DOE and others
    provided funding for Battelle to conduct detailed geologic
    characterization under the Ohio Valley CO2 Storage Project,
    which included a seismic survey and drilling of one well in 2003
    followed by reservoir testing, modeling, and conceptual CO2
    injection simulations. Second, AEP hired Battelle in 2007 to construct
    the geologic sequestration systems for the 20 MW CCS validation
    project. This included completion of the original well and drilling of
    four new wells on the Plant site. Extensive evaluation of voluminous
    data from the projects along with the drilling of an additional
    characterization well some 2.5 miles south of the validation project
    site, indicate that the Copper Ridge Formation has significant
    reservoir storage potential. Additional injection potential has been
    identified in the Rose Run Sandstone and other zones.
        While the success of the Mountaineer Plant validation project
    proved that CCS is viable at a coal-fired power plant and also
    demonstrated that CO2 could be safely injected into deep
    saline reservoirs in that region, the commercial-scale demonstration
    has been put on hold. An agreement for DOE funding of the commercial-
    scale project was finalized in early 2010, allowing for a combination
    of DOE CCPI Round 3 and American Recovery and Reinvestment Act of 2009
    funds to provide 50 percent of the cost of the project up to $334
    million. AEP was responsible for securing the other 50 percent of the
    cost. This seemed very plausible at the time of the grant application
    due to the House's passage of the Waxman-Markey climate legislation and
    the Senate's serious consideration of similar legislation at that time.
    Both bills, as well as other legislative proposals, contemplated
    significant economic incentives to develop CCS projects and a
    regulatory justification for approval by State Commissions. However,
    during the balance of 2010, as the U.S. economy remained sluggish and
    prospects for climate legislation dimmed, it became clear to AEP that
    cost recovery for the expense of a CCS project would not be approved by
    state regulatory agencies. Therefore, AEP was unable to move forward
    with the commercial demonstration and has placed the project on hold.
    The agreement with DOE was terminated following the completion of
    project Phase 1 and plans to complete the project are on hold.
        Even though the Mountaineer commercial-scale project has been
    postponed, there is still enormous value in the efforts and investment
    by AEP and DOE. Prior to this project, much of what has been publically
    discussed and debated regarding performance and cost was based upon
    crude estimates and extrapolations from petro-chemical processes that,
    at best, bore no more than a simplistic resemblance to CCS on coal-
    fired power plants. Because of the work done through Phase 1 of the
    commercial-scale project, an engineering package has been developed
    specifically for a retrofit of post-combustion CO2 capture
    installation on a coal-fired power plant. Detailed process
    understanding and performance knowledge was collected from the
    validation project and applied at full-scale. Optimization of process
    elements and individual pieces of equipment has yielded a state-of-the-
    art design. As a result, we now have a robust front-end engineering
    package that includes extensive geologic characterization and a solid
    cost estimate. While certain aspects of the information gained through
    years of technology development at Mountaineer belong to Alstom as
    intellectual property, a wealth of knowledge has been publically
    disclosed at conferences and other venues, with even more to come
    through relationships with DOE, the Global CCS Institute, and others.
    Hundreds of tours and literally thousands of visitors have come through
    Mountaineer Plant over the past several years. Clearly this work has
    been recognized and appreciated on a global scale.
        AEP's work on CCS is a critically vital step, but only the
    beginning of a long path toward broad deployment of CCS technology.
    AEP's work has not yet produced a commercial scale demonstration of the
    technology for capturing and sequestering CO2 at an
    affordable cost. AEP's work is merely the first of multiple steps in
    the maturation of a widely-deployable technology. Much like the power
    industry's experiences with sulfur dioxide scrubbers in the 1970's,
    much optimization remains to be done. With real demonstrations,
    brilliant minds working together will identify improvements and process
    optimizations that will eventually simplify designs, drive down costs,
    reduce energy consumption, and make the technology more affordable. Now
    is not the time to ease up on CCS development and demonstration
    efforts. On the contrary, the industry, with government support, must
    continue to march together down the path of progress. The DOE program
    of technology development and commercial-scale demonstration is
    critical to making this happen. DOE's technology roadmap and planned
    demonstration projects are essential for commercial technology
    advancement.

    AEP'S EXPERIENCE WITH ULTRA-SUPERCRITICAL PULVERIZED COAL TECHNOLOGY

        The J.W. Turk Plant is a 600 megawatt (MW) net, ultra-supercritical
    unit designed to fire subbituminous coal. The Turk Plant cycle is
    classified as advanced coal generation technology primarily because of
    the use of an ultra-supercritical steam cycle. The ultra-supercritical
    cycle is a technology advancement of the supercritical steam cycle. The
    term ``supercritical'' steam cycle means that the water/steam pressure
    used in this technology is above critical pressure of water (3,208.2
    psi). Water above the critical pressure does not boil, but makes a
    transition from the properties of liquid water directly to the
    properties of superheated steam. Superheated steam provides a higher
    efficiency heat transfer mechanism and serves to increase the overall
    efficiency of the steam cycle. While a supercritical plant cycle uses
    high pressure, it uses steam temperatures only as high as 1,050F-
    1,080F. The Turk Plant's main steam temperature will be 1,110+F and
    its reheat steam temperature will be 1,125F. These very high
    temperatures, coupled with operation at these high pressures, produce
    higher cycle efficiency, and thus the term ``ultra-supercritical.'' In
    addition, Turk uses advanced equipment design features, such as axial
    flow air and gas fans, pulse jet fabric filters, spray dryer absorber
    (SDA) technology, and a steam turbine driven boiler feed pump to drive
    down auxiliary loads (power used by plant equipment) which also improve
    the overall efficiency of the generating unit.
        AEP led the industry in the deployment of supercritical pulverized
    coal technology. The first commercial supercritical unit in the world
    was AEP's Philo Unit 6, built in 1957. Since then, AEP has constructed
    20 supercritical units and is currently operating 18 supercritical
    units. These units range in size from 500 MW to 1,300 MW, with a total
    generating capacity of over 17,000 megawatts.
        The advancement to ultra-supercritical has been made possible by
    recent ASME-approved, cost-effective high temperature chrome and
    nickel-based alloys in the steam generator, piping, and turbine
    systems. This development signals a degree of maturity which allows for
    minimal risk in deployment of this advance technology.
        The use of high steam temperatures and pressures at the Turk Plant
    will result in a steam cycle that is one of the most efficient in the
    industry. In addition, the use of high efficiency equipment allows the
    Turk Plant to have one of the lowest heat rates in the world. Turk's
    full load higher heating value (HHV) net heat rate will be 8,992 Btu/
    kWh, which converts to an overall net efficiency of 38%, HHV. As
    reported by the DOE Energy Information Administration in January 2009,
    for 2007 the industry average full load net heat rate is 10,114 Btu/
    kWh, HHV, or an average efficiency of 33.7%, HHV. The high efficiency
    of the Turk Plant results in very low emissions per megawatt hour, in
    comparison with those generating units with average efficiency rates.
        To give some perspective, the following is a comparison of Turk
    Plant's ultra-supercritical benefits when compared with a same-sized
    unit using conventional subcritical technology, based on an 85%
    capacity factor, per year basis:

          180,000 tons less coal consumed (1,500 fewer coal train
    cars)

          1,600 tons less lime consumed

          Reduction of 14,000 tons ash and FGD waste

          360 million gallons less water consumed

          320,000 tons less CO2 emitted

          150 tons less SO2 emitted

          100 tons less NOx emitted

        Achieving higher efficiency performance is limited by the available
    materials to handle extreme temperatures and pressures, and is also
    limited by approved methods for welding the materials. Simply put,
    there are no available materials or approved welding procedures in the
    U.S. that enable higher temperature steam cycles than those installed
    today at Turk Plant.
        The Turk Plant received regulatory approval in Arkansas, Louisiana,
    and Texas in 2007-2008. Construction of the plant began after AEP
    Southwestern Electric Power Company (SWEPCO) received the Clean Air Act
    construction permit in 2008. Since that time, SWEPCO has encountered
    some challenges to the various permits and regulatory approvals.
        Construction of the Turk Plant continues, with key milestones
    approaching that include the boiler hydro test, followed by the first
    combustion of coal to take place in late spring of next year. The first
    planned synchronization of the generator to the electric grid is
    planned for mid-2012.

    AEP'S PERSPECTIVE ON THE RECENT EPA REGULATIONS

        AEP strongly supports the Clean Air Act and continued reduction in
    emissions from our power plants. However, AEP believes that the current
    regulatory track being pursued by the Environmental Protection Agency
    (EPA) will have damaging impacts on the reliability of our nation's
    electric system, as well as broader negative employment and economic
    implications. Together, the federal Cross-State Air Pollution Rule
    (CSAPR)--formerly known as the Transport Rule, the Utility Maximum
    Achievable Control Technology Rule (Utility MACT), the Clean Air
    Visibility Rule, the Coal Combustion Residuals Rule (CCR) as well as
    the Cooling Water Intake Structures Rule under section 316(b) of The
    Clean Water Act (316(b) rule) will require very large utility capital
    investments on a timeline that can only be described as unrealistic.
    CSAPR and the Utility MACT alone, according to EPA's own estimates,
    will impose massive costs within the next 3 to 4 years, the vast
    majority of which will be borne by coal-fired generators and their
    customers.
        This follows two decades during which generators within these same
    areas have invested billions of dollars to achieve reductions of over
    70 percent in emissions of both SO2 and NOx.
    Electricity rates in states where these investments have been made have
    already risen. For most coal-reliant states, the CSAPR will require
    additional substantial emission reductions starting in January of 2012.
    In several of these states, these represent reductions of more than 30
    percent below actual emissions in 2010. Further even more substantial
    reductions are required in 2014, with Ohio, Pennsylvania, Indiana,
    Kentucky and Virginia required to make 60-76 percent reductions below
    2010 actual levels. This is also the same year EPA proposes to make the
    Utility MACT effective for sources nationwide. There is simply not
    enough time to get regulatory approvals, design, permit, and construct
    scrubbers, SCRs or other major pollution control investments to achieve
    those levels of reductions. As a result, they will force a large number
    of premature power plant retirements where investments are uneconomical
    given the remaining useful life of the plants. Where such investments
    are the most cost-effective compliance option, plants may have to be
    idled or significantly curtail production for two or more years in
    order to complete installation of the necessary controls. These power
    plant operational outcomes raise significant policy, economic, and
    energy issues that Congress should carefully examine.
        AEP has achieved very substantial SO2 and NOx
    reductions over the past two decades. Our efforts began with a series
    of cost-effective measures to cut SO2 and NOx
    emissions in the 1990's under the Acid Rain program, including
    installing SO2 scrubbers and NOx combustion
    controls, as well as blending lower sulfur coals into the fuel mix at
    plants that could accommodate such coals. The past decade has seen a
    continuation of AEP's program to transform our fleet of coal-fired
    generating units. This transformation included the installation of
    state-of-the-art control technologies at many of our generating
    stations in order to meet the steep NOx reduction
    requirements of the NOx SIP Call in the early part of the
    decade. It has continued with a third wave of emissions controls being
    installed to achieve additional NOx and SO2
    reductions required under the Clean Air Interstate Rule (CAIR), which
    CSAPR would replace. As a result of these efforts, over the last 20
    years, our annual SO2 emissions have declined by about 1.1
    million tons (a 73 percent reduction) and our annual NOx
    emissions have been reduced by about 450 thousand tons (an 80 percent
    reduction).
        Over that same period, AEP has invested more than $7 billion in
    emissions control equipment on our coal units to reduce SO2
    and NOx emissions and to comply with the NOx SIP
    Call and CAIR programs. AEP has spent several additional billions of
    dollars on low sulfur fuel, chemical reagents, and other pollution
    control operations and maintenance costs. Most of these investments and
    the emission reductions have occurred in the Eastern portion of the AEP
    system. About 80 percent of AEP coal-fired capacity is located in AEP's
    Eastern footprint, which includes coal-fired plants in Virginia, West
    Virginia, Ohio, Kentucky, and Indiana. Annual SO2 and
    NOx emissions have been reduced at AEP plants in these
    states by 64 percent and 84 percent, respectively, in the last decade
    alone. About two-thirds of the AEP Eastern coal-fired fleet is now
    equipped with the most advanced SO2 controls--Flue Gas
    Desulfurization (FGD) which reduces SO2 emissions by about
    95 percent. Similarly, about three-quarters of the AEP Eastern coal-
    fired fleet is equipped with the most advanced NOx
    controls--Selective Catalytic Reduction (SCR) which reduces NOx
    emissions by about 90 percent. Two projects were completed in the last
    18 months at our Amos Plant, and we are preparing to submit
    applications for regulatory approvals to install additional controls in
    Indiana. All of these efforts have also been consistent with an
    agreement we signed in 2007 with EPA and other plaintiffs to settle an
    enforcement action under the New Source Review Provisions of the Clean
    Air Act. But EPA's new rules impose more obligations, sooner than
    required under that Consent Decree.
        We expect this transformation of our coal fleet to continue in the
    coming decade. Two of our newer coal plants in our Western states were
    originally constructed with FGD controls, and we expect to reduce
    SO2 and NOx emissions further at units that are
    regulated under the Clean Air Visibility Rule in Arkansas and Oklahoma.
    CSAPR will impose additional obligations on our units in Texas,
    Arkansas, Oklahoma and Louisiana as well.

    The EPA Rules Threaten Electric Grid Reliability, Create Higher
    Unemployment, and Result in Much Higher Electricity Rates for States
    Reliant on Coal Fired Generation.

        Although AEP is committed to working with EPA in the development of
    future control requirements under its proposed Utility MACT, CCR and
    316(b) rules, the final Clean Air Visibility Rule, and the final Cross-
    State Air Pollution Rule, we nonetheless have major concerns with these
    new EPA rules, including the following:

        1.  Infeasible Compliance Deadlines. EPA is simply not providing
    sufficient time to design, permit, and install major emissions control
    technologies on large amounts of existing coal-fired capacity that are
    necessary to comply with EPA's Cross-State Air Pollution Rule
    (beginning in 2012, with more stringent limits in 2014), the proposed
    Utility MACT Rule (by the end of 2014 or by end of 2015) and the
    proposed Federal Visibility Rule in Oklahoma (end of 2014).

        2.  Multiple Major Regulatory Programs Resulting in Unprecedented
    Capital Expenditures, Mostly Before 2015. There would be two to three
    times as much capital spent in the U.S. to comply with these new EPA
    rules by 2020, compared with the amounts that were spent cumulatively
    on all utility air pollution controls during the previous 20 years.

