[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


SOLVING THE CLIMATE CRISIS: REDUCING INDUSTRIAL EMISSIONS THROUGH U.S. 
                               INNOVATION

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

                                HEARING

                               BEFORE THE

                        SELECT COMMITTEE ON THE
                             CLIMATE CRISIS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                           SEPTEMBER 26, 2019

                               __________

                           Serial No. 116-10

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                            www.govinfo.gov
   Printed for the use of the Select Committee on the Climate Crisis
   
                               __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
38-473                      WASHINGTON : 2020                     
          
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                 SELECT COMMITTEE ON THE CLIMATE CRISIS
                 
                     One Hundred Sixteenth Congress

                      KATHY CASTOR, Florida, Chair
BEN RAY LUJAN, New Mexico            GARRET GRAVES, Louisiana,
SUZANNE BONAMICI, Oregon               Ranking Member
JULIA BROWNLEY, California           MORGAN GRIFFITH, Virginia
JARED HUFFMAN, California            GARY PALMER, Alabama
A. DONALD McEACHIN, Virginia         BUDDY CARTER, Georgia
MIKE LEVIN, California               CAROL MILLER, West Virginia
SEAN CASTEN, Illinois                KELLY ARMSTRONG, North Dakota
JOE NEGUSE, Colorado

                              ----------                              

                Ana Unruh Cohen, Majority Staff Director
                  Marty Hall, Minority Staff Director
                         climatecrisishouse.gov
                            C O N T E N T S

                   STATEMENTS OF MEMBERS OF CONGRESS

                                                                   Page
Hon. Kathy Castor, a Representative in Congress from the State of 
  Florida, and Chair, Select Committee on the Climate Crisis:
  Opening Statement..............................................     1
  Prepared Statement.............................................     3
Hon. Garrett Graves, a Representative in Congress from the State 
  of Louisiana, and Ranking Member, Select Committee on the 
  Climate Crisis:
  Opening Statement..............................................     3

                               WITNESSES

David Gardiner, President, David Gardiner and Associates
  Oral Statement.................................................     7
  Prepared Statement.............................................     9
Jeremy Gregory, Executive Director, MIT Concrete Sustainability 
  Hub on behalf of Portland Cement Association
  Oral Statement.................................................    12
  Prepared Statement.............................................    14
Brad Crabtree, Vice President of Carbon Management, Great Plains 
  Institute on behalf of the Carbon Capture Coalition
  Oral Statement.................................................    30
  Prepared Statement.............................................    32
Cate Hight, Principal of Industry and Heavy Transport, Rocky 
  Mountain Institute
  Oral Statement.................................................    37
  Prepared Statement.............................................    39

                       SUBMISSIONS FOR THE RECORD

Article by Bill Gates, ``Here's a question you should ask about 
  every climate change plan,'' submitted for the record by Hon. 
  Garret Graves..................................................     4
Report, Federal Policy Blueprint, submitted for the record by 
  Hon. Kathy Castor..............................................    37
Letter from United Steelworkers, submitted for the record by Hon. 
  Kathy Castor...................................................    60
Letter from the American Forest & Paper Association, submitted 
  for the record by Hon. Kathy Castor............................    63

                                APPENDIX

Questions for the Record from Hon. Kathy Castor to David Gardiner    65
Questions for the Record from Hon. Sean Casten to David Gardiner.    72
Questions for the Record from Hon. Kathy Castor to Jeremy Gregory    74
Questions for the Record from Hon. Kathy Castor to Brad Crabtree.    75
Questions for the Record from Hon. Kathy Castor to Cate Hight....    80

 
SOLVING THE CLIMATE CRISIS: REDUCING INDUSTRIAL EMISSIONS THROUGH U.S. 
                               INNOVATION

                              ----------                              


                      THURSDAY, SEPTEMBER 26, 2019

                          House of Representatives,
                    Select Committee on the Climate Crisis,
                                                    Washington, DC.
    The committee met, pursuant to call, at 2:07 p.m., in Room 
HVC-210, Capitol Visitor Center, Hon. Kathy Castor [chairwoman 
of the committee] presiding.
    Present: Representatives Castor, Bonamici, Brownley, 
Casten, Neguse, Graves, Griffith, Palmer, Carter, Miller, and 
Armstrong.
    Ms. Castor. The committee will come to order.
    Without objection, the chair is authorized to declare a 
recess of the committee at any time.
    Welcome to our witnesses. Today we will discuss reducing 
emissions in the industrial sector. Welcome to the--one of the 
most exciting hearings on the Hill today. We will focus on the 
technological opportunities and the policies needed to spur 
American innovation in addressing this global challenge.
    I now recognize myself for 5 minutes for an opening 
statement.
    I would like to start off by just acknowledging that it has 
been a very busy week for climate action. Kicking things off 
last Friday, young people and adults all across the world 
united for the Global Climate Strike. And here in Washington, 
D.C., and in the communities we represent back home, we were 
humbled to witness our own American student activists lead the 
March for Climate Action.
    And starting earlier this week, world leaders gathered in 
New York City for the Climate Action Summit to call for urgent 
action to reduce carbon pollution and meet the goals of the 
International Paris Climate Agreement.
    President Trump was, unfortunately, absent from the Climate 
Action Summit.
    But while I was there for just a day or two, I saw American 
businesses, local community leaders and representatives, and a 
whole host of folks representing our country and working 
towards the goals of the Paris Agreement.
    And I view our job on this committee as trying to fill the 
policy void left at the national level by the President.
    To meet the goals of the Paris Agreement, to limit warming 
as much as we can, to 1.5 degrees Celsius, we will have to 
reduce emissions from every sector in the economy. Our 
committee has heard from experts on how to reduce pollution 
from the power and transportation sectors, both of which have 
received the most attention from policymakers at the State and 
Federal levels.
    But today we are here to tackle the industrial sector. This 
is the sector we count on to make raw materials, like steel and 
cement, for our buildings and infrastructure. It is the sector 
that makes fertilizer to grow our food, and the metals, 
plastics, and chemicals that go into the products we use every 
day. It is responsible for more than $3 trillion of U.S. GDP 
and almost 20 million jobs.
    Industry also contributes nearly 30 percent of U.S. 
greenhouse gas emissions.
    Many industrial processes use large amounts of energy and 
require high temperature process heat that cannot be 
electrified. Some industries release carbon dioxide from 
chemical reactions in the production process, which cannot be 
avoided. This makes industry one of the most difficult sectors 
to decarbonize.
    Difficult, but not impossible.
    As our panelists today will share, we already have tools at 
our disposal to reduce emissions from this sector and others 
are promising. Industrial efficiency technologies, like 
combined heat and power and waste heat to power, are already 
commercially available but require high upfront capital costs 
to implement.
    Carbon capture of industrial carbon dioxide streams is 
being demonstrated around the world but is far from being 
widely deployed. Technologies like low-carbon cement and 
concrete and renewable hydrogen for industrial energy and 
feedstocks have great potential but need further development to 
be cost effective.
    To reach the scale of deployment at the speed to limit 
warming to 1.5 degrees, we must put policies in place to 
incentivize all stages of research, development, demonstration, 
and deployment of these technologies.
    And that is where we come in. As we craft policies for this 
sector, we must consider any potential impacts on production 
and on employment. Many industrial products are globally traded 
commodities, which means they are very sensitive to cost 
increases.
    Well-designed policies can reduce emissions while 
maintaining U.S. competitiveness and preventing offshoring of 
family-sustaining industrial jobs in the United States. We do 
not have to choose between reducing emissions and maintaining a 
robust industrial sector. I am confident that American 
innovation, coupled with smart policies, will be the key.
    At this time, I would recognize the ranking member, Mr. 
Graves, for 5 minutes.
    [The statement of Ms. Castor follows:]

              Opening Statement (As Prepared for Delivery)

                           Chair Kathy Castor

                 Select Committee on the Climate Crisis

Hearing on ``Solving the Climate Crisis: Reducing Industrial Emissions 
                       Through U.S. Innovation''

                           September 26, 2019

    It's been a busy week for climate action. Kicking things off last 
Friday, young people and adults around the world united for the global 
climate strike. Here in DC, I was humbled to witness our own young 
activists lead the march for climate action.
    On Monday, world leaders gathered in New York to call for urgent 
action to reduce carbon pollution and meet the goals of the Paris 
Climate Agreement. President Trump was notably absent from the lineup.
    Our job on this committee is to try to fill the policy void left at 
the national level by the president.
    To meet the goals of the Paris Agreement to limit warming as much 
as we can to 1.5 degrees Celsius, we will have to reduce emissions from 
every sector of the economy. Our committee has heard from experts on 
how to reduce pollution from the power and transportation sectors, both 
of which have received the most attention from policymakers at the 
state and federal levels.
    Today, we're here to tackle the industrial sector. This is the 
sector we count on to make raw materials--like steel and cement--for 
our buildings and infrastructure. It's the sector that makes the 
fertilizer to grow our food and the metals, plastics, and chemicals 
that go into the products we use every day. It's responsible for more 
than $3 trillion of U.S. GDP and almost 20 million jobs.
    Industry also contributes nearly 30% of U.S. greenhouse gas 
emissions. Many industrial processes use large amounts of energy and 
require high temperature process heat that cannot be electrified. Some 
industries release carbon dioxide from chemical reactions in the 
production process, which cannot be avoided. This makes industry one of 
the most difficult sectors to decarbonize.
    Difficult, but not impossible.
    As our panelists today will share, we already have tools at our 
disposal to reduce emissions from this sector, and others are 
promising. Industrial efficiency technologies, like combined heat and 
power and waste heat to power, are already commercially available but 
require high upfront capital costs to implement. Carbon capture of 
industrial carbon dioxide streams is being demonstrated around the 
world but is far from being widely deployed. Technologies like low-
carbon cement and concrete and renewable hydrogen for industrial energy 
and feedstocks have great potential but need further development to be 
cost effective.
    To reach the scale of deployment at the speed needed to limit 
warming to 1.5 degrees, we must put policies in place to incentivize 
all stages of research, development, demonstration, and deployment of 
these technologies. That's where we come in.
    As we craft policies for this sector, we must consider any 
potential impacts on production and employment. Many industrial 
products are globally-traded commodities, which means they are very 
sensitive to cost increases. Well-designed policies can reduce 
emissions while maintaining U.S. competitiveness and preventing off-
shoring of family-sustaining industrial jobs in the United States.
    We do not have to choose between reducing emissions and maintaining 
a robust industrial sector. I am confident that American innovation, 
coupled with smart policies, will be the key.

    Mr. Graves. Thank you, Madam Chair.
    This whole time I sit here, I have been talking. I don't 
think you listened to anything I say. But you just said some 
great words in there. I want to make note that you talked about 
the role of incentives, you talked about considering employment 
impacts and economic impacts.
    And importantly, and perhaps most importantly, you 
discussed how the wrong policies could result in offshoring or 
leakage of emissions to other countries. And I do very much 
appreciate your recognition. I think those are important, very 
important factors that we need to be working together on as we 
move forward.
    Thank you for holding this hearing today.
    And I want to thank all of the witnesses for being here. 
Looking forward to your testimony.
    Madam Chair, as we look back over the last several years in 
the United States and the emissions reduction profile that we 
have been able to experience in the United States, it has 
resulted in, in some cases, in emissions increases by other 
countries.
    As we have discussed, if we squeeze the balloon in the 
United States, sometimes that pops out in other areas and you 
see greater global emissions, greater global emissions, not a 
reduction, as a result of inappropriate policies in the United 
States that are not smart, that are not well thought out, are 
not considering the global environment that we are operating 
in.
    I have mentioned numerous times in this committee, and I am 
going to say it every single time: For every one ton of 
emissions we have had in the United States, China has increased 
their emissions by four tons. That is not a global win. It is 
not.
    And for us to continue to look only myopically, only in a 
vacuum at the United States, that is not a global greenhouse 
gas emissions strategy, that is not a global climate change 
strategy. It is one that will have very little impact, if any, 
on the United States and on the globe, because it will result 
in greater greenhouse gas emissions for the globe, which 
doesn't turn that trend, bend that curve that we are all 
seeking to bend or change.
    Madam Chair, I want to ask, submit for the record, this is 
an August 27 document that Bill Gates wrote. And here is a 
question you should ask about every climate change plan, and I 
am going to read one line he has here at the end where he says, 
``I am optimistic about all these areas of innovation, 
especially if we couple progress in these areas with smart 
public policies.''
    Companies need the right incentives--you see that, Bill 
Gates is quoting you--incentives to phase out old polluting 
factories and adopt these new approaches.
    I think it is a really good, really good--I don't know if 
this is an op-ed or what this was--but it is a very good 
document. Again, I ask that this be included in the record.
    Ms. Castor. Without objection.
    [The information follows:]

