    [Senate Hearing 115-104]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 115-104

                         EXPANDING AND ACCELERATING THE
                     DEPLOYMENT AND USE OF CARBON CAPTURE,
                         UTILIZATION, AND SEQUESTRATION

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

                                    HEARING

                                   before the

                                  COMMITTEE ON
                          ENVIRONMENT AND PUBLIC WORKS
                              UNITED STATES SENATE

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               SEPTEMBER 13, 2017

                                   __________

      Printed for the use of the Committee on Environment and Public Works

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                   COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                         ONE HUNDRED FIFTEENTH CONGRESS
                                 FIRST SESSION

                        JOHN BARRASSO, Wyoming, Chairman
    JAMES M. INHOFE, Oklahoma            THOMAS R. CARPER, Delaware
    SHELLEY MOORE CAPITO, West Virginia  BENJAMIN L. CARDIN, Maryland
    JOHN BOOZMAN, Arkansas               BERNARD SANDERS, Vermont
    ROGER WICKER, Mississippi            SHELDON WHITEHOUSE, Rhode Island
    DEB FISCHER, Nebraska                JEFF MERKLEY, Oregon
    JERRY MORAN, Kansas                  KIRSTEN GILLIBRAND, New York
    MIKE ROUNDS, South Dakota            CORY A. BOOKER, New Jersey
    JONI ERNST, Iowa                     EDWARD J. MARKEY, Massachusetts
    DAN SULLIVAN, Alaska                 TAMMY DUCKWORTH, Illinois
    RICHARD SHELBY, Alabama              KAMALA HARRIS, California

                  Richard M. Russell, Majority Staff Director
                   Gabrielle Batkin, Minority Staff Director

                                C O N T E N T S

                                  ----------
                                                                       Page

                               SEPTEMBER 13, 2017
                               OPENING STATEMENTS

    Barrasso, Hon. John, U.S. Senator from the State of Wyoming......     1
    Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..     2

                                   WITNESSES

    Fry, Matt, Policy Advisor, Office of Governor Matt Mead..........    11
        Prepared statement...........................................    14
        Responses to additional questions from:
            Senator Barrasso.........................................    24
            Senator Sullivan.........................................    26
            Senator Whitehouse.......................................    27
    David Greeson, Vice President of Development, Nrg Energy.........    28
        Prepared statement...........................................    30
        Responses to additional questions from:
            Senator Barrasso.........................................    39
            Senator Sullivan.........................................    42
            Senator Whitehouse.......................................    42
    Friedmann, S. Julio, CEO, Carbon Wrangler Llc....................    44
        Prepared statement...........................................    46
        Responses to additional questions from:
            Senator Barrasso.........................................    52
            Senator Whitehouse.......................................    54

                              ADDITIONAL MATERIAL

    Statements:
        Bluegreen Alliance...........................................    92
        Clean Air Task Force.........................................   107
        Department of Energy, Staff Report to the Secretary on
          Electricity Markets and Reliability........................   113
        National Coal Council........................................   121
    Article; The Weekly Standard: Revolution?........................   184

     EXPANDING AND ACCELERATING THE DEPLOYMENT AND USE OF CARBON CAPTURE,
                         UTILIZATION, AND SEQUESTRATION

                                  ----------

                         WEDNESDAY, SEPTEMBER 13, 2017

                                           U.S. Senate,
                     Committee on Environment and Public Works,
                                                        Washington, DC.
        The committee met, pursuant to notice, at 10:04 a.m. in
    room 406, Dirksen Senate Office Building, Hon. John Barrasso
    (chairman of the committee) presiding.
        Present: Senators Barrasso, Carper, Inhofe, Capito,
    Boozman, Fischer, Rounds, Ernst, Sullivan, Whitehouse, Merkley,
    Gillibrand, Booker, Markey, Duckworth, and Harris.

               OPENING STATEMENT OF HON. JOHN BARRASSO,
                 U.S. SENATOR FROM THE STATE OF WYOMING

        Senator Barrasso. Good morning. I call this hearing to
    order.
        Today we are here to discuss promising technologies that
    both advance environmental aims and support continued use of
    our abundant energy resources. Those technologies are known as
    carbon capture, utilization, and sequestration, or CCUS.
        In Wyoming we have tremendous coal, natural gas, and oil
    resources. These resources fuel our State's economy. CCUS
    presents a win-win opportunity. Here is the concept. Instead of
    releasing the carbon dioxide into the atmosphere when we
    combust fossil fuels, CCUS allows us to turn the carbon dioxide
    into a useful commodity. Through this technology, carbon
    dioxide is captured, where the fuel is burned, such as a power
    plant, and then transported, used, and ultimately stored.
        One key use for this carbon captured dioxide is enhanced
    oil recovery. Enhanced oil recovery operations, also known as
    EOR, are operations that use carbon dioxide, and they have been
    around for more than 40 years in the United States.
    CO2 is injected into wells that otherwise
    economically couldn't produce oil. By capturing the carbon
    dioxide, we have an opportunity to increase the supply of
    carbon dioxide available for enhanced oil recovery and produce
    oil that otherwise could not have been harvested.
        The colored map on this area show all of the oil basins
    where carbon dioxide-enabled enhanced oil recovery could be
    further used. As you can see, there are areas all over the
    United States.
        CCUS and enhanced oil recovery should play an important
    role in a truly all-of-the-above energy policy. With
    CO2 enabled oil recovery, we do have a win-win
    situation; we have the potential to make it economical, to
    extract more than 60 billion barrels of oil in this Country.
    And in producing the oil, billions of tons of carbon dioxide
    would then be stored, which would lead to a significant
    decrease in carbon dioxide emissions into the atmosphere.
        The International Energy Agency estimates that the
    technology could enable the storage of 140 billion tons of
    carbon dioxide in oil reservoirs all around the world. The
    Clean Air Task Force recently reported that using carbon
    dioxide captured through CCUS ``can result in a 63 percent net
    reduction in carbon dioxide emissions for every barrel of oil
    produced.'' This is an impressive number and one that should
    grab all of our members' attention.
        America is currently a leader in CCUS technology, and we
    want to keep it that way. Use of fossil fuels globally is
    projected to increase over time. The U.S. Energy Information
    Administration predicts global increases in coal use through
    2040. Encouraging American innovation is the right approach to
    continuing American leadership, leadership in the development
    of technologies to lower the emissions associated with fossil
    fuel use. Through American leadership we create opportunities
    to export our innovations around the world.
        My colleagues on both sides of the aisle recognize the
    critical role that CCUS can play in our future. This Congress,
    Senator Capito, Senator Whitehouse, and I were original
    cosponsors of bipartisan legislation introduced by Senator
    Heitkamp known as the FUTURE Act, or the Furthering carbon
    capture, Utilization, Technology, Underground storage, and
    Reduced Emissions Act. The FUTURE Act extends and expands tax
    credits for facilities with CCUS technologies, and I am proud
    to say the bill now has over 24 bipartisan cosponsors.
        This Committee has an opportunity to complement the FUTURE
    Act through our efforts by reviewing statutes and regulations
    that impact carbon capture, utilization, and storage. Now is
    the time to see what more we could do to encourage and remove
    impediments to the use and deployment of CCUS. We need to make
    sure our laws and regulations accelerate, not hinder, our
    environmental goals.
        I look forward to working with members of the Committee in
    a bipartisan way to examine how we can expand and accelerate
    CCUS deployment and use. When we do that, we promote American
    leadership in technology innovation, increase our energy
    security, and improve our environment.
        I would now like to invite the Ranking Member for his
    testimony.

              OPENING STATEMENT OF HON. THOMAS R. CARPER,
                U.S. SENATOR FROM THE STATE OF DELAWARE

        Senator Carper. Thanks, Mr. Chairman.
        You know, we never say, I want to work in a partisan way;
    we always say we want to work in a bipartisan way. We
    oftentimes work in a partisan way, but we always say we want to
    work in a bipartisan way, and this is one where we can work in
    a bipartisan way.
        Ironically, one of the first people I ever talked with
    about clean coal technology was Robert Byrd, who was from my
    native State of West Virginia for many years. He was not born
    there, but certainly grew up there and served them forever. I
    had breakfast this morning with Ann Barth, who for many years
    was a State director. One of the things we talked about was the
    efforts going on in West Virginia to try to diversify the
    economy and she gave me encouraging reports. So this is rather
    timely, and I am channeling Robert Byrd this morning as we
    convene, Mr. Chairman, for this hearing.
        I want to say to our witnesses, good to see you all. We
    welcome you to this important hearing and we welcome your
    efforts to help enable us to work in a bipartisan way.
        It is refreshing to have a hearing that looks at solutions
    to climate change, as opposed to a hearing that fuels the
    debate over the science of climate change. And I believe one of
    the most important roles for our Government, and my colleagues
    have heard me say this more than a few times, is not to create
    jobs, but to create a nurturing environment for job creation.
        Another critical role is to help protect public health and
    try to ensure that all Americans can pursue life, liberty, and
    happiness; and luckily the two are not mutually exclusive.
        I spent the early years of my life growing up in
    communities in West Virginia whose economies depended largely
    on coal, and for a short time I was the son of a coal miner.
    Many years later I am now a U.S. Senator who is privileged to
    represent the lowest lying State in our Nation, that is
    Delaware. But I haven't entirely forgotten my roots.
        I have long believed that the deployment of technologies
    that allow us to burn coal and electric power generation in a
    much cleaner way, with significant reduction in emissions, can
    be a real win-win for coal communities, for manufacturing, and
    for our climate.
        Today our Country is in the midst of a clean energy
    revolution, as we know. Didn't happen by accident. Over the
    last 8 years, starting with the Recovery Act, the Federal
    Government has provided economic incentives and environmental
    targets to encourage investments in clean energy.
        As a result, $507 billion have been invested in the clean
    energy sector over the past 10 years and our Country is a
    leader today in exporting clean air and clean energy
    technology. Thanks in part to these investments in clean energy
    and energy efficiency, American consumers are paying less for
    energy today and jobs are being created here at home to produce
    these clean energy technologies.
        Following 8 years of smart economic and environmental
    policies, America has largely rebounded from one of the
    greatest economic downturns in our history, the Great
    Recession. Until last week, we have enjoyed lower energy costs
    at the meter and the pump for consumers, and we implemented
    clean air protections that protect public health and our
    climate, while adding some 16 million jobs over the past 6
    years. Not too shabby when compared to the 6-years that
    preceded it.
        However, as we know, not all of our communities have felt
    the benefits of the clean energy economic boom. Too many of our
    manufacturing plants remain dormant in States across the
    Country, and a number of them can be found in my State of West
    Virginia and my current home State of Delaware, and the States
    of all of us, I suspect, all around this table. In addition,
    many of our coal mines and coal-fired utilities are continuing
    the decades long trend of closing or reducing production.
        Investments in carbon capture and storage can help slow or
    reverse this trend. These investments can lead to good paying
    American jobs in engineering and design, as well as
    manufacturing, installing and operating technology that is made
    in America and sold all over the world. Investments in this
    technology are also critical if we are going to meet our long-
    term climate goals.
        But just as with other coal-related technologies, the
    barriers to carbon capture and storage are largely financial,
    not environmental. Investors have shied away from expensive
    large-scale carbon capture projects in part because energy
    prices are low, and this Country has struggled to put a price
    on carbon usage. The reluctance of investors to invest is not
    because we require that sequestered carbon stays sequestered,
    or that these operations meet other basic and important
    environmental requirements.
        Walking away from climate and clean air protections has
    only compounded the problem. As a result, we are well on the
    way of ceding the economic opportunities of carbon capture
    technology to other countries, such as China, which only hurts
    the very communities that our President and I think all of us
    want most to help.
        So, in closing, let me reiterate that we don't need to
    scrap our environmental standards to provide a nurturing
    environment for American innovation and economic investment in
    carbon sequestration technologies. They are not mutually
    exclusive.
        With that, we welcome our witnesses. We look forward to
    hearing from you and having a robust conversation. Thank you
    all.
        [The prepared statement of Senator Carper follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Barrasso. Thank you very much, Senator Carper.
        We have, to testify today, Dr. Julio Friedmann, who is the
    Distinguished Associate of the Energy Futures Initiative; Mr.
    David Greeson, who is the Vice President of Development for NRG
    Energy; and, in addition, we have Mr. Matt Fry, who is the
    Policy Advisor of the Office of the Wyoming Governor, Matt
    Mead.
        Before turning to you, Mr. Fry, I just want to point out
    that Mr. Fry has a distinguished career in the natural resource
    field, spanning approximately 20 years, including time in the
    private and public sectors. He served as a staff biologist at
    the Wyoming Game and Fish Department before assuming his
    current role in Governor Mead's office as a policy advisor.
        Mr. Fry has a Bachelor of Science degree in biology, with a
    minor in chemistry, and a Masters in Natural Resource Law from
    the University of Denver in the Sturm School of Law.
        While he is a native of Virginia, we are glad he has chosen
    to make Cheyenne his home. His work in Governor Mead's office
    includes management of the Wyoming Pipeline Corridor
    Initiative. The Initiative is a first of its kind endeavor by a
    State to encourage and facilitate the development of a
    CO2 pipeline corridor.
        I commend Mr. Fry for his leadership on this Initiative and
    look forward to his testimony.
        I remind all of the witnesses that your full written
    testimony will be made part of the official hearing record, so
    please try to keep your statements to 5 minutes; that way we
    might have time for questions. We look forward to hearing your
    testimony.
        Mr. Fry.