        3.  Abrupt and Significant Power Plant Retirements due to the
    Combination of the High Costs of Compliance and the Infeasible
    Deadlines. Recent studies have suggested that between 50 and 110
    gigawatts of coal-fired capacity will be forced to prematurely retire
    due to proposed EPA rules, impacting the reliability of the grid, jobs,
    taxes, and utility rates. The un-depreciated balances associated with
    these retirements will place greater pressures on utility rates.

        4.  Unanticipated Electric Grid Reliability Problems Particularly
    during 2014-2016. Because many generating units provide system security
    and reliability to the grid (e.g., black start, voltage support, etc.),
    this impact will be exacerbated by the large number of premature
    retirements; substantial idled capacity arising from insufficient time
    to design, permit, and install major emissions controls; and the
    necessarily wide-scale unit outages required to ``tie-in'' these major
    new emission controls. The greatest capacity reductions will occur in
    the PJM (i.e., Pennsylvania New Jersey Maryland Interconnection)
    region, a very large power pool which serves the Mid-Atlantic states
    (NJ, PA, DE, MD), plus several states just to the west (including WV,
    OH, IN, MI and parts of IL) as well as in the SERC (i.e., Southeast
    Reliability Coordinating Council) region, which includes most of the
    Southeastern U.S., with additional localized reliability issues in
    these regions and ERCOT and SPP (the Electric Reliability Council of
    Texas and Southwest Power Pool, respectively).

        5.  Very High Electricity Rate Increases Due to High Capital Costs
    of Compliance and New Replacement Capacity. These rate increases will
    hit electricity-intensive manufacturing in the Appalachian Region as
    well as other parts of the Midwest and Southeast particularly hard,
    leading to industrial plant shutdowns and substantial job losses. They
    will also be disproportionately borne by consumers in some of the
    poorest rural counties in these same states where there are many
    customers who are unemployed or on fixed incomes.

    There is Not Enough Time to Comply with EPA's New Rules for Controlling
    SO2, NOx, and HAP Emissions from Power Plants.

        EPA's Cross-State Air Pollution Rule and Utility MACT Rule will
    require installation of a large amount of SO2 scrubbers and
    other capital intensive air emission controls. In particular, under the
    Cross-State Air Pollution Rule, the SO2 caps become
    significantly more stringent in 2014 for more than two-thirds of the
    States covered under the SO2 portion of the rule. \1\ These
    States are those most reliant on coal and they will bear the major
    portion of the compliance burden for limiting SO2 emissions.
    The SO2 budget limits in Eastern states, specifically states
    in the Appalachian Region, are equivalent to an average emission rate
    of approximately 0.20 to 0.30 lbs SO2 per million Btu. Such
    very low emission rates can only be achieved at power plants burning
    Eastern bituminous coals by adding scrubbers. As such, these limits
    would require most all of AEP's coal-fired power plant units in these
    states to either install FGD, switch to natural gas or significantly
    curtail operations in order to comply.
    ---------------------------------------------------------------------------
        \1\ Specifically, 16 states, out of the 23 states covered under the
    Cross-State Air Pollution Control Rule program for SO2,
    would be subject to more stringent SO2 reduction
    requirements starting in 2014.
    ---------------------------------------------------------------------------
        In addition to the massive SO2 emission reductions
    required in 2014, the emission reductions slated for 2012 are very
    significant as well. These new emission requirements will be enforced
    less than three months from now, with little advanced notice, as the
    final requirements of the Cross-State Air Pollution Rule are
    significantly more stringent than those of the proposed Transport Rule.
    EPA's proposed revisions just announced last week do not result in
    appreciable changes in allowance allocations. For example, Ohio,
    Pennsylvania and Indiana are required respectively to make 46 percent,
    33 percent and 31 percent reductions in SO2 emissions from
    2010 levels by next year. Other states outside of the Appalachian and
    Midwest Regions are also hit hard with stringent SO2
    reduction requirements. For example, Texas, even after EPA's proposed
    revisions to the budgets, is still required to reduce 2012 SO2
    emissions by 21 percent, as compared to actual 2010 levels.
        These ``new'' reduction requirements in just three months (first
    known with the issuance of the final rule just two months ago) are
    particularly problematic because utilities are largely unable to make
    modifications to existing power plants in this time frame to
    substantially reduce emissions. Also, as most utilities procure most of
    their coal on a contractual basis well in advance, a major switch to
    lower sulfur coals is often not a realistic option. As a result, coal-
    fired power plants will likely have to be significantly curtailed.
    Replacement electricity is likely to come in the form of more expensive
    gas-fired generation. Additionally, the replacement capacity might not
    be located in areas critical to transmission reliability, or able to
    provide voltage support or black start capability, creating further
    risks to reliability and increasing the costs of maintaining the
    electric grid.
        In addition to the Cross-State Air Pollution Rule, the proposed
    Utility MACT Rule requires compliance on a plant by plant basis with
    three separate emission limits (1) a very low mercury limit, (2) a PM
    limit (as a surrogate for non-mercury metals), and (3) a hydrogen
    chloride limit (as a surrogate for acid gases, or an optional stringent
    SO2 limit as a surrogate at certain units). These limits
    will have to be met by the end of 2014 with a possible one-year
    extension allowed to the end of 2015. Based on a thorough review of
    these limits (when combined with the requirements of CSAPR), we believe
    AEP will be required to retrofit SO2 scrubbers on most of
    the remaining Eastern fleet, and at a minimum, install a combination of
    baghouses, carbon injection and DSI (dry sorbent injection) at our
    plants in Texas, Arkansas and Oklahoma. For our Western fleet, some of
    these same units are affected by EPA's Clean Air Visibility Rule
    (CAVR), and thus could be required to retrofit scrubbers on the same or
    a slightly longer schedule.
        Compliance with the final Cross-State Air Pollution Rule and
    proposed Utility MACT Rule, plus the existing Clean Air Visibility
    Rule, will effectively require AEP to install scrubbers at almost all
    of its unscrubbed units or retire the plants altogether, and to do so
    for virtually all of these plants by the end of 2014 (or perhaps the
    end of 2015 if a one year extension is granted). This allows between 2
    + and 3 + years for compliance with at most 4 + years in a few cases.
    This time frame is completely infeasible to get regulatory approvals,
    design, permit, fabricate, and install a retrofit scrubber as shown in
    Figure 1 below:

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Figure 1 shows that the average time needed from project
    commencement to completion for a retrofit scrubber is five years for a
    regulated electric utility. (The time frame is similar if a unit is
    retired and replaced on site with a new combined cycle gas plant). This
    figure is based on the actual average time period needed during 2003-10
    when AEP added scrubbers at 7,800 MW of capacity or--more installations
    than anyone else in the industry. Given that the EPA rules will require
    a greater number of retrofit projects and/or plant replacements and
    other related environmental investments across our industry within the
    same three to five year window, compliance with the Utility MACT Rule
    and Cross-State Air Pollution Rule is simply infeasible within this
    very short compliance period.

    High Costs and Infeasible Deadlines Will Lead to Substantial Coal Plant
    Retirements and Significantly Compromise Electric Grid Reliability.

        Due to the high costs of compliance and infeasible time deadlines,
    a large amount of coal unit retirements at AEP and across the industry
    is expected in the 2014-15 time period. In addition, a large number of
    units that are complying by retrofitting will have to be taken out of
    service, mothballed, or significantly curtailed during the 2014-16 time
    period as well.
        AEP estimates that in its own coal fleet about 6 GW of its coal
    fired capacity (or about 25 percent of the company's coal-fired
    generating capacity) would retire by the 2014-15 time period under the
    EPA rules. We recognize that certain of our units are also subject to
    the requirements of our New Source Consent Decree, but only 615 MW is
    required to comply with those requirements before 2015. Other major
    coal-fired utilities such as Southern Company and DTE Energy Company
    have estimated that a similar 20 to 30 percent of their coal-fired
    capacity would retire in the period before 2015. AEP also estimates
    that 1.5-5 GW of coal-fired capacity would be temporarily out of
    service or severely curtailed during 2014-16 as retrofit pollution
    controls are being completed.

    There is A Better Way

        The combination of EPA's new rules for power plants will result in
    a series of relatively inflexible and stringent air pollution and other
    environmental regulations with infeasible timelines and unnecessarily
    high compliance costs. In addition to high costs borne by our
    electricity customers, these new rules could also result in many
    premature plant retirements and over 1 million net jobs lost in the
    U.S. \2\
    ---------------------------------------------------------------------------
        \2\ NERA (2011). A loss of one job-year is equivalent to a loss of
    one job for a period of one year. Job-years are commonly used by
    economists, CBO, OMB and others in reporting employment statistics.
    ---------------------------------------------------------------------------
        We believe that a more reasonable approach to energy and
    environmental policy is needed. AEP has been working on these issues
    with the International Brotherhood of Electrical Workers (IBEW); the
    United Mine Workers of America (UMWA); and the International
    Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers,
    and Helpers.
        A comprehensive analysis of the economic impacts of the proposed
    regulations as well as the feasibility and timing of their
    implementation is needed. While we continue to support sound policy
    aimed at improving air quality and public health, numerous economic
    studies and modeling analyses have demonstrated that the implementation
    of these major EPA requirements occurring in the same narrow time
    period will have major adverse economic repercussions. More time for
    phasing in the new control requirements is required to smooth the
    impacts associated with power plant closures and electricity rate
    increases, as well as to allow for the construction and installation of
    major environmental retrofit controls. Longer time frames also would
    enable better planning, ensure electricity grid reliability and avoid
    many premature plant shutdowns or excessively high costs for pollution
    controls due to supply constraints.
        Given the multi-dimensional nature of major environmental policy
    initiatives and the immediacy of the compliance deadlines, we believe
    that Congress must intervene and assure that a sensible multi-pollutant
    environmental program is developed on a rational schedule and that this
    schedule is coordinated with the other new EPA rules. We believe that a
    legislative approach can continue to promote the air quality and public
    health goals set forth in EPA's regulatory initiatives while ensuring
    that adequate emphasis is focused on the employment, economic and
    reliability impacts of the program.
        The challenge of EPA's current regulatory approach is not a
    technology issue requiring the Department of Energy to venture down the
    path of R&D or major demonstrations. On the contrary, there is simply
    no time to develop new technologies, demonstrate their viability, and
    engineer these systems. We believe the technologies exist today to
    enable AEP and the larger US fleet to comply with increasingly
    stringent environmental requirements while maintaining a robust and
    reliable electric power infrastructure. However, timing is the limiting
    factor in enabling a viable path toward compliance. The role we see for
    DOE, and it is a vital role indeed, would be to become engaged in a
    thorough analysis of EPA rules impacts and deployment timelines. In
    short, DOE should serve as a trusted advisor to the EPA in the
    rulemaking process.
        DOE has expertise in all the areas of power generation and
    electricity transmission and distribution. They have the well-informed
    authority to evaluate the electric power generation system and grid
    stability/security risks and can make a non-biased assessment of the
    timelines needed to deploy technology at the broad scale required under
    EPA's program. It is AEP's preference that DOE be engaged in this
    process.

    CONCLUSION

        In summary, American Electric Power has an established history as
    an industry leader in technology development and deployment. We were
    the first in high voltage transmission of electricity and have blazed
    trails in the development of smart grid technologies. Supercritical
    steam generation was first put into utility power production by AEP
    more than a half-century ago, and many of our units operating today
    represent new benchmarks in performance and efficiency at the time they
    were commissioned. We carry forward that proud tradition even today
    with deployment of the nation's first ultra-supercritical unit, which
    will come on line less than one year from now. We embrace technology as
    the means to produce and deliver clean and affordable electricity to
    our customers. We share much of our knowledge with the industry because
    we believe everybody benefits when technology is allowed to flourish.
    This philosophy of living on the cutting edge of technology advancement
    has its risks and uncertainties, as is most evidenced with our
    extensive work on CCS. While many were hoping and waiting for others to
    deliver a solution to CO2 emissions, AEP boldly pursued the
    path of developing and demonstrating CCS technology. Our shareholders
    have shown the vision to support this approach by shouldering the
    burden of extraordinarily-expensive demonstration projects when other
    means have not been available.
        We believe DOE should be bolstered in their efforts to develop
    viable and affordable technology solutions. While legislative activity
    on CCS has diminished and some key government-funded demonstration
    projects, like AEP's, have been cancelled or are currently at risk of
    being cancelled, now is not the time to divert DOE's attention from
    further advancement of CCS technology. Robust and affordable choices
    for CCS will in fact NOT be available in the market for installation on
    coal-fired power plants if the technology is not demonstrated in the
    meantime. AEP is ready and eager to reenter the demonstration phase of
    our CCS program at such a time when adequate funding of demonstrations
    enables successful completion of projects.
        In this same spirit of ingenuity, AEP urges the new EPA rules be
    structured in a way to allow for cost-effective implementation on a
    reasonable schedule so as to minimize the impacts on our residential
    customers, local businesses, and the reliability of the electricity
    grid. It is also critical that the emissions reduction levels of the
    program be set at levels that are technically feasible to achieve over
    the given time frame and are in fact necessary to fulfill the air
    quality goals and requirements of the Clean Air Act. As a nation, we
    must ensure our future energy security and reliability by using
    domestic resources such as coal, while continuing to advance
    technology. AEP would like to thank the Committee for the opportunity
    to present our views on the issues of advanced coal research and a
    secure energy future.

        Chairman Harris. Thank you very much.
        I now recognize our fourth witness, Mr. David Foerter,
    Executive Director, Institute of Clean Air Companies.