                       Submission for the Record

                      Representative Garret Graves

                 Select Committee on the Climate Crisis

                           September 26, 2019

    Here's a Question You Should Ask About Every Climate Change Plan

                  (By Bill Gates,\1\ August 27, 2019)
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    \1\ https://www.gatesnotes.com/Books/Sustainable-Materials-With-
Both-Eyes-Open.
---------------------------------------------------------------------------
    I get to learn about lots of different plans for dealing with 
climate change. It's part of my job--climate change is the focus of my 
work with the investment fund Breakthrough Energy Ventures \2\--but 
it's just as likely to come up over dinner with friends or at a 
backyard barbecue. (In Seattle, we get outside as often as we can 
during the summer, since we know how often it'll be raining once fall 
comes.)
---------------------------------------------------------------------------
    \2\ http://www.b-t.energy/ventures/.
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    Whenever I hear an idea for what we can do to keep global warming 
in check--whether it's over a conference table or a cheeseburger--I 
always ask this question: ``What's your plan for steel?''
    I know it sounds like an odd thing to say, but it opens the door to 
an important subject that deserves a lot more attention in any 
conversation about climate change. Making steel and other materials--
such as cement, plastic, glass, aluminum, and paper--is the third 
biggest contributor of greenhouse gases, behind agriculture \3\ and 
making electricity \4\. It's responsible for a fifth of all emissions. 
And these emissions will be some of the hardest to get rid of: these 
materials are everywhere in our lives, and we don't yet have any proven 
breakthroughs that will give us affordable zero-carbon versions of 
them. If we're going to get to zero carbon emissions overall\5\, we 
have a lot of inventing to do.
---------------------------------------------------------------------------
    \3\ https://www.gatesnotes.com/Energy/We-should-discuss-soil-as-
much-as-coal.
    \4\ https://www.gatesnotes.com/Energy/A-critical-step-to-reduce-
climate-change.
    \5\ https://www.gatesnotes.com/Energy/My-plan-for-fighting-climate-
change.
---------------------------------------------------------------------------
    This video features one company with an idea about how to make 
steel without coal. (I'm an investor in Breakthrough Energy 
Ventures\6\, which in turn has invested in this company.)
---------------------------------------------------------------------------
    \6\ http://www.b-t.energy/ventures/.
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    Steel, cement, and plastic are so pervasive in modern life that it 
can be easy to take them for granted. The first two are the main reason 
our buildings and bridges are so sturdy and last so long. Steel--cheap, 
strong, and infinitely recyclable--also goes into shingles, household 
appliances, canned goods, and computers. Concrete--rust-resistant, rot-
proof, and non-flammable--can be made dense enough to absorb radiation 
or light enough to float on water.
    The 520 floating bridge \7\ near my house sits on 77 concrete 
pontoons, each weighing thousands of pounds. In his book Making the 
Modern World\8\, Vaclav Smil estimates that America's interstate 
highway system contains about 730 million tons of concrete in the 
driving lanes alone. (People sometimes use the terms cement and 
concrete interchangeably, but they're not the same thing. You make 
cement first, and then you mix it with sand, water, and gravel to make 
concrete.)
---------------------------------------------------------------------------
    \7\ https://en.wikipedia.org/wiki/Evergreen_Point_Floating_Bridge.
    \8\ https://www.gatesnotes.com/Books/Making-the-Modern-World.
---------------------------------------------------------------------------
    As for plastics, they have a bad reputation these days--and it's 
true that the amount piling up in the oceans is problematic. But they 
also do a lot of good. For example, you can thank plastics for making 
that fuel-efficient car you drive so light; they account for as much as 
half of the car's total volume, but only 10 percent of its weight!
    So how do we cut down on emissions from all the steel, cement, and 
plastic we're making? One way is to use less of all these materials. 
There are definitely steps we should take to use less by recycling more 
and increasing efficiency. But that won't be enough to offset the fact 
that the world's population is growing and getting richer; as the 
middle class expands, so will our use of materials.
    In a sense, that's good news, because it means more people will be 
living in sturdy houses and apartment buildings and driving on paved 
roads. But it's bad news for the climate. Take Africa, for example: Its 
emissions from making concrete are projected to quadruple by 2050. 
Emissions from steel could go up even more, because the continent uses 
so little now.
    If using less isn't really a viable option, could we make things 
without emitting carbon in the first place? That is, in fact, what 
we'll need to do--but there are several challenges. First, these 
industries require a lot of electricity, which today is often generated 
using fossil fuels. Second, the processes also require a lot of heat 
(as in thousands of degrees Fahrenheit) and fossil fuels are often the 
cheapest way to create that heat.
    Finally--and this might be the toughest challenge of all--
manufacturing some of these products involves chemical reactions that 
emit greenhouse gases. For example, to make cement, you start with 
limestone, which contains calcium, carbon, and oxygen. You only want 
the calcium, so you burn the limestone in a furnace along with some 
other materials. You end up with the calcium you want, plus a byproduct 
you don't want: carbon dioxide. It's a chemical reaction, and there's 
no way around it.
    All three are tough challenges, but don't despair. Scientists and 
entrepreneurs are trying to solve these problems and help make zero-
carbon materials that will be affordable around the world. Here are a 
few of the innovative approaches that I'm especially excited about 
(note that I have investments in two of these companies, Boston Metal 
and TerraPower):
           Carbon capture. The idea here is to suck greenhouse 
        gases out of the air. I think this is probably the approach 
        we'll have to take with cement; rather than making it without 
        emissions, we'll remove the emissions before they can do any 
        damage. There are two basic approaches: One is to grab the 
        greenhouse gases right where they're created, such as at a 
        cement plant (that's called carbon capture); the other is to 
        pull them from the atmosphere, after they've dispersed. That's 
        called direct-air capture, and it's a big technical challenge 
        that various companies are trying to solve. Mosaic 
        Materials\9\, for example, is developing new nano-materials 
        that could make direct-air capture much more efficient and 
        cost-effective. And government policies that create financial 
        incentives to use carbon-removal technology--like federal tax 
        credits that were passed in 2018--will help us deploy it 
        faster.
---------------------------------------------------------------------------
    \9\ http://mosaicmaterials.com/.
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           Electrification. We may be able to replace fossil 
        fuels with electricity in some industrial processes. For 
        example, as you saw if you watched the video above, Boston 
        Metal \10\ is working on a way to make steel using electricity 
        instead of coal, and to make it just as strong and cheap. Of 
        course, electrification only helps reduce emissions if it uses 
        clean power, which is another reason why it's so important to 
        get zero-carbon electricity\11\.
---------------------------------------------------------------------------
    \10\ https://www.bostonmetal.com/.
    \11\ https://www.gatesnotes.com/Energy/A-critical-step-to-reduce-
climate-change.
---------------------------------------------------------------------------
           Fuel switching. Some industrial processes can't 
        easily be electrified because they require too much heat. One 
        possible alternative is to get the heat from a next-generation 
        nuclear plant. (As I've mentioned before, a company that I 
        helped start, TerraPower\12\, uses an approach called a 
        traveling wave reactor that is safe, prevents proliferation, 
        and creates very little waste.) We also might be able to get 
        the heat using hydrogen fuels, which can be made using clean 
        electricity and don't emit any carbon when they're burned. 
        Hydrogen fuels exist today, but they're expensive to make and 
        transport, so companies are trying to drive the cost down and 
        make hydrogen fuels available at scale. The Swedish steelmaker 
        SSAB plans to build the world's first fossil fuel-free steel 
        plant powered by hydrogen\13\, which will be running as a pilot 
        project next year. ThyssenKrupp \14\ and ArcelorMittal \15\ 
        also recently announced projects in this area.
---------------------------------------------------------------------------
    \12\ https://terrapower.com/.
    \13\ https://www.economist.com/technology-quarterly/2018/11/29/how-
to-get-the-carbon-out-of-industry.
    \14\ https://www.thyssenkrupp-steel.com/en/newsroom/press-releases/
press-release-110080.html.
    \15\ https://corporate.arcelormittal.com/news-and-media/news/2019/
mar/28-03-2019.
---------------------------------------------------------------------------
           Recycling. On its own, recycling steel, cement, and 
        plastic won't be nearly enough to eliminate greenhouse gas 
        emissions, but it will help. The best book I've read on 
        recycling--yes, I've read more than one!--is called Sustainable 
        Materials With Both Eyes Open, and I highly recommend it\16\.
---------------------------------------------------------------------------
    \16\ https://www.gatesnotes.com/Books/Sustainable-Materials-With-
Both-Eyes-Open.
---------------------------------------------------------------------------
    I'm optimistic about all these areas of innovation--especially if 
we couple progress in these areas with smart public policies. Companies 
need the right incentives to phase out old polluting factories and 
adopt these new approaches. If all of these pieces come together, we 
will have a climate-friendly plan for steel, as well as cement, 
plastic, and the other materials that make modern life possible.

    Mr. Graves. Thank you.
    And it is a very, very practical approach. He talks 
specifically about concrete, about plastics, and other sectors.
    But there is no question that cement plays a very important 
role in our infrastructure and the resiliency of this Nation. 
It is going to continue to. You can look at the emissions 
profile as we import all of this cement from other countries, 
particularly China, and look at the emissions profile there 
versus in the United States.
    We need to continue making investments in carbon capture, 
storage, utilization, and other technologies that complement--
in fact, I believe as Bill Gates notes in his letter--that 
complement some of the domestic resources that we have in the 
United States in industries, because simply offshoring these 
industries to other countries does not provide a global 
solution.
    So with that, I want to thank you again for hosting the 
hearing.
    And looking forward to hearing from you all. And thanks for 
being here.
    Yield back.
    Ms. Castor. Thank you.
    Well, without objection, members who wish to enter opening 
statements into the record may have 5 business days to do so.
    Now I want to welcome our witnesses.
    David Gardiner is president of his own environmental 
consulting firm, David Gardiner and Associates, which focuses 
on climate change and clean energy issues. The firm coordinates 
the Combined Heat and Power Alliance and the Renewable Thermal 
Collaborative.
    Prior to founding DGA, Mr. Gardiner served in the Clinton 
administration as executive director of the White House Climate 
Change Task Force and as assistant administrator for policy at 
the Environmental Protection Agency.
    Dr. Jeremy Gregory is executive director of the MIT 
Concrete Sustainability Hub. Dr. Gregory is an engineer who 
studies the economic and environmental implications of 
materials, their recycling and recovery systems. The CSHub at 
MIT was established with grants from the Portland Cement 
Association.
    Brad Crabtree is vice president of the Carbon Management 
Program at the Great Plains Institute and director of the 
Carbon Capture Coalition. The coalition is a national 
partnership of more than 70 companies, labor unions, and 
environmental, clean energy, and agricultural organizations 
that support the adoption and deployment of carbon capture 
technologies.
    And Ms. Cate Hight is a principal at Rocky Mountain 
Institute where she leads the institute's efforts to reduce 
methane emissions from the global oil and gas industry. Before 
joining RMI, Ms. Hight spent 10 years at the Environmental 
Protection Agency, where she managed the oil and gas program of 
the Global Methane Initiative.
    Welcome to all of you.
    Without objection, the witnesses' written testimony will be 
made part of the record.
    With that, Mr. Gardiner, you are recognized for 5 minutes.

STATEMENTS OF MR. DAVID GARDINER, PRESIDENT, DAVID GARDINER AND 
    ASSOCIATES; DR. JEREMY GREGORY, EXECUTIVE DIRECTOR, MIT 
   CONCRETE SUSTAINABILITY HUB, ON BEHALF OF PORTLAND CEMENT 
    ASSOCIATION; MR. BRAD CRABTREE, VICE PRESIDENT, CARBON 
  MANAGEMENT, GREAT PLAINS INSTITUTE, ON BEHALF OF THE CARBON 
CAPTURE COALITION; AND MS. CATE HIGHT, PRINCIPAL, INDUSTRY AND 
           HEAVY TRANSPORT, ROCKY MOUNTAIN INSTITUTE

                  STATEMENT OF DAVID GARDINER

    Mr. Gardiner. Thank you, Chair Castor.
    And thank you, members of the committee. It is great to be 
here.
    I would urge this committee to focus on three key points.
    First, as you indicated in your opening remarks, the 
biggest challenge in reducing industrial emissions comes from 
the energy to produce heat used in the manufacturing process. 
Globally, industrial heat makes up two-thirds of industrial 
energy demand and almost one-fifth of global energy 
consumption; 90 percent of this heat is produced using carbon-
emitting fuels.
    Emissions from heat are concentrated in eight energy-
intensive basic sectors: steel, chemicals, cement, pulp and 
paper, aluminum, glass, food, and oil refining. Climate 
solutions must include approaches to reduce emissions 
associated with heat production while also making those 
industries more competitive.
    Second, we can and should make America's factories more 
efficient through the use of efficiency technologies such as 
combined heat and power, CHP, and waste heat to power, WHP. 
Because they use heat, which would otherwise be wasted, these 
technologies can make manufacturers more competitive by 
reducing energy costs while also cutting emissions.
    By harnessing that heat with industrial efficiency, in 
combination with CHP and WHP, America's manufacturers can cut 
carbon emissions in an amount equal to that emitted by 46 coal-
fired power plants, while saving their own businesses $298 
billion between now and 2030.
    The Department of Energy has identified nearly 241 
gigawatts of remaining CHP technical potential, an amount equal 
to 480 conventional power plants, with the greatest 
opportunities in the chemicals, petroleum refining, food, 
paper, and primary metal sectors.
    But CHP and WHP face economic and financial, regulatory and 
informational barriers to their deployment. To help make 
manufacturers more competitive, we need a variety of policies 
to move them forward, many of which already enjoy bipartisan 
support. These include tax, energy infrastructure, regulatory, 
information, and industrial efficiency policies.
    Third, the committee should recommend policies which 
accelerate the development and deployment of renewable heat 
technologies. These technologies have received little attention 
in discussions of how to reduce emissions and have been called 
the sleeping giant of renewable energy.
    Today, only 10 percent of global heat production is powered 
with renewable energy. So there is clearly a very large 
opportunity to scale that up.
    Renewable heat sources include renewable natural gas, which 
is produced from agricultural and food wastes, wastewater 
treatment plants and landfills, biomass, under the right 
circumstances, renewable hydrogen and electrification, solar 
thermal, and geothermal.
    In March, the Renewable Thermal Collaborative issued a 
renewable energy buyers statement calling on market players and 
policymakers, such as all of you, to accelerate the deployment 
of cost-effective renewable thermal technologies. Leading 
industrial companies, such as Cargill, Clif Bar, Chemours, 
General Motors, HP, L'Oreal, Mars, Proctor and Gamble, and 
Stonyfield signed the statement.
    To meet their own corporate commitments to reduce carbon 
emissions, they need cost-effective and sustainable renewable 
thermal technologies. Like combined heat to power and waste 
heat to power, these technology face supply, market, and policy 
barriers. The signers believe we should follow a path similar 
to that of renewable electricity markets where steady 
technology innovation and improvement have made wind and solar 
cost effective and the preferred choice in many markets.
    The challenge is that few countries, including the United 
States, have done much. More than 120 countries have policies 
to promote renewable electricity, but only about 40 have 
specific policies for renewable heat, most of which are located 
in the European Union.
    So in conclusion, I would just urge the committee to focus 
real attention on the greenhouse gas emissions associated with 
producing heat. Step one is to accelerate energy efficient 
measures like combined heat and power and waste heat to power, 
and step two is to focus on the innovation of renewable thermal 
technologies.
    There are opportunities to advance these objectives with 
the support of industry and from Members of both parties, and 
we should seize them.
    Thank you.
    [The statement of Mr. Gardiner follows:]

 Testimony of David Gardiner, President, David Gardiner and Associates 
 and Executive Director, The Combined Heat and Power Alliance, Before 
 the House Select Committee on the Climate Crisis, Solving the Climate 
    Crisis: Reducing Industrial Emissions Through U.S. Innovation, 
                           September 26, 2019