    STATEMENT OF MATT FRY, POLICY ADVISOR, OFFICE OF GOVERNOR MATT
                                  MEAD

        Mr. Fry. Good morning, Mr. Chairman, members of the
    Committee. Appreciate the opportunity to talk with you all this
    morning about CCUS.
        Mr. Chairman, as you are well aware, Wyoming is heavily
    dependent upon the development of fossil fuels. Coal, oil,
    natural gas are responsible for approximately 65 percent of our
    State's revenue. A number of factors in recent years have led
    to the decline in these industries. As a result, State coffers
    have shrunk and our citizens find it more and more difficult to
    obtain stable, profitable employment. In order to address these
    issues, Governor Mead has spearheaded a number of initiatives,
    with carbon capture, utilization, and storage, or CCUS, playing
    a major role.
        The deployment of CCUS technology is of great importance
    not only to Wyoming, but to the Nation as a whole. CCUS
    provides us with the opportunity to treat CO2 as a
    valuable commodity, rather than an end-product with no value.
    However, there are substantial challenges associated with its
    implementation. We recognize these challenges and are working
    diligently to manage them head-on.
        Development of infrastructure requires myriad regulatory
    review processes and approvals. The most costly and time-
    consuming of these regulatory processes is the one dictated by
    the National Environmental Policy Act, or NEPA. NEPA analyses
    historically were completed in relatively short timeframes and
    at acceptable costs. Unfortunately, in recent years they have
    evolved in such a way that they may now take upwards of a
    decade and tens of millions of dollars to complete. From a
    project proponent's perspective, this drawn out process creates
    a number of problems, which I have illustrated in my written
    testimony.
        So I am not here this morning to suggest that NEPA be
    abolished or even significantly amended. NEPA is meant to
    function merely as a procedural law, which requires that
    impacts of a proposed action and alternative actions be
    disclosed for the purposes of informing a decision. The
    fundamental basis of the law has eroded, which has led NEPA to
    be utilized in a prescriptive manner, and to a large extent it
    has become a tool to either defend or inform litigation. I
    suggest we take a step back and return the process to its
    original intent.
        While this recommendation sounds simplistic, the reality is
    that it will require a significant paradigm shift, as well as
    cultural changes. Reversing the inertia of NEPA's current
    course will require significant leadership, and I submit that
    this Committee is eminently qualified to undertake and
    accomplish this goal.
        Additionally, I suggest a foundational change to the NEPA
    process. NEPA requires a specific sequence of actions to reach
    a final decision. It has been my experience that far too many
    resources are devoted to these formal steps and not nearly
    enough work is done on the front end of these projects in order
    to build a strong base.
        There are a number of agency activities that occur behind
    the scenes to prepare for the NEPA process. Unfortunately,
    Federal agencies don't effectively reach out to other entities
    that are oftentimes much more knowledgeable and may have far
    greater insight into potential constraints that inevitably lead
    to delays. Adding this outreach on the front end will
    undoubtedly reduce time and resources required to reach a
    decision.
        In Wyoming, we are actively developing a project that
    exemplifies this effort to build a strong foundation in order
    to minimize future analysis requirements. We call it the
    Wyoming Pipeline Corridor Initiative, or WPCI. WPCI is a sound
    strategy to streamline the NEPA process for pipeline
    infrastructure without compromising the integrity of the Act or
    its processes. While developing this project proposal, we
    coordinated with industry, local State and Federal agencies,
    non-governmental organizations, individuals that have intimate
    knowledge of the lands within our borders, and other
    authorities with experience in the CO2 -EOR
    industry.
        One of the primary purposes of the pipeline network is to
    connect oil fields suitable for EOR with CO2
    sources. Once we complete our EAS and authorization is
    approved, companies will be able to build their infrastructure
    within the corridors and reduce time and reduce costs, as will
    have already dedicated State resources to completing the bulk
    of the NEPA analysis.
        I provided a third description of the WPCI and all of its
    benefits in my written testimony, but to highlight just a few:
    WPCI will spur the development of up to 1.8 billion barrels of
    oil, while potentially storing 20 trillion cubic feet of
    CO2 ; WPCI will provide a large number of jobs for
    those building, maintaining, and operating pipelines and EOR
    fields; and WPCI provides a balanced approach of natural
    resource utilization and environmental conservation.
        We currently are anxiously awaiting the approval from BLM
    to begin our NEPA process and, once finalized, WPCI can serve
    as a model that could be followed by any States interested in
    streamlining the NEPA work.
        Once again, I appreciate the opportunity to present this
    testimony today, and I would be happy to answer any questions.
    Thank you.
        [The prepared statement of Mr. Fry follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Barrasso. Thank you so much for your testimony.
        Mr. Greeson.

    STATEMENT OF DAVID GREESON, VICE PRESIDENT OF DEVELOPMENT, NRG
                                 ENERGY

        Mr. Greeson. Thank you, Chairman Barrasso and Ranking
    Member Carper, and Committee members. My name is David Greeson.
    I am Vice President of Development for NRG Energy. I am based
    in Houston, Texas, where I have spent the last 7 years
    developing the world's largest carbon capture system attached
    to a power plant. The project is called Petra Nova, and I am
    happy to report that it came online on time and on budget
    thanks to a lot of hard work by NRG and our partners, JX and
    Hilcorp.
        As I appear before you today, this $1 billion project is
    capturing 5,000 tons per day of CO2 , which is the
    equivalent of taking 350,000 cars off the highways of the U.S.
    And it is doing it without increasing the cost of electricity
    to consumers in Texas. We achieved this success despite
    numerous challenges that come with deploying the first-of-a-
    kind technology. The biggest hurdle was, and remains, the up-
    front capital cost. And I will refer you to my written
    testimony for a discussion of what the industry is doing to
    reduce those costs.
        But I would like to take this opportunity to thank Congress
    and particularly the members of this Committee who have
    supported DOE's efforts to address the up-front costs, such as
    the Clean Coal Power Initiative, which funded $190 million of
    our $1 billion project. DOE's grant and the participation of
    the DOE was essential to the success of our project.
        I would like to also thank the members of this Committee
    that are supporting the 45Q program improvements. We feel like
    this change to the program will help level the playing field
    between carbon capture and other low carbon technologies such
    as wind and solar.
        But up-front cost was not our only obstacle. We also faced
    a number of licensing and permitting challenges, as well. For
    example, during the financing of the project, we had to deal
    with confusion in the industry over whether EPA's Class VI
    versus Class II injection well standards would apply. If Class
    VI had applied to our project, it would have added over $100
    million to the cost of this project; a huge sum.
        Thankfully, EPA eventually issued a guidance paper that
    clarified the Class II standard, that we have used for over 40
    years in the U.S. and has served us very well, will continue to
    be the standard.
        But a much bigger concern was the NSR rules of the Clean
    Air Act. They caused us a great deal of heartache and
    ultimately cost a lot of dollars to circumnavigate. Carbon
    capture systems need steam, and when considering our options to
    provide steam, it would seem logical that we would take that
    steam from the boiler, since it is already making a lot of
    steam for electric purposes, but modifying the boiler to
    provide that steam can cause a lot of permitting problems. You
    see, our coal plant is 35 years old. It has a complete suite of
    environmental controls already, for NOx, SOx, particulate, and
    mercury, and has an exemplary environmental performance record.
        Nevertheless, control technologies have evolved over the
    years, and these older systems may not be sufficient to pass a
    New Source Review. So, if we had made modifications to the
    boiler to provide steam to carbon capture, we might have
    triggered the need for a New Source Review, and we are not sure
    that all of the systems on the plant would have been up to the
    New Source Review standard.
        Since the cost and schedule impacts of a New Source Review
    were just not knowable in advance, it was impossible for us to
    build a project plan based on any path forward that relied on
    New Source Review, so we decided to go a different way. We
    supplied the steam through a $100 million cogeneration system.
    This system also provided electricity, so there were some
    offsets to this up-front cost, but in the end the up-front cost
    was substantial and it hurt the project economics.
        So it was a shame that we missed the opportunity to save
    money by sourcing steam from the boiler. But an idea that might
    preserve that option for future carbon capture projects would
    be to provide an NSR exemption for the existing plant systems
    when the project being permitted is a new emission control
    system. In this way, the truly new facilities would be fully
    vetted through the permitting process without putting risk on
    the systems that are already permitted and running.
        You know, it is ironic that the New Source Review rules are
    meant to improve air quality, but in practice they actually
    discourage plant owners from considering major improvements,
    including environmental improvements.
        In the first 8 months of operation, we have injected almost
    1 million tons of CO2 into the oil field, and that
    CO2 would have otherwise been emitted to the
    atmosphere.
        For the next projects, capital costs will continue to be a
    barrier to entry and be the largest barrier to entry, and I can
    assure you that the industry is working on those. But
    environmental rules can and do hinder the deployment of future
    systems.
        Thank you, and I look forward to the Q&A.
        [The prepared statement of Mr. Greeson follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Barrasso. Thank you very much, Mr. Greeson.
        Mr. Friedmann.