            STATEMENT OF DAVID FOERTER, EXECUTIVE DIRECTOR,

                    INSTITUTE OF CLEAN AIR COMPANIES

        Mr. Foerter. Thank you for inviting the Institute of Clean
    Air Companies or ICAC or Institute to testify and present its
    perspectives on what motivates the air pollution control and
    measurement industry to innovate and deploy commercial-ready
    technologies and enable power generators and manufacturers to
    operate responsibly and ensure cleaner air to the pollutions
    they serve.
        To provide some perspective about our industry, we are a
    growing number of technology manufacturing and service
    companies that have a sustainable industry due to the demand of
    our technologies and services. And that demand comes from clean
    air regulations and policies. This industry has great--has
    matured greatly in the more than a half century ICAC has been
    its public representative, and we are proud of having met and
    often exceeded the regulatory control and measurement
    challenges of the industries we serve.
        It should come as no surprise that the air pollution
    control industry is well prepared with suites of affordable
    technologies and eager and experienced workforce to achieve the
    air quality improvements needed to deliver healthy air.
        The science of air pollution control and measurement are
    well understood by our industry, and technologies are
    continuously refined through healthy competition if the demand
    is there. Our industry's impact on jobs is well documented, and
    I have included insights into my written testimony. For brevity
    I won't go into some of those issues.
        Air pollution control and measurement technologies are
    available to meet the upcoming regulations for hazardous and
    conventional air pollutants emitted by firing coal, and we are
    confident that these--that any issues that still exist can be
    addressed within the framework used to develop regulations and
    do not require any priority for R&D funding.
        Therefore, as an industry largely made up of engineers, we
    are ready to innovate and build equipment that our clients need
    in the marketplace.
        R&D is best used judiciously to develop and test
    technologies where none already exist, and this is clearly not
    needed to effectively address the air pollutant emissions of
    conventional pollutants such as criteria and hazardous
    pollutants in the electric power sector. Probably the best
    example of this is mercury control technology, which about ten
    years ago didn't exist to an R&D Program that was developed,
    and it is now probably one of the easiest pollutants to deal
    with under the Hazardous Air Pollutant Control requirements.
        Because of the diversity of control and measurement
    technologies and the offerings of multiple vendors and mature
    industry, there are many choices available to sources affected
    by regulations. For example, some of the largest SO2
    scrubbers may have a large capital cost but also allow sources
    to take advantage of cost savings and using higher sulfur coal
    that is often much cheaper, less expensive to use. Therefore,
    it is possible that for some of the facilities cost savings on
    coal can cover most, if not all, of the technologies that are
    being put in place.
        But there is also other opportunities because there is less
    resource and time-intensive technologies are available to be
    quickly deployed and offers the power generation industry the
    needed flexibility it may need to comply with upcoming
    regulations.
        For example, direct sorbent injection, another type of
    scrubbing technology, and circulating and dry scrubbers are
    technology options with costs and install times less than the
    larger Wet FGD types of programs.
        Today I have in my comments nearly two-thirds of the coal-
    fired electric power plants are controlled. I am going to have
    to review that to 75 percent based on two witness testimonies,
    leaving approximately another 25 percent of the fleet
    substantially uncontrolled. Decisions to control much of the
    power fleet generally installed controls on units that were
    most cost-effective to control.
        Plant retirements are inevitable, even in the absence of
    regulations. Building new plants is problematic, and so I just
    add that as some of the witnesses already.
        As an industry built on innovations, we seek new challenges
    and opportunities, particularly those that serve the public
    health and industrial progress. There are certainly challenges
    for all fossil fuels, particularly coal, which will benefit
    from well-spent R&D dollars. Chief among those challenges and
    right for R&D investments is carbon capture as part of a
    CO2 control strategy. Here the challenge and the
    opportunity is to enable coal to be a more sustainable fuel
    choice whereby emissions are well controlled.
        In our industry it is clear that regulations designed to
    improve air quality for public health is the primary driver for
    much of the technology development and innovations. For
    example, as the understanding of particulate control emissions
    we moved from a very coarse type of particulate control
    emissions to coarse, fine, and even condensables. In the amount
    that we have been doing this there has been cost and benefit
    analysis done, and the benefit-cost analysis prepared by EPA
    shows that for every dollar spent there was as much as $4 to
    $20 that comes back to direct public health benefit, and that
    includes the prevention of pre-mature mortality. From our
    industry's perspective, this is comforting.
        The biggest challenge that we see is not the hazardous and
    criteria pollutants. It is in CO2 capture and
    thermal efficiency. So we look forward to seeing work more in
    that field, not on criterion, hazardous pollutants.
        Thank you.
        [The prepared statement of Mr. Foerter follows:]
    Prepared Statement of Mr. David Foerter, Executive Director, Institute
                             of Clean Air Companies

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Harris. Thank you very much.
        I now recognize our final witness, Mr. Stu Dalton, Senior
    Government Representative for Generation of the Electric Power
    Research Institute.

               STATEMENT OF STU DALTON, SENIOR GOVERNMENT

      REPRESENTATIVE-GENERATION, ELECTRIC POWER RESEARCH INSTITUTE

        Mr. Dalton. Thank you, Chairman Harris, Congressman Miller,
    and Members of the Committee. I appreciate the opportunity to
    give this testimony today.
        The U.S. DOE has a significant R&D effort as you have
    heard, developing technology for coal and a long history of
    doing that work with an important program in place. We have
    worked independently as well as collaboratively with the DOE
    over several decades in many of the areas you have heard talked
    about today on SO2, NOx, mercury control, as well as
    on advanced technologies.
        But the changing regulations and demands of the system are
    requiring or creating new challenges which are, indeed, calling
    for new R&D, and that is what I will talk about today.
        Based on our review there are three major areas that are
    not sufficiently covered in the current R&D Program. One is
    high-efficiency combustion plants. We have heard a little talk
    about that today. Another area is water management, we have
    also heard that mentioned. The third area is new implications
    of the recent work on hazardous air pollutants. We have worked
    on hazardous air pollutants for two decades at least.
        These technologies are needed to meet the global challenges
    in advanced coal-powered technology as well as the domestic
    regulatory compliance schedules. A fourth area of gasification
    would also benefit from additional R&D.
        The first area involves high-efficiency steam cycles based
    on American advanced alloy steels that have been developed
    largely with funding from the DOE. The need is to accelerate
    the pace from successful component fabrication and testing to
    in-service boiler and turbine testing that includes operation
    of a complete integrated demonstration plant. This RD&D would
    put American technology and suppliers in the lead worldwide for
    high-efficiency technology and low-emission use of coal.
        The DOE has been a major sponsor of this work, along with
    the Ohio Coal Development Office. They have supported a public,
    private, federal, and state effort across the U.S. Industry and
    national lab participants have worked for almost a decade on
    this area to create, fabricate, and weld these alloys with work
    done in six states--in Indiana, Ohio, Pennsylvania, Texas, West
    Virginia, and Wisconsin. We have done work with a number of
    these organizations.
        We have shown that high-temperature materials can work for
    tens of thousands of hours in the lab. You need to take it to
    the full scale. The very high-temperature steam pressures and
    temperatures that are used to get this high efficiency requires
    some new novel technology. I am holding a report that is
    actually entitled, ``U.S. Department of Energy and Ohio Coal
    Development Office Report on Advanced Ultra-Supercritical
    Materials Project for Boilers and Steam Turbines.'' This report
    has a lot more details on the timing and the content of that
    work.
        The second area I would like to mention is water
    management. We are seeing new barriers to siting plants as well
    as barriers for continued operation from some of the new
    regulatory requirements. Water management needs to reduce
    consumption, accommodate lower water quality supplies, and
    address more complex waste water treatment. Solid management
    issues need to be addressed, partly because there are
    requirements that cover all aspects of water management, not
    just water but air and solids as well. Use of degraded waters
    and recovery of water from power are also issues. There are
    many different ideas out there, and EPRI is working with
    industry right now to create a water research center in this
    area.
        A third area is in hazardous air pollutants. Not just in
    capturing Mercury but looking at other compounds like Selenium,
    Arsenic, Hydrochloric acid, Hydrofluoric acid, and things of
    that sort that are--that might be cross-media. You catch it
    from the air, it goes somewhere.
        The variety of coal and power plant types, and emission
    control configurations require different controls because of
    the new regulations. It is urgent because firms are starting to
    design and purchase equipment, yet we believe not all these
    issues are resolved.
        The fourth area, gasification is one where DOE has an
    ongoing program and has been doing a lot of work. We need to
    accelerate work on synthesis gas cleanup, higher temperatures,
    larger turbines, lower oxygen costs for the supply, and better
    plant controls.
        Finally, I would like to say that EPRI has been working
    cooperatively in the area of CO2 control with the
    Department of Energy. The heavy focus on CO2
    capture, utilization, and storage we think is worthwhile and
    now utilization might be possible for enhanced oil recovery to
    bootstrap CO2 demonstrations and improve the
    domestic oil capabilities as well.
        We see that the sustained work on integrated demos is
    important because it is a very broad issue. We thank you for
    the opportunity to address the Committee.
        [The prepared statement of Mr. Dalton follows:]
           Prepared Statement of Mr. Stuart Dalton Senior Government
               Representative, Generation Electric Power Research
        My name is Stuart M. Dalton. I am the Senior Government
    Representative, Generation, for the Electric Power Research Institute
    (EPRI, www.epri.com). EPRI conducts research and development relating
    to the generation, delivery, and use of electricity for the benefit of
    the public.
        As an independent, nonprofit corporation, EPRI brings together its
    scientists and engineers, as well as experts from industry, academia,
    and government, to help address challenges in electricity, including
    reliability, efficiency, health, safety, and the environment. EPRI also
    provides technology, policy, and economic analyses to drive long-range
    research and development planning, and supports research in emerging
    technologies. EPRI's members represent more than 90 percent of the
    electricity generated and delivered in the United States, and
    international participation extends to 40 countries. EPRI's principal
    offices and laboratories are located in Palo Alto, California;
    Charlotte, North Carolina; Knoxville, Tennessee; and Lenox,
    Massachusetts. EPRI appreciates the opportunity to provide this
    testimony today.

    Introduction and summary

        EPRI analysis including our Prism/MERGE reports shows multiple
    future scenarios in which coal will be an important fuel in the US
    generation mix. In the wake of recently proposed environmental rules
    and other regulations, U.S. power producers have estimated that tens of
    thousands of megawatts of coal-fired power generation capacity could be
    retired prematurely. At the same time, studies by EPRI, the
    International Energy Agency and others demonstrate that in order to
    reliably and affordably meet the nation's energy needs and
    environmental goals all types of power plants--from renewables to
    advanced coal and natural gas to nuclear--are needed to provide a
    secure energy future.
        For coal-based generation to fulfill its potential to contribute to
    the nation's clean energy supply, new technologies and practices must
    be developed and demonstrated to address concerns over air, water, and
    thermal emissions, as well as secure solids disposal and CO2
    storage.
        The U.S. Department of Energy (DOE) has excellent research,
    development, and demonstration (RD&D) programs in place on CO2
    capture and storage and conducts significant work on advanced coal
    generation technology; these were preceded by a long history of
    successful RD&D on criteria pollutant, particulate, and hazardous
    pollutant controls for coal power plants.
        RD&D on stronger and more durable high-temperature materials as
    well as improved integration and process configurations for increased
    plant efficiency have paralleled environmental control technology
    development. EPRI has worked independently, as well as cooperatively,
    with DOE and other government agencies to help attain many of these
    research objectives.
        The needs of the electric power industry are evolving rapidly
    because of changing emission regulations and power grid system
    requirements. The continued alignment of RD&D efforts to reflect these
    latest priorities is necessary to help ensure that the nation's coal-
    based power plants can continue to supply affordable electricity.
        Based on EPRI's analysis, three major areas not sufficiently
    covered by current DOE coal RD&D need additional support and these
    areas currently compromise the power industry's ability to meet both
    global competitive challenges in advanced coal power technology and
    domestic regulatory compliance schedules. A fourth area is relatively
    well addressed, but would benefit from additional RD&D on basic
    gasification and power block technology improvements. These areas are
    listed below and discussed individually in further detail:

        1.  Ultra-high-efficiency steam power cycles based on American
    advanced alloy steels: we need to accelerate the pace from successful
    component fabrication and testing to in-service boiler and steam
    turbine testing and a complete integrated demonstration plant

        2.  Improved water management to reduce consumption, accommodate
    lower-quality/degraded water supplies, and address more complex
    wastewater treatment and solid by-product management challenges

        3.  Workable solutions to proposed hazardous air pollutants (HAPs)
    emission standards accounting for real-world operational issues, flue
    gas constituent interactions and cross-media impacts, and measurement
    capabilities

        4.  Efficiency and cost improvements for gasification power plants
    independent of CO2 capture processes: we need to accelerate
    scale-up, testing, integration engineering, and demonstration of
    fundamental improvements in synthesis gas cleanup at higher
    temperatures, higher gas turbine firing temperatures and larger
    turbines (and associated blade temperature control), lower-energy
    oxygen supply technologies, and better plant controls

        EPRI would like to stress that these areas are identified as
    necessary to augment, not supplant, DOE's current RD&D programs
    focusing heavily on CO2 capture, utilization, and storage
    (CCS). Continued and sustained support for CCS development and
    integrated demonstration is essential to success in this most
    overarching of issues facing coal power plants.

    Advanced ultra-supercritical steam cycle development using nickel-based
    alloys: In-service test facility and fully integrated demonstration

        Higher plant efficiency reduces the amount of fuel consumed and
    associated emissions and water consumption per megawatt hour of
    electricity generated. Notably, CO2 reduction is
    significant, up to 20-25% per megawatt hour and the avoided cost per
    ton of CO2 is estimated both by DOE and EPRI as being one of
    the lowest avoided costs compared to any technology for CO2
    capture and storage. This is a win-win approach for utility customers
    and the environment. Thermodynamics dictates that increasing the
    efficiency of a steam cycle requires hotter and higher pressure steam
    conditions known as ultra-supercritical (USC) at the turbine inlet.
    Maintaining boiler, piping, and turbine safety and longevity at steam
    temperatures of up to 1400F (760C) requires a new class of high-
    nickel-content steel alloys and, in some cases, coatings, several of
    which have been pioneered in the United States under a research program
    sponsored by DOE and the Ohio Coal Development Office (OCDO).
        Despite this successful record of fabrication and testing of key
    boiler and steam turbine components by American manufacturers, the
    program faces federal funding uncertainties at a time when European
    competitors have advanced to an in-service boiler test loop and Asian
    firms are looking to move to higher temperature and pressure cycles. To
    reach DOE and industry goals for improving coal plant efficiency, EPRI
    recommends a ``managed risk'' series of demonstration elements embedded
    in commercial power projects, concluding with a fully integrated plant
    (dubbed UltraGen) featuring nickel-alloy high-temperature components,
    superior environmental controls, and CO2 capture and
    compression.
        The foundation has been laid with earlier DOE/OCDO materials work
    managed by Energy Industries of Ohio and EPRI (one team focused on
    boilers, one on steam turbines), with a joint vision for future scale-
    up and demonstration established by DOE, EPRI, and the Coal Utilization
    Research Council. The most developed alloys are Inconel 740, a product
    of Special Metals Corporation in West Virginia, and Haynes 282 alloy by
    Haynes International, headquartered in Indiana.
        Large-diameter pipe extrusions have been made by Wyman-Gordon in
    Texas, and Haynes alloy 282 castings have been made by MetalTek in
    Wisconsin and Flowserve in Ohio. The project also conducted powder
    metallurgy work at Carpenter Technology Corporation in Pennsylvania.
    Some of these firms are already receiving inquiries for use of these
    materials overseas. To reap the benefits of this technology research
    domestically, we need to adequately fund the next stages of
    development, namely in-service test and demonstration to allow for
    commercial deployment.
        At a cost of about $50M over three years, an in-service component
    test facility at an existing plant would lay the groundwork for the
    design and installation of a demonstration unit, possibly in later
    phases of DOE's Clean Coal Power Initiative or via other risk-sharing
    mechanisms for first applications in the United States. Under this
    scenario, advanced USC plants would become commercially available after
    2020, following successful operation of a demonstration plant. This
    recommended path to commercialization and prior work on advanced
    materials development are described in EPRI brochure 1022770, U.S.
    Department of Energy and Ohio Coal Development Office Advanced Ultra-
    Supercritical Materials Project for Boilers and Steam Turbines (March
    2011).
        Such a commitment would return the United States to the forefront
    in thermodynamic efficiency, building upon the legacy of the world's
    first plants with USC steam conditions-AEP's Philo Unit 6 in 1957 and
    Exelon's Eddystone Unit 1, in service from 1960 until its retirement
    this year. Finally, given the prospect of future CO2
    regulations (and efforts by power producers to demonstrate voluntary
    CO2 reductions), the impetus for higher efficiency in future
    coal-based generation units has gained traction worldwide. Many new
    coal plant projects announced over the last two years will employ
    supercritical steam cycles, and several will use high-efficiency
    ``moderate USC'' steam conditions, building a logical progression
    toward advanced USC plants with the help of financiers, state
    regulators, and other key stakeholders.