    Good morning. I am David Gardiner, President of David Gardiner and 
Associates, a strategic consulting firm focused on climate, clean 
energy and sustainability. I am also Executive Director of the Combined 
Heat and Power Alliance (``the Alliance''), a coalition of business, 
labor, contractor, and non-profit organizations, who share the vision 
that Combined Heat and Power (CHP) and Waste Heat to Power (WHP) can 
make America's manufacturers and other businesses more competitive, 
reduce energy costs, enhance grid reliability and reduce carbon 
emissions.\1\ Companies like Cargill, GM, Kimberly-Clark, L'Oreal, 
Mars, P&G, and Stonyfield, are working with my firm, the Center for 
Climate and Energy Solutions and the World Wildlife Fund to scale up 
renewable heating and cooling at their facilities as part of the 
Renewable Thermal Collaborative.
---------------------------------------------------------------------------
    \1\ Until September 17, 2019, the Combined Heat and Power Alliance 
was known as the Alliance for Industrial Efficiency.
---------------------------------------------------------------------------
    The industrial sector is a large source of carbon dioxide and other 
greenhouse gas emissions and there is widespread recognition in 
America's manufacturing sector of the need to reduce their emissions. A 
2018 report from the Alliance examined the public clean energy goals of 
160 of the nation's largest industrial companies with a combined 2,100 
manufacturing facilities in the United States. It found that seventy-
nine percent of these manufacturers in the United States have 
established ambitious public goals to reduce their greenhouse gas 
emissions. Those companies need our help and support to ensure they can 
meet those emission reduction targets and become more competitive in 
global markets.
    Much of these industrial emissions result from the energy used to 
produce heat for the manufacturing production process. Across the 
globe, industrial heat makes up two-thirds of industrial energy demand 
and almost one-fifth of total energy consumption. These emissions are 
concentrated in eight energy-intensive basic material manufacturing 
sectors--steel, chemicals, cement, pulp and paper, aluminum, glass, 
food, and oil refining--which produce more than 77 percent of global 
industrial emissions. Climate solutions must include approaches to 
reduce emissions associated with heat production, while also making 
those industries more competitive.
Make Industrial Processes More Efficient with CHP and WHP
    The first step in addressing these emissions is to make industrial 
processes more efficient through the use of technologies such as CHP 
and WHP. CHP uses a single fuel source to generate both heat and 
electricity. As a result, it is twice as energy efficient and has half 
the emissions of the average power plant and it can deliver both the 
electricity and heat which industrial companies need to power their 
plants. WHP captures industrial waste heat and uses it to generate 
electricity with no additional fuel and no incremental emissions.
    Because they use heat which would otherwise be wasted, CHP and WHP 
can make manufacturers more competitive by reducing energy costs while 
also cutting emissions. Our own analysis shows that by using industrial 
efficiency and CHP and WHP, manufacturers can cut carbon emissions by 
174.5 million short tons in 2030--equal to the emissions from 46 coal-
fired power plants--while saving businesses $298 billion from avoided 
electricity purchases.\2\ The top 10 states in which these energy 
efficiency improvements would produce the greatest total carbon 
emission reductions and many of the cost savings are Texas, Ohio, 
Illinois, Indiana, Pennsylvania, Kentucky, Michigan, California, 
Georgia, and Alabama.
---------------------------------------------------------------------------
    \2\ Alliance for Industrial Efficiency, State Ranking of Potential 
Carbon Dioxide Emission Reductions through Industrial Energy 
Efficiency, September 2016. https://chpalliance.org/resources/state-
industrial-efficiency-ranking/.
---------------------------------------------------------------------------
    Moreover, CHP can provide overall energy and carbon dioxide savings 
on par with comparably sized solar photovoltaics (PV), wind, Natural 
Gas Combined Cycle (NGCC), and at a capital cost that is lower than 
solar and wind and on par with NGCC, according to the Department of 
Energy (DOE) and the Environmental Protection Agency (EPA).\3\
---------------------------------------------------------------------------
    \3\ U.S. DOE, EPA, Combined Heat and Power: A Clean Energy 
Solution, August 2012 https://www.epa.gov/sites/production/files/2015-
07/documents/combined_heat_and_power_a_clean_
energy_solution.pdf.
---------------------------------------------------------------------------
    CHP systems can also run on renewable fuels, such as biomass (e.g., 
forest and crop residues, wood waste, food processing residue) or 
biogas (e.g., manure biogas, wastewater treatment biogas, landfill 
gas), which can lower GHG emissions even further.
    CHP is also accelerating the deployment in microgrids of other 
renewable technologies, such as solar. A microgrid is a local energy 
grid that can disconnect from the traditional grid and operate on its 
own during grid outages. CHP provides 39% of the energy in existing 
microgrids and offer important reliability benefits when the solar 
power may not be working.\4\
---------------------------------------------------------------------------
    \4\ U.S. Department of Energy, Jun. 17, 2014, ``How Microgrids 
Work'' (https://bit.ly/2nFsiSP).
---------------------------------------------------------------------------
    In addition, because CHP and WHP produce energy onsite at 
manufacturing facilities, they also can make industrial plants more 
resilient in the wake of extreme weather events. This ability to come 
back online, when the electricity grid is not operating, is a 
significant advantage for industries such as chemicals and petroleum 
refining, which are highly concentrated on the hurricane-prone Gulf 
Coast.
    Today, CHP produces approximately 9 percent of U.S. electricity, 
but the potential is much greater. CHP could produce 20 percent of all 
electricity by 2030, according to DOE's Oak Ridge National 
Laboratory.\5\ DOE has identified nearly 241 GW of remaining CHP 
technical potential capacity, an amount equal to 480 conventional power 
plants. The chemicals, petroleum refining, food, paper and primary 
metals industrial sectors have the greatest potential for CHP 
installation and to cut emissions while increasing competitiveness, 
according to DOE.\6\
---------------------------------------------------------------------------
    \5\ Oak Ridge National Laboratory, Combined Heat and Power: 
Effective Energy Solutions for a Sustainable Future, December 2008. 
https://info.ornl.gov/sites/publications/files/Pub13655.pdf.
    \6\ U.S. DOE, Combined Heat and Power Technical Potential in the 
United States, March 2016. https://www.energy.gov/sites/prod/files/
2016/04/f30/CHP%20Technical%20Potential%20Study %203-31-
2016%20Final.pdf.
---------------------------------------------------------------------------
    Unfortunately, CHP and WHP face economic and financial, regulatory 
and informational barriers to their deployment, according to DOE.\7\ 
CHP requires a significant upfront capital investment, forcing it to 
compete with other industrial company priorities for limited investment 
capital. The business model of a utility can reduce its interest in 
promoting industrial CHP projects. States may adopt policies, such as 
burdensome standby rates, which discriminate against CHP, or fail to 
account for its resilience, cost savings and emission reduction 
benefits. Potential hosts, utilities and policymakers are often unaware 
of the benefits of CHP and WHP.
---------------------------------------------------------------------------
    \7\ U.S. DOE, barriers report, 2015. https://www.energy.gov/sites/
prod/files/2015/06/f23/EXEC-2014-005846_6%20Report_signed_v2.pdf.
---------------------------------------------------------------------------
Make American Manufacturers Clean and More Competitive with CHP and WHP 
        Policies
    To drive the emission reductions and increased competitiveness 
which CHP and WHP can deliver to America's manufacturers, the Combined 
Heat and Power Alliance recommends Congress adopt policies which can 
overcome these barriers. In particular, we urge Congress to enact:
           Tax--There are several tax policy measures that 
        would support greater adoption of CHP and WHP, and ensure their 
        contribution to greenhouse gas emission reduction is recognized 
        in the marketplace.
                   (HR 2283 and S 2289) Renewable Energy 
                Extension Act which would extend the section 48 
                investment tax credit for CHP for five years, and 
                (S.2283) The Waste Heat to Power Investment Tax Credit 
                Act which would add WHP to the section 48 tax credit.
                   (S 1288) Clean Energy for America Act 
                which is a technology neutral clean energy tax credit 
                that accounts for both the thermal and electric energy 
                that CHP systems generate when determining a system's 
                overall greenhouse gas reduction benefit.
                   Finally, Congress should consider 
                boosting the value of the investment tax credit for CHP 
                to incentivize wider adoption, especially in non-
                traditional markets such as light manufacturing and 
                multifamily housing.
           Energy Infrastructure--(HR 2741) The Leading 
        Infrastructure for Tomorrow's (LIFT) America Act proposes 
        several grid modernization and resiliency programs that 
        encourage the use of onsite energy generation resources like 
        CHP.
                   Section 31101--Authorizes $515 million 
                per year (2020-2024) for a grant program to support 
                state, local, and tribal governments in their efforts 
                to employ ``resiliency related technologies,'' like 
                CHP, to harden their electric grids and protect 
                critical infrastructure.
                   Section 31201--Authorizes $200 million 
                per year (2020-2024) for a financial assistance program 
                to support grid modernization partnership projects and 
                allow greater customer based electric generation.
                   Sections 33301-33304--Establishes 
                several programs to support distributed energy systems, 
                including CHP and WHP. These include the creation of a 
                revolving loan fund to support states, tribes, higher 
                education institutions and utilities distributed energy 
                deployment projects, and a technical assistance and 
                grant program to assist nonprofit and profit entities 
                with site identification, evaluation, engineering, and 
                design of distributed energy systems.
           Regulatory--Regulatory policies promoting clean 
        energy should allow CHP and WHP fair and equal access to energy 
        markets.
                   (HR 2597 and S 1359) Clean Energy 
                Standard Act which credits the greenhouse gas reduction 
                benefits of CHP.
                   Encourage states to establish standby 
                rate and interconnection policies that allow CHP and 
                WHP deployment, and technical assistance grants. The 
                Heat Efficiency through Applied Technology (HEAT) Act 
                introduced by Senator Shaheen in 2017 proposed 
                establishing model best practices states could use to 
                address regulatory barriers to CHP and WHP deployment.
                   Recognize WHP as a renewable energy for 
                purposes of federal electricity purchases (H.R. 8, 
                114th Congress, sec. 3115).
           Information--(HR 1480 and S 2425) CHP Support Act 
        which would continue to provide information to manufacturers 
        about the benefits of CHP and WHP by reauthorizing the 
        Department of Energy's Technical Assistance Partnerships 
        (TAPs). Congress should continue to provide appropriations for 
        this program.
           Industrial Efficiency Policies--Congress should also 
        enact policies that focus the federal government on broad 
        strategies to encourage energy efficiency in the industrial 
        sector such as the Energy Savings and Industrial 
        Competitiveness Act (H.R. 3962, S. 2137), and Smart 
        Manufacturing Leadership Act (H.R. 1633, S. 715).
Develop Cost-Effective and Sustainable Renewable Thermal Technologies
    The second approach to reducing emissions from the energy used to 
produce heat used in the manufacturing process is to accelerate the 
development and deployment of renewable heat sources. This is an area 
which has received little attention in discussions of how to reduce the 
emissions which cause climate change. Indeed, the International Energy 
Agency (IEA) has called renewable heating and cooling ``the sleeping 
giant'' of renewable energy.\8\ IEA has also found that only 10 percent 
of global heat production is powered with renewable energy, with the 
remaining 90 percent from carbon emitting fuel sources.\9\
---------------------------------------------------------------------------
    \8\ International Energy Agency, Waking the Sleeping Giant, 
February 2015, http://iea-retd.org/wp-content/uploads/2015/02/RES-H-
NEXT.pdf.
    \9\ International Energy Agency (IEA), 2014, Heating without Global 
Warming, https://bit.ly/2jj4mCy.
---------------------------------------------------------------------------
    Renewable heat sources include Renewable Natural Gas (produced from 
agricultural and food wastes, wastewater treatment and landfills), 
biomass (under the right circumstances), renewable hydrogen and 
electrification, solar thermal, and geothermal.
    Over the long term, the Energy Transmission Commission, for 
example, recommends using three renewable technologies to address 
industrial emissions, especially for heat production--biomass, 
electrification, and hydrogen.\10\ In the short-term, however, the best 
approach is to advance a broad range of renewable thermal technologies 
and let markets determine the best outcomes.
---------------------------------------------------------------------------
    \10\ Energy Transitions Commission, Mission Possible: Reaching Net-
Zero Carbon Emissions from Harder-To-Abate Sector by Mid-Century, 
November 2018. http://www.energy-transitions.org/sites/default/files/
ETC_MissionPossible_FullReport.pdf.
---------------------------------------------------------------------------
    In March, the Renewable Thermal Collaborative issued a Renewable 
Energy Buyers Statement calling on market players and policy makers to 
accelerate the deployment of cost-effective renewable thermal 
technologies. Leading industrial companies such as Cargill, Clif Bar, 
Chemours, GM, HP, L'Oreal, Mars, Procter & Gamble, and Stonyfield 
signed the statement.\11\ They note that renewable thermal technologies 
are needed as they meet their own corporate commitments to reduce 
carbon emissions and that these technologies face many barriers. They 
believe we should follow a path similar to that of the renewable 
electricity market, where steady technology innovation and improvement 
has made wind and solar cost-effective and the preferred choice in many 
markets. Renewable thermal energy will benefit from a similar approach 
to develop innovative new technologies and deploy market-ready ones. As 
they note in their statement, this ``may include development of new 
technologies, innovation and efficiency improvements in existing 
technologies, and research and deployment support from the national 
government''.
---------------------------------------------------------------------------
    \11\ Renewable Thermal Buyers Statement, https://
www.renewablethermal.org/buyers-statement/.
---------------------------------------------------------------------------
    These technologies face supply, market, and policy barriers, as 
outlined in a 2018 report to the Renewable Thermal Collaborative from 
my firm.\12\ Renewable thermal technologies have few supporting 
policies, especially when compared to renewable electricity. According 
to the IEA, more than 120 countries in all world regions have 
introduced policies designed to promote renewable electricity, whereas 
only around 40 have specific policies for renewable heat, most of which 
are within the European Union.\13\
---------------------------------------------------------------------------
    \12\ David Gardiner and Associates, A Landscape Review of the 
Global Renewable Heating and Cooling Market, July 2018, https://
www.renewablethermal.org/a-landscape-review-of-the-global-renewable-
heating-and-cooling-market/.
    \13\ International Energy Agency (IEA), 2014, Heating without 
Global Warming, https://bit.ly/2jj4mCy.
---------------------------------------------------------------------------
Conclusion
    In conclusion, the Committee should focus significant attention on 
reducing the greenhouse emissions associated with producing heat. The 
first step is to accelerate energy efficiency measures, such as CHP and 
WHP, and the second is to focus on innovation of renewable thermal 
technologies. Many of the approaches to accelerate energy efficiency, 
CHP and WHP enjoy bipartisan support and Congress should move them 
forward quickly.

    Ms. Castor. Thank you very much.
    Dr. Gregory, you are recognized for 5 minutes.