       STATEMENT OF S. JULIO FRIEDMANN, CEO, CARBON WRANGLER LLC

        Mr. Friedmann. Thank you, Mr. Chairman. Thank you, Ranking
    Member Carper and all the members of the Committee. My name is
    Julio Friedmann. Thank you for inviting my testimony. I am the
    CEO of Carbon Wrangler, LLC. Until recently, I served as the
    Senior Advisor for Energy Innovation at the Lawrence Livermore
    National Laboratory, one of the DOE's 17 national labs. From
    2013 to 2016, I served in two capacities in the Obama
    administration at the Department of Energy, first as the Deputy
    Assistant Secretary for Clean Coal and Carbon Management and,
    second, as the Principal Deputy Assistant Secretary for the
    Office of Fossil Energy. I have worked for something like 17
    years on clean energy technology deployment and development,
    focusing my work on CCUS, mostly from my position at the
    National Lab.
        Clean energy demand continues to grow worldwide, with an
    investment of nearly $400 billion in 2015 and 2016. Many
    governments see investment in this technology as important to
    transforming energy markets and claim the additional benefits
    from those investments, for example, stronger heavy industry
    sector, maintaining and growing jobs, avoiding the health
    consequences of pollution, a number of other things. In a
    global clean energy market, the U.S. is considering how to best
    invest in the power, transportation, and industrial energy
    sectors as they change nationally and globally.
        In this context, carbon capture, use, and storage, CCUS,
    remains a critically important and under-supported sector in
    the clean energy industry. CCUS includes carbon capture and
    storage, CO2 enhanced oil recovery, which was
    mentioned by the Chairman, CO2 conversion and use,
    and even carbon removal from the atmosphere. These different
    pathways provide real commercial and environmental
    opportunities for companies, communities, and governments.
        Recent progress on CCUS is profound. Today there are 16
    commercial plants operational worldwide, including Mr.
    Greeson's plant at Petra Nova. Six more are planned, with 22
    expected to be operating in 2020. These include power and
    industrial projects, new build and retrofits, some for
    CO2 -EOR, some for saline storage mostly in North
    America. A third of them are in North America. Costs have come
    down, performance has gone up, and new technologies have been
    born that show that CCUS can be cost competitive today with
    other clean energy technologies in many markets. In some
    sectors like heavy industry, CCUS is the only available option
    today.
        Importantly, the challenges CCUS faces in deployment are
    neither fundamentally technical nor regulatory. Rather, it is
    that today there is no policy or set of policies in place that
    make it possible to finance a project. There is a gap between
    project costs and market prices, and tariffs that prevent
    private capital from flowing into projects. This greatly limits
    deployment. While there are many potential pathways for
    providing policy support, there is no market for CCUS absent
    such policies. These will severely limit the number of
    projects, the scale of the projects, and the availability of
    private capital to build and deploy CCUS. It is worth noting
    that of the $2.2 trillion that flowed into the clean energy
    deployment sector worldwide, according to the Global CCS
    Institute, less than 1 percent of that money, less than 1
    percent went into CCS.
        You have my testimony. It speaks volubly about the prices
    and the costs for carbon capture and storage, where these
    projects are going, and how it can be applied in the power and
    industrial sector. It is worth noting that if there were
    pipelines in place right now and some straightforward policies,
    we could capture 44 million tons of carbon dioxide for very,
    very low cost today from pure streams of CO2 in the
    industrial sector.
        But I want to focus the rest of my time on the finance
    question. As I mentioned earlier, CCUS is competitive on a
    purely levelized cost of electricity basis with many, many
    clean power options. Whether it is applied to power, industrial
    sectors, or not, it is not possible to obtain the financing for
    the commercial projects today. Just can't do it. This is
    chiefly because it is not possible to recoup the investment.
        Many clean energy technologies in the United States and
    elsewhere, such as wind and solar, rightly benefit from policy
    support. These include renewable portfolio standards which
    mandate a fraction of generation; investment and production tax
    credits, the ITCs and PTCs; feed-in tariffs, which are
    guaranteed price supports, common in Europe; development
    mandates, such as the Chinese government says when they say we
    are going to build 200,000 megawatts of wind; and many other
    policies.
        For many years in the U.S. and other countries, policies
    like this closed the financing gap for those clean energy
    technologies. That created markets for those clean energy and
    have led to growth and jobs. None of this is contested.
        CCUS projects have no access to these policies. If they
    did, the size of those policies for other clean energy
    investments, such as the ITC, the PTC, et cetera, would be
    large enough to close that financing gap. The lack of policies
    that support financing limit the flow of private capital to
    CCUS projects. Similarly, they limit the corporate R&D, which
    is necessary to get dramatic price drops through deployment and
    activation. It limits VC financing in startups. It limits the
    development of human capital. It limits the supply chains that
    would go into these industries. Many ministries in many
    countries, including the United States, have called for policy
    parody to close the financing gap and to help create a vibrant
    CCUS market.
        I look forward to your questions and comments. Thank you
    for the opportunity to testify.
        [The prepared statement of Mr. Friedmann follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Senator Barrasso. Well, thank you to all three of you for
    your very interesting testimony. We will have some time for
    members to ask questions now, so I appreciate your willingness
    to participate in this.
        I am proud to say, Mr. Fry, that our home State of Wyoming
    is already a leading promoter of CO2 pipeline
    development, with the Wyoming Pipeline Corridor Initiative that
    you outlined. This proposes developing a network of
    CO2 pipelines connecting oil fields with
    CO2 sources, both manmade and natural, within
    Wyoming.
        In my opening statement, I showed a chart that showed many
    areas across the Country that could benefit from similar
    efforts. Are there things that the Federal Government could do?
    We just heard from Dr. Friedmann, who I thought eloquently
    talked about some of the problems that were out there. Are
    there things, Mr. Fry, that you think we could do to make it
    easier for other States to replicate what you are doing in
    Wyoming?
        Mr. Fry. Well, thank you, Mr. Chairman. Yes, I believe
    there are. As Dr. Friedmann mentioned, the opportunity to move
    forward with 45Q legislation provides that financial incentive
    that we are looking at. But as far as a regulatory incentive,
    the discussion that I made in regards to up-front planning is
    probably key in this instance, so if States outside of Wyoming
    took the initiative to focus on where they could capture the
    CO2 and where they could inject it, be it either in
    EOR fields or in saline formations, I think they could be ahead
    of the curve substantially.
        Senator Barrasso. And your testimony mentions that CCUS
    provides us with the opportunity to treat carbon dioxide as a
    valuable commodity when it is used in conjunction with the
    enhanced oil recoveries you just mentioned. Do you think that
    the use of CO2 for enhanced oil recovery is a more
    powerful incentive to develop projects like this and decrease
    CO2 emission, compared to, say, extensive more
    regulations on the energy industry?
        Mr. Fry. Yes, sir, I believe it is. It seems like project
    proponents typically are more open to letting the market drive
    something like this than they are being dictated by
    regulations. So I agree 100 percent that is the way to go.
        Senator Barrasso. Mr. Greeson, can you explain some of the
    benefits of retrofitting plants with CCUS to produce cleaner
    energy? And what can CCUS provide that other clean energy
    technologies such as wind and solar can't?
        Mr. Greeson. Sure, thank you, Chairman Barrasso. The
    benefits of retrofit are that is where the bulk of the
    emissions that everybody is trying to address is coming from
    now. It is not new plants, because there are very few new coal
    plants being proposed or developed, at least in the U.S. It is
    possible to do carbon capture on a greenfield plant, and do it
    even less expensively than you could on a retrofit, but the
    bulk of the emissions we are trying to address these days are
    on retrofitted opportunities. And then with the design that we
    ended up with, and thanks to the difficulties of navigating New
    Source Review, we ended up with a stand-alone cogeneration
    facility to supply steam and electricity to the cogen, to the
    carbon capture.
        Our plant actually increased the number of clean megawatt
    hours being produced at this plant, rather than using some of
    the load at the plant for parasitic loads. So, yes, it
    definitely improves the emissions profile. The coal plant that
    we have attached our carbon capture system to has the same
    carbon footprint as a gas-fired combined cycle.
        Senator Barrasso. Mr. Fry, could you elaborate on some of
    the specific obstacles that the National Environmental Policy
    Act, or NEPA, presents when companies try to build
    CO2 pipelines?
        Mr. Fry. I think the greatest challenges it presents would
    be time constraints, as well as financial constraints when a
    company comes in to develop a project that may take them 10
    years to finalize their NEPA document, at which point the
    market could have changed drastically and they may no longer
    have an economically viable project. So time is a big concern.
        Senator Barrasso. As you mentioned with time being a big
    concern, what are some improvements that could be made to
    preserve the goals of NEPA and facilitate quicker development
    of the pipelines?
        Mr. Fry. From my perspective, if people would follow the
    model that we are laying down in Wyoming as far as up-front
    planning, so they can build that strong foundation, they would
    have a lot less constraints to challenge their project and the
    future of their NEPA analysis.
        Senator Barrasso. And then, Mr. Greeson, my final question,
    you stated that there are certain regulatory requirements that
    dissuade companies from installing the CCUS technology. Can you
    explain how New Source Review, which is required by the Clean
    Air Act, actually dissuades companies from installing
    technology that would decrease emissions in certain areas?
        Mr. Greeson. Certainly. So, many of the retrofit
    opportunities are in plants that are old and depreciated, and
    there are certain triggers under the Clean Air Act that would
    trigger a New Source Review, including the size of the
    investment that you are about to make versus the book value of
    the host unit. So many of these units are already very well
    depreciated and so an investment the size of $1 billion, per
    se, would trigger a New Source Review, and that is, as I
    mentioned in my testimony, pretty risky for the host coal unit.
    So it makes it a very gut-wrenching decision to make to go that
    way.
        Senator Barrasso. Thank you.
        Senator Carper.
        Senator Carper. Let me just ask my dear Democratic
    colleagues. Anybody in a hurry to go to another hearing or
    something you need to rush off to? If you do, I will yield my
    time to you initially. Anybody?
        I have no questions.
        [Laughter.]
        Senator Carper. No, actually, I do.
        Julio Friedmann, that is an interesting combination of
    names. How did you get to be a Julio?
        Mr. Friedmann. I was a birthday present, sir.
        Senator Carper. OK. Thank you.
        [Laughter.]
        Senator Carper. Whatever.
        Mr. Friedmann. My mom is Columbian, my father is
    Venezuelan, and they met in the Catskills in Grossinger's
    Hotel.
        Senator Carper. Well, that would explain it.
        [Laughter.]
        Senator Carper. More people should meet there.
        I want to give you just a moment to respond to the claims
    made by one or two of our other witnesses that we need to make
    changes in environmental regulations in order to grow the use
    of this technology, which we all seem to support. I believe, as
    I have said, there are real benefits to CCUS. I also believe
    that we need to deploy it in a manner that doesn't create
    additional environmental problems while solving carbon dioxide
    emissions.
        In your opinion, are the biggest hurdles holding back the
    use of this technology are they financial in nature or do they
    deal more with environmental permitting?
        Mr. Friedmann. It has been my experience and is strongly my
    opinion that the primary barriers are financing barriers. It is
    not possible to get a loan to build a CCS plant because you
    can't get your money back. And it is not possible to get an
    equity investor for a CCS plant because you can't get your
    money back. If we had clean energy portfolio standards, instead