    Improved water management to reduce water consumption, accommodate
    degraded water supplies, and address wastewater treatment and solid by-
    product disposal challenges

        Water withdrawals and discharges by the power industry are falling
    under new regulatory requirements, and are posing new engineering
    challenges, as the sources and composition of water available to power
    plants are changing, along with restrictions on its discharge.
        Water is the lifeblood of a power plant, serving both as the
    working fluid that converts combustion heat to turbine shaft power and
    as the cooling medium that allows high-purity steam cycle water to
    circulate continuously from boiler to turbine and back. Accordingly,
    water quality and cost are major factors in plant economics.
        Cooling water is a power plant's largest use. There are proven low-
    water-use cooling options--developed in the arid western states and
    other locations where power plants have faced water limitations for
    decades--providing a technical foundation for new innovations. However,
    these alternative cooling options normally require more space than
    traditional ``once through'' river, lake, or ocean water cooling, which
    can create significant challenges when existing plants are compelled to
    retrofit recirculating cooling systems in response to Clean Water Act
    Section 316 rules on intake structures and thermal discharges. Thus,
    there is an RD&D need for retrofit cooling options, as well as designs
    for new plants.
        Even in areas of the United States with historically adequate water
    supplies, reducing water use is a growing issue for the power industry,
    so the need is now national rather than regional. Compounding the
    challenge is the prospect of future regulations limiting CO2
    emissions. Virtually every type of CO2 capture technology
    requires steam use for the process and additional cooling. CO2
    compression for sale or geologic storage also requires additional
    cooling. DOE research in this area will be especially important if
    CO2 capture, utilization, and storage become widespread
    because power plant cooling demand will increase substantially.
        In many cases, power plants are finding the only (or most economic)
    new source of water is from lower-quality and/or degraded supplies,
    such as municipal wastewater treatment plant discharge. These less-pure
    waters require different treatment methods and more blowdown (a
    slipstream sent to the plant's wastewater treatment equipment) than
    conventional water supplies.
        Wastewater treatment also faces new engineering challenges due to
    tighter air pollution requirements, which result in greater amounts of
    trace species such as mercury, arsenic, selenium, and acid gases being
    removed from flue gases and transferred to wastewater streams. These
    may need to be treated differently before discharge than under prior
    practices. The particular wastewater treatment needs and available
    technology options depend on the coal and boiler type and the type and
    configuration of air pollution equipment used (e.g., wet vs. dry
    scrubbing for SO2, different types of particulate and
    NOx controls, and different sorbents or additives for
    mercury control). EPRI in conjunction with industry is developing an
    initiative to address plant water management and welcomes further
    collaboration with DOE.
        Additional information is being developed in a draft roadmap by
    EPRI and the Coal Utilization Research Council. Some of the R&D goals
    being addressed are:

          Demonstrate reduced water consumption technologies

          Improve wet, hybrid, and dry cooling testing in
    conjunction with water balance modeling

          Moisture/water recovery

             Test membrane, liquid desiccants, cyclic reheat and/or
    other new approaches, as well as low-temperature heat recovery plus
    water capture on coal gasification/combustion

             Demonstrate integrated treatment, quality management,
    and moisture recovery

          Create an industry water research center to demonstrate
    methods for reduced water consumption and improved water management

    Researching solutions to hazardous air pollutants issues in a real-
    world deployment setting: flue gas constituent interactions, cross-
    media impacts, and measurement capabilities

        In the same manner that tailpipe emissions from new cars are a
    minuscule fraction of the emissions from cars of the 1960s, new coal-
    fired power plants are vastly cleaner than plants from a generation
    ago. In addition, many existing plants have been retrofit with
    technologies to capture SO2, NOx, mercury, and
    SO3 and fine particulates.
        New regulations have been proposed for hazardous air pollutants and
    the power industry is currently looking at process and operational
    alternatives for the coal fired stations as well as weighing options to
    retire plants where compliance with this plus other pending
    requirements for criteria emissions, water limitations , and solids
    management is not practical. In the timeframe required it will also be
    difficult to plan, permit, fabricate, install and place in service the
    equipment necessary to meet the U.S. Environmental Protection Agency's
    Maximum Achievable Control Technology (MACT) rule proposed in 2011, and
    the Cross-State Air Pollution Rule (CSAPR) rule finalized in July 6,
    2011.
        As the government, industry, and EPRI have tested the various types
    of plants and process configurations and their emissions, real-world
    issues and unintended consequences of HAPs reduction methods have been
    identified. The issues vary, and the solutions have required additional
    R&D to resolve concerns about water and solid by-product changes that
    would make current management practices unsuitable. Conditions can vary
    widely because coals can contain virtually any of the constituents of
    the earth's crust. Because coal and ash compositions vary, plants must
    have different plant configurations, firing equipment, and processes
    existing on the units to operate properly. Testing, modeling, and
    limited experience has identified a wide variety of issues. Some of
    these issues are cross-media (i.e., between air, aqueous, solid release
    streams) and can cause currently useful materials such as fly ash or
    gypsum used in aggregate, concrete, or wallboard to be questioned or to
    make them unusable. Research is needed in this area to verify and
    resolve potential impacts to enable reliable, operable units that
    consistently meet regulations for criteria air emissions, HAPs, as well
    as water and solids limits, and allows beneficial use of coal
    combustion by-products whenever possible.
        Current emissions controls reduce criteria pollutant emissions to
    very low levels, and often capture a significant fraction of mercury in
    the process. Nonetheless, new regulations call for further reductions
    in NOx, SO2, SO3, fine particulates,
    and mercury emissions, with an added focus on other HAPs, including
    selenium. Chief among these regulatory drivers are the utility HAPs
    MACT and CSAPR rules. EPRI has commented on the HAPs MACT in a
    submission dated August 4, 2011, and identified some of the challenges
    in measurement and compliance that make power company compliance
    difficult within the proposed timeframe and implies urgent R&D is
    needed. Some of the summary comments related to the need for additional
    R&D are quoted below, followed by a comment regarding R&D needs. The
    entire EPRI submission is available to the public at the following
    site:

    http://mydocs.epri.com/docs/CorporateDocuments/SectorPages/Environment/
    hapsicr/EPRI--HAP s--Comments--08-04-11.pdf

    EPRI comments on the difficulty of meeting proposed limits and the
    issues with data collection

          ``No coal-fired EGU (new and existing coal- and oil-fired
    electric utility steam generating units) tested in the ICR (EPA's
    Information Collection Request)would likely meet the new unit MACT
    limits for all three regulated HAPs-total particulate matter, mercury,
    and hydrogen chloride (or the alternative acid gas surrogate, sulfur
    dioxide). The new unit limits are very challenging to achieve as few
    EGUs have multiple ICR measurements that are consistently below the
    proposed new unit limits. The use of the lowest test series average
    introduces biases, and EPA should use the average of all ICR data for
    setting the HAPs standards for both new and existing EGUs.''

        The proposed regulations for new and existing coal- and oil-fired
    electric utility steam generating units (EGUs) have very low limits
    which have been set based on, in many cases, erroneous data and a
    limited number of data points. Despite the values that are eventually
    established, additional R&D will be needed to ensure that the new
    limits can be met on an ongoing basis and for the variety of coals and
    plant designs in operation.

    EPRI comments on dry sorbent injection and the ability to use the
    technology without power plant impacts in other areas

          ``Additional data are required to evaluate the use of dry
    sorbent injection as a control for removing hydrochloric acid (HCl) and
    hydrofluoric acid (HF). Based on the limited available data, there are
    concerns about whether EGUs firing medium- to high-chloride coals can
    achieve the HCl standard using dry sorbent injection, and whether there
    would be impacts to balance-of-plant operations.''

        A number of firms are considering dry sorbent injection to manage
    hydrochloric acid (HCl) and hydrofluoric acid (HF). Because data are
    limited it is unclear the range of coals and conditions which may be
    able to use this control technique and the type of sorbent that will be
    effective and able to avoid cross media issues after use (not making an
    air issue into a solid waste or water issue). R&D is needed to test
    alternate sorbents and their fitness for the purpose of acid gas
    control and the cost effectiveness of their use.

    EPRI comments on the data not representing the range of operating
    conditions and the ability to comply under all normal and transient
    conditions.

          ``The ICR did not require EGUs to test over the full
    range of operating conditions, and therefore the ICR data do not
    represent the entire range of emissions variability from power plants.
    Additional measurements are needed to adequately characterize the
    variability of HAPs and surrogate emissions during normal plant
    operations. Sources of emissions variability include fuels burned,
    startup and shutdown conditions, partial load operation, and other
    reasonably foreseeable changes to operating conditions. Limited
    measurements at one facility indicated that trace metal variability was
    comparable to the variability of filterable PM measurements.''

        The EPA's Information Collection Request (ICR) collected data for a
    number of static conditions but data is not available to assure power
    plants can comply with a range of operating conditions typical of coal
    plant operation. In order to retain reliable grid operation and
    maintain the obligation to serve customers with economic, secure power,
    it is normally necessary to vary load from different types of
    generation sources. Now that more ``non-dispatchable'' power such as
    wind is generated in certain areas of the country such as the upper
    Midwest and Texas, power companies are seeing added requirements to
    turn down or reduce coal generation periodically and bring it back if
    those non-dispatchable sources cannot generate. This variation in
    demand will mean chemical and physical processes may be called on to
    operate out of their most efficient or effective ranges and it may be
    difficult to meet the emission standards during transients or at
    partial loads. R&D is needed to evaluate and test, understand, model
    and provide guidelines for design and operation in these instances.
        As regulations become more sweeping, with less flexibility in terms
    of time averaging and emissions banking and trading, fuel-specific
    nuances become magnified in their impact on compliance assurance, as do
    the relative effects of emissions from transients (startups, shutdowns,
    and load changes), seasonal variations, effects of one emission control
    device (or new additive) on another device, and measurement
    reliability. Compliance timetables are short and coal plant ``back
    ends'' are packed with emissions control devices so many strategies for
    capturing trace toxics involve modifications to existing systems or
    operations. A major industry concern is unintended consequences that
    could risk noncompliance or lead to premature corrosion or other
    failure of emissions control equipment.
        In the near term, EPRI notes particular technology development and
    demonstration needs as follows:

          Controls consistent with 90%-plus mercury reduction for
    all applications and fuels

          Managing acid gas removal including HCl and SO2
    as surrogates for acid gases

          Model, test, and develop operation and maintenance
    practices for wet and dry scrubbers which are also used to remove HAPs,
    and how to best manage cross-media impacts and implications for
    operations, such as corrosion due to high levels of chlorides or
    halogens in plant process water

          Selective catalytic reduction (SCR) NOx
    control catalyst regeneration strategies, as well as SCR catalyst
    management systems consistent with year-round system operation at >90%
    NOx removal, minimum SO3 generation, and maximum
    oxidation of elemental Hg in the flue gas

          Robust, reliable FGD systems for all coals

          More wear-tolerant, low-pressure-drop, ultra-high-
    efficiency baghouses for control of particulates from a wide range of
    fuels; improved performance of electrostatic precipitators (ESPs) for
    applications not suited to baghouses or amenable to upgrading in
    existing power plants; and demonstrated wet ESPs for acid mist and fine
    trace metal particulate capture

          Resolution of balance-of-plant issues and long-term
    operability issues for recently installed environmental controls.