                  STATEMENT OF JEREMY GREGORY

    Mr. Gregory. Good afternoon, Chairwoman Castor, Ranking 
Member Graves, and members of the Select Committee. I am 
pleased to be here on behalf of the Massachusetts Institute of 
Technology's Concrete Sustainability Hub and the Portland 
Cement Association to talk about concrete's role in a 
sustainable low carbon economy and how Congress and the cement 
and concrete industries can work together to achieve this goal.
    I am the executive director of the MIT CSHub, a dedicated 
interdisciplinary team of researchers working on science, 
engineering, and economics for the built environment since 
2009. PCA is the premier organization serving America's cement 
manufacturers.
    Since the CSHub is jointly funded by the cement and 
concrete industries by PCA and the Education Foundation for the 
National Ready Mixed Concrete Association, our research teams 
regularly interact with companies in this arena and also 
stakeholders who are involved in decisions related to concrete, 
such as architects, engineers, and contractors.
    In my testimony today, I would like to provide the 
committee with some key actions related to the cement and 
concrete industries that will accelerate us on the path to 
sustainability in the industrial manufacturing sector.
    For background, cement is the powdery substance that is 
mixed with water and aggregates to make concrete. If you didn't 
realize there was a difference between cement and concrete, you 
can join my entire extended family in that esteemed club.
    Although cement and concrete have different manufacturing 
processes and emissions profiles, they are inherently linked as 
an end-use building material whose use impacts other emissions, 
such as building energy consumption or vehicle fuel consumption 
on pavements.
    In addition, exposed concrete sequesters CO2 over its 
lifetime in a naturally occurring chemical process. Thus it is 
important to consider the embodied emissions for these 
materials in the context of their full lifecycle and their 
potential to naturally sequester carbon.
    Furthermore, concrete is the most used building material in 
the world for a reason: It is a relatively low-cost and low-
environmental footprint material that provides critical 
functionality for buildings and infrastructure. It is necessary 
to meet societal goals for sustainable development.
    There are four actions that can be taken to catalyze 
innovation in low-carbon cement and concrete.
    The first action is reducing regulatory barriers to cement 
plant energy efficiency improvements and use of alternative 
fuels that are less carbon intensive than conventional fuels, 
such as biomass and waste materials. New Source Review and the 
Clean Air Act serve important functions, but they can be 
adapted to encourage reductions in cement production CO2 
emissions.
    The second action is to support research and investment 
into the use of carbon capture utilization and storage 
technologies for the cement industry. Cement production is 
unique from most other industrial processes in that it has 
emissions associated with energy generation and the production 
process. Thus, even if zero or low carbon fuels can be used, 
emissions will still be a fundamental part of the process. As a 
consequence, CCUS is necessary to meet deep decarbonization 
goals, and pilot programs in the cement industry are underway 
across the world.
    Fortunately, there are several companies that are 
demonstrating how captured carbon may be used to produce 
binders and aggregates, thereby enabling circularity for these 
emissions. However, cost is a significant barrier to 
implementation of carbon capture technologies at cement plants, 
in terms of capital costs, and the adoption of carbon utilizing 
materials, in terms of higher product cost in the building 
material marketplace. Thus, there are significant opportunities 
for Congress to provide targeted CCUS research, development, 
and deployment funding that is specific to the cement sector 
and incentives for adoption of innovative technologies and 
materials.
    The third action is to encourage measurement of the 
environmental footprint of concrete. The public sector uses 
approximately 45 percent of cement in the U.S. and thus can 
play a role in asking producers to report the CO2 emissions 
associated with the concrete used in those projects. What gets 
measured matters. This will help to increase competition for 
the use of low-carbon cement and concrete, many of which are 
available today.
    The final action is to encourage adoption of performance-
based standards. Increasing the adoption of alternative binders 
will require overcoming the risk aversion of engineers 
specifying concrete. Engineers typically rely on prescriptive-
based specification that detail the types and limits of 
materials that can be used in concrete mixtures.
    In addition, there is a significant burden of proof to 
demonstrate that new low carbon materials will meet long-term 
structural and durability requirements. Supporting a shift to 
performance-based specifications for concrete would spur 
innovation in the design of low-carbon concrete mixtures. 
Sponsoring research on the long-term structural and durability 
performance of concretes using blended or alternative cements 
will help to mitigate perceived risks by engineers.
    As you can see, there are steps Congress, industry, and 
academia can take together that would ensure the continued role 
of cement and concrete in sustainable development.
    Ms. Chairwoman and members of the committee, we are ready 
to work with you to pursue the path toward the goal of a clean 
and sustainable economy together.
    Thank you.
    [The statement of Dr. Gregory follows:]

       Testimony for the Congress of the United States House of 
   Representatives Select Committee on the Climate Crisis hearing on 
  ``Solving the Climate Crisis: Reducing Industrial Emissions Through 
  U.S. Innovation'', September 26, 2019, Presented by Jeremy Gregory, 
    PhD, Research Scientist, Department of Civil and Environmental 
     Engineering, Executive Director, Concrete Sustainability Hub, 
Massachusetts Institute of Technology, On behalf of the Portland Cement 
                              Association

    Good afternoon Chairwoman Castor, Ranking Member Graves, and 
esteemed Members of the House Select Committee on the Climate Crisis. I 
am pleased to be here on behalf of the Massachusetts Institute of 
Technology's (MIT) Concrete Sustainability Hub (CSHub) and the Portland 
Cement Association (PCA) to talk about concrete's role in a sustainable 
low-carbon economy and how Congress and the cement and concrete 
industries can work together to address emissions from the industrial 
manufacturing sector and advance our nation's climate reduction goals. 
I am Executive Director of the MIT Concrete Sustainability Hub, a 
dedicated interdisciplinary team of researchers from several 
departments across MIT working on concrete, buildings, and 
infrastructure science, engineering, and economics since 2009. The MIT 
CSHub brings together leaders from academia, industry, and government 
to develop breakthroughs using a holistic approach that will achieve 
durable and sustainable homes, buildings, and infrastructure in ever 
more demanding environments.
    We conduct our research with the support of the Ready Mixed 
Concrete Research and Education Foundation and the Portland Cement 
Association (PCA). PCA is the premier advocacy, policy, research, 
education, and market intelligence organization serving America's 
cement manufacturers. PCA members represent 92 percent of the United 
States' cement production capacity and have distribution facilities in 
every state in the continental U.S. Cement and concrete product 
manufacturing, directly and indirectly, employs approximately 610,000 
people in our country, and our collective industries contribute over 
$125 billion to our economy (see details in Figure 1). Portland cement 
is the fundamental ingredient in concrete. The Association promotes 
safety, sustainability, and innovation in all aspects of construction; 
fosters continuous improvement in cement manufacturing and 
distribution; and promotes economic growth and sound infrastructure 
investment. PCA also works hand in hand with our partner associations 
and companies advancing the interests and sustainability of concrete 
building materials and products through the North American Concrete 
Alliance (NACA).

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    In my testimony today, I would like to leave the Committee with 
five fundamental points about the path to sustainability in the 
industrial manufacturing sector through the lens of the cement and 
concrete industries.
    First, while cement and concrete are separate and distinct 
materials, with different manufacturing processes and emissions 
profiles, they are inherently linked as an end-use building material 
and should be measured in the context of that end-use sustainability 
profile. Cement and concrete building materials (CCBMs), like steel, 
wood, glass, and other building materials, should be considered in 
terms of their embodied carbon across their full life cycle--from 
materials sourcing and manufacturing, to productive use, reuse, 
recycling, or disposal. Anything less than a life cycle approach 
creates a shell game where carbon emissions just shift from one part of 
the economy to another, or one nation to another, without solving the 
global challenge of climate change.
    Second, CCBMs are and will continue to be critical and 
irreplaceable building materials for our national economy, providing 
sustainable, resilient, safe, and energy-efficient building solutions 
for the development and maintenance of our nation's infrastructure and 
built environment. When considered across their full life cycle, CCBMs 
provide comparable if not superior performance in terms of embodied 
carbon, resilience, safety, and climate adaptability when compared 
against other building materials.
    Third, CCBM manufacturers are committed to working with 
policymakers, environmental scientists and engineers, builders, and 
customers to improve their sustainability and carbon intensity while 
maintaining the performance characteristics and value that have made 
CCBMs so important to our economy. CCBM manufacturers already invested 
billions of dollars to upgrade manufacturing facilities and processes, 
increase the fuel and energy efficiency of the manufacturing process, 
and reduce carbon and other air, waste, and water emissions. Where 
allowed under federal and state regulations, many of our manufacturers 
have looked for opportunities to incorporate lower-carbon alternative 
fuels like used tires, biomass, and other non-hazardous secondary 
materials into the manufacturing process.
    Fourth, the CCBM industry faces unique challenges in building upon 
these initial sustainability efforts. With respect to fuel-related 
emissions, most of the opportunities for energy efficiency improvements 
for cement plants have been leveraged, and those remaining are often 
prohibitively expensive with limited impact. Federal and state 
regulations discourage the use of many lower-carbon alternative fuel 
sources, treating non-hazardous secondary materials like non-recyclable 
paper, plastic, and fibers as dangerous wastes, and cement 
manufacturers as incinerators. Many cement facilities cannot even 
transition from coal to lower-carbon natural gas due to the lack of 
natural gas pipelines and delivery infrastructure.
    But fuel emissions are only part of the emissions reduction 
challenge. Cement manufacturers face a heretofore unsolved basic 
chemical fact of life--the industrial process for manufacturing cement 
from limestone results in the chemical release of carbon dioxide. No 
level of investment in additional energy efficiency technology or 
alternative fuels will address these process emissions, which 
constitute the majority of the cement industry's emissions. Only 
innovation and new technologies for carbon capture, transport, use, 
and/or storage will address these emissions, and these technologies are 
still years, if not decades away from plant-scale deployment in the 
cement industry. Bringing these technologies to market will require 
billions of dollars of additional investment in research, development, 
pilot scale testing, and infrastructure.
    Fifth, any national carbon reduction strategy will need to 
recognize the economic realities of today's global market economy. 
Cement is a fungible global commodity, and domestic cement 
manufacturers are price takers rather than price makers, with limited 
ability to pass additional costs on to customers who can easily switch 
to lower-cost, often higher carbon imported cement. Domestic cement 
manufacturers cannot compete in a global market against foreign 
importers and countries who are not doing their fair share to reduce 
emissions. If the U.S. is to maintain a healthy domestic cement 
industry and the jobs and contributions to the domestic economy it 
provides, policymakers will need to address the risk of trade leakage 
head on. Policymakers in the EU, Canada, and California have recognized 
the need to protect energy-intensive trade exposed industries from 
trade leakage, and Congress needs to provide for a level competitive 
playing field for cement, concrete, and other industrial manufacturers.
    With these facts in mind, the concrete and cement industries will 
need help from Congress to do their part. Congress can start by 
reducing the barriers manufacturers face to taking early action:
           reform and streamline federal and state permitting 
        regulations under the Clean Air Act's New Source Review program 
        to update facilities with more energy efficient manufacturing 
        equipment;
           reform federal air and waste laws to treat non-
        hazardous secondary materials like non-recyclable paper, 
        plastic, and fibers as fuel sources, not just waste products 
        destined for landfills;
           expedite the permitting process for energy 
        infrastructure projects, including pipelines to transport 
        natural gas and other lower-carbon fuels to cement plants; and
           perhaps most important, provide dedicated funding 
        for research, development, and deployment of commercial scale 
        carbon capture, transport, use, and storage technologies needed 
        to manage industrial process emissions and other hard-to-abate 
        emissions from industrial manufacturing.
    The remainder of this document provides background on CCBMs and 
opportunities, barriers, and solutions for enabling low-carbon pathways 
in the sector.
1  Background on concrete and cement
1.1  Concrete is critical for sustainable development
    Concrete plays a critical role in achieving societal goals for 
sustainable development. It is required for nearly all aspects of our 
built environment including buildings, pavements, bridges, dams, and 
other forms of infrastructure. Infrastructure is required to achieve 
all 17 of the United Nation's sustainable development goals.\1\ As 
growth in urban and suburban areas of the US significantly outpaces 
growth in rural areas (13%, 16%, and 3%, respectively since 2000),\2\ 
demand for buildings and infrastructure will increase to meet the needs 
of migration and immigration. Calls for increased housing to address 
affordable housing shortages and more resilient buildings and 
infrastructure to mitigate the impacts of natural disasters will also 
lead to increased construction using concrete. While this development 
is inevitable, it is possible to make it sustainable.
1.2  Concrete is the most used building material in the world
    Concrete's critical role in our built environment is manifest in 
how much it is used. Figure 2 shows global production (per capita) of 
common building materials.\3\ Production volumes for cement, the 
binding agent in concrete, are nearly three times as much as steel, and 
concrete production is approximately seven times as much as cement (as 
shown in the chart). This significant consumption means it is also 
important to address when setting industrial emission targets.


[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

1.3  Concrete is a mixture that usually includes cement as a binder
    Concrete is made using five basic ingredients: coarse aggregates 
(gravel), fine aggregates (sand), binder (including cement), water, and 
admixtures (chemicals that can change concrete properties). These can 
be combined in infinite ways to meet performance requirements including 
strength, stiffness, density, constructability, and durability. When 
the binder is mixed with water it hardens to create a paste that keeps 
the aggregates in place.
    There are numerous types of binders that can be used in concrete, 
as shown in Figure 3. Some are based on materials that can be mined and 
transformed into binders, whereas others are derived from waste 
materials. The most common binder used is portland cement (the name 
derives from the type of mineral first mined from the Isle of Portland 
in the UK when the process was developed in the 1800s). Portland cement 
is primarily made using limestone, which is abundantly available all 
over the world, can be produced within tight and reliable 
specifications, and has been used extensively for over 150 years, 
thereby making it the preferred binder for producing concrete. 
Alternative binders to portland cement are referred to as supplementary 
cementitious materials (SCMs). These include naturally occurring 
materials, such as natural pozzolans or calcined clays, and waste 
materials, such as fly ash from coal fired power plants, granulated 
slag from steel production, and more recently ground post-consumer 
glass. Availability and composition of SCMs can vary significantly, and 
they can have a different impact on the performance of concrete than 
portland cement.


[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

1.4  Cement production has energy and process-related emissions
    The cement production process is shown in Figure 4 \4\. Limestone 
and other raw materials are mined and then go through a series of 
treatment steps before entering the kiln (step 6), which requires 
significant amounts of energy to maintain at 1,450 +C (these are 
referred to as energy or thermal emissions). The limestone is 
transformed into clinker in the kiln in a process called calcination 
that emits carbon dioxide (these are referred to as process emissions). 
The clinker may be blended with other cementitious binders and then 
ground to create the final cement product.


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    Production of conventional portland cement in the US emits about 1 
kg of carbon dioxide for every kg of cement produced \5\. As shown in 
Figure 5, approximately 50% of these emissions are from the calcination 
process, and 40% are from thermal or energy generation processes 
(maintaining the kiln at 1,450 +C).

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1.5  Cement drives concrete's environmental impact
    Figure 6 shows that by mass, concrete is primarily made up of 
aggregates. However, the greenhouse gas emissions (which are 
predominantly carbon dioxide) are from the cement. The aggregates have 
very low environmental footprint because they are simply mined from 
quarries without further transformation.

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1.6  Concrete and cement are low-impact materials
    On a per unit weight basis, concrete and cement have low embodied 
carbon dioxide and energy footprints (i.e., emissions and energy 
associated with production). Figure 7 compares these measures with 
those of other industrial materials \7\. Concrete's environmental 
footprint is so much lower than other materials because it is primarily 
made from aggregates, which, as noted above, have a low environmental 
footprint. While cement has significant process and energy emissions, 
they are smaller than those of other materials such as metals.