    of renewable portfolio standards, it would be possible to get
    rate recovery for utilities. We do not have access to those
    mechanisms.
        If there was something like 45Q, where you could have
    sufficiently large investment and production tax credits, that
    would be enough to close the financing gap. The regulatory
    issues would be the next thing that people would look at, but
    the first thing they would look at, like Mr. Greeson said, is
    the up-front capital cost and the financing.
        Senator Carper. You were very straightforward, but just
    tell us what do we need to do? Just say it again. I want us to
    listen. What do we need to do in order to provide for a more
    level playing field for this technology?
        Mr. Friedmann. Fundamentally, we want to close the
    financing gap. So, today, if you wanted to retrofit a plant,
    like the NRG Petra Nova guys have done, you need to raise
    capital, you need to discount that capital over some period of
    time. You have to have a finance raise; you need an internal
    rate of return. If you can't get the IRR, you can't get the
    project. So you need to close that financing gap.
        Depending on how you calculate it, the production tax
    credit for wind today is about $60 a ton for CO2
    abatement. That would be large enough. The amounts of money
    that have been proposed for 45Q would be enough to launch a
    whole bunch of projects in the industrial sector and in the
    power sector for gas, as well as coal. You just need to close
    that financing gap.
        Senator Carper. I just want to say very briefly, Mr. Fry,
    Mr. Greeson, do you approve this message?
        Mr. Greeson. I largely approve whatever Julio says.
        Senator Carper. OK, thank you.
        Mr. Fry.
        Mr. Fry. I agree the financing gap is a huge challenge, and
    afterwards we could certainly work on expediting the
    environmental issues.
        Senator Carper. All right.
        Mr. Friedmann, Julio Friedmann, ever since President Trump
    announced that the U.S. would exit from the Paris agreements, I
    have been concerned that America will cede, as I said in my
    opening statement, cede opportunities to lead the world in
    technological innovation that could both fight climate change
    and create manufacturing jobs right here in the USA. Do you
    share my concerns? And would you further discuss the policies
    that you believe the U.S. should pursue to bridge the financial
    gaps with the CCUS, unless you think you have already done
    that? You may have done that in answer to my last question.
        Mr. Friedmann. In response to your question, the
    fundamental fact of the Paris Agreement is 197 countries have
    agreed that carbon matters. That means there is no market
    anywhere in the world where carbon is not an issue. There is no
    market anywhere in the world where carbon is not an issue. That
    creates opportunities for U.S. technology export. In fact,
    today the United States is an unambiguous global leader in
    carbon capture, utilization, and storage.
        If we do not continue to press for an innovation agenda, if
    we do not continue to deploy plants, we will lose that
    advantage to other countries that are making substantial
    investments along these lines, notably, China, Japan, and
    Germany, and Canada.
        Senator Carper. And Canada?
        Mr. Friedmann. Canada is actually, is in fact the
    technology that is deployed on the smaller version of David
    Greeson's plant up at Boundary Dam, that is Canadian
    technology, Cansolv, and the largest saline aquifer storage
    project in the world today is up in Canada as well, it is the
    Shell Quest Project.
        Senator Carper. OK, thanks.
        Mr. Greeson, you testified that NRG's Petra Nova's project
    was on budget and on time with the current environmental
    protections in place. Is that correct, yes or no? Is that
    correct?
        Mr. Greeson. Yes, our project was on time and on budget,
    yes.
        Senator Carper. Good. Thanks. In your written testimony you
    mention this project started in 2009 because NRG felt that we
    would have Federal regulations in place that would constrain
    carbon emissions from power plants. If you would, just answer
    briefly. Do you believe that NRG would make the same decisions
    today, based on this Administration's policies to roll back all
    regulations dealing with climate change and carbon pollution?
        Mr. Greeson. So, we are hearing from our customers. We are
    a competitive retail electric provider. We sell everything we
    sell under competitive market structures. We do not have rate
    base to put off cost onto, so everything we do we do because we
    are trying to make our product more attractive to our
    customers.
        Right now, our customers are asking for lower carbon
    products, and so the current status of the Administration
    almost doesn't matter. We looked at what our customers are
    demanding, and that is what we try to provide.
        Senator Carper. Do you believe that NRG would make the same
    decisions today based on this Administration's policies?
        Mr. Greeson. So----
        Senator Carper. If you would just say yes or no, then we
    will go on.
        Mr. Greeson. So the question--there are so many factors
    that go into making the decision. Definitely, the
    Administration's position would be one of those factors that we
    would consider.
        Senator Carper. All right, thanks.
        Thanks very much.
        Senator Barrasso. Thank you, Senator Carper.
        Senator Inhofe.
        Senator Inhofe. Thank you. Thank you, Mr. Chairman. You
    know, this is kind of interesting because there are so many
    areas here where we are in agreement. That isn't always true in
    this Committee.
        Now, you folks are all experts in these areas and, of
    course, we are not up here, but we are going to be wanting to
    make decisions, wanting to make changes so that we can
    accomplish some of the goals that we are talking about. So
    essentially, we are talking about three steps: first, the
    captured technology separates some CO2 from gases
    produced in electricity generation; second, purified,
    compressed, and all of that; and, finally, the CO2
    is injected into underground reservoir for use in other
    purposes.
        Now, as the Chairman pointed out in his opening remarks,
    this does have great opportunities, opportunities that you have
    talked about in your testimony, Mr. Greeson. But there also is
    the problem of NRS. I was chairman of this Committee at the
    time that we went through this and, yes, it is ironic that was
    set up in order to make things come out cleaner, and it didn't
    work out that way.
        Now, when you are looking at opportunities you have, we
    need to start talking about a legislative fix that we can do.
    We can do it maybe through NRS; we can do it a number of
    different ways. I know you outlined a few things, but have you
    gone into a lot of detail on this as to what we at this side of
    the table could do to resolve the problem that we are here
    meeting on today and to enhance our production?
        Mr. Greeson. Thank you, Senator. I did not go into detail
    in my testimony. We can certainly provide more detail.
        Senator Inhofe. I think you referred to your written
    testimony. Did you get more detail there?
        Mr. Greeson. There is a little more detail there talking
    about the steps that can be taken to make the NSR process less
    of a deterrent to a major capital improvement in environmental
    performance, yes.
        Senator Inhofe. Right. Now, you had several operations. You
    only used this in one area. What was the reason for that? Why
    were you able to face the risks that were posed by NSR in that
    one area and not the rest of some of your other operations?
        Mr. Greeson. So, the design of this carbon capture system,
    it only touches the host coal unit right before the exhaust
    stream goes up the chimney. So, because of that, the carbon
    capture system itself was not considered an addition to the
    host coal unit; it has a separate air permit for the carbon
    capture system. So, in that way we did not have to face NSR on
    the host coal unit.
        Senator Inhofe. I see. All right. Well, you know, in my
    State of Oklahoma we are doing this right now. It is Chaparral.
    I have been to their operations. One is in the northeastern
    part of the State and one in the northwestern part of the
    State.
        Have you ever thought about what kind of a figure we would
    be looking at if we resolved that problem and were able to
    utilize this enhanced system?
        Mr. Greeson. So, every project and every plant is
    different. I can tell you for our project that we probably
    could have spent $50 million less if we had been able to take
    steam from the host coal unit.
        Senator Inhofe. That is interesting. How are things in
    Houston right now?
        Mr. Greeson. Drying out.
        Senator Inhofe. Yes. Well, that is good. That is good.
        Mr. Greeson. Drying out. We are getting there.
        Senator Inhofe. Mr. Fry, you know, we are interested in
    doing the same things that you have been doing. Do you have any
    specific advice for us to accomplish the successes that you
    have achieved in Wyoming?
        Mr. Fry. I would suggest that if you all have opportunities
    to find CO2 sources and places to inject it, whether
    it be EOR, saline, start planning now. Look at where you could
    route pipelines with the minimal amount of constraints. And I
    realize that you have a different Federal land status than we
    do in Wyoming, but I think you would follow those same steps to
    plan ahead and make your process a lot easier.
        Senator Inhofe. Thank you. That is very helpful.
        Thank you, Mr. Chairman.
        Senator Barrasso. Thank you very much.
        Senator Whitehouse.
        Senator Whitehouse. Thank you, Chairman. First, let me
    thank you and Senator Capito for cosponsoring the bill that is
    kind of at the heart of today's hearing. I would hope that
    other colleagues on the Committee would look at it and consider
    cosponsoring it as well. We are up to 25 cosponsors, which is a
    terrific number, but it is certainly not enough to convince the
    majority leader that he can get over a 60-vote threshold. So to
    the extent that I don't want to run too many more Democrats
    onto it because I don't want to get too far out of balance, to
    the extent that we can get more Republican cosponsors, I think
    that could move the project forward.
        I also want to say that I have been to Saskatchewan
    Boundary Dam and I have been to Shenandoah, Iowa, where they
    are growing algae with the waste exhaust from ethanol plants,
    so I have seen this technology in action; I know that it is
    tangible and real. And everywhere I have gone I have also been
    told what Dr. Friedmann and Mr. Greeson have told us, which is
    that it is really hard to find a revenue stream to pay for the
    sequestered or captured carbon.
        I want to emphasize Mr. Greeson's testimony that enhanced
    oil recovery was and is still today the only known way to
    create a revenue stream that could offset the cost of building
    and operating carbon capture right now. That is how
    Saskatchewan works. It is near an oil field, so you can do EOR.
    But there is an enormous amount of capacity out there and
    capability and technology to do this that isn't going to be
    located near an oil field, and at this point that is being
    shackled, smothered by this problem.
        One of the things that we are seeing emerging is
    recognition of a cost of carbon, which implies that there
    should either be a payment for reductions in carbon emissions
    or a price on carbon emissions. And, Mr. Greeson, you mentioned
    that absent a price on carbon emissions, this is a problem, so
    presumably a price on carbon emissions would help create a
    revenue stream. Is that correct?
        Mr. Greeson. That is correct, sir.
        Senator Whitehouse. It would facilitate market and industry
    getting together and trying to come up with ways to take
    advantage of that price on carbon emissions, correct?
        Mr. Greeson. That is correct. Any opportunity to create a
    revenue stream is going to help.
        Senator Whitehouse. And, Mr. Friedmann, the heart of your
    testimony about the different ways that government, through
    specialized government programs, can help, isn't it true that
    the fundamental problem here is that there is no way to be
    compensated for reducing carbon, presently, without either a
    price on carbon or a benefit for carbon emission reductions?
    Correct?
        Mr. Friedmann. Correct.
        Senator Whitehouse. So, you know, one thing that is
    interesting to me is that if you get away from Congress, into
    courts and into administrative agencies, which are forums in
    which facts tend to have to be factual and economics tend to
    have to be real and false and misleading statements tend to be
    punished, you see a really strong and, in fact, inevitable move
    toward a social cost of carbon.
        Three circuit courts of appeal, everyone that have looked
    at the question, have either approved or required
    administrative agencies to adopt a social cost of carbon.
    District courts, over and over, have approved or required a
    social cost of carbon repeatedly. Mining expansions have been
    stopped because the applications did not include a social cost
    of carbon. FERC has been instructed to consider a social cost
    of carbon in pipeline hearings.
        The National Highway Transportation Safety Administration