        Recent Testimony by J. Edward Cichanowicz an independent consultant
    based in Saratoga, California before this Subcommittee October 4, 2011
    is available on line at the following url (http://science.house.gov/
    sites/republicans.science.house.gov/files/documents/hearings/100411--
    Cichanowicz.pdf) his testimony identifies issues with the short time
    for compliance being proposed under MACT and CSAPR. We agree with the
    concerns addressed by Mr. Cichanowicz and suggest that this creates an
    urgent need to get DOE support for understanding the HAPs issues and
    solutions. We need to understand unintended consequences, the ability
    to comply under all conditions, and the ability of the planned
    equipment to address varying coals and water compositions. Given the
    tight schedule the power industry faces for compliance, DOE could best
    support industry RD&D efforts by building upon previous work for
    mercury controls, including management of HAPs control processes to
    minimize water and/or solids contamination. In other words, power plant
    operators need help identifying and testing approaches to managing HAPs
    issues holistically for the variety of plant types and conditions. To
    summarize, specific areas the industry needs support in are:

          1.  Understanding HAPs control (mercury, HCl, trace metals)
    balance of plant issues such as corrosion, increased PM emissions,
    solid by-product disposal/use, leaching, and wastewater treatment

          2.  Development of lower cost HAPs control options to maintain
    the viability of coal-fired power plants

          3.  Understanding the variability of long term HAPs control
    effectiveness (startup, shutdown, cycling)

          4.  Understanding the underlying mechanisms for HAPs formation
    and control, as well as independent assessments of emerging emission
    controls

    Efficiency and cost improvements for gasification power plants:
    synthesis gas cleanup at higher temperatures, higher gas turbine firing
    temperatures and larger turbines, lower-energy oxygen supply
    technologies, and better plant controls

        Gasification technology uses heat and pressure to partially oxidize
    a carbonaceous fuel to create a combustible ``synthesis gas,'' which
    can be fired in a highly efficient combined cycle (gas turbine and
    steam turbine) power block. In the power industry, gasification plants
    are used with inexpensive solid fuels, such as coal or petroleum coke,
    or sustainable fuels such as biomass, and in some cases, the plants
    sell steam or hydrogen as well as electricity. Gasification technology
    is also offers a relatively lower incremental cost for incorporation of
    CO2 capture and compression, relative to other fossil power
    technologies. However, a ``base'' gasification combined cycle power
    plant (i.e., one without CO2 capture and compression)
    usually costs more than other types of fossil power plants. Hence there
    is an RD&D focus on improving gasifier, power block, and auxiliaries
    performance and cost by equipment improvements and improved
    integration. DOE has long and active history in coal gasification RD&D,
    providing a knowledge and experience base to manage an accelerated
    program of competitiveness-driven gasification combined cycle
    technology development and demonstration, which would parallel ongoing
    efforts on integrating CO2 capture and compression.
        The synthesis gas, or syngas, produced in a gasifier consists
    chiefly of CO, with varying degrees of methane and heavier
    hydrocarbons, hydrogen, water vapor, CO2, nitrogen, and H2S,
    COS, and other sulfur compounds. To prevent erosion and corrosion in
    the gas turbine and associated heat exchangers and ducting, and to
    limit stack emission of sulfur species, the ``raw'' syngas is cleaned
    of particulate matter and sulfur compounds. Traditionally, this is
    accomplished by cooling the syngas with a water quench and/or a series
    of heat exchangers, and treating it with sulfur removal processes
    commonly used in the petrochemical industry. Because cooling reduces
    the thermodynamic properties of syngas, plant designers would prefer a
    reliable and effective ``warm gas'' cleanup process (which is actually
    quite hot). This has been the subject of numerous DOE RD&D efforts, and
    new technical options are ready for pilot- and demonstration-scale
    testing so this needs to be emphasized in the DOE portfolio.
        To capture CO2 from a gasification combined cycle power
    plant, an additional step (known as water-gas shift) is added to the
    syngas cleanup train, in which water vapor and syngas react in the
    presence of a catalyst to form hydrogen and CO2. Established
    chemical industry processes can remove the CO2, leaving a
    high-hydrogen content that can be combusted in the gas turbine with
    little CO2 formation. Emerging technologies, such as
    membranes, may be able to separate the hydrogen from CO2
    with less energy and in more compact vessels. One promising approach
    couples the membrane with the water-gas shift reaction, saving
    additional equipment, space, and cost and could benefit from additional
    support.
        Gas turbines designed specifically to combust high-hydrogen-content
    syngas are being built, tested, and commercially introduced. These will
    be essential to reliable and efficient gasification power systems with
    CO2 capture and compression. DOE development and
    demonstration funding has contributed to success in this area. Equally
    important in EPRI's view is RD&D to move gas turbine technology to
    higher firing temperatures to improve efficiency and output--for both
    conventional and high-hydrogen syngas. EPRI economic analyses show
    larger and more efficient gas turbines to be perhaps the single most
    important step to improving integrated gasification combined cycle
    power plant economics. Although the commitment of gas turbine
    manufacturers is essential to ultimate success in realizing new
    commercial offerings, advances in the underpinning materials, design
    concepts and integration engineering can advance with DOE and industry
    cooperative efforts.
        Many gasifier designs use a nearly pure oxygen input to the
    gasification reaction. That oxygen has traditionally been produced by
    cryogenic air separation units, which tend to be large, expensive, and
    large energy consumers. DOE has been funding lower-energy alternative
    oxygen production technologies, and EPRI has assembled an industry team
    to participate in one such effort, the scale-up and testing of Air
    Products' ion transport membrane (ITM) technology. EPRI is assisting in
    assuring that the product design and test program meet power company
    ``real world'' operation and maintenance criteria and also in
    gasification plant integration engineering.
        EPRI believes that this model of cooperative DOE, industry team,
    and technology developer RD&D speeds the path to successful deployment
    and attainment of electricity cost reductions for the American economy.
    EPRI is also investigating whether a variation in the process can be
    used for supplying oxygen to future oxygen-fired systems (an early
    example of an oxygen-fired system is the FutureGen 2.0 project).
    Additional development and demonstrations in this area can support
    cost, efficiency and energy security from a variety of coal utilization
    processes.
        Gasification power plants will also benefit substantially from
    improvements in process measurement and control. For example, durable
    fast sensors that provide real-time readings of temperatures and gas
    composition within the gasifier would provide operators with more
    accurate and timely measurement of syngas heating value, which in turn
    could be fed forward to power block controls. For the last several
    years, an EPRI program has been investigating the use of laser-based
    sensors for this purpose, and scale-up and demonstration funding is
    still needed.
          For additional information on gasification power plant
    RD&D opportunities, refer to EPRI publication 1023468, Advanced Coal
    Power Systems with CO2 Capture: EPRI's CoalFleet for
    Tomorrow Visionr - 2011 Update.

    Sustaining vital DOE RD&D on CO2 capture, utilization, and
                        storage

        EPRI's analysis of options needed for the future validates DOE's
    high prioritization of RD&D to establish effective, economical, and
    publicly acceptable technologies to reduce atmospheric greenhouse gas
    buildup. This supports DOE's work on coal-based technology including
    CO2 capture at power plants, cost-effective cleanup and
    compression for on-site geologic injection or transportation off-site,
    CO2 utilization where economical, and secure long-term
    storage away from the atmosphere. In particular, EPRI identifies the
    following current work as warranting continued RD&D to achieve the cost
    and efficiency improvements necessary to allow viable commercial
    deployment:

          1.  R&D, scale-up, and integrated operation of coal power systems
    based on gasification and oxy-combustion technologies (presently
    through Clean Coal Power Initiative and American Reinvestment and
    Recovery Act funding, loan guarantees, and other mechanisms plus base
    program DOE funding)

          2.  CO2 capture, compression, and storage RD&D to seek
    breakthrough innovations for low-cost capture, lower-energy
    compression, and for larger scale integrated projects, to understand
    operational flexibility, cost reduction options, and techniques to
    verify long-term storage

          3.  CO2 utilization: because CO2 used for
    enhanced oil recovery (or other means of generating revenue) will be
    essential to jump-starting CCS deployment, and may also help in
    reducing dependence on foreign oil, additional geologic
    characterization of areas near concentrations of power plants may be a
    logical follow-on under the DOE regional carbon sequestration
    partnerships programs