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1.7  Cement emissions constitute approximately 1% of US greenhouse gas 
        emissions
    Estimating greenhouse gas (GHG) emissions from cement production is 
difficult because it requires tracking both process and energy-derived 
emissions, and energy-derived emissions are rarely tracked for a 
specific industrial sector. For example, the most reputable 
quantitative estimate of global cement emissions as a fraction of all 
emissions has been done by the PBL Netherlands Environmental Agency 
\8\. They stated that process emissions contributed ``to about 4% of 
the total global emissions in 2015'' (pg. 64). To estimate total cement 
emissions, they state: ``Fuel combustion emissions of CO2 related to 
cement production are of approximately the same level, so, in total, 
cement production accounts for roughly 8% of global CO2 emissions.'' 
(pg. 64-5) Their study details how they estimated cement emissions but 
does not describe how total GHG emissions are estimated. Thus, the 8% 
figure is an approximation.
    Estimating US cement GHG emissions can be done using the US EPA's 
GHG inventory \9\. Process-derived emissions from cement production 
were 40.3 MMT CO2 Eq. (million metric tons carbon dioxide equivalent) 
in 2017, out of 6,456.7 MMT CO2 Eq., or approximately 0.6%. The 
inventory does not quantify energy-related emissions from cement 
production, so we are forced to use a similar approximation to the PBL 
study that energy and process-derived emissions are the same. This 
would make total cement industry emissions approximately 1.2% of total 
US GHG emissions in 2017.
1.8  The US produces a small fraction of the world's cement
    China produces more than half of the world's cement, as shown in 
Figure 8 \6\ \8\. The US produced approximately 2% of global cement in 
2015, compared to China's 58%, India's 7%, and the EU's 4% \8\. Thus, 
while it is important to strive to lower emissions from US cement 
production, it is also important to consider that the US has lower 
production than China, India, and the EU.

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1.9  Different standards and practices for cement production worldwide 
        present opportunities for leakage
    It is basic economics that in a global market for a commodity 
product like cement, managing the costs of production is critical to 
ensuring the continued competitiveness of domestically-manufactured 
products. Facilities that can produce, ship, and deliver cement to 
customers at a competitive cost will flourish. Those that cannot 
maintain cost-competitiveness will fail.
    These costs are determined in large part by the design and 
operating practices of the manufacturing facilities where cement is 
produced. While every cement manufacturing plant is different, the 
basic steps in the manufacturing process are the same. Costs of 
production are not, however, particularly with respect to compliance 
costs imposed by government entities. Government policies that impose 
additional costs on manufacturers have a direct impact on the global 
competitiveness of manufacturers and the risk of trade and carbon 
leakage.
    This is particularly the case for the cement industry for several 
key reasons:
           The energy intensive nature of the manufacturing 
        process, combined with the significant process emissions 
        resulting from the conversion of limestone to cement makes the 
        cement industry particularly vulnerable to policies that 
        increase the cost to manage carbon emissions.
           U.S. cement manufacturers have limited ability to 
        cost-effectively reduce GHG emissions and, therefore, to 
        minimize compliance costs through investments in direct 
        abatement.
           U.S. cement manufacturers have limited ability to 
        pass through compliance costs to customers without a 
        significant loss in market share.
    Due to this unique combination of features, carbon pricing is 
likely to result in significant leakage in the U.S. cement industry 
unless countervailing measures are applied.
    To illustrate this challenge, PCA estimates that given a carbon 
price of $40 per metric ton, the U.S. cement industry would experience 
an operating cost increase of more than $2.6 billion per year, 
representing roughly 50% of the U.S. cement industry's value added 
($5.0 billion) and 30% of its total shipments ($8.7 billion) in 2016. 
Such increases could easily increase the cost of producing cement by 
more than $30 per ton, making domestic cement uncompetitive in many 
markets served by imports.
    As Congress develops a comprehensive federal climate policy for 
U.S. manufacturers, this lesson in ``economics 101'' should be front 
and center as a consideration. Any comprehensive climate policy that 
imposes increased operating, compliance, or research and development 
costs on cement manufacture must include measures to address the risk 
of leakage from imported products.
2  Opportunities to lower carbon dioxide emissions of cement production
2.1  There are four primary levers for reducing cement production 
        carbon dioxide emissions
    The World Business Council on Sustainable Development (WBCSD) and 
the International Energy Agency's (IEA) Cement Sustainability 
Initiative (CSI) produced a technology roadmap for the cement sector in 
2018 \10\. They identified four carbon reduction levers:
           Improving energy efficiency in the cement plant.
           Switching to alternative fuels that are less carbon 
        intensive than conventional fuels, such as biomass and waste 
        materials.
           Reducing the clinker to cement ratio by increasing 
        the use of blended materials (including some of the 
        aforementioned SCMs, among others) in the production of blended 
        cements.
           Use emerging technologies to capture carbon and use, 
        store, or sequester it, including in the production of new 
        building materials.
    The first three levers are already being used by the cement 
industry in the US and beyond.
2.2  The US cement industry has made significant efforts to improve 
        energy efficiency and use of alternative fuels
    U.S. cement manufacturers continue to invest billions of dollars in 
technologies to increase the energy efficiency of their plants and 
reduce carbon emissions associated with the cement manufacturing 
process. Duke University evaluated the improvement in the cement 
industry's energy performance over a 10-year period and found that: 
energy intensity improved 13 percent, the energy performance of the 
industry's least efficient plants changed most dramatically, total 
source energy savings were 60.5 trillion Btu annually, and 
environmental savings were 1.5 million metric tons of energy-related 
carbon emissions \11\. As a result, today's plants are far more fuel 
efficient than a generation ago, in many cases approaching the maximum 
levels of fuel efficiency technically feasible.

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    Another key opportunity to reduce fuel emissions is to increase the 
use of lower carbon alternative fuels. Secondary materials like post-
industrial, post-commercial, post-consumer paper, plastic, and other 
materials have tremendous energy value, providing a cost-effective and 
sustainable alternative to traditional fossil fuels. The cement 
industry has a long history of safe and efficient use of alternative 
fuels, ranging from used tires and biomass to a wide variety of 
secondary and waste materials. The high operating temperature and long 
residence times in the kiln make cement kilns extremely efficient at 
combusting any fuel source with high heating value while maintaining 
emissions at or below the levels from traditional fossil fuels. For the 
cement industry, secondary materials that would otherwise have little 
market value are valuable commodities, offering a cost-effective and 
environmentally sustainable alternative to traditional fossil fuels. 
While these efforts are important, there is much more to be done. 
Today, alternative fuels make up only about 15 percent of the fuel used 
by domestic cement manufacturers, compared to more than 36 percent in 
the European Union, including as high as 60 percent in Germany. Legal 
and regulatory barriers to alternative fuels use prevent the U.S. from 
having similar alternative fuels utilization rates to Europe.
    The CCBM industry faces unique challenges in building upon these 
initial sustainability efforts. With respect to fuel-related emissions, 
most of the low-hanging fruit opportunities for energy efficiency 
improvements for cement plants have been leveraged, and those remaining 
are often prohibitively expensive with limited impact. Further 
improvements will also require cooperation by federal and state 
regulators that determine, through their regulations and permitting 
programs, whether and when facilities can adopt lower-carbon 
technologies, facility improvements, operations, and fuels.
2.3  Blended cements are available today
    Portland limestone cement (PLC) is an example of a blended cement 
that is readily available from cement manufacturers. It is made by 
blending limestone with clinker (Step 8 of Figure 4). The limestone 
replaces clinker in the cement and therefore, has lower carbon dioxide 
emissions per unit weight of cement produced.
    PLC has been used in Europe for over fifty years \12\. Current 
European standards allow for up to 35% replacement of cement with 
limestone, whereas in the US and Canada the limit is 15%. Studies have 
shown that PLC has nearly the same performance as ordinary portland 
cement (OPC) \12\, but with a 10% reduction in carbon dioxide emissions 
from production (assuming 15% replacement) \13\. Costs of PLC are 
similar to OPC, as is its performance. Given, the lower environmental 
footprint, it would appear to be a strong candidate for increased use. 
However, PLC is approximately 1% of all cement produced in the US (all 
types of blended cements make up less than 3% of all cement produced in 
the US) \14\. This is primarily due to an unwillingness of concrete 
specifiers (such as engineers) to choose PLC over OPC, which has a 
longer history of use.
2.4  The technology roadmap for the global cement industry identifies 
        emissions reductions required to meet global targets
    CSI's 2018 technology roadmap \10\ evaluated the required emissions 
reductions in the global cement industry required to meet a 2 +C 
climate scenario (2DS--maximum of 2 +C global temperature increase), as 
well as a beyond 2 +C scenario (B2DS--lower than 2 +C global 
temperature increase). They used a reference technology scenario (RTS) 
that assumed relatively flat direct carbon dioxide emissions until the 
year 2050 despite increases in cement production. This reference 
scenario assumes continued progress to reduce emissions associated with 
cement production at current rates.
    As shown in Figure 10, the 2DS represents a 24% reduction in direct 
carbon dioxide emissions from the RTS by 2050. The B2DS represents an 
additional 45% reduction in direct carbon dioxide emissions over the 
2DS.

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    Lowering emissions requires a combination of the four levers 
mentioned in Section 2.1, as illustrated in Figure 11. Carbon capture 
technologies contribute 48% of cumulative emissions reductions, 
followed by use of blended cements (reduction of clinker to cement 
ratio) at 37%. There are fewer opportunities to improve thermal energy 
efficiency in cement plants or switch to alternative fuels.

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    The CSI roadmap includes estimates of global investments required 
to meet both the RTS and 2DS (Figure 12). $107 billion to $127 billion 
are estimated cumulative investments to meet the RTS globally by 2050 
(24-28% increase over no action), and an additional $176 billion to 
$244 billion required to meet the 2DS (32-43% increase over RTS). No 
investment estimates are available for the US.

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3  Opportunities to lower carbon dioxide emissions of concrete
    The majority of concrete's environmental footprint derives from the 
footprint of the materials in the concrete, rather than the production 
of the concrete, which primarily involves mixing (materials represented 
95% of the GHG emissions in the case shown in Figure 6). Thus, use of 
low-carbon (i.e., low carbon dioxide footprint) constituent materials 
is the primary mechanism for lowering carbon dioxide emissions of 
concrete. There are three main categories of low-carbon constituent 
materials.
3.1  Blended cements
    Blended cements, such as portland limestone cement, were described 
in Section 2.3 and are currently produced by cement manufacturers. They 
make use of many of the same SCMs used in concrete such as fly ash and 
blast furnace slags (described in Section 1.3). Production of blended 
cements varies significantly worldwide depending on demand, which is 
primarily influenced by historical practices for producing concrete, 
although availability of SCMs is a factor as well (e.g., China and 
India have significant availability of fly ash from coal fired power 
plants). There is currently limited demand for blended cements in the 
US--they make up less than 3% of all cement produced in the US.\ 14\
3.2  Supplementary cementitious materials
    SCMs are used more extensively in the US in concrete than in 
cement. Conventional SCMs include fly ash and blast furnace slag, 
although other alternatives exist that are used more commonly in other 
parts of the world including silica fume, natural pozzolans, calcined 
clays, vegetable ash. More recently, binders made from ground post-
consumer glass have become commercially available at small scales. 
Availability, chemical composition, performance, and cost often 
determine whether SCMs are used in concrete.
3.3  Cement, aggregate, and concrete made from captured carbon dioxide
    The process of mineralization involves exposing minerals to carbon 
dioxide to create a carbonate mineral. It is a natural process that 
took place over millions of years to create the limestone used in the 
production of cement. More recently it has been proposed as a form of 
carbon capture and utilization (CCU) to create materials that can be 
used in concrete production. This includes the production of binders, 
aggregates, and concrete (i.e., carbon dioxide is used in the mixing 
process) using carbon captured from industrial sources, potentially 
including cement plants. Several companies have been created over the 
past decade in an attempt to commercialize mineralization for building 
products \15\. There is significant variation in the degree to which 
they make use of carbon dioxide. Most of the companies are in a start-
up phase with demonstration plants or small production volumes, but 
several of them have products currently being used in construction 
projects. In some cases, the technologies can only be used to make 
concrete blocks in production facilities (as opposed to cast-in-place 
concrete on job sites) because of the requirements to control the 
mixing of carbon dioxide with minerals. As such, this limits their 
application to cases where concrete blocks can be used (such as 
buildings).
3.4  Considerations for the use of low-carbon constituent materials
    It is important to note that substitution of these low-carbon 
constituent materials for conventional materials in a concrete mixture 
will not necessarily result in the same performance (strength, 
stiffness, constructability, durability) of the concrete mixture. 
Designing a concrete mixture to meet performance targets can be a 
complicated process that involves trade-offs of many factors that vary 
depending on the constituents being used. Furthermore, specifications 
for concrete often limit the use of blended cements or SCMs \16\. Thus, 
requirements for substitutions of conventional materials for low-carbon 
alternatives are not straightforward and may not be feasible for many 
situations.
4  Importance of a life cycle perspective in evaluating environmental 
        impacts of buildings and infrastructure using concrete
    The true environmental impact of concrete can only truly be 
evaluated using a life cycle perspective that encompasses its 
application in buildings and infrastructure. For example, a life cycle 
assessment of several building types conducted by our team at MIT has 
shown that embodied environmental impacts of buildings (associated with 
material production and building construction) are at most 10% of the 
total life cycle greenhouse gas emissions (Figure 13); energy use 
represents the vast majority of environmental impacts \17\.

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    Similarly, the life cycle impacts of pavements are dominated by the 
use phase, which includes excess fuel consumption of vehicles due to 
roughness or deflection in the pavements (which leads to additional 
energy dissipation in the vehicle).\18\ In the case of the urban 
interstate pavements in Figure 14, materials and construction make up 
only 26% of the life cycle GHG emissions.

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    Finally, concrete naturally absorbs carbon dioxide over its 
lifetime as part of a chemical process called carbonation, which is the 
reverse of the calcination process that leads to process emissions in 
the production of cement. A study estimated that 4.5 gigatons of carbon 
dioxide has been sequestered in carbonating cement materials worldwide 
from 1930 to 2013, offsetting 43% of process CO2 emissions 
(Figure 15) \19\. Hence, there is significant potential to use cement 
and concrete as a carbon sink in the future.