    has been instructed to use a social cost of carbon and told
    that it cannot be zero. The Department of Energy was affirmed
    in considering a social cost of carbon with respect to
    commercial refrigeration. Indeed, the court said, yes, that
    kind of has to happen. New York, Minnesota, and Colorado public
    utility or public service commissions have adopted social cost
    of carbon. The Illinois State legislature has adopted the
    social cost of carbon.
        It is now a commonplace for U.S. corporations and for major
    investors to bake an internal social cost of carbon into their
    decisions.
        Mr. Friedmann, do you think that is a sensible move on the
    part of these courts, these administrative agencies, and these
    corporations?
        Mr. Friedmann. It is simply a market reality. They are
    trying to manage the carbon risks and how the market values
    those carbon risks. Every multinational oil company that I know
    of carries a social cost of carbon and an operational cost of
    carbon for their investment planning, and they won't build a
    unit unless it can have a strong internal rate of return given
    a high cost of carbon.
        Senator Whitehouse. So, I would suggest if it is good
    enough for the oil industry itself, it might, at some point
    before too long, be good enough for Congress to consider.
        Mr. Chairman, I would love, if it works, to have a second
    round to ask Mr. Friedmann a particular question. We have dealt
    mostly with atmospheric CO2 with technologies that
    relate to extracting the CO2 load from our oceans,
    which are dramatically acidifying as a result of the
    CO2 load.
        Senator Barrasso. Certainly.
        Senator Rounds.
        Senator Rounds. Thank you, Mr. Chairman.
        Mr. Fry, I would like to begin with you. First of all, the
    Wyoming pipeline corridor takes a significant step forward
    streamlining the NEPA process for pipeline infrastructure. How
    do you envision the Wyoming process becoming integrated in an
    overly complicated and complex Federal process, and how do you
    see the Wyoming process perhaps serving as a model for the
    Federal system?
        Mr. Fry. Sir, our expectation is that we will develop this
    project and work through the Federal agencies with a final
    product of an environmental impact statement. And after we are
    completed with that, companies could come in and build within
    this corridor system at a reduced environmental analysis that
    would probably be an environmental analysis. So we are hoping
    to cover the bulk of the EIS and the environmental impacts, and
    then they would come in just to do a lesser analysis, as well
    as their surveys for specific resources.
        Senator Rounds. OK.
        Mr. Greeson, you indicated that the biggest challenge you
    have is the original or the capital costs involved in creating
    the projects up front. At the same time, you also indicated
    that, as I understand it, with regards to the costs, you
    specifically pointed out the fact that the NSR, the current
    process in place really placed a burden on the company who was
    trying to capture the carbon. It made it more difficult because
    in doing so the existing rules would perhaps have included an
    additional cost to upgrade an existing plant, which the vast
    majority of the plants in the United States are older plants.
    Fair enough?
        Mr. Greeson. Fair enough.
        Senator Rounds. So it made it more difficult for you to
    actually take advantage of an opportunity here to capture
    carbon in the way that your company analyzed that process.
        Mr. Greeson. Yes, Senator.
        Senator Rounds. OK.
        Mr. Friedmann, would you agree that the approach that Mr.
    Greeson has expressed and the concern that his company clearly
    looked at with regard to the NSR in its current format could be
    improved upon? Or at least in your analysis or as you have
    looked at this, would it be fair to say that if there was a way
    to take these older plants and to allow them to be able to be
    integrated into some sort of a CCUS process, that there would
    be a value there to taking a second look at the current rules
    in place at the Federal level to allow more certainty as to
    what their costs would be to upgrade that plant?
        Mr. Friedmann. I am in no way, shape, or form an expert on
    New Source Review and regulatory issues associated with it.
    What I feel comfortable saying is that I have heard the same
    concerns that Mr. Greeson has expressed by many other power
    producers, that they are considering projects and would like to
    do projects, but they are concerned about the potential
    triggering of New Source Review and how it will affect the
    project process.
        Senator Rounds. Thank you.
        I think as we look at this from differing points of view,
    there is a discussion about the social cost of carbon, which is
    a discussion as to if there is a desire to reduce the total
    amount of carbon within the atmosphere that is being released,
    there are two ways to approach it. No. 1, you can simply say,
    well, we are going to add a cost to anybody who creates carbon
    within the atmosphere or, No. 2, we can look at, as has been
    suggested here, that there are positive attributes that we can
    take that carbon and use it for a positive way in which to
    actually add additional power or additional resources to our
    energy portfolio.
        It seems to me that there is more logic in not increasing
    the cost of energy by adding a social cost of carbon to the
    creation of energy, but, rather, looking at, in particular,
    this particular process that you all are discussing today,
    CCUS, in particular with being able to produce more energy at
    this time.
        It would appear that there is a suggestion that there is a
    divergency here, and I guess I am just curious. It seems to me
    that we ought to be focusing on how we create more using the
    existing resources we have, rather than simply saying let's add
    a cost to the cost for the consumer in the first place up
    front.
        It looks to me, Mr. Greeson, like your company has tried to
    address this by saying let's take this carbon and make it a
    value or give it a value, as opposed to calling it a cost.
    Would you care to comment on the difference between the two
    approaches?
        Mr. Greeson. Well, Senator, clearly, because we are a
    competitive electric retail company, raising cost is not an
    option for us because others would simply undercut us and get
    the business. So, as I mentioned in my testimony, we found a
    way, using enhanced oil recovery coupled with carbon capture,
    to not increase the cost of electricity, and yet we are
    reducing by 1.6 million tons a year the emissions from the host
    power plant. So we kind of were able to run the circuit and get
    everybody something in this project.
        Senator Rounds. My time has expired, but at the same time
    what you are saying is if we were to take a look at the NSR
    rules in place today, there may very well be other companies
    out there who might very well be able to accomplish the same
    thing if there was certainty, so that they knew that if they
    did upgrade an existing facility to take advantage of CCUS,
    that we might very well be able to capture more carbon and do
    it in an efficient manner and actually add value, as opposed to
    costing those consumers more money.
        Mr. Greeson. Yes, I would agree. If you can solve the
    biggest problem, which is the up-front capital, then you have
    to attack the next reasons why people wouldn't adopt this
    technology, and NSR would be one of those reasons.
        Senator Rounds. Thank you.
        Thank you, Mr. Chairman.
        Senator Barrasso. Thank you, Senator Rounds.
        Senator Harris. Thank you.
        Dr. Friedmann, thank you for your work at Lawrence
    Livermore. It is certainly a jewel of California and, dare I
    say, the Nation, so thank you for your work there.
        Some would say that a price on carbon via cap and trade or
    a carbon tax, or any other mechanism, would help, but that
    ultimately wind and solar are often cheaper than CCS and have
    fewer smog-forming pollutants and other impacts to communities.
    What would be your perspective on that, in terms of that being
    one of the reasons why CCUS needs subsidies?
        Mr. Friedmann. I would have three specific responses to
    that. First of all, what you said is only true in some markets;
    it is not universally true. Across the United States, resources
    vary in terms of solar and wind. The costs of power vary
    dramatically. So what may work well in one State or one region
    is not actually universally true, and that is also true
    internationally.
        The second thing I would say is that a straight levelized
    cost of electricity basis, which has its own flaws, it does not
    include the cost of transmission buildout and it doesn't
    include resilience and all these other sorts of things, just on
    that basis alone CCS is cost competitive with a boatload of
    clean energy technologies, including offshore wind, including
    rooftop and residential solar in a bunch of markets.
        What is not possible, though, is to finance those projects.
    Those other projects actually can recoup through a renewable
    portfolio standard or through the investment or production tax
    credit, they can recoup the capital investments. I know of at
    least three companies that scrubbed really hard looking to see
    if they could finance a CCS project, and they said, nope, we
    are going to do solar, wind, and gas, because that is what we
    can do today.
        The third thing that I would say is that I simply don't
    think of this at all as an either-or question. We absolutely
    need more solar and wind. I don't think that is debated. In
    fact, the supports and subsidies which we have put in place to
    enable those technologies have created new industries,
    supported jobs, made America a technology leader, all that
    stuff.
        We are still not reducing our emissions anywhere near
    quickly enough. We are far, we are far, far away from a
    satisfactory trajectory. And if you actually look at the
    emissions gap report from the United Nations, we are not even
    on the current policy trajectory for 2010; we are on the
    baseline worst business as usual scenario. We are emitting 53
    billion tons of greenhouse gas emissions every year.
        So I simply think that we need to do more. We need an
    innovation agenda; we need a deployment agenda. And, in fact,
    CCS is required as part of the mix, along with efficiency,
    along with nuclear, along with solar, along with wind, along
    with electric vehicles, along with biofuels. We actually need
    all of the above.
        Senator Harris. So you make a very persuasive point. Why,
    then, do you believe have we not developed financial incentives
    and investment in this method?
        Mr. Friedmann. I think there are two issues which come
    back. The first is that the financing for CCS projects is
    lumpy. David has had to live through this. At some point or
    another, someone has to write a billion dollar check, and that
    makes it hard to pull the financing together. You can actually
    deploy much smaller wind and solar projects without taking the
    same financing risk. And that has created, among other things,
    a distributed energy renaissance in this Country that has its
    own benefits associated with it. You can't really do that with
    CCS; you need the large central application. In fact, that is
    its primary use and benefit.
        The second is one that I grapple with all the time.
    Everyone knows what a windmill is. Everyone knows what a solar
    panel is. Everybody knows what a gas turbine and a nuclear
    plant is. It is very, very hard to communicate what CCS is to
    people. And so even for people who care about this topic, even
    people who are enthusiastic about climate change, there is an
    educational and informational barrier that comes with it.
        There are other reasons as well. I am happy to talk to you
    offline and give you a much wider description.
        Senator Harris. That would be helpful, if we are going to
    pursue anything as a Committee. It would be good to predict the
    obstacles.
        Tell me, in your work in this area, have you done an
    analysis? You have mentioned, but have you done an analysis of
    what we would look at in terms of, if there were such an
    investment, what it would do in terms of job creation for the
    Country?
        Mr. Friedmann. Actually, I worked with Dan Kammen on this a
    number of years ago in which we looked at the job creation
    associated with it. I don't have the numbers now, I am happy to
    followup with you, but it is substantial.
        There are two dimensions to this that I think are also
    important. One of them is it is not just job creation, which is
    real, but it is also job sustainment. This is particularly
    important to the unions, which are looking at a number of their
    jobs going away associated with the industry. But the other is
    actually because you are dealing with these large centralized
    facilities, you don't just create jobs or sustain jobs, you
    actually create and sustain communities; that whole communities
    that are at risk actually get sustained through CCS.
        Senator Harris. Can you give me just a couple of examples
    of the sustainable jobs that this would create? What type of
    job are we talking about?
        Mr. Friedmann. Any number of things. Let's just do quickly,
    anybody building and operating the plant. I think there is well
    over 1,000 jobs associated with the Petra Nova project and
    there are 54 or some number of full-time employees who are