        Chairman Harris. Thank you, and I thank the panel for the
    testimony. Reminding Members Committee rules limit questioning
    to five minutes.
        The chair at this point will open the round of questions,
    and I recognize myself for the first five minutes.
        Mr. Klara, let me just ask a question. The CCS projects
    that were funded from the first Stimulus Bill, was the total
    allotted around a little over $3 billion? Is that correct?
        Mr. Klara. The Stimulus Bill provided $3.4 billion but not
    all that went to demonstrations.
        Chairman Harris. How much of that----
        Mr. Klara. Probably about a little more than $2 billion
    went to demonstrations.
        Chairman Harris. And of that $2 billion how much has been
    spent in the last year and a half?
        Mr. Klara. The spending on the Stimulus so far is probably
    in the neighborhood of $500 million.
        Chairman Harris. So the Stimulus Bill passed a year and a
    half ago, which was supposed to provide immediate jobs
    obviously at least $1-1/2 billion of that is sitting around,
    something that you are waiting to spend.
        Mr. Klara. Well, the----
        Chairman Harris. Or can be spent but has not been spent,
    hasn't created a job.
        Mr. Klara. No. There have been some jobs created with----
        Chairman Harris. Out of that $1-1/5 billion that hasn't
    been allotted. Is that an accurate representation of the
    timeline of things?
        Mr. Klara. Yes.
        Chairman Harris. Okay. Those projects, of the ones that are
    going to be, that were funded, what is your belief, how many of
    those will be successfully implemented to the point where all
    that money will be spent?
        Mr. Klara. Well, we have had one project drop out which was
    indicated by Mr. Akins.
        Chairman Harris. Okay.
        Mr. Klara. Our AEP project. We have seven projects
    currently being funded with Stimulus dollars, and right now all
    of those projects continue to go forward in a positive
    direction.
        Chairman Harris. Now, was there any project further along
    than the AEP project?
        Mr. Klara. Yes. We actually have three projects that are--
    have already started construction. One is with Southern
    Company, another is with Archer Daniels Midland, and another
    with Air Products. So, yes, three of the projects are actually
    starting construction, and I would add, too, that the Stimulus
    requirements were pretty specific on putting a lot of the money
    on what we call these demonstration projects, and I think what
    you will hear from members of the panel is when you deal with
    building demonstration projects, retrofitting a plant or
    building an entirely new plant----
        Chairman Harris. Right.
        Mr. Klara. --that the spending profile was such that it
    takes a couple----
        Chairman Harris. Yes. They are not shovel ready, are they?
        Mr. Klara. No. Correct.
        Chairman Harris. Right, and so that is what I thought.
        Let me ask a question, Mr. Dalton, I guess if I summarize
    your testimony, you kind of believe that we really ought to
    have a diversified approach to research on these coal-related
    areas.
        Mr. Dalton. Yes, Mr. Chairman.
        Chairman Harris. Okay.
        Mr. Dalton. Absolutely. We need all the options, coal,
    nuclear, renewables, several options.
        Chairman Harris. So that the movement in certainly with
    regards to the Stimulus Bill and in the President's budget
    toward really a concentration on just CCS with really decreased
    funding to the other areas is probably in your opinion might
    not be the right direction to go.
        Mr. Dalton. Well, we see that the addition of work on very
    high efficiency, getting that to the----
        Chairman Harris. Right.
        Mr. Dalton. --demonstration stage is critical, and there
    are new areas that are opening up partly due to regulation, on
    water and HAPs--that are requiring some additional----
        Chairman Harris. Right. There might be very useful places
    for that funding. Yes. I can understand that.
        What is the--and a question to Mr. Akins and Ms. Gellici, I
    mean, what is the future for, the outlook for building new
    power plants? Mr. Akins, you have said you have one, the ultra-
    supercritical plant under construction. If I could just ask
    about how much more does that cost to build than a regular
    plant in a conventional, I guess we call them sub-critical
    plants.
        Mr. Akins. Typically a sub-critical plant would probably be
    on the order of $1.5 billion, maybe $1.6 billion. This one is
    around $2.1 billion to $2.3.
        Chairman Harris. And it consumes how much less fuel is your
    consumption per----
        Mr. Akins. Eleven percent.
        Chairman Harris. Eleven percent less, and of course, with
    that it is also less pollution because you are burning less
    fuel I take it----
        Mr. Akins. Yes. Absolutely.
        Chairman Harris. --with that. Okay, and so to the rate
    payer, I mean, what is your estimate of how much that increases
    the cost of the electricity?
        Mr. Akins. Generated?
        Chairman Harris. Yes.
        Mr. Akins. For the power plants?
        Chairman Harris. You go to the ultra-supercritical versus
    the conventional.
        Mr. Akins. Over the lifetime of the plant----
        Chairman Harris. Yes.
        Mr. Akins. --it will be relatively negligible compared to
    the sub-critical.
        Chairman Harris. Negligible.
        Mr. Akins. And from an environmental standpoint you----
        Chairman Harris. Beneficial. So the testimony we have
    heard, and well, I guess we didn't hear it but I was going to
    ask Mr. Klara actually to substantiate that, is it true that,
    in fact, a goal is only a 30 percent increase in costs?
        Mr. Klara. Well, we have two pathways.
        Chairman Harris. Right.
        Mr. Klara. The one pathway is for new plants gasification
    which would be 10 percent----
        Chairman Harris. Right.
        Mr. Klara. --and the other is for pulverized coal-based
    systems, which is what you are talking about with Mr. Akins,
    and yes, there is a 35 percent increase with the cost of
    adding----
        Chairman Harris. For the CCS technology.
        Mr. Klara. Correct.
        Chairman Harris. Right, but when you are talking about
    ultra-supercritical, that is not--that has nothing to do with
    CCS. Right? That is just thermal.
        Mr. Klara. That is correct.
        Chairman Harris. Right. So, in fact, if what you are
    looking to do is decrease pollution and keep the costs over
    the--of the lifecycle of the plant relatively stable, you
    wouldn't pick a CCS technology, I mean, because, I mean, if
    our, I mean, I can guarantee that if our research goal is to
    only increase the cost by 30 percent, it is going to increase
    at least 30 percent. Is there any reason to believe, Mr. Klara,
    that we are going to hit below that target in the next few
    years for increased costs? Well, we won't know until the
    demonstration projects are done, I guess.
        Mr. Klara. Well, yeah. You are correct that when you add
    CCS to a plant that it adds cost. Within our program we are
    trying to look at a no-regrets path forward, and part of that
    no-regrets, for example, is that if you could use the carbon
    dioxide that is captured for valued-added stream back such as
    enhanced oil recovery, now you can potentially have a scenario
    where it is----
        Chairman Harris. Sure. A win-win.
        Mr. Klara. --neutral. Yeah. Win-win.
        Chairman Harris. Right.
        Mr. Klara. Right.
        Chairman Harris. Thank you.
        Mr. Miller.
        Mr. Miller. Thank you, Mr. Chairman. I was Chair of the
    Subcommittee on Investigations and Oversight of the Science
    Committee in the two previous Congresses to this one, and
    questioned and criticized the Bush Administration for pulling,
    without explanation, the funding for Future Gen, which was the
    principal, very ambitious carbon sequestration effort for coal.
    So I do support R&D for the coal industry.
        Mr. Dalton urged DOE to help the coal power industry meet
    competitive challenges. Ms. Gellici, Ms. Gellici, by the way, I
    appreciate your using, speaking slowly and using--avoiding big
    words in your testimony so I could understand it. You said that
    the sole focus on basic engineering and research will not
    advance commercial technologies to the marketplace, and the
    Department of Energy funding of late-stage, large-scale
    demonstration activities advances the efficiency, reduces
    capital costs, and increases the commercial availability of the
    advanced coal technologies.
        Do all of you agree with those statements? Do any of you
    disagree with those statements? I am not seeing any movement at
    all. Either heads up or down. I assume no one disagreed at
    least.
        Why does, again, I supported research, R&D funding for
    Future Gen but why is the coal industry not capable of doing
    that research themselves? The basic research, to applied
    research, to demonstration on their own. What are the reasons
    that justify government funding for research that helps that
    industry?
        Mr. Akins.
        Mr. Akins. Sure. I will be happy to answer that. You know,
    when you start with these technologies, it is basically bench-
    top scale, and then it moves to more proving the technology.
    Moving to commercial scale is an entirely different approach
    where the magnitude of the dollars associated with it are
    important to be able to deal with from a cost-recovery
    perspective. In our business we have to be able to recover our
    costs from someone, and we invested over $100 million dollars
    on the integrated carbon capture and storage project I talked
    about, and our shareholders wound up footing that bill.
        For--to upscale this project to another CCS project would
    be on the order of $700 to a billion dollars, and when you talk
    about that kind of dollar commitment, there has to be some
    sense of certainty around not only legislation or regulation
    but also for us to be able to recover from our costs from the
    customers. We have to be able to have some requirement to do
    so.
        Mr. Miller. So the funding for that research and
    development does not crowd out private investment in
    innovation?
        Mr. Akins. The funding for the research if the government
    were to fund it?
        Mr. Miller. Right.
        Mr. Akins. If the government were to fund that type of
    research, we could advance the technology.
        Mr. Miller. And it wouldn't discourage private investment.
    It wouldn't crowd out private investment.
        Mr. Akins. I think at the demonstration scale you could
    have private investors involved with that as well.
        Mr. Miller. Okay.
        Mr. Akins. I think it is a public-private partnership.
        Mr. Miller. All right. Well, do you think that the same
    arguments apply to the less mature technologies? One of you
    suggested we should be doing all coal and nuclear and the newer
    technologies as well. Do the same arguments not apply to them,
    and if not, why not?
        Mr. Akins. Are you asking me?
        Mr. Miller. Yes, sir. You were--you volunteered earlier
    so----
        Mr. Akins. Okay. Yeah. I think the advancement of the
    technology is needed regardless. If we are going to have a
    secure energy future in this country, it includes all
    resources, and the government has to be very selective about--
    and make sure we maximize the value of taxpayer funds to
    support these kind of investments, but it is clearly important
    to advance the technologies on all fronts.
        Mr. Miller. Mr. Foerter, the industry often has estimates
    on what compliance with EPA regulations will cost, and it
    usually assumes the worst possible case, the most expensive,
    the most time consuming, retrofits, wet scrubbers, cooling
    towers. All that will be required. But it appears in most cases
    there are other technological--there are other technology
    options that are less costly and can be implemented more
    quickly.
        Could you describe the options the power companies might
    have and what the biggest factors are in how they choose
    between technologies, how to proceed, what the technological
    readiness is of those various options?
        Mr. Foerter. Yes. In fact, that is an astute difference
    between the difference of trying to predict what is going to go
    into the marketplace and what the marketplace actually creates.
    When EPA makes predictions, they use big monolithic type of
    technologies, and that is where the big costs come out.
        But when you get into the marketplace and there is--it is
    quite different, and quite frankly, our industry moves with
    that market, what the demands are and what the changes are.
    Things like ash handling and water cooling issues. All those
    things start to come in. We start looking towards dryer
    systems, so a wet scrubber becomes not the favorite, and you
    start moving down that same chain and looking at dry systems or
    direct sorbent injection kind of systems. Direct sorbent
    injection installed in a couple of months. A wet scrubber takes
    30 plus months to install it.
        So it is very different in that kind of thing. Wet
    scrubbers, very expensive, direct sorbent injection, relatively
    inexpensive. Your cost--the biggest cost there is going to be
    the reagent that you are continually feeding into the system.
    You turn it on, and you turn it off, and that is where your
    costs begin and end.
        So we have really diversified within our system, and I,
    when I talk about our pollution control technologies, if I
    started to move towards saying just wet FGD for scrubbing, you
    know, there would be a lot of my members who would be very
    unhappy because they are all out there competing in the
    marketplace to sell all the different suites of technologies,
    and the same thing happens with NOx and every other pollutant
    that is out there.
        Mr. Miller. My time has expired.
        Chairman Harris. Okay. Thank you. The gentleman from
    Maryland.
        Mr. Bartlett. The other gentleman from Maryland. Thank you
    very much.
        We use energy in basically two different forms. We use
    electrical energy for a great variety of things, and we use
    liquid fuels, and it is hard for us to compare the relative
    costs of those because they are used in very different domains.
        But when we can use them for the same thing like in an
    electric car, we find that you have about half the cost per
    mile in the electric car that you do in a car using liquid
    fuels. So we know that the electric power is much cheaper per
    unit of power than liquid fuels. The average American should be
    a big fan of coal because the electricity is so cheap largely
    because coal is the source of the base load production for most
    of our electricity.
        Ms. Gellici, you said that we have 200 years of coal. Is
    that a current use rate?
        Ms. Gellici. That is correct. Yeah.
        Mr. Bartlett. Okay. Be careful when you hear somebody say
    we have so many years of something at current use rates. Do you
    suspect that we will increase the rate at which we use coal?
        Ms. Gellici. Yeah. The latest projections are that we will
    probably increase our use of coal by about 25 percent.
        Mr. Bartlett. Twenty-five percent. Wow. Do you know what
    that does? If you increase the use of coal only two percent----
        Ms. Gellici. Uh-huh.
        Mr. Bartlett. --two percent growth of something, it doubles
    in 35 years. It is four times bigger in 70 years, it is eight
    times bigger in 105 years, it is 16 times bigger in 140 years.
    That means that your 200 years of coal, if we increase its use
    only two percent, you suggested 25 percent, that dramatically
    reduces the time. But if the increase is only two percent, that
    200 years now shrinks to 70 years. So be very careful when you
    hear somebody say we have so many years of something at current
    use rates, because our economy is growing, our use of energy is
    growing. That is very likely to increase.
        You know, that is not a very long time, is it? Seventy
    years. And then it is all gone if we increase its use only two
    percent. You said we might increase its use 25 percent, which
    would dramatically reduce the time that it is available to us.
        I would ask to have a couple of slides loaded into our
    little magic system. I don't know if it did or not but--oh,
    there they are up there. Okay. Well, I can't read the end of
    that. Does that say 35 years or 30 years? That one says 35
    years. Okay. We are talking about secure energy future, and
    this is a chart produced by the IEA. This is a creature of the
    OECD, one of the two best entities in the world tracking the
    use and predicting the continued production of liquid fuels.
        If you look at that, you will see if--I am sure that is--
    yes, that is the one that ends in '35. They are predicting that
    by '35, we will have, will be producing only 96 million barrels
    a day. Now we are producing 84 million barrels a day. Just two
    years before this their prediction had us in--by 2030,
    producing 106 million barrels a day.
        Notice the dramatic reduction in the production of
    conventional oil. That is the dark blue on the bottom. It is
    now plateaued for four years at 84 million barrels of oil a
    day. That plateau was reached in our country in 1970.
        With everything we have done since then since like finding
    a lot of oil in Alaska and the Gulf of Mexico and drilling more
    oil wells than all the rest of the world put together, today we
    produce half the oil that we did in 1970. The United States
    certainly has to be a microcosm of the world, and you see those
    two big wedges in there? The medium blue wedge and the light
    blue wedge, the light blue wedge is oil that we are going to
    get from fields that we discovered that are too tough to
    develop like under 7,000 feet of water and 30,000 feet of rock
    out in the Gulf of Mexico. The medium blue field there is
    fields yet to be discovered. Those two wedges, if the United
    States is any indication what will happen, will not occur.
        So we are talking about a secure energy future. The
    production of liquid fuels for the future is going to do in the
    world what it has done in the United States, and it is
    inexorable. We could not turn it around with all of our
    creativity and innovation, and so this is where the world is
    going, and we are talking about a secure energy future since
    that was a part of the title of our hearing, I just wanted to
    use this opportunity to present those graphs to show that we
    have got some big challenges facing us.
        Thank you all for what you are doing to help us have more
    energy.
        [The slides follows:]

    Slides Presented by Mr. Roscoe Bartlett, Committee on Science Space and
                                   Technology

