[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
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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
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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:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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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