    working on that site. They are high-paying jobs; they are good
    jobs. GE has stopped doing research on CCS because they didn't
    see a market opportunity, but they were looking at an export
    technology market as large as their wind export technology
    market that is thousands and thousands of jobs.
        You are talking about boilermakers, heavy equipment
    manufacturers, and all of the equipment that comes with that;
    the people who make compressors, the people who make pipelines,
    the people who make control systems, and, of course, all of the
    people who support those people.
        Senator Harris. Thank you.
        Thank you.
        Senator Barrasso. Thank you, Senator Harris.
        Senator Ernst.
        Senator Ernst. Thank you, and thank you to our witnesses
    for being here today.
        Like many of my colleagues here on the Committee, I believe
    that an all-of-the-above energy approach is the most effective
    way to create jobs, promote energy independence, and ensure
    that our households and businesses have reliable and affordable
    electricity. Perhaps no State is better in leading the way or
    setting an example of this approach than Iowa, my home State.
    Largely a result of our State policies and community
    engagement, I am proud to say that Iowa now has one of the
    Nation's most diverse energy mixes, with wind now providing
    nearly 40 percent of our electricity.
        And to give you an idea of how quickly this diversification
    has taken place, in 2008, 76 percent of our electricity came
    from coal; and just recently, 2016, now about 47 percent of our
    electricity comes from coal. And I would encourage other States
    to look to Iowa as an example of the successful application of
    an all-of-the-above energy approach.
        Dr. Friedmann, in your testimony, you touched on biomass
    being a possible application for carbon capture, utilization,
    and sequestration. Iowa's energy plan, which was unveiled by
    our Governor, Kim Reynolds, earlier this year identifies one of
    our State strengths as its abundant and largely untapped
    biomass potential, which could be used to produce biofuels or
    generate electricity. And by 2030 it is projected that Iowa
    will lead the Nation in crop residues and manure, over 30
    million metric tons, which have the potential to be used for
    bioenergy.
        Companies are starting to invest in cellulosic technology
    in Iowa, such as POET's Project Liberty, near Emmetsburg. And
    now with DuPont's plant near Nevada, we can boast of being home
    to the largest cellulosic ethanol facility in the world.
        Dr. Friedmann, can you elaborate on the potential for this
    type of biomass as an application for CCUS?
        Mr. Friedmann. Thank you, I am happy to. One of the first
    applications for CCUS is actually directly in the ethanol
    industry. Ethanol fermentation creates a byproduct stream of
    pure CO2 . The Decatur project in Illinois is
    happily storing about a million tons of carbon dioxide every
    year into a deep saline formation, and has been doing so
    successfully. It is worth noting that for companies who are
    able to do this, they could actually cash in on that in the
    California low carbon fuel standard market, which actually has
    a metric and a methodology in which the carbon footprint for
    those fuels is assessed and includes carbon capture and
    storage. So, in fact, if those fuels were sold into the
    California market and CCS was applied to them, they would be
    benefited today at the cost of about $90 a ton they would be
    compensated for that.
        Senator Ernst. And we would love to sell those fuels to
    California.
        Mr. Friedmann. I am happy to talk about that more.
        Second, as you mentioned corn stover and crop residues,
    there is an opportunity for co-firing of biomass with coal
    plants. This is something which is relatively straightforward
    to do. It is hard to get large volumes in that, but in fact you
    can reduce the carbon footprint with that. If that plant is a
    CCS plant, you begin to trend into something that is called
    BECCS, bioenergy with CCS, which is one of the many technology
    pathways to get carbon removal or negative emissions.
    Essentially, the corn pulls the CO2 from the air and
    then you put the CO2 underground.
        The Intergovernmental Panel on Climate Change and many
    other groups have insisted that BECCS is necessary for us to
    hit their climate target and, in fact, Iowa and the Midwest are
    excellent places to test such things.
        The third thing is to think about enhanced terrestrial
    uptake. This is looking at things like soil carbon and
    increasing the richness in there. There is a meme going around
    right now of soil carbon farmers, and these guys actually have
    difficult access to the carbon market but are actually able to
    increase their yields. Our laboratory is actually working with
    Iowa State University on a project to in fact do exactly that,
    and look at ways to enhance terrestrial uptake.
        There are other ways to go about this as well, but
    functionally, for example adding biochar, which is a byproduct
    of fast pyrolysis; and there are ways to think about combining
    char and char gasification with coal firing. There are many,
    many ways to think about combining biomass with CCS in a way
    that can achieve deep decarbonization.
        Senator Ernst. I appreciate that very much. And it is
    fascinating and technology that I hope we are able to tap into
    and use in the very near future.
        With that, my time has expired. Thank you very much, Mr.
    Chair.
        Senator Barrasso. Thank you, Senator Ernst.
        Senator Duckworth.
        Senator Duckworth. Thank you, Mr. Chairman, and thank you
    for convening this very important hearing.
        Like many of my colleagues, I also support the FUTURE Act,
    which will provide industry with incentives they need for
    widespread implementation. I am a proud sponsor of CCUS because
    I have seen firsthand how effective this technology can be in
    bringing economic and environmental benefits. Decatur,
    Illinois, in my home State, is home to Archer Daniels Midland,
    a project that began capturing carbon dioxide from an ethanol
    production facility in April 2017. This project can capture up
    to 1.1 million tons of CO2 per year, which is
    sequestered in a nearby deep saline rock formation.
        So from power plants to industrial facilities to oil
    operations, there is obviously tremendous opportunities to
    deploy CCUS, and I believe we must invest and prioritize CCUS
    so that we can maintain our leadership in the energy sector, as
    well as realize its tremendous job growth potential.
        Dr. Friedmann, can you please share the economic
    development potential associated with wide-scale implementation
    of CCUS not just here in the U.S., but also for us to sell or
    deploy this technology abroad as well?
        Mr. Friedmann. Thank you. It is clear to me that there are
    large opportunities for deploying CCS in the United States and
    in the North America market, including Canada and Mexico, which
    are seriously chasing CCS and looking for projects and
    partners. The market opportunity and the job opportunities in
    that are very large. I have seen a number of commercial
    estimates that suggest that by 2025 this could be a $6 billion
    market in the United States with the appropriate policy
    structures.
        I think, however, the big opportunity is the international
    market. I have had the good fortune of representing our Country
    in negotiations and discussions with China, with India, with
    Japan, with Australia, with South Africa, and with many
    countries in Europe. They are aware that they are not going to
    hit their climate targets without CCS either. They are a bit
    reluctant to take it on up front, a bit the way that my
    children are reluctant to clean their room, but ultimately my
    children have to clean their room and these countries know that
    they have to do that work as well.
        Right now it is still the case that the United States can
    develop and lead the world in deploying and marshaling that
    technology, and that is an export opportunity that is immense;
    many hundreds of billions and trillions of dollars of total
    revenues.
        Senator Duckworth. And so if we don't invest in its
    development here in the U.S., are other countries poised to
    take over should we not develop and be the ones to provide the
    CCS technology abroad with this market potential? If we don't
    do it, is somebody else going to step in and provide the
    service?
        Mr. Friedmann. Unquestionably, and a number of countries
    are very aggressive on that front. The most obvious is Norway.
    Since 1993, Norway has had a carbon tax. They are the global
    leaders in carbon capture technology. They have the technology
    center, Mongstad, which they are using to test technologies
    from around the world, and they have their own state-sponsored
    research programs and commercialization programs to get that
    technology out. Aker Clean Carbon and Statoil are in fact
    actively competing in this space.
        Next in line I had mentioned Canada, and that is an
    important actor, but probably the one to keep an eye on, not
    surprisingly, as always, is China. Japan has put a lot of money
    into this, and, in fact, Dr. Greeson's plant is in fact using
    this Japanese technology, because that was the market beater at
    the time. But China is dumping an awful lot of money into
    center of excellence on everything from geological storage to
    material science to supercomputing, and they are fielding large
    projects and demonstration now for the first time ever.
        XI Jinping is clearly making commitments to accelerate
    their current commitments beyond the Paris commitment, and CCS
    is one of the things that they can do. They are able to lay out
    tariffs, declare projects, marshal thousands of engineers at
    the drop of a hat, and are very much looking at this technology
    space for the global lead position.
        Senator Duckworth. So they have clarity in their national
    policy in investing in this technology. And I am not one to
    support red tape for the sake of red tape, but I think that
    with CCS I think there is a different challenge for businesses
    here in the U.S. that want to make these investments. I think
    we fail to send a direct signal to business indicating that we
    take the threat of climate change seriously, and with that we
    don't have a clarity in our national energy policy that would
    set up the goals, the support, so if we don't have a national
    policy the way the Chinese do, then people are going to be
    reluctant to get into the industry.
        Mr. Friedmann. If we are going to be competitive in that
    race, we have to run faster. And the way that you get the team
    to run faster is to incent them. And there are many, many
    different ways to do that, but you need to send that signal and
    you need to make it big enough so that companies will commit
    the capital and the staff and the human beings and all the rest
    of it to really make it work.
        Senator Duckworth. Thank you. I am out of time.
        Thank you, Mr. Chairman.
        Senator Barrasso. Thank you, Senator Duckworth.
        Senator Capito.
        Senator Capito. Thank you, Mr. Chairman, and thank all of
    you here. Appreciate it. I would like to give a shout out to
    the ranking member on my subcommittee, Senator Whitehouse. We
    are both on the 45Q tax credit bill, the FUTURE Act, and my
    colleague from Illinois a cosponsor as well.
        Dr. Friedmann, when you were questioned by the Senator from
    California as to the job benefits of pursuing an active CCSU or
    CCUS format around the Country, one of the jobs that you didn't
    mention, but I am sure you knew, were the coal mining jobs that
    are associated with keeping coal as an active energy source
    here in the Country. So, for a place like West Virginia, that
    has great meaning, so I will add that to the mix of the
    numerous jobs that you mentioned would be not just created, but
    sustained through an active CCUS commitment.
        Let me ask you just a quick question, Dr. Friedmann. In
    your statement you mentioned, and you mentioned this orally,
    too, that there is 16 projects that are currently doing this
    and 22 that are going to be doing it by the year 2020. We know
    Petra Nova is one in the United States. How many of these 16
    are located in the United States?
        Mr. Friedmann. Quite a number of them. The LaBarge project
    in Wyoming is one of these projects. The Air Products project
    in Port Arthur, Texas, actually the largest clean hydrogen
    project in the world, is in the United States. Plant Barry, the
    Enid Fertilizer Plant that actually sends the CO2
    through the company of Chaparral into Oklahoma for enhanced oil
    recovery. There is quite a lot.
        Senator Capito. OK. Good. I was wondering, since you
    mentioned that a third in North America, I thought was that a
    way of saying North America, but not in this Country. But that
    is not the case, so thank you for that.
        Mr. Greeson, you mentioned some of the regulatory burdens.
    We have talked a lot about the financial burdens, and that is
    part of the reason that 45Q, the FUTURE Act, is so important, I
    think. In terms of the regulatory burden, is there any way that
    you can approximate which one is a bigger burden to you, or was
    to you at Petra Nova, in the development? Was it the financial,
    was it the regulatory, or are they all just too melded in there
    together to really make a distinction?