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Harris. Thank you very much.
        I recognize the chairman, the gentleman from Texas.
        Mr. Hall. I thank you, Mr. Chairman. I want to talk a
    little about the EPA's war on energy, which is really the
    President's war on energy, which this Committee and this
    Chairman has devoted a lot of time and effort to examine over
    the last few months.
        Specifically, with regard to coal, we have looked at the
    science behind the whole package of Clean Air Act rules EPA's
    pursuing, and we held a hearing in September on the Cross-State
    Rule. I don't know if you all know about that or you remember
    about it or you read the reports within it, which would force
    the closure of significant coal-fired electricity capacity,
    even in my State of Texas, as close to me as I know about, and
    I don't know how much other all over the country. But we would
    lose 500 jobs in one plant, in one little district there.
        EPA announced revisions to this rule last week after some
    weaknesses in the technical assumptions were exposed and after
    Dr. Broun and this chairman, Dr. Harris, and other subcommittee
    chairmen and Congressman Rohrabacher had raised that Billy
    Graham preaches against all the time on it, and I don't think
    that is enough. And I have called for EPA to simply scrap the
    rule and start all over.
        My question is this, primarily Mr. Akins, but I welcome
    thoughts from anybody else that wants to chime in on it. How do
    the compliance deadlines under mercury MACT and the Cross-State
    rules compare with the time it takes to install the emissions
    control equipment necessary to achieve compliance with these
    rules?
        That is a question, and what happens when you can't install
    equipment in time under these rules?
        Mr. Akins. Chairman Hall, it is something we have done
    quite a bit of analysis on. It typically takes us about five
    years to put a scrubber in, and I think EPA had assumed three
    years. I don't know where their numbers come from. I will let
    them cover their numbers, but with our numbers they are based
    upon substantial amount of work done. We spent $7.2 billion in
    the last--over the last decade putting in scrubbers and SCRs,
    Selective Catalytic Reduction devices. It typically takes about
    five years because we have to go through regulatory approvals
    with the In-State Commissions before we are able to move
    forward with the projects. And then by the time you get through
    with engineering, project design, construction, those types of
    things, a procurement of supplies, you are talking about five
    years.
        So--and as what we have looked at is the staging of all
    those projects, it is just impossible to get the number of
    projects done in that amount of time. If we--for AEP it would
    force the retirement of about 6,000 megawatts of generation. If
    you impute that, we are about ten percent of the coal-fired
    capacity in the country. That would be about 60,000, which is
    right in line of many of the studies that have been done.
        So if we can't get the projects done, we either retire the
    units or we put them on idle. I mean, we just don't run them
    for a period of time, but then that capacity is not available
    to customers during peak periods like in Texas over the summer.
        Mr. Hall. Well, listening to your figures I think in the
    Cross-State rule I think they gave from now to the first of the
    year----
        Mr. Akins. That is right.
        Mr. Hall. --to correct that. Just impossible. Absolutely
    impossible to do that. Impossible even to plan it probably.
        Mr. Akins. That is right.
        Mr. Hall. And yes, ma'am.
        Ms. Gellici. Yes. I think this is one of other major
    differences between the current regulations as proposed and the
    ones that we had seen in the past. We have much success in
    meeting the SO2 and NOX reduction
    regulations that have been imposed in the past because we had a
    five to ten year compliance schedule. The Acid Rain Program was
    passed in 1980, and we had five years, five to ten years for
    compliance.
        What we are looking at now is extremely truncated
    compliance deadlines, sometimes three years if we are lucky but
    oftentimes much shorter. So----
        Mr. Hall. Well, thank you for that, and Mr. Akins, another
    thing. Can you explain how the new EPA rules could threaten the
    electric grid reliability? Just address that. I think I have--
    --
        Mr. Akins. We have done----
        Mr. Hall. --about 30 seconds left.
        Mr. Akins. --an extensive amount of analysis. When you look
    at the security of the electric grid, these plants are located
    in particular areas for reasons, and primarily they supply
    black start which restarts the system in a blackout or voltage
    support, which supports the voltage so that, basically so power
    could be delivered where it needs to be delivered.
        So you look at these plants in these localized areas, if
    you truncate all these units at one time, then we are
    essentially shutting them down, and they are not available to
    the grid. And in that context you are dealing with serious
    reliability implications, and we have looked at it on our
    system in a lot of detail and have confirmed that is the case,
    and in fact, the regional transmition organizations like ERCOT,
    Southwest Power Pool, and PJM have verified that.
        Mr. Hall. I thank you, and my time is up. I thank you for
    your service, each of you, and for coming here today, and I
    thank the chairman for holding this hearing.
        I yield back.
        Chairman Harris. Thank you very much, and we still have
    time before we have to go to see the President of Korea, so we
    will have another round of questioning.
        I will recognize myself for the first five minutes.
        Mr. Klara, let me ask you, is--if those additional projects
    fail to be--to reach completion, the CCS projects with the
    Stimulus money, what happens to that money that is not spent?
    And I guess we can just ask upfront, you know, the AEP project
    that is not--it looks like it is not going to continue. I mean,
    is that money going to come back to pay down the deficit, does
    it--what does it do? What happens to that money?
        Mr. Klara. Well, what we know or what I know is that any of
    the Stimulus funds will go back to the Treasury. Where it goes
    from there is beyond my ability to know, but, yes, any of the
    Stimulus funding that is not used will go back to the Treasury.
        Chairman Harris. Okay. So that is your belief. Okay. Very
    good. I am glad to hear that because we got a little deficit
    running.
        I am going to ask you also, you know, I think everyone kind
    of acknowledges cap and trade isn't going anywhere, and in the
    absence of cap and trade, you know, they probably--I would
    imagine there is really no economic way that you could have
    carbon restrictions that wouldn't make electricity rates
    skyrocket.
        So given that what is the Administration's position on the
    future of coal in America? I mean, is it--is CCS really going
    to be financially viable at all unless you had a cap and trade
    system? I mean----
        Mr. Klara. Well, we have tried to design the program as a
    no-regret strategy as I somewhat inferred earlier, and what I
    mean by that is we have tried to design it such that the key
    developments that come out of the program are going to be
    valuable whether there is a carbon----
        Chairman Harris. Well, let us assume that that is not
    scalable. Let us just make the assumption that we are not going
    to grow enough algae to use the CO2, and we are not
    going to, you know, that, yes, there will be some secondary oil
    recovery, but let us assume that that is a minimal benefit. Or
    is that what the Administration is banking on, that we are
    actually going to have some incredible breakthrough, and we are
    going to be able to use every molecule of CO2 from a
    burnt piece of coal to do something else?
        Mr. Klara. Well, we believe, looking at the R&D portfolio
    and if it is successful. So if you make the assumption that it
    can be successful----
        Chairman Harris. I know, but Solyndra made the assumption,
    too, and it is a lot of money and a lot of effort that it goes
    to the negation of other efforts. It is really the bottom line
    of the hearing. So--but I think you have answered the question,
    so thank you for that.
        Mr. Foerter, you made the statement that building new
    plants is problematic, but Mr. Akins sitting next to you said,
    wait a minute. They just built an ultra-supercritical plant,
    and it is going to have negligible effect over its lifetime on
    the cost of energy, and it is going to burn cleaner, it is
    going to burn more efficiently. Why do you say it is
    problematic?
        Mr. Foerter. Well, and we agree on the thermal efficiency
    and it is a better, you know, it has an upfront CO2
    benefit from it as Janet Gellici kind of talked about in the
    different levels, and if you ask Mr. Akins about how long it
    took to go through that permit and how problematic that process
    may have been, it was very, very difficult.
        Chairman Harris. So it is the regulations you mean?
        Mr. Foerter. It was a process of trying to get--there is no
    infrastructure right now that allows for power plants to be
    built without sort of a CO2 kind of issue. So the
    real issue comes back to CO2.
        Chairman Harris. Right. So if we negated the CO2
    issue, let us say we put it on hold for awhile, we could build
    plants that actually are more efficient and cleaner and could
    supply energy from coal.
        Mr. Foerter. Well, the idea was that we were going to build
    new plants that could be retrofitted with a technology which
    would be proven, and that that is what AEP and others were
    trying to do. But building new plants, there is an upfront----
        Chairman Harris. Let me just clarify something because the
    plant Mr. Akins is building actually produces less CO2
    per unit of energy.
        Mr. Foerter. But they go through permit processes which are
    strenuous----
        Chairman Harris. Right, but it--just so, I mean, there are
    ways to do it without sequestration I guess is what I am
    getting to with that.
        Mr. Foerter. Well, up front you do get the reduction.
    Eventually you are--if you are trying to look to a 70 or 90
    percent reduction on the CO2, you are going to start
    using like a technology they were trying to demonstrate fully,
    scale, and that is the chilled ammonia chilled ammonia process
    which was working well at a smaller scale.
        Chairman Harris. Right.
        Mr. Foerter. They are getting ready to go to the next
    level.
        Chairman Harris. I don't know. It sounds like an ultra-
    supercritical might be the next level. I mean, your testimony
    did mention the availability of dry sorbent injection as a
    technology option, pollution control, but as you know, EPA's
    proposed utility rule relies heavily on this technological fix.
        Which coal-fired units in the United States utilize that
    dry sorbent injection to capture more than 90 percent of acid
    gases?
        Mr. Foerter. Well, the dry sorbent injection and EPA's--we
    even commented on this. We think they have overused the DSI
    part of it. We think they will go drier systems, which are dry
    scrubbers and circulating dry scrubbers. We don't think we are
    necessarily going to see the wet type scrubbers that Mr. Akins
    was talking about that take five years to put in place. We will
    see something that takes a lot less install time, permits still
    have to be found, but we think that EPA, and we have told them
    we----
        Chairman Harris. Those permits again. Thank you very much.
    I am out of time.
        Mr. Foerter. Those permits are always there. Yeah.
        Chairman Harris. I recognize Mr. Miller.
        Mr. Miller. Thank you, Mr. Chairman.
        I have questions that kind of pursue the line of
    questioning I had earlier for Mr. Foerter. Critics of the EPA
    regulations say that the regulations will cause, will force a
    number of coal plants to close and even compromise the
    reliability of our electric system, but the projections of the
    number of retirements do vary greatly, and the estimates as Mr.
    Foerter said of costs also vary greatly. And it appears that
    some that are supposedly going to close because of EPA
    requirements were scheduled to retire anyway. That happens.
    Plants wear out and also technology becomes obsolete. It is
    replaced by other technologies.
        Do any of you see the likely coal plant retirement rates--
    or, how do you see the likely coal plant retirement rates under
    current expectations, business as usual, versus that under EPA
    regulations?
        Mr. Foerter. If I could, if you have been watching, you
    sort of have a trend of what the announcements are for
    retirements and what the predictions are. I just saw one
    yesterday. ICF had said 68 megawatts or gigawatts in
    retirement, have now revised that down to around 40. There has
    been--so you start putting more and new information in,
    including final rules, not proposed rules, information. You
    start seeing those numbers of retirements come down quite a
    bit.
        But on these plants we have 50 and 60-year-old air
    pollution control technologies on some of these plants. So, the
    technologies wear out, the boilers can wear out, the
    technologies are put on them, wear out. They lack any useful
    life in them.
        So some of these are not even supplied with coal anymore,
    and so they are just sitting there waiting for a decision to be
    made, and decisions are starting to be made.
        Mr. Miller. Okay. Can the rest of you kind of roughly
    describe what plants you think might be retired and how they
    compare in age and efficiency and the environmental profile
    compared to the rest of the coal fleet?
        Mr. Akins. Well, typically, I can speak for our system. We
    have several of the 50, 60-year-old units, and the units
    continue to operate fine. You have made a lot of capital
    commitments associated with the continuing operation of those
    plants.
        One thing I wanted to clarify was when we talk about--they
    were slated to retire anyway, that is true. We plan on retiring
    several of these units through the 2020 timeframe and beyond.
    The issue is the compliance time that forces those retirements
    on an earlier basis.
        So if we are talking about 2014, or 2015, you are
    effectively truncating all of these units at the same time, and
    that is the part that we have an issue with. These units are
    going to gradually retire. They are intended to do that. We
    will make decisions on the scrubber technology, on whatever,
    dry sorbent injection or whatever, but many of these units will
    probably not survive, but we know that, and we are making that
    transformation to a new energy future, I think. My biggest
    issue is that people need to have the patience to get there. I
    mean, this is a heavy capitalized industry, and when we talk
    about retiring units, they are done over time, they are done in
    the manner to preserve the reliability of the system, and to
    mitigate cost increases to customers.
        So those are the kinds of things we look at.
        Mr. Miller. Do the regulators, in fact, have the authority
    to disallow closing a plant if it would threaten reliability,
    electrical reliability?
        Mr. Akins. Yes. They do. The in-state regulator would have
    to give approval for retirement of the units.
        Mr. Miller. Right.
        Mr. Akins. And reliability of--the priority in that, they
    have the resource requirements within the state, the regional
    transmission organizations, they also have the authority which
    is an extension of FERC, and then obviously if the EPA requires
    something, then we are stuck between three agencies trying to
    determine what the heck to do.
        Mr. Miller. Okay. Mr. Foerter, you said that some of the
    estimates of cost were high because they assume that the most
    expensive technology would have to be used, but do you think
    the estimates about forcing plants to close would change when
    the industry really did look at the technological, regulatory,
    and financial options available to them?
        Mr. Foerter. Yeah. I think it would change because they
    were looking at it like the example I would use with Mr. Akins
    was five years for building this scrubber. Well, we are not
    building any big scrubbers like that anymore, and for that
    first 75 percent, we were building lots of big wet scrubbers. I
    mean, that is what we spent our last five to seven years doing.
        As we move into the future, we are moving towards things
    that have less capital cost, so if you got an old car, and you
    want to--you try to fix it up a little bit, you are not going
    to go in there and put a new engine, a new transmission and
    everything else. You are going to try to do what you can with
    less capital costs. It might mean you use some fuel additives,
    some things to keep it going, and that is exactly what is
    happening, could happen in this industry. We can keep these
    things running as long as we can.
        There was a good testimony in another hearing where they
    said they tried to close down a power plant, and then they went
    through this due diligence process, took 29 months for
    everybody to agree this is how they were going to do a closure
    on that plant for reliability issues. So it does work really
    well. We have a lot of confidence. In fact, we have heard that
    reliability card used many, many times before and it just
    doesn't happen, and we have done some very, very big capital
    projects like SCR where the boiler goes out for quite a bit and
    FGD, where these are much bigger tax construction projects.
        So it hasn't happened in the past. I am not exactly sure
    why I think it is going to happen in the future.
        Mr. Akins. If I could respond to that, is it okay?
        Mr. Miller. Sure. It is up to the chairman. My time has
    expired.
        Chairman Harris. Sure.
        Mr. Akins. Okay. The first thing is we have spent $7.2
    billion on investments in scrubbers and SCRs. We continue to
    build large scrubbers and SCRs throughout out system. For 500
    megawatt units, for 1,300 megawatt units, and we have achieved
    over 80 percent reduction in SOx and NOx emissions from our
    power plants.
        To get the other 20 percent or 15 to 20 percent is another
    $6 to $8 billion, and that is what we are slated to spend in
    the future on these plants. So, there are smaller, more elegant
    solutions that are cheaper, that are less efficient, but
    scrubbers and SCRs continue to be built.
        Mr. Foerter. If it is helpful, as they start building--that
    means that these units they expect to keep around for a long
    time, and they are willing to make the large capital
    investments, and the way that the Clean Air Act is set up and
    particularly the max standards is there is more time than is
    provided there. In fact, we have used that more time in many
    other industries. Someone was telling me about metal smelters.
    You can't just shut a unit down and not have, you know, you
    still have to have the capacity.
        Same thing happens here. There is lots of flexibility, and
    EPA has reached as hard as they can finding that flexibility,
    and I think they have done a pretty good job. No one is going
    to shut down units that are critical to reliability in the
    Nation's power.
        Chairman Harris. Thank you. Let me just take 30 seconds for
    a follow-up with Mr. Akins.
        The--with regards to the dry sorbent technology, is that an
    answer for a lot of your plants? That is something that you
    are----
        Mr. Akins. Yeah. We are utilizing dry sorbent technology,
    but in a lot of cases you get the maximum benefit for scrubber,
    for removal efficiencies you are going to the larger scrubbers,
    and for the larger units that is what you put in place.
        Chairman Harris. The dry sorbent? Not--you can't do it.
        Mr. Akins. We have dry scrubbers, we have wet scrubbers
    but--and the dry sorbent injection is a smaller, less----
        Chairman Harris. Smaller scale.
        Mr. Akins. --efficient solution.
        Chairman Harris. Thank you, and before we--and in the
    last--if you would in the last minute, I am just going to ask
    each of you if--we are going to, obviously going to spend money
    on CCS. We are going to spend research money that is in the
    pipeline. What should our number two priority be with regards
    to government-funded coal research?
        Just go down the line. Mr. Klara. What do you think? You
    had a chance, all of you had a chance to look over what you
    think we--where you think we should be spending the money.
        Mr. Klara. Well, I think many of the things that were
    mentioned here, for example, water management is a key.
        Chairman Harris. You think water management.
        Mr. Klara. And you have heard that time and time again.
        Chairman Harris. Okay. Ms. Gellici.
        Ms. Gellici. Efficiency improvements. I think even just
    through simple operations and maintenance techniques we can
    pick up three to five percent efficiencies at our existing
    power plants. We have got some new source review issues that
    are preventing us from doing that, but there is still quite a
    bit of low-hanging fruit out there that we can reduce not just
    criteria, pollutants, but SO2 as well.
        Chairman Harris. Okay. Mr. Akins.
        Mr. Akins. Yeah. I would agree efficiency improvements.
        Chairman Harris. And including thermal energy----
        Mr. Akins. Yes.
        Chairman Harris. --improvements?
        Mr. Akins. Yes.
        Chairman Harris. And Mr. Foerter?
        Mr. Foerter. Yeah. The thermal efficiency of new power
    plants as I previously had talked about. There is--you need to
    test these things out. I mean, the TURK Plant is an ultra-
    supercritical or supercritical, so we want to keep pushing that
    envelope. You can get up to 50, maybe 51 percent. Those are
    huge benefits as you get out there. They do need to be tested
    and maybe not through the public permitting process.
        Chairman Harris. Mr. Dalton.
        Mr. Dalton. All of the above. Actually, efficiency and
    water both----
        Chairman Harris. Okay.
        Mr. Dalton. --are----
        Chairman Harris. Listen, thank you very much to the panel
    for your testimony. It has been very eye opening. If any
    Members have additional questions for the witnesses, we ask you
    to submit them, and we are going to ask you to respond to them
    in writing. The record will remain open for two weeks for
    additional comments from Members. The witnesses are excused,
    and the hearing is adjourned.
        [Whereupon, at 3:43 p.m., the Subcommittee was adjourned.]
                                  Appendix I:

                                  ----------

                       Answers to Post-Hearing Questions

                       Answers to Post-Hearing Questions
    Responses by Mr. Scott Klara, Deputy Director,
    National Energy Technology Laboratory

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    Responses by Ms. Janet Gellici, CAE,
    Chief Executive Officer, American Coal Council

    Question Submitted by Chairman Andy Harris

    Q1.  As we examine the future of coal in America, it is important to
    consider what the President said in November 2008 about the outlook for
    coal under his Administration. He said that ``if somebody wants to
    build a coal-powered plant, they can. It's just that it will bankrupt
    them.'' The American Coal Council's member companies are in the
    business of building and operating coal plants. What is the status of
    and outlook for building new plants? And if new power plants do not
    move forward, what does that mean for electricity supply and
    reliability?