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    Thus, while it is important to seek opportunities to lower embodied 
emissions in the built environment, it is also important to consider 
the impact that materials and design choices have on life cycle 
impacts, particularly if they can enable emissions reductions (e.g., 
through reduced building energy consumption or lower excess fuel 
consumption) and carbon uptake.
5  Barriers to adoption of low-carbon solutions
5.1  Regulations prohibit increased use of alternative fuels in cement 
        plants
    Federal policies often discourage rather than embrace the use of 
secondary materials as fuel in the industrial sector. The industry's 
use of alternative fuels falls under two environmental laws 
administered by the U.S. Environmental Protection Agency (EPA), the 
Clean Air Act (CAA), and the Resource Conservation and Recovery Act 
(RCRA). The CAA addresses ambient air quality and emissions from 
manufacturers, power plants, and motor vehicles. RCRA governs the 
management of solid waste and the generation, transport, and disposal 
of hazardous materials.
    In recent years, narrow judicial and regulatory interpretations of 
RCRA, the CAA, and EPA regulations have discouraged the use of non-
hazardous secondary materials and wastes as fuels, treating these 
materials as dangerous wastes, and facilities using them as 
incinerators. These policies are contrary to basic science and public 
policy, discouraging the productive conservation and recovery of 
resources and increasing the use of emissions-intensive fossil fuels.
    EPA recognized this fact in 2011 and issued a regulation known as 
the Non-Hazardous Secondary Materials (NHSM) Rule, intended to allow 
for secondary materials to be used for energy recovery if they met 
specific legitimacy criteria. In theory, the rule provided a way to 
distinguish between true waste materials with little to no value as 
fuel and those material streams that, traditionally discarded as a 
waste, could now be put to far more productive use as alternative 
fuels. In practice, the rule has become yet another roadblock to sound 
energy and materials recovery policy.
    Manufacturers face a costly and time-intensive process to prove, on 
a case-by-case basis, why commonly landfilled materials such as 
unrecycled plastics, paper, fabrics/fibers, and other secondary 
materials should qualify for treatment as fuels, despite their 
demonstrably lower greenhouse gas and other air emissions and 
comparable heat value. The result is predictable. While alternative 
fuels make up an average of 36 percent of the fuel used to manufacture 
cement in the European Union (60 percent in Germany), it constitutes 
only 15 percent of the domestic cement industry's fuel portfolio.
5.2  New Source Review and other permitting processes discourage energy 
        efficiency and carbon capture improvements and critical 
        infrastructure
    One of the common-sense strategies for any industry to reduce GHG 
emissions is to maintain and improve the operational efficiency of its 
facilities over time. Unfortunately, the current Clean Air Act New 
Source Review program, as interpreted by the courts and some prior 
administrations, actually penalizes companies for increasing the 
efficiency of its facilities. This forces companies to reject upgrades 
and investments. To address these process emissions and further reduce 
industry GHG emissions, manufacturers will need to install carbon 
reduction and carbon capture, use, and storage (CCUS) technologies, 
other technological advances developed in the future, and implement 
process improvements. Under the NSR program, such investments would 
face the same permitting and regulatory barriers that new facilities 
would face, particularly where the addition of new emissions control 
technology for one pollutant has a negative impact on the emissions 
profile for another. Congress should revise the NSR process to 
encourage, rather than discourage, investments in energy efficiency and 
carbon capture, use and storage technologies.
    Other energy improvements require investment in infrastructure, 
like pipelines and distribution networks. Cement kilns operate 24 hours 
per day and almost 365 days per year, and have historically used fossil 
fuels, such as coal and petroleum coke, due to the need for plentiful 
fuel supplies that can easily be stored and are in plentiful supply. In 
recent years, the cement industry has used more natural gas to reduce 
GHG and other air emissions. According to the PCA's Labor and Energy 
Survey, from 2011 to 2016 the industry increased natural gas use from 
3.9% to 15.5% of its fuel use, displacing higher carbon fuels like coal 
and petroleum coke and, as a result, lowering GHG emissions. Natural 
gas use at cement plants could be further increased if pipelines and 
related infrastructure were in place to supply these plants. 
Unfortunately, the permitting process under NEPA, the Clean Water Act, 
and state standards is preventing many industries from taking advantage 
of natural gas by preventing or delaying the necessary supply 
infrastructure. Congress should reform the infrastructure permitting 
process for badly needed energy infrastructure.
5.3  There is limited room for additional energy efficiency 
        improvements in cement plants
    The heat energy required to heat raw materials to the temperatures 
needed to trigger calcination makes cement manufacturing an inherently 
energy-intensive process. As noted in Section 2.2, the cement industry 
has invested significantly to increase the energy efficiency of its 
kilns, grinding equipment, and other operations. Moving forward, the 
industry will face increasing challenges in squeezing additional 
efficiency improvements out of its operations.
    Further increases in efficiency improvements in cement 
manufacturing are not on the horizon without a revolutionary 
advancement in a completely new technology. The industry's efficiency 
is already close to the theoretical maximum. Martin Schneider, a cement 
processing expert has noted, ``Taking into account all process-
integrated measures, thermal process efficiency [in cement 
manufacturing] reaches values above 80% of the theoretical maximum.'' 
\20\ That level of thermal process efficiency is unparalleled.
    Any marginal increases in efficiency that could be gained, 
including technologies such as waste heat recovery, require additional 
energy. The basic laws of thermodynamics dictate that it takes energy 
to save energy; there is no free lunch. That additional energy 
increases the carbon footprint of a cement plant, making each 
additional joule of energy efficiency that much more difficult to gain. 
This explains why the CSI technology roadmap shows thermal energy 
efficiency gains as having the smallest opportunity for carbon dioxide 
emissions reductions (Figure 11 in Section 2.4).
5.4  Increased cost of low-carbon cement and concrete products
    Publicly available data on prices of low-carbon cement and concrete 
products relative to conventional products is not available. However, 
anecdotal evidence suggests that there are usually cost premiums for 
the low-carbon products. Although one would expect there to be 
increased demand for these products in a place like Europe where a 
carbon cap and trade system exists, that has so far not been the case. 
Furthermore, there is at least one case of an American start-up company 
that created a binder using a mineralization process but never achieved 
commercial success and had to pivot to other applications \15\. The 
highly cost-conscious nature of the construction industry will likely 
make this a key barrier for some time.
5.5  Risk aversion of engineers specifying concrete
    Given the high stakes involved in structures that use concrete, it 
is understandable that civil engineers specifying concrete mixtures 
would be risk averse. Engineers typically rely on prescriptive-based 
specifications that detail the types and limits of materials that can 
be used in concrete mixtures. Following such specifications helps to 
mitigate risk for them and the concrete producers because they can 
point to the specifications in case there are unforeseen problems. They 
also prefer to rely on the use of constituent materials that have been 
used in the past because of their perceived familiarity with 
performance. The downside of this practice is that it often limits the 
use of low-carbon materials, either explicitly or implicitly \16\. As 
such, prescriptive specifications inhibit opportunities for innovative 
concrete mixtures that make use of low-carbon materials, included 
blended cements and SCMs that are available for use today. In addition, 
there is a significant burden of proof to demonstrate that new low-
carbon materials will meet long-term structural and durability 
requirements.
6  Solutions to enable a low-carbon cement and concrete industry
6.1  Promote adoption of energy efficiency technologies for new and 
        retrofit cement plants
    As noted in Section 5.3, it is possible to make energy efficiency 
improvements in cement plants, but they will require more than a simple 
federal mandate. Industry will have to partner with government to 
identify promising new energy efficiency technologies and make the 
investments in research, development, and deployment to bring them to 
market.
6.2  Encourage and facilitate increased use of alternative fuels in 
        cement plants
    There is a step the Committee could take today to reduce greenhouse 
gas emissions: provide manufacturers with enhanced flexibility to 
expand their use of alternative fuels. Congress can and should address 
this issue as a simple and early first step by amending the definitions 
of ``Recovered Materials'' and ``Recovered Resources'' within RCRA to 
distinguish them from solid waste. A core mandate of the Resource 
Conservation and Recovery Act is to conserve and recover national 
resources. To do so, it must start by clearly recognizing that 
materials with energy value are truly ``resources,'' not waste.
    In the interim, the Committee should urge EPA to revise the NHSM 
Rule, implementing guidance, and interpretations to limit the 
processing requirements for ``discarded'' materials to those activities 
necessary to create useful fuel. EPA should not impose processing 
requirements that add costs to fuel use without materially improving 
the fuel value or the emissions associated with its use. Finally, 
Congress should urge EPA to act on PCA's pending petition to provide a 
categorical exemption for the use of nonrecycled paper, plastics, 
fiber, and fabrics as fuel, based on the extensive data already 
provided to EPA.
6.3  Encourage and facilitate use of blended cements
    As noted in Section 2.3, several blended cements are produced in 
the US today, including portland limestone cement and other blended 
cements that make use of SCMs, but there is limited demand for them, 
most likely due to risk aversion of engineers specifying concrete. The 
adoption of performance-based specifications (described below in 
Section 6.5) would make it easier to use such cements. In addition, 
sponsoring research on the long-term structural and durability 
performance of concretes using blended cements will help to mitigate 
perceived risk by engineers.
6.4  Support development and deployment of emerging and innovative low-
        carbon technologies for cement production including carbon 
        capture, storage, and utilization
    With at least half of the cement industry's greenhouse gas 
emissions resulting from the chemical conversion of limestone and other 
ingredients into clinker, any long-term carbon reduction strategy for 
the cement manufacturing industry will require significant advances in 
carbon capture, use, distribution, and storage (CCUS) technologies.
    But while many promising technologies are under development 
domestically and overseas, few have reached the commercial stage of 
development, and most of the research and all of the federal funding 
has focused on the energy sector (power, oil, gas), not industrial 
sector solutions. This is an important point because, if the US is 
going to develop a long-term strategy to reduce carbon emissions from 
the industrial sector, policymakers must realize there is no one-size-
fits-all solution to capturing, transporting, and using or storing 
carbon emissions. Industrial sources face different and far more 
complex technical challenges and operating conditions in adopting 
carbon capture, use, and sequestration technologies.
    In short, successful commercialization and deployment of any 
broadly-applied CCUS carbon mitigation strategy will require targeted 
funding and financial incentives to move the technology from the 
demonstration and pilot stage to commercial-scale use--particularly 
within the industrial sector.
    Potential policy mechanisms that can help accelerate these 
technologies include:
           Provided targeted CCS research, development, and 
        deployment funding for the cement sector.
           Use long-term and predictable tax policy to 
        incentivize R&D and rapid investment in carbon capture, 
        distribution, use, and storage technologies and infrastructure.
           Reward early investment and adoption in new 
        technologies.
6.5  Support deployment of performance-based specifications for 
        concrete to spur innovation in concrete mixtures
    In contrast to prescriptive-based specifications, performance-based 
specifications define performance targets for concrete (strength, 
stiffness, constructability, durability) with minimal limitations on 
the constituent materials that may be used \21\. This enables 
significant opportunities to spur innovation in concrete mixtures by 
enabling use of low-carbon materials \22\. Although performance-based 
specifications have been proposed for over two decades, there has been 
limited adoption within the architecture, engineering, and construction 
community, most likely due to a preference for using materials and 
practices that have been used in the past. A shift in paradigm to 
performance-based specifications will require encouragement and 
incentives.
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    17. Ochsendorf, J. et al. Methods, Impacts, and Opportunities in 
the Concrete Building Life Cycle. Res. Rep. R11-01, Concr. Sustain. 
Hub, Dep. Civ. Environ. Eng. Massachusetts Inst. Technol. 119 (2011).
    18. Xu, X., Akbarian, M., Gregory, J. & Kirchain, R. Role of the 
use phase and pavement-vehicle interaction in comparative pavement life 
cycle assessment as a function of context. J. Clean. Prod. 230, 1156-
1164 (2019).
    19. Xi, F. et al. Substantial global carbon uptake by cement 
carbonation. Nat. Geosci. 9, 880-883 (2016).
    20. Schneider, M. Process technology for efficient and sustainable 
cement production. Cem. Concr. Res. 78, 14-23 (2015).
    21. National Ready Mixed Concrete Association. Guide Performance-
Based Specification for Concrete Materials. (2012).
    22. Lemay, L., Lobo, C. & Obla, K. Sustainable concrete: The role 
of performance-based specifications. in Structures Congress 2013: 
Bridging Your Passion with Your Profession--Proceedings of the 2013 
Structures Congress 2693-2704 (2013).

    Ms. Castor. Thank you very much.
    Mr. Crabtree, you are recognized for 5 minutes.

                   STATEMENT OF BRAD CRABTREE

    Mr. Crabtree. Chair Castor, Ranking Member Graves, members 
of the select committee, thank you for inviting me to testify.
    I also want to recognize my fellow North Dakotan, 
Congressman Armstrong. Good to see you.
    I am vice president for carbon management at the Great 
Plains Institute, and I am here today in my capacity as 
director of the Carbon Capture Coalition.
    The 70 industry, labor, and environmental members of the 
Carbon Capture Coalition are dedicated to a common goal: 
economy-wide deployment of carbon capture to reduce emissions, 
support domestic energy and industrial production, and protect 
and create high-wage jobs.
    Economy-wide deployment of carbon capture is indispensable 
to reducing industrial emissions and to meeting midcentury 
climate goals.
    In March, coalition members urged this committee to include 
carbon capture research, development, and commercial deployment 
as an essential component of a broader strategy to decarbonize 
power generation in key industrial sectors by midcentury. Their 
letter cited IEA and IPCC modelling to underscore that carbon 
capture is not optional but essential from a climate 
perspective.
    Industrial sectors, it has been noted, are responsible for 
roughly one-third of U.S. global greenhouse gas emissions. Many 
sources of industrial carbon emissions are inherent to the 
chemistry of industrial processes themselves. They often have 
few, if any, alternative options beyond carbon capture to 
reduce those process emissions.
    Industries such as refining, steel, cement, chemicals, and 
others are central to modern life. They provide high-wage jobs 
to millions of Americans, and they support the economic and 
social fabric of our Nation. Yet their low-margin, trade-
exposed commodity businesses are vulnerable to increases in 
costs due to emissions reductions. Fortunately, Federal policy 
can reduce these costs while avoiding plant closures and the 
offshoring of jobs and livelihoods.
    We also start from a strong foundation of American 
technology leadership. Successful large-scale carbon capture 
and storage began in 1972 in west Texas, and the U.S. now has 
12 commercial-scale facilities capturing over 25 million tons 
of CO2 every year from industrial sources. Roughly 
5,000 miles of existing CO2 pipelines in 11 States 
transport that CO2 from where it is captured to 
where it can be stored.
    We are also now seeing growing innovation and investment in 
technologies to produce fuels, chemicals, building products, 
and advanced materials from captured carbon. This will create 
new markets for industrial emissions of CO2 and its 
precursor, carbon monoxide.
    Important innovation is also occurring overseas. Earlier 
this month, a U.S. delegation, coordinated by the Great Plains 
Institute, traveled to the United Arab Emirates, where Emirates 
Steel has the first, the world's first and only large-scale 
carbon capture project in that sector.
    We also visited Belgium, where ArcelorMittal is partnering 
with U.S. technology firm LanzaTech on a project that will 
produce just over 20 million gallons of ethanol from steel 
plant carbon monoxide emissions.
    Federal policy has a crucial role to play in helping to 
sustain American leadership and innovation in building this new 
carbon economy. The coalition commends Congress for last year's 
passage of landmark bipartisan legislation to reform and expand 
the section 45Q tax credit for geologic storage and for the 
beneficial use of captured carbon. We need to build on this 
important first step.
    Toward that end, the Carbon Capture Coalition recently 
released a Federal Policy Blueprint recommending Federal 
financial incentives and other policies to complement 45Q in 
achieving economy-wide deployment of carbon capture, transport, 
use, removal, and geologic storage.
    The Blueprint reflects a consensus of the over 70 
companies, unions, and NGOs that are participating in the 
coalition, something of a rarity in Washington right now.
    Coalition participants recognize that a whole portfolio of 
policies has supported the successful development and 
commercial scale-up of wind, solar, and other low and zero 
carbon technologies. Economy-wide deployment of carbon capture 
will require a comparable policy portfolio.
    My written testimony outlines many of the Blueprint's 
specific policy recommendations, and it is also submitted into 
the record.
    In summary, the coalition's policy recommendations fall 
into four major categories: ensuring effective implementation 
of the 45Q tax credit by Treasury and other agencies to make 
sure that the tax credit provides the expected certainty and 
financial flexibility; providing additional Federal incentives 
to enhance and complement 45Q to help more carbon capture 
transport, use, removal, and storage projects to achieve 
financial feasibility; making the development and financing of 
CO2 transport networks a key component of broader 
national infrastructure policy; and finally, expanding and 
retooling Federal funding for research, development, 
demonstration, and deployment to make sure that the next 
generation of innovative technologies that will lower costs and 
improve performance make it to the marketplace.
    In conclusion, economy-wide deployment of carbon capture is 
not optional if we are to decarbonize industry and achieve 
climate goals while avoiding the offshoring of jobs. We must 
build on the nearly 50 years of successful experience in this 
country with large-scale industrial carbon capture and learn 
from successful policy precedents in other areas and go on to 
implement a comprehensive policy portfolio that helps put our 
Nation on a path toward midcentury decarbonization.
    Thank you again for the opportunity to testify.
    [The statement of Mr. Crabtree follows:]