        Mr. Greeson. Thank you, Senator. Absolutely far and away
    the up-front capital cost was the biggest barrier. We found a
    number of like-minded companies that joined in with us, so we
    limited each company's exposure to the project. So that is how
    we were able to raise the capital.
        But behind that, we did have to do a lot tap dancing to
    find a way to make this project work. One was to just have a
    minimal touchpoint on the existing plant so that we avoided New
    Source Review. But there were others. As I mentioned, the Class
    VI versus Class II injection well dust-up. That was real
    exciting at a time we were very near the end of our financing
    and the lenders were asking, what are you talking about an
    extra $100 million dollars? NEPA was also something that was,
    we feel like, a burden on the project with no real
    environmental benefit. Every aspect of this project is on
    disturbed lands, industrial sites, so we weren't really
    incrementally having any impact, but yet, because of the grant,
    we had to go through that. So there were a number of things
    like that.
        Senator Capito. Right. Well, thank you.
        Mr. Fry, I noticed in your bio that you acquired your
    beginning education at Davis & Elkins College in West Virginia,
    so very proud of that.
        Mr. Fry. Yes, ma'am.
        Senator Capito. Are you a West Virginian or a Wyomian?
        Mr. Fry. I am originally from Virginia.
        Senator Capito. Well, that is OK.
        [Laughter.]
        Senator Capito. In any event, talking about pipelines, we
    are having issues in West Virginia, I am sure all across the
    Country, obviously, about siting and permitting of pipelines.
    From a technological standpoint, is there a way to convert old
    pipelines into pipelines that can carry carbon, or do you have
    to have a specialized new pipeline developed, or is that a bad
    concept, to use an old pipeline for what is considered to be a
    newer technology?
        Mr. Fry. So, actually, to utilize an old pipeline would be
    a challenge because the CO2 is in supercritical
    State, which means it is under extremely high pressure. But
    what we have done in siting our pipeline corridors in Wyoming
    is followed alongside of those old pipelines, whereby we
    disturb less ground by following to the side in a safe manner.
    So there is an opportunity to use the pipeline in the corridor,
    but not the pipe itself.
        Senator Capito. Is the corridor, as I understand it, just
    intraState, so you are not crossing over into other States?
        Mr. Fry. Yes, ma'am. It is challenging from a NEVA
    perspective to do internal, but when we started to think about
    coordinating with our neighboring States, where we would enter
    and leave the State, it just became too much of a challenge. So
    we come close to the borders, but we are not promoting going
    across.
        Senator Capito. Do you consider this like a step one for
    you? Because I would imagine, in order to really maximize the
    financial benefit, being able to go outside of the State would
    probably be beneficial as well.
        Mr. Fry. We are hoping that our model follows through in
    our neighboring States, then we can start opening those
    discussions.
        Senator Capito. Thank you.
        Mr. Fry. Thank you.
        Senator Barrasso. Thank you, Senator Capito.
        Senator Whitehouse, you had some additional questions?
        Senator Whitehouse. Thank you, Chairman, I appreciate the
    courtesy.
        I gave Dr. Friedmann a warning of where I would be going.
    We have been talking in this hearing virtually exclusive of
    atmospheric carbon; and obviously that is a significant
    problem. For as long as humankind has been on our planet, we
    have had atmospheric carbon dioxide concentrations between
    about 160 and 300 parts per million. We have now blown through
    400, which humankind has never experienced; and projections are
    that we will crest above 500 parts per million.
        So, I don't mean to deprecate the importance of atmospheric
    carbon dioxide hyper-concentrations, but 30 percent of that
    carbon dioxide has been absorbed, roughly has been absorbed
    chemically into the oceans, with a very, very predictable,
    replicable scientific chemical result, which is that the oceans
    acidify.
        Mr. Chairman, I actually had a moment in the wee hours of
    the morning during one of our late sessions to perform I think
    the first scientific experiment ever done on the Senate floor,
    blowing my CO2 -laden breath into the glass of water
    that the pages give us on the Senate floor with pH dye in it
    and showing that, in fact, just that dramatically increased the
    acidity of the water in the glass. So this is something that
    any middle school science lab could replicate, and not very
    debatable.
        So we really need to, I think, focus a little bit on the
    oceans here as well, and if you could just say a few words
    about what you see as potential carbon load reduction
    technologies and prospects in our oceans. And do you agree or
    disagree with any of what I just said?
        Mr. Fry. I 100 percent agree with everything that you just
    said. Ocean acidification is an often overlooked consequence of
    global greenhouse gas emissions and, in fact, atmospheric
    carbon dioxide becomes ocean carbon dioxide with negative
    consequences. It is already an economic burden for a number of
    fisheries. In particular, oyster fisheries around the Country
    are already adding lime to the waters because the oysters
    aren't growing fast enough because of the consequences of ocean
    acidification.
        In the same way that we now face such an urgent problem
    that people have begun to think about pulling carbon dioxide
    directly out of the air, I was pleased to not only be part of,
    but to discover there are a large number of groups that are now
    looking at pulling carbon dioxide directly out of the oceans;
    it is called direct ocean capture.
        I can identify eight different groups and companies who
    have developed technologies to do such things, including work
    that is going on at the National Laboratories. So, again, some
    work that was executed at Lawrence Livermore to pull carbon
    dioxide directly out of oceans.
        This has a number of positive consequences. For me, the
    first order one is in fact that you reduce ocean acidification
    at its source. Rather than adding more stuff to the ocean, we
    are subtracting the problem in the first place, and that is an
    unambiguous benefit.
        Second is the fact that when you pull carbon dioxide out of
    seawater, you actually create new things. Most importantly, you
    precipitate carbonate minerals that are commonly used in
    building materials. Sand, aggregate, cement, additives, all
    these things can actually be made by pulling carbon dioxide out
    of the ocean. And the costs for that today are substantive but,
    again, the best time to plant a tree is 20 years ago; the
    second best time is now. If we get on the stick with an
    innovation agenda, we can think about how to develop better
    technologies and ratchet down the costs for those kinds of
    operations.
        Senator Whitehouse. And these ocean technologies suffer
    from the same finance problems that the atmospheric
    technologies do, which is that, presently, there is no revenue
    stream that rewards the reduction of carbon dioxide levels in
    the ocean in the same way that, other than EOR, there is no
    revenue stream that rewards reduction of carbon dioxide levels
    in the atmosphere.
        Mr. Fry. That is correct. Even the revenues from byproducts
    for things like the lime materials are nowhere near enough to
    close the financing gap. So projects are not being fielded and
    the amount of research that is being done on this topic is very
    small.
        Senator Whitehouse. Who knew hard to get investors for
    something where there is no prospect of a revenue stream? Thank
    you.
        Senator Barrasso. Well, thank you very much, Senator
    Whitehouse.
        Thank you all for your responses.
        Senator Gillibrand, whenever you are ready.
        Senator Gillibrand. Thank you, Mr. Chairman and Mr. Ranking
    Member.
        This hearing on carbon capture technology comes at a time
    when parts of our Country are seeing the devastating
    consequences of climate change caused by carbon emissions. My
    heart breaks for the people in Florida, Texas, Puerto Rico,
    Virgin Islands, Caribbean who are literally struggling to put
    the pieces of their lives back together following both
    Hurricane Harvey and Irma.
        But as we help them to rebuild, we must also confront the
    reality of climate change. We cannot ignore that carbon
    emissions are causing our ocean temperatures to get warmer,
    which is fueling more powerful hurricanes. Reducing carbon
    emissions should be an urgent priority for this Committee, and
    now is exactly the time we should be talking about it.
        I would also note that this is the second hearing this
    Committee has held on carbon capture technology. While this is
    an important topic that deserves our attention, I hope that we
    will also hold hearings on what we can do to facilitate the
    development of renewable technologies like wind and solar.
        This Country used to be at the forefront of wind and solar
    technology; we invested in it. But because we haven't invested
    in it, a lot of the manufacturing has gone to China, our
    biggest competitor. And when you manufacture something, you are
    better poised to do next generation innovation. So we are
    losing a competitive space to China right now, and that has to
    be regained.
        So if you truly believe that we should have an all-of-the-
    above energy strategy, then we should be talking about
    renewable energies as well. I have two questions for our
    witness Dr. Friedmann.
        Dr. Friedmann, in your testimony you State the barriers to
    carbon capture technology are not fundamentally technical or
    regulatory. Could you speak more to what you mean by that?
        Mr. Friedmann. Carbon capture technology was first invented
    in 1930 and fielded in 1938. This is actually a relatively
    mature technology even at scale. It is used in many, many
    commercial operating facilities.
        Carbon storage was first deployed in 1972 for the purpose
    of enhanced oil recovery in the Permian Basin of Texas. We have
    been injecting large volumes of carbon dioxide underground
    basically for 45 years.
        These technologies are separately mature. Combined, we have
    been doing carbon capture and storage projects around the world
    for over 20 years. And, in fact, we have many projects that are
    operating above a million tons of year, so some of the
    geotechnical questions that people had concerns about have
    fundamentally been resolved.
        The regulatory issues are not the primary barrier either.
    There are, I think, questions that people have about what is
    the appropriate degree of oversight for such things, but
    fundamentally, if you are going to be doing this, the gross
    scientific and technical consensus is you have to monitor. You
    have to monitor the carbon dioxide that is stored. And, in
    fact, that is one of the things that Hilcorp is doing at the
    Petra Nova project. That technology also exists, is well
    demonstrated, and there are dozens of companies to sell it.
        So the primary issue is finance. You have to get a lot of
    money up front; you have to get a rate of return. Absent
    incentives that can close the gap for that, like we have
    provided for other clean energy technologies, we are not going
    to see deployment, we are not going to have a market.
        Senator Gillibrand. Storage of sequestered carbon requires
    large areas, which you mentioned, often deep underground or in
    the ocean. There are legitimate questions around the challenges
    of identifying suitable carbon reservoirs for storage and
    ensuring that any potential impacts on water supplies or other
    disturbances to the environment are addressed before a project
    is constructed.
        Is there any reason why carbon capture projects should be
    subjected to different environmental review standards or
    processes other than other energy projects?
        Mr. Friedmann. As I had said, the whole purpose of doing
    carbon capture and storage is in order to demonstrate the
    CO2 is staying out of the atmosphere. That is the
    primary undertaking. So, in fact, there is some obligation to
    verify and validate that the carbon dioxide is remaining
    underground and that there are no demonstrable substantive
    public harm that comes from it.
        It is my strong scientific opinion that the risks
    associated with geological storage are grossly overblown. In
    fact, any good storage site is going to be a good storage site.
    The Earth is in fact spectacularly well configured to store
    carbon dioxide indefinitely. But it is incumbent on operators
    to ensure that the carbon dioxide is in fact not reentering the
    atmosphere, and that requires an additional monitoring
    protocol.
        Senator Gillibrand. Thank you, Mr. Chairman.
        Senator Barrasso. Thank you very much.
        Senator Carper.
        Senator Carper. Thanks, Mr. Chairman. I want to ask, for
    the record, to enter a report from a new organization called
    Global CO2 Initiative, which is chaired by a
    Delawarean, a fellow named Bernard David. And he is doing some,
    I think, really interesting work that is relevant to what we
    are talking about here today.
        Senator Barrasso. Without objection.
        [The referenced information follows:]