    A1. In response, I would reference a recent Burns & McDonnell which
    evaluated the existing coal fleet in compliance with various EPA
    regulations, including a) the proposed Clean Air Transport Rule
    (CATR)--now known as the Cross State Air Pollution Rule (CSAPR), b)
    National Emission Standards for Hazardous Air Pollution (NESHAP)--
    utilizing the proposed Industrial Boiler MACT rule as a proxy since the
    proposed Utility MACT had not been introduced yet at the time, c) Coal
    Combustion Residue Regulations and d) Clean Water Act Cooling Water
    Requirements under sections 316(a) and 316 (b).
        B&Ms analysis indicated that these regulations would require
    approximately $135 billion in retrofit capital costs and $8 billion/
    year in additional O&M expenses. The additional costs associated with
    retrofit equipment are expected to increase the U.S. average
    electricity price by approximately 8%. These costs would force high-
    cost, smaller units to retire and would force some mid-cost, mid-sized
    units to retire with most to be retrofitted with compliance pollution
    control equipment. Most low-cost, large units would be retrofitted.
        Announced coal-fired plant retirements as of the summer 2011, total
    161 units = 26.5 GW; this represents 7% of the fleet on a capacity
    basis and 14% of the fleet on a unit basis. B&M believes that 40-50 GW
    of coal generation will be retired due to low utilization, current coal
    and gas costs, and upgrade investments. Other industry analysts have
    projected retirements on the order of 60-80 GW this decade.
        Another study prepared by NERA Economic Consulting examined the
    same EPA regulations and concluded that these policies would lead to 39
    GW of prematurely retired capacity by 2015, about 12% of 2010 U.S.
    coal-fired electricity generating capacity. Compliance costs were
    projected to be approximately $21 billion (in 2010$) per year over the
    period from 2012 to 2020. Capital costs for environmental controls and
    replacement capacity are about $104 billion.
        According the NERA study, ``Coal-fired generation is projected to
    decrease by an average of 11.1 percent over the period from 2012 to
    2020. The reduction in coal demand is projected to decrease coal prices
    by 5.7 percent on average. In contrast, the regulations are predicted
    to increase natural gas-fired generation by 19.7 percent on average
    over the period and increase Henry Hub natural gas prices by 10.7
    percent on average. The increase in natural gas prices would lead to an
    estimated average increase in costs of about $8 billion per year for
    residential, commercial and industrial natural gas consumers, which
    translates into an increase of $52 billion over the 2012-2020 period
    (present value in 2010 as of 2011 discounted at 7 percent). Average
    U.S. retail electricity prices are projected to increase by an average
    of 6.5 percent over the period.''
        The study further notes that ``Over the period from 2012 to 2020,
    about 183,000 jobs per year are predicted to be lost on net due to the
    effects of the four regulations. The cumulative effects mean that over
    the period from 2012 to 202, about 1.65 million job-years of employment
    would be lost.''
        With regard to potential job losses, another report released in
    September 2011 indicates that efforts to curtail development of new
    coal plants are contributing to potential job losses of 1.24 million
    jobs in 36 states.
        The intent of the Clean Air Act was to ensure that new units met
    technology limits (New Source Performance Standards - NSPS), while
    existing units were regulated by air quality standards. Overtime, the
    fleet would get cleaner. EPA has changed the rules by forcing existing
    units to meet limits on a schedule which cannot be met without closing
    those units. Previous CAA programs made it possible to invest in
    emission controls at the economic units to obtain the greatest
    reductions. The newest, large units got NSPS technology while allowing
    the older units to continue to run, enhancing reliability of the
    electric supply grid. EPA used trading to allow for the most efficient
    investments to reduce emissions. New EPA programs require technology at
    all plants with limited trading.
        Previous EPA programs provided a 5-10 year compliance schedule,
    e.g., acid rain regulations were passed in 1990 and required compliance
    at points in 1995 and 2000; CAIR was promulgated in December 2003,
    requiring compliance at points in 2010 and 2015. New EPA programs allow
    less than three years to comply, e.g., HAPS final rule is expected in
    December 2011 with compliance required by 2014; CSAPR final rule
    anticipated in August 2011 requires compliance in 2012 and 2014. It is
    reasonable, therefore, to assume that EPA is interested in closure of
    coal units, not control of coal-fired emissions.
        A combined reduction in coal-fired electricity and a greater
    reliance on natural gas is likely to result in an increase in the cost
    of electricity and a loss of jobs. Additionally, prospective coal power
    plant closures may result in significant challenges for the
    transmission and power system reliability. As noted by ICF
    International Inc. ``Because system reliability must be ensured during
    these retirements, many plants slated for closure likely will be put
    into reliability must run (RMR) status, delaying their decommissioning
    timelines. Furthermore, significant challenges loom for plants in RMR
    status. RMR rules are not designed to support multi-year, high-capital
    retrofit investments but rather temporary status quo operations to
    address reliability concerns. Plants that fail to retrofit or retire by
    the deadlines specified in the EPA rules could incur heavy civil and
    criminal penalties. They could also affect market prices as uneconomic
    supply is kept on line.''
        ICF's analysis indicated that the location of the prospective power
    plant retirements could significantly impact system reliability, not
    just from a resource adequacy perspective, but with transmission
    security in mind as well. Among the key study results:

        1.  Event retiring moderate amounts of capacity can incur the risk
    of transmission security problems.

        2.  Demand-side management can help mitigate a low-voltage
    situation, but cannot solve the problem when load reduction
    requirements are up to the 30 percent level.

        3.  Sufficient replacement capacity is only part of the solution.
    The location of this capacity is also important.''

        ``Removing up to nearly one-sixth of the nation's coal-fueled
    generation in a geographically concentrated manner, i.e., concentrated
    in MISO, PJM, and SERC from the power system has billion-dollar
    implications, and decisions are very difficult to reverse once the
    train has left the station.''

    Q2.  In the current budget environment, it is imperative that DOE
    improves prioritization and pursue only the most important and
    impactful R&D. With that in mind, what would you change about the
    current DOE R&D portfolio? Specifically, what at the 1-2 areas that you
    believe deserve highest priority within DOE coal R&D? What are the 1-2
    areas or activities currently supported that may warrant cuts in order
    to pay for the highest priority?

    A2. I will stand by my testimony in addressing this question. We need
    to focus our coal R&D efforts going forward in four areas:

          Advanced Energy Systems
          Carbon Capture and Storage
          Water Use Technologies and
          Demonstration Projects

        Given the current uncertainty that Congress will pass climate
    legislation in the near term, it might be tempting to curtail funding
    for Carbon Capture and Storage RD&D. The reality is that while GHG
    legislation may not be imminent, GHG regulation is proceeding and we
    need technologies to meet our long-term CO2 reduction goals. To be
    successful, RD&D funding needs to be stable and consistent. Curtailing
    the CCS technology program today could potentially negate gains we've
    made to date and impair our ability to meet future requirements.

    Q3.  The National Coal Council is a Federal Advisory Committee tasked
    with advising the Secretary of Energy--at his request--on general
    policy matters relating to coal. The last three NCC reports focused
    exclusively on CCS and the Committee has not weighed in on non-CCS coal
    issues in over five years. As a member of the NCC, and in light of the
    increasing need to prioritize R&D efforts, do you believe there would
    be value in an NCC report detailing a long-term roadmap to advance
    entire system-wide advancements of a coal-fired unit to put DOE on a
    path towards facilitating a new fleet of coal plants? Would it be
    similarly beneficial if the NCC reviewed how best to meet stringent air
    toxics rules or handle toxic waste byproducts?

    A3. I believe an NCC report detailing a long-term roadmap to advance
    clean coal technology developments would be duplicative of the efforts
    historically and presently being advanced by the Coal Utilization
    Research Council (CURC www.coal.org), in cooperation with EPRI and
    other industry associates.
        Does ``toxic waste byproducts'' refer to coal ash? Perhaps not
    since coal ash is not ``toxic.'' If the question does relate to coal
    ash, I feel again that others, such as the American Coal Ash
    Association (www.acaa-usa.org) and the Utility Solid Waste Group
    (www.uswag.org) are already presently addressing these issues and that
    effort in this area by NCC would be duplicative.
        In keeping with its charter, I believe there may be a role for the
    National Coal Council to advise the Secretary on plans, priorities and
    strategies to more effectively address technological, regulatory and
    social impacts of current issues relating to coal production and use.
    This would include addressing how to facilitate advancement of
    tomorrow's clean coal fleet.
    Responses by Mr. Nick Akins, President and
    Chief Executive Officer of American Electric Power

    Questions Submitted by Chairman Andy Harris

    Q1.  As we examine the future of coal in America, it is important to
    consider what the President said in November 2008 about the outlook for
    coal under his administration. He said that ``if somebody wants to
    build a coal-powered plant, they can. It's just that it will bankrupt
    them.''

      American Electric Power is in the business of building and operating
    coal plants. What is the status of and outlook for building new plants?
    And if new power plants do not move forward, what does the mean for
    electricity supply and reliability?

    A1. AEP has a long history in building and operating coal plants and is
    completing our Turk plant, a brand new ultra-supercritical coal plant
    in Arkansas, which will be among the most efficient and cleanest coal
    plants in the U.S.
        In the near term, there are many uncertainties associated with
    building new coal fired power plants, including stagnant growth
    prospects in an already depressed economy, the currently low natural
    gas prices, and future environmental regulations to name just a few. As
    a result, AEP will mostly be building new natural gas plants over the
    next few years to replace retiring existing coal fired units as well as
    to meet additional demands for power. Furthermore, the addition of new
    gas-fired capacity will provide for a more diverse portfolio in the AEP
    generating fleet, which historically has been powered predominantly by
    coal.
        However, over the longer term, we believe that a portfolio of
    different generating options will be essential in meeting future
    demands for electricity. This includes coal, natural gas, nuclear and
    renewable energy. To ensure affordable and reliable electricity, we
    cannot entrust our future electricity supply to only one fuel or source
    of power. While generating plants fueled by natural gas look
    particularly attractive today due to the currently low natural gas
    prices and the apparent plentiful supply of shale gas in the U.S. due
    to the advent of natural gas fracking, in the long run, being overly
    reliant on natural gas for electric power is not a wise strategy. Such
    a dependence on natural gas has many inherent risks due to real
    possibility of supply problems, price volatility, and higher prices--
    all of which have occurred in the recent past. America's coal resources
    remain plentiful and low cost and need to play an important role in
    U.S. electricity supply in the future.
        Regarding reliability, our greatest concern in the near term is
    that the new EPA regulations that I discussed in my testimony will
    force a significant number of coal fired plants to retire prematurely
    in just the next 2-3 years. This could pose significant local and
    regional reliability problems because new replacement capacity,
    transmissions improvements and other measures to address reliability
    problems cannot be completed in that short a period of time. As I have
    noted, these reliability problems (along with adverse impacts on jobs
    and the economy) can be largely resolved simply by extending the
    compliance time frames through federal legislation.

    Q2.  In the current budget environment, it is imperative that DOE
    improves prioritization and pursue only the most important and
    impactful R&D. With that in mind, what would you change about the
    current DOE R&D portfolio? Specifically, what are the 1-2 areas that
    you believe deserve highest priority with DOE coal R&D? What are the 1-
    2 areas or activities currently supported that may warrant cuts in
    order to pay for the highest priority?

    A2. AEP believes that the Department of Energy (DOE) should focus its
    coal R&D efforts on developing advances in ``next generation''
    technologies to address the high cost and energy penalty concerns
    associated with the reduction of CO2 emissions from coal fueled power
    plants. Such technologies could include the following:

          Advanced oxygen production systems;

          oxy-combustion systems;

          coal gasification systems with CO2 capture and
    sequestration, including polygen systems that produce high value
    products in addition to electricity; and

          post-combustion CO2 capture systems that employ
    catalysts, advanced enzymes or emerging membrane separation
    technologies as a means to reduce dramatically energy penalties
    associated with the operation of CO2 capture technology.

        These next generation technologies hold out the promise of
    generating electricity with very low emissions of both CO2 and other
    conventional air pollutants at much lower energy consumption and
    operating costs than currently available technologies. AEP believes
    that the development and deployment of these technologies is critical
    to ensure that coal, with its relatively low cost and abundant domestic
    supply, remains a viable and important component of a portfolio of
    domestic generation sources.
        AEP generally does not favor in the near term federal expenditures
    for additional large scale demonstration projects beyond those that are
    already underway for deploying existing CO2 capture technologies.
    However, federal investments that encourage early commercial deployment
    of these CO2 capture technologies could be warranted for those projects
    that use the captured CO2 for enhanced oil recovery (EOR) due to their
    very large economic, energy independence, and energy security benefits.
    DOE studies have identified 45-67 billion barrels of domestic oil
    resources, most of which can only be produced if additional volumes of
    CO2 from fossil fueled power plants and industrial sources become
    available. At current prices for oil, these resources have an estimated
    direct economic value of $5-7 trillion, and would provide important
    energy independence, energy security, and employment benefits to the
    nation. In the near-term, development of this domestic energy resource
    may best be fostered by favorable federal policies to encourage the
    deployment of these CO2 capture technologies for EOR purposes. In the
    longer term, the federal coal R&D efforts recommended above for
    developing next generation technologies would support development of
    this domestic energy resource by lowering energy consumption and
    overall operating costs of generating electricity while capturing CO2.

    Questions Submitted by Ranking Member Brad Miller

    Q1.  Please provide your name and employing organization(s).

    A1. Nick Akins, President and Chief Executive Officer of American
    Electric Power.

    Q2(a).  Are you an officer or employee of, or otherwise compensated by,
    any other organization(s) that may have an interest in the topic of
    this hearing?

    A2(a). No

    Q2(b).  If the answer to question 2a is ``yes,'' please specify the
    organization(s) and the nature of your relationship with the
    organization(s).

    Q3(a).  In the last three calendar years, including this one, have you
    been a registered lobbyist?

    A3. No

    Q3(b).  If the answer to question 3a is ``yes,'' please list all of
    your client(s) that may have an interest in the subject matter of this
    hearing, and the dates between which you represented that client or
    those clients.

    Q4.  If you have worked as an attorney, contractor, consultant, paid
    analyst, or in any other professional services capacity, please provide
    a list of all of your firm's clients who you know to have an interest
    in the subject matter of this hearing. These should be clients that you
    have personally worked with in the last three calendar years (including
    the present year). Provide the name of the client, the matter on which
    you worked and the date range of that work. If there was a deliverable,
    please describe that product.

    A4. I have only been an employee of American Electric Power during the
    specified 3-year period. I have not worked as an attorney, contractor,
    consultant, paid analyst, or in any other professional services
    capacity for any other company or firm during the last 3 years.

    Q5.  Please provide a list of all publications on which you have
    received an author or coauthor credit relevant to the subject of this
    hearing. If the list is extensive, the 10 most recent publications
    would be sufficient.

    A5. Not applicable. I am not an author of publications relevant to the
    subject of the hearing. This does not include any other publications of
    American Electric Power related to our business, such as annual
    reports, etc. Those are publications of the corporation, and not
    written by me personally.
    After several attempts by the Committee staff to obtain responses to
    post-hearing questions, Mr. Foerter refused to furnish answers for the
    record.

    Questions submitted to Mr. David Foerter,
    Executive Director,
    Institute of Clean Air Companies

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    Responses by Mr. Stu Dalton,
    Senior Government Representative-Generation,
    Electric Power Research Institute

    Questions Submitted by Chairman Andy Harris

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