  Testimony of Mr. Brad Crabtree, Director, Carbon Capture Coalition, 
Before the House Select Committee on the Climate Crisis, September 26, 
                                  2019

    Chairwoman Castor, Ranking Member Graves, and Members of the Select 
Committee, thank you for inviting me to testify. My name is Brad 
Crabtree, and I am Vice President for Carbon Management at the Great 
Plains Institute. I am here today in my capacity as Director of the 
Carbon Capture Coalition, a national partnership (https://
carboncapturecoalition.org/about-us/) of over 70 energy, industrial and 
technology companies, labor unions, and environmental, clean energy and 
agricultural organizations.
    My testimony will address:
           the essential role that carbon capture must play in 
        managing industrial carbon emissions to meet midcentury climate 
        goals;
           existing examples of U.S. and global technology 
        innovation and leadership; and
           key elements of a U.S. federal policy framework 
        needed to achieve deployment of carbon capture technologies in 
        key carbon-intensive industrial sectors.
Carbon Capture is Essential to Managing Industrial Emissions to Meet 
        Midcentury Climate Goals
    The Carbon Capture Coalition was established in 2011 to help 
realize the full potential of carbon capture as a national strategy for 
reducing carbon emissions, supporting domestic energy and industrial 
production, and protecting and creating high-wage jobs. The Coalition's 
members have forged an alliance of unprecedented diversity in the 
context of U.S. federal energy and climate policy, and they are 
dedicated to achieving a common goal: economywide deployment of carbon 
capture from industrial facilities, power plants, and ambient air.
    Economywide deployment of carbon capture is indispensable to 
reducing industrial emissions. In March, the Coalition's industry, 
labor and NGO participants submitted a joint letter to this Committee 
and other committees of jurisdiction urging Congress ``to include 
carbon capture research, development, and commercial deployment as an 
essential component of a broader strategy to decarbonize power 
generation and key industry sectors by midcentury.''
    In their letter, Coalition participants pointed to modeling by the 
International Energy Agency (IEA) and the Intergovernmental Panel on 
Climate Change (IPCC) that illustrates the critical role carbon capture 
must play in industrial decarbonization to meet climate goals. For 
example, in its modeling of scenarios for limiting warming to 2+ 
Celsius, the IEA found that carbon capture must contribute 14 percent 
of cumulative emissions reductions by midcentury and 20 percent 
annually by 2050, with 45 percent of those reductions coming from 
industrial sources.
    Capture from industrial facilities is not optional from a climate 
perspective. Industrial sources constitute roughly one third of global 
and domestic carbon emissions. While a range of measures can be taken 
to decarbonize energy inputs into industrial production (including 
carbon capture in power generation and reforming natural gas to produce 
hydrogen), many sources of carbon emissions are inherent to the 
chemistry of industrial processes themselves, which often have few, if 
any, alternative mitigation options available beyond carbon capture. 
Figure 1 highlights the significance of process emissions as a 
component of broader industrial emissions from refining, pulp and 
paper, chemicals, cement and lime, and iron and steel production.

[GRAPHIC] [TIFF OMITTED] T8473A.016


    The outputs of these and other industries are central to modern 
life, underpinning the livelihoods of millions of Americans and 
contribute to the economic and social stability of entire communities 
and regions across our nation. Industrial production and associated 
energy production and manufacturing support a high-skill, high-wage 
jobs base, yet these sectors' low-margin, trade-exposed commodity 
businesses leave them vulnerable to increases in costs incurred to 
reduce emissions. Deployment of carbon capture technologies, coupled 
with appropriate financial incentives and other policies to reduce 
costs and buy down risk, can enable the decarbonization and continued 
operation of existing industrial facilities, while avoiding their 
closure and the offshoring of jobs and livelihoods.
U.S. and global technology innovation and leadership
    To underscore the challenge before us, over half of global 
industrial carbon emissions come from just three sectors--steel, cement 
and basic chemicals--and over half of those three industries' emissions 
are process emissions unrelated to energy inputs. Yet, there is only 
one large-scale commercial carbon capture facility operating in the 
world today in these three industries, and that is a steel plant in the 
United Arab Emirates.
    Fortunately, carbon capture works, and we have a strong foundation 
of American technology leadership on which to build as we embark on 
strategies and policies to reduce industrial carbon emissions while 
sustaining our country's high-wage jobs base. Currently, there are 23 
large-scale carbon capture and storage facilities operating in the 
world today, capturing nearly 40 million metric tons of CO2 
annually. Ten of those large-scale facilities are located in the U.S. 
In terms of industrial carbon capture, there are 12 operating 
commercial-scale facilities in the U.S. that capture CO2 
from a variety of industrial sources. They have a combined annual 
capture capacity of just over 25 million metric tons. The transport, 
use and geologic storage of that CO2 is enabled by roughly 
5,000 miles of existing CO2 pipelines in 11 states.
    Successful commercial and operational experience with large-scale 
industrial carbon capture with geologic storage dates back to 1972 in 
the U.S., when oil companies in West Texas first began capturing 
CO2 from natural gas processing for use in enhanced oil 
recovery. Next, industrial carbon capture expanded to gasification for 
fertilizer and substitute natural gas production, followed by capture 
from fermentation at ethanol plants. Finally, large-scale commercial 
carbon capture from refinery hydrogen production came on line earlier 
in this decade.
    These successful examples of commercial carbon capture represent 
higher purity industrial sources of CO2 with lower costs of 
capture. These ``low-hanging fruit'' for industrial decarbonization 
include fermentation in ethanol production, gas processing, 
gasification and natural gas reformation for hydrogen production, all 
of which produce relatively pure streams of CO2. Their costs 
of CO2 capture and compression are now within range of the 
newly revamped federal Section 45Q tax credit. A key remaining 
deployment need for these sectors is federal support for financing 
additional infrastructure to transport the CO2 from where it 
is captured to where it can be stored or put to beneficial use.
    A second tier of industrial processes produce lower-purity streams 
of CO2, and these include cement, catalytic cracking in 
refining, and steel production. These lower purity sources have seen 
little or no commercial-scale deployment of capture technology because 
of their higher capture costs. To varying degrees, they will need 
additional federal policy support for early commercial demonstration to 
complement the existing 45Q tax credit to reach financial feasibility.
    In addition to effective demonstration of capture technologies, 
commercial markets and uses of captured industrial CO2 in 
the U.S. have expanded over time as well. Until this decade, most 
CO2 captured from industrial sources was utilized and 
geologically stored through enhanced oil recovery, with some 
CO2 destined for food and beverage, dry ice and other high-
value niche markets. In 2017, Archer Daniels Midland began large-scale 
storage of CO2 from ethanol production in a saline geologic 
formation, a geologic storage pathway anticipated to grow significantly 
now that the 45Q tax credit provides $50 per metric ton for saline 
storage over $35 per ton for CO2 stored through EOR. Looking 
ahead, rapidly growing interest and investment in the development and 
commercialization of different technology pathways to produce fuels, 
chemicals, building products, advanced materials and other beneficial 
products from captured carbon will create new markets for industrial 
emissions of carbon dioxide and its precursor carbon monoxide. To build 
upon the well-established pathway of CO2 use and geologic 
storage through CO2-enhanced oil recovery, it is critical 
that federal policy prioritize further development and commercial 
deployment of large-scale saline geologic storage and creation of new 
markets for captured carbon through stepped up R&D into beneficial uses 
of both CO2 and CO.
    American industry, labor and NGO leaders and federal and state 
officials are also learning from technology innovation overseas for 
application here at home. Earlier this month, a U.S. delegation 
coordinated by the Great Plains Institute traveled to the United Arab 
Emirates, where Emirates Steel began capturing 800,000 metric tons 
annually of CO2 since 2016, and to Belgium, where 
ArcelorMittal is partnering with U.S. technology firm LanzaTech to 
construct a facility that will use microbes to transform waste carbon 
monoxide emissions captured from steel production into 17.5 million 
gallons of ethanol annually.
    These successful examples of industrial carbon capture, coupled 
with emerging innovation in carbon utilization technologies and 
business models, are spurring the interest of U.S. companies, 
entrepreneurs and investors in a circular industrial economy in which 
waste carbon dioxide and carbon monoxide emissions become a source of 
economic value and part of the climate solution.
A robust federal policy framework is needed to sustain U.S. leadership 
        and achieve economy wide deployment of carbon capture in key 
        carbon-intensive industrial sectors
    Federal policy has a critical role to play in helping to sustain 
American leadership and innovation in building this new carbon economy. 
Congress is to be commended for bipartisan passage last year of the 
FUTURE Act, a landmark reform and expansion of the Section 45Q tax 
credit for geologic storage and beneficial use of carbon captured from 
industrial facilities, power plants and ambient air.
    To build on this cornerstone federal policy, the Carbon Capture 
Coalition released a Federal Policy Blueprint (https://
carboncapturecoalition.org/wp-content/uploads/2019/05/BluePrint-
Compressed.pdf) to Congress earlier this year, recommending federal 
financial incentives and other policies to complement the 45Q credit in 
driving private investment, and spurring innovation and cost reductions 
sufficient to achieve economywide deployment of carbon capture. The 
Coalition defines economywide deployment as advancing a critical mass 
of commercial-scale projects in key industrial sectors and power 
generation between now and 2030 to enable the scaling of the technology 
by midcentury to reach decarbonization goals. It's worth noting that 
the Blueprint reflects a consensus of the over 70 companies, unions and 
NGOs participating in the Coalition--a rarity on matters of federal 
energy, industrial and climate policy.
    In crafting the Blueprint, Coalition participants recognized that 
an array of federal policies have supported the development and 
commercial scale-up of wind, solar and other low and zero-carbon 
technologies in the marketplace and that economywide deployment of 
carbon capture will require a comparable portfolio of policies. Toward 
that end, the Coalition recommends a package of federal policies that 
spans the full value chain of carbon capture, transport, use, removal 
and geologic storage.
    The Carbon Capture Coalition's strategic vision for future policy 
action is to:
           Ensure effective implementation of 45Q by the U.S. 
        Treasury to provide the investment certainty and business model 
        flexibility intended by Congress;
           Provide additional federal incentives to complement, 
        expand and build upon 45Q in financing carbon capture, 
        utilization, removal and storage projects;
           Incorporate carbon capture, transport, utilization, 
        removal and storage into broader national infrastructure 
        policy; and
           Expand, retool and prioritize federal funding for 
        research, development, demonstration and deployment (RDD&D) of 
        the next generation of carbon capture, utilization, removal and 
        geologic storage technologies and practices.
    Economywide deployment of carbon capture will require federal 
legislative and administrative action in the following areas:
Investment Certainty
    Effective implementation of the 45Q tax credit is crucial to 
providing the financial certainty and flexibility needed to leverage 
the private investment in projects sought by Congress. In particular, a 
longer time horizon for federal policy is needed to support early 
commercial-scale demonstrations of essential carbon capture technology 
in the most carbon-intensive industrial sectors, given long lead times 
needed to develop, permit, finance and construct such projects. The 
Coalition welcomes recent signals from the Treasury Department that the 
Internal Revenue Service (IRS) is now prioritizing completion of 
guidance to implement the 45Q tax credit, but significant concerns 
remain that hundreds of millions and perhaps billions of dollars in 
private capital remain on the sidelines as project developers and 
investors have waited 19 months for clarity from Treasury and the IRS.
            Key Policy Priorities
           Lawmakers should extend the commence construction 
        window for 45Q beyond the end of 2023 given Treasury delays on 
        guidance and to send a signal of long-term policy continuity to 
        project developers and investors.
           IRS should provide an additional equivalent pathway 
        for demonstrating secure geologic storage through 
        CO2-EOR (in addition to the existing federal Subpart 
        RR Greenhouse Gas Reporting Program) based on the International 
        Organization for Standardization (ISO) Standard 27916 and 
        supplemented with additional public transparency and 
        accountability measures as recommended in the Coalition's June 
        28, 2019 comments (https://carboncapturecoalition.org/
        wp-content/uploads/2019/06/Final-CCC-submission-to-Treasury-6-
        28-19.pdf) to Treasury.
           Facilitate CO2 transport infrastructure 
        planning, siting and permitting through passage of the USE IT 
        Act to help ensure the availability of infrastructure needed 
        for development of carbon capture, use and geologic storage 
        projects.
Technology Deployment & Cost Reductions
    Just as federal investments in research, development, demonstration 
and deployment (RDD&D) have successfully helped scale up wind, solar 
and other low and zero-carbon energy technologies in the marketplace, 
expanding, retooling and prioritizing federal investments in 
transformational carbon capture, utilization, storage and removal 
technologies will be a critical component of driving down costs of 
carbon capture and utilization in key industrial sectors and making 
sure that the next generation of technologies with reduced costs and 
increased performance make their way to the marketplace. In this 
context, it is especially crucial that an expanded federal RDD&D 
program prioritize later-stage demonstrations of critical industrial 
capture and utilization technologies and not just early stage research 
and development.
    The Carbon Capture Coalition welcomes and supports the many current 
bipartisan legislative efforts to update and expand federal authorities 
and funding for industrial carbon capture, utilization and storage as 
part of a broader innovation agenda. These bills enjoy widespread 
bipartisan and bicameral support and should be passed this Congress.
            Key Policy Priorities
           Ensure robust federal appropriations for carbon 
        capture, utilization, removal and storage RDD&D, ensuring 
        inclusion of diverse industry sectors and processes, technology 
        pathways and energy resources.
           Retool and expand federal RDD&D programs, including 
        near-term passage of bipartisan legislation such as the USE IT 
        Act, House Fossil Energy R&D Act, Senate EFFECT and LEADING 
        Acts, and Clean Industrial Technology Act.
           Provide DOE cost share for Front-End Engineering and 
        Design (FEED) studies to support the development of critical, 
        commercial-scale industrial carbon capture and utilization and 
        other technology demonstration projects.
Project Finance & Feasibility
    An expanded portfolio of incentive policies to enhance and expand 
upon the 45Q tax credit will ultimately be necessary to foster early 
stage commercial demonstration and broader economywide deployment of 
industrial carbon capture and utilization technologies. These include: 
improvements to 45Q and other existing tax incentives that enhance 
monetization; technical corrections to 45Q that broaden eligibility and 
access; and complementary policies that contribute to overall financial 
feasibility by lowering the cost of debt and equity, reducing commodity 
risk and expanding markets.
    An expanded incentive portfolio will be especially important to 
achieve widespread demonstration and deployment of carbon capture in 
three areas of crucial importance to industrial decarbonization: 
carbon-intensive industrial processes with higher costs of capture, 
such as the manufacture of steel and cement; electric generation needed 
to power and, where feasible, further electrify industrial processes; 
and natural gas reformation with carbon capture, which currently offers 
the lowest-cost pathway to provide zero-carbon hydrogen for process 
heat and other industrial applications.
    Given the significant role that the federal government plays in the 
purchase of cement, steel and other key industrial commodities, federal 
procurement policy will play an especially important part in building 
markets for early commercial carbon capture and utilization projects in 
industry. In the case of low-margin industrial commodities, federal 
procurement policy can enable early innovators and investors to deploy 
technology to deliver a low or zero-carbon product to market, while 
only adding marginally to the total cost of federally-funded 
infrastructure, buildings and other projects.
            Key Policy Priorities
              Monetizing Financial Incentives
           Prevent the disallowance of 45Q under the BEAT Tax, 
        similar to treatment of the Production Tax Credit for wind and 
        Investment Tax Credit for solar.
           Enhance transferability of the 45Q tax credit 
        consistent with the 45J tax credit for advanced nuclear.
           Provide a revenue-neutral refundability option for 
        45Q.
           Establish a 45Q bonding mechanism.
              Technical Corrections to Expand Eligibility and Access
           Eliminate the 25,000-ton annual capture threshold in 
        45Q for carbon utilization projects.
           Fix the 48A tax credit to enable carbon capture 
        retrofits of existing power plants (Carbon Capture 
        Modernization Act).
              Federal Policies to Complement 45Q
           Make carbon capture projects eligible for tax-exempt 
        private activity bonds (Carbon Capture Improvement Act).
           Provide for eligibility of carbon capture projects 
        for tax-advantaged master limited partnerships (Financing Our 
        Energy Future Act).
           Reform the DOE Loan Program.
              Creating Predictable Markets for Carbon Capture and 
                    Utilization
           Develop federal procurement policies for 
        electricity, fuels and products produced from carbon capture, 
        utilization, removal and geologic storage.
           Reduce commodity risk through federal contracts-for-
        differences (CfDs).
           Incentivize commercial production of low-carbon 
        fuels from captured carbon.
           Ensure eligibility for carbon capture, if Congress 
        enacts a federal electricity portfolio standard.
           Provide an enhanced investment tax credit for 
        transformational carbon capture technologies.
Infrastructure Deployment
    To achieve the full potential of carbon capture to reduce 
industrial emissions, while protecting and creating high-wage jobs, we 
must responsibly scale up infrastructure to create a nationwide network 
for transporting CO2 captured from industrial facilities, 
power plants and ambient air to locations around the country where it 
can be put to beneficial use or safely and permanently stored in 
geologic formations. This buildout will include capacity expansions and 
extensions of existing pipeline networks, as well as the construction 
of long-distance, large-volume interstate trunk lines to serve states 
and regions that currently lack such infrastructure.
            Key Policy Priorities
           Provide low and zero-interest federal loans to 
        supplement private capital in financing pipeline projects.
           Provide federal grants to cover the incremental cost 
        of supersizing pipelines to provide for extra capacity and 
        realize economies of scale.
           Support flagship demonstration projects in key 
        regions of the country, featuring large-volume, long-distance 
        interstate trunk lines linking multiple industrial facilities 
        and power plants that supply CO2 to multiple 
        utilization and geologic storage sites.
           Facilitate planning, siting and permitting of 
        CO2 transport infrastructure (USE IT Act).
           Provide eligibility for tax-exempt private activity 
        bonds and master limited partnerships (Carbon Capture 
        Improvement Act and Financing our Energy Future Act, 
        respectively).
    In summary, economywide deployment of carbon capture, use and 
geologic storage is not optional if we are to decarbonize industry and 
achieve midcentury climate goals. Carbon capture technology provides a 
viable pathway to enable the decarbonization and continued operation of 
existing and new industrial facilities, while avoiding plant closures 
and the offshoring of jobs and livelihoods. The U.S. is the world's 
leader in the capture, use and geologic storage of CO2 from 
industry, with nearly 50 years of successful commercial and operational 
experience on which to build. We now have an opportunity to enact a 
broader portfolio of federal incentives and other policies for carbon 
capture, transport, use, removal and geologic storage. We must learn 
from our successful experience with wind, solar and other low and zero-
carbon technologies and implement a broader policy framework for carbon 
capture in order to sustain U.S. leadership and help put our nation on 
a path toward midcentury decarbonization.
    Thank you again for your opportunity to testify, and I look forward 
to your questions.