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        Senator Carper. Thank you. And built on some points made by
    Sheldon Whitehouse of all people.
        Senator Whitehouse. Astonishing.
        Senator Carper. And a word, if I could, about the Global
    CO2 Initiative. It is focused on research and
    development, commercialization of products that reuse carbon
    dioxide. In other words, this Initiative is trying to find new
    ways to make the CO2 captured from our coal plants
    valuable in the marketplace.
        The roadmap for this is called the Roadmap for the Global
    Implementation of Carbon Utilization Technologies, and I
    encourage anyone interested in today's hearing to also take
    some time to look at the report and the work that they are
    doing. And we thank Bernard David and the folks that are
    working with him.
        Thanks, Mr. Chairman.
        This question has been asked a couple times now, but I am
    going to ask it once more. Repetition is good, as you know.
        How important is carbon capture and sequestration
    technology for the coal industry and for assisting the U.S. in
    meeting our global climate goals? And, economically, how big of
    an opportunity are we missing if we don't capitalize on this
    technology?
        You responded to this in waves, but I want you to do it
    again.
        Mr. Friedmann. Because of the way that you framed the
    question, I have the opportunity to do exactly that. In 2007,
    MIT released something called The Future of Coal Report. I had
    the good fortune of working with----
        Senator Carper. In 2007?
        Mr. Friedmann. In 2007.
        Senator Carper. Ernie Moniz.
        Mr. Friedmann. Ernie Moniz----
        Senator Carper. He actually was a witness at a field
    hearing that I held there.
        Mr. Friedmann. Yes.
        Senator Carper. On this report.
        Mr. Friedmann. And one of the findings----
        Senator Carper. And his hair was cut just the same then as
    it is now.
        [Laughter.]
        Mr. Friedmann. One of the findings of that report was that
    in a carbon constrained world, the market share for coal will
    drop dramatically without carbon capture and storage. Another
    finding is that if carbon capture and storage is deployed in a
    carbon constrained world, that in fact coal can have a bright
    future.
        And what we have in fact seen is what those findings
    predicted; that the global market share for coal is beginning
    to drop and part of the reason why, by no means the only reason
    why, but part of the reason why is the carbon risk associated
    with those coal projects.
        And even in areas where people expected long sustained
    growth in carbon dioxide emissions from coal plants, like in
    India, like in China, it is clear that the governments of those
    countries are taking aggressive action to limit the deployment
    of coal plants in part because of the carbon risks.
        Senator Carper. All right. Thank you.
        Kind of a wrap up question for the whole panel. When we
    have a panel like this, one of the things that is very helpful
    is for you to help us develop consensus; and I think you are
    doing that today, whether you want to or not. But I want to ask
    each of you to just briefly tell us maybe something that you
    think we ought to take away from this hearing that will help
    further develop consensus around this issue.
        Mr. Fry, who grew up in Virginia. Where in Virginia?
        Mr. Fry. Staunton.
        Senator Carper. Staunton.
        Mr. Fry. Yes, sir.
        Senator Carper. I know where Staunton is. Danville and
    Roanoke right here.
        Senator Whitehouse. Lived in Crozet.
        Senator Carper. Yes.
        Mr. Fry, give us one great take away to help further
    develop this evolving consensus around this issue.
        Mr. Fry. I think the greatest consensus in our discussion
    today is obviously the financial incentives required for CCUS.
    But, from my perspective, we also need to incentivize
    pipelines. It is a bit of a chicken and an egg scenario we have
    here. We have had companies come into Wyoming interested in
    projects, but since we don't have these pipeline
    infrastructure, they have gone somewhere else. So, beyond the
    obvious 45Q and financial issues, we need infrastructure.
        Senator Carper. All right, thank you.
        Mr. Greeson.
        Mr. Greeson. Like a broken record, I will say up-front
    capital costs and incentives to help to support financing those
    up-front costs. And right behind that, our project was blessed
    with the opportunity to pay for a pipeline as a part of the
    project because of the way we structured the ownership of the
    oil field. But that is clearly not something that is easily
    repeatable. Even our oil company partner said they would not
    repeat that model again.
        So pipeline corridors will be a challenge, right behind the
    financing.
        Senator Carper. All right, thanks.
        Last word, Dr. Friedmann, Julio Friedmann. Down by the
    Schoolyard.
        Mr. Friedmann. Thank you, Senator Carper. I think there are
    three points of consensus for the Committee. Two of them have
    already been mentioned. One of them is needing to close that
    financial gap through some policy option. Second is the need
    for pipelines and acting on pipelines. I would actually point
    people to the work done by the Great Plains Institute at the
    behest, actually, of Matt Mead and Governor Bullock in Montana
    to start working on pipeline infrastructure as part of a
    national agenda.
        The third point, which hasn't been talked about as much but
    is also, I think, an easy point of consensus is an innovation
    agenda. We need to get more people at more universities, in
    national labs, small businesses, VCs, companies large and small
    working on innovation to make the performance better and the
    costs lower. And there are many ways to incent such things, but
    an innovation agenda will undergird any American
    competitiveness going forward, and it is a critical piece of
    the wainscoting.
        Senator Carper. All right, thanks.
        Gentlemen, have you ever heard of the leadership being
    provided by Senator Heitkamp on 45Q? Are you all familiar with
    that?
        Mr. Friedmann. Yes, sir.
        Senator Carper. Do you think he is doing good work?
        [Laughter.]
        Mr. Friedmann. I am sorry, I didn't quite hear.
        Senator Carper. Do you think she is doing good work? You
    are going to see her in about an hour.
        Mr. Friedmann. The good news is that not only is she doing
    good work, but all of her partners, and Senator Barrasso, the
    Chairman, Senator Whitehouse, Senator Capito are all doing
    extraordinary work with this.
        Senator Carper. I think they have me outnumbered, don't
    they?
        Senator Barrasso. We got you surrounded.
        Senator Carper. Maybe I should talk to Heidi.
        Mr. Friedmann. It is an opportunity to close that financing
    gap, and that is the most critical piece that needs to be done.
    Whether the Congress adopts it or not is not my business, that
    is your business, but some sort of policy structure like that
    is necessary to achieve liftoff. And if we are going to score,
    we need to take more shots on net.
        Senator Carper. And what did Wayne Gretzky say? They used
    to ask Wayne Gretzky why do you take so many shots on goal. Do
    you remember what he said? I missed every shot I never took.
    How is that? That is a good note to close on, too.
        Thank you all very, very much.
        Senator Barrasso. Senator Whitehouse.
        Senator Whitehouse. Mr. Chairman, I just wanted to ask your
    permission to have Dr. Friedmann answer about the eight
    technologies that he described in the oceans as a question for
    the record so that we can get that into the record of the
    Committee.
        Senator Barrasso. Absolutely.
        Senator Whitehouse. And if that is OK with you, then I will
    proceed on that basis with Dr. Friedmann.
        And I thank the entire panel for their testimony.
        Senator Barrasso. Thank you very much, Senator Whitehouse.
        And, of course, other members of the Committee may submit
    written questions. The hearing is going to stay open for 2
    weeks, but I would ask you to respond in appropriate time to
    those written questions, as well as the one just brought
    forward by Senator Whitehouse.
        I appreciate all of you being here today. I thought it was
    a very productive hearing, very important information. I want
    to thank each and every one of you.
        This hearing is adjourned.
        [Whereupon, at 11:37 a.m. the Committee was adjourned.]
        [Additional material submitted for the record follows.]

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