    Ms. Castor. Thank you, Mr. Crabtree. And I have a copy of 
your May 2019 Federal Policy Blueprint from the Carbon Capture 
Coalition. So without objection, we will add that to the 
record.
    [The information follows:]

                       Submission for the Record

                      Representative Kathy Castor

                 Select Committee on the Climate Crisis

                           September 26, 2019

    ATTACHMENT: Federal Policy Blueprint. Carbon Capture Coalition, May 
2019.
    This report is retained in the committee files and available at: 
https://carboncapturecoalition.org/wp-content/uploads/2019/05BluePrint-
Compressed.pdf

    Mr. Crabtree. Thank you, Madam Chair.
    Ms. Castor. Ms. Hight, you are recognized for 5 minutes.

                    STATEMENT OF CATE HIGHT

    Ms. Hight. Thank you, Chair Castor, and thank you, Ranking 
Member Graves and members of the select committee, for inviting 
me to be here with you today.
    It is truly an honor to be here with you during this very 
important week for climate, Climate Week, which really presents 
a special opportunity to bring attention to how we can 
decarbonize industry.
    As the chair mentioned, I am a principal at Rocky Mountain 
Institute, where I lead our work on decarbonizing energy inputs 
to industry. RMI was founded in 1982 in Colorado, and we are an 
independent, nonpartisan charitable nonprofit dedicated to 
transforming global energy use to move the world toward a low 
carbon future that is clean, prosperous, and secure.
    So I was invited here to provide RMI's perspective on 
decarbonizing industry and to speak specifically about how 
hydrogen can be used as part of the solution.
    When we talk about industrial emissions, it is important to 
take into account the whole value chain, from start to finish. 
We need to consider how raw materials are sourced and 
processed, how products are manufactured, and finally, all of 
the transportation pathways--the ships, the trains, the planes, 
the trucks--that enable that package to arrive on your doorstep 
after you click the 2-day shipping button.
    The environmental footprint of that package is unclear to 
customers who cannot see the emissions from each step in that 
value chain. But these activities contribute a huge share of 
greenhouse gas emissions, more than 40 percent worldwide, and 
these emissions are continuing to grow, putting our climate, 
our health, and our economy at risk.
    Hydrogen can play a key role in reducing industrial 
emissions by displacing the fossil fuels that power much of 
this sector. The good news is that hydrogen is being produced 
in nearly every State, using a variety of different fuel 
sources.
    Collectively, the U.S. makes about 10 million metric tons 
of hydrogen per year, which is about 15 percent of the global 
total. The challenge is that we need to produce a lot more of 
it, about 10 times as much, and we need more industrial sectors 
to use it. You, as legislators, can play a key role in making 
this happen.
    About 95 percent of the hydrogen made in the U.S. today is 
manufactured through a process called steam methane reforming 
or SMR. Because this process uses natural gas as an input, it 
results in significant carbon dioxide emissions.
    A commercially available alternative to SMR is 
electrolysis, which uses electricity to split water molecules 
into hydrogen and oxygen. In itself, this process produces no 
greenhouse gases, so its carbon intensity depends on the carbon 
intensity of the electricity used.
    We will need both of these processes and others under 
development to manufacture the 600 million metric tons of 
hydrogen per year that we need no decarbonize industry. And to 
reach this level, production needs to steeply increase in the 
next decade and then continue to grow at a steady rate.
    To date, ramping up hydrogen supply and uptake by 
industrial users has presented a sort of chicken or the egg 
problem. Industry doesn't use a lot of hydrogen fuel for power, 
because there is not enough of it for the market to be cost 
competitive, and hydrogen producers don't want to take on the 
financial risk of ramping up production if they don't have a 
sure market to allow them to recover costs. Targeted policy is 
key to resolving both sides of the problem so that we can meet 
our decarbonization goal.
    On the supply side, the focus should be on leveraging our 
existing hydrogen production resources to build supply and 
bring down prices while also accelerating production based on 
low-carbon energy sources. This will require a mix of 
regulations and financial incentives, including renewable 
energy mandates, tax credits, loan guarantees, and feed-in 
tariffs.
    On the demand side, clear regulations, direct investment, 
and loan guarantees for building additional transportation and 
distribution infrastructure can make hydrogen easier for 
industry to access. Financial incentives can be used to 
stimulate hydrogen use by large industrial facilities, and 
investment support programs can help reduce the costs 
associated with fuel switching at these facilities.
    These are just some of the tools that Federal policymakers 
have to reduce investment risk in hydrogen production and grow 
the market to the scale we need to decarbonize industry. And 
the good news is that many of these tools have been applied 
with impressive results in similar markets.
    For example, the solar investment tax credit has helped 
that industry to expand at an annual growth rate of 50 percent 
since 2006, which has brought the price of solar power down 
dramatically and facilitated deployment of thousands of 
megawatts of clean electricity onto our Nation's power grid.
    Similar instruments have been used to expand wind energy, 
and the 45Q tax credit that Brad mentioned could do the same 
for CCS.
    Today we have the same opportunity with hydrogen. If we are 
truly serious about decarbonizing industry, hydrogen will be a 
critical part of the solution.
    Thank you for inviting me to testify today. I look forward 
to your questions.
    [The statement of Ms. Hight follows:]

  Testimony of Cate Hight, Principal, Rocky Mountain Institute, U.S. 
   House of Representatives Select Committee on the Climate Crisis, 
  Hearing entitled ``Solving the Climate Crisis: Reducing Industrial 
         Emissions Through US Innovation'', September 26, 2019

    Thank you, Chairwoman Castor, Ranking Member Graves, and 
distinguished members of the select committee, for inviting me to 
testify and for your leadership in focusing on climate change. My name 
is Cate Hight, and I am a principal at Rocky Mountain Institute (RMI). 
Founded in 1982, RMI is an independent, nonpartisan, charitable 
nonprofit dedicated to transforming global energy use to create a 
clean, prosperous, and secure low-carbon future. I am grateful for the 
opportunity to speak with you today about RMI's work to decarbonize 
industry, including the challenges present in this harder-to-abate 
sector, as well as the many opportunities we have to bring about 
transformative change.
    I was invited here today to provide RMI's perspective on 
decarbonizing industry, as well as more specific information on how 
hydrogen may be used as a critical, low-carbon fuel in industrial 
processes. First, I'll share our wider perspective on this complex 
sector. At RMI, we think of industrial decarbonization in terms of the 
whole value chain, which means we consider the process from start to 
finish, thinking through how goods and services are designed, produced, 
sourced, and then ultimately delivered to consumers.
    Consumer goods are formed through a set of industrial activities, 
starting with the sourcing of raw materials, either through recycling 
or virgin extraction. Those raw materials then undergo energy-intensive 
processes to refine and transform them. Next, the product is 
manufactured, generally in a large, energy-intensive factory, and 
finally, it is shipped to the end consumer, typically on a ship, plane, 
or truck that uses fossil fuels.
    Although few of the activities in this chain are consumer facing, 
they play an important role in our everyday lives. They are essential 
to creating and delivering the things we use every day, from the cars 
and bicycles we use to get around, to the phones and laptops we use to 
connect to the world, and the cement, steel, and bricks we use to build 
houses. These products all require raw materials, along with energy, 
usually in the form of fossil fuels, to create and transport them. Not 
surprisingly, these activities also contribute a significant share of 
global greenhouse gas (GHG) emissions each year. If you include the 
emissions from the generation of electricity (Scope 2 emissions), the 
industry sectors represent more than 40% of the global GHG footprint 
today.\1\ In addition to their contribution to climate change, these 
emissions create daily risks to our food and water, our health, our 
homes, and our economy. And industrial emissions are on the rise as 
economies around the world continue to grow, to a point where heavy 
industry alone will consume more than two times the remaining carbon 
budget for limiting global warming to 1.5 degrees Celsius.\2\
---------------------------------------------------------------------------
    \1\ https://www.ipcc.ch/sr15.
    \2\ https://rmi.org/insight/the-next-industrial-revolution/.
---------------------------------------------------------------------------
    The main challenges in decarbonizing industry are not necessarily 
expensive solutions or the need to develop unknown technology. The main 
challenge is that we have to overcome three fundamental market forces 
that work against the energy transition: (1) maintaining the status quo 
to de-risk investments in long-life assets, (2) commoditizing the 
traded products to enable global competition and reduce the cost to 
consumers, and (3) siloing capital in asset classes, which isolates the 
processes that are in dire need of investments in low-carbon 
technology.
    Overcoming these forces will take a combination of market, 
financial, and policy solutions. Today I will speak about how federal 
policy may be used to address each of these barriers by deploying more 
hydrogen into the industrial sector. When produced using renewable 
resources, hydrogen can play a critical role in decarbonizing this 
sector by replacing many of the fossil fuels the world relies on to 
power the economy. And we have the technology available today to 
produce large quantities of this clean energy source.
    In fact, the US produces and uses hydrogen in its industrial 
economy today. Each year, we manufacture about 10 million metric tons 
of hydrogen, which is equal to about 15% of the global total. Most of 
this hydrogen is manufactured using natural gas and steam as inputs. 
Nearly three quarters of the hydrogen we produce is used in our 
domestic petroleum refining industry; the remainder is primarily used 
in fertilizer production.\3\ There are hydrogen production facilities 
in almost every state in the US. However, scaling hydrogen production 
and use to the level we need to truly decarbonize industry will require 
intervention from policymakers, consumers, and the financial sector.
---------------------------------------------------------------------------
    \3\ https://www.hydrogen.energy.gov/pdfs/
16015_current_us_h2_production.pdf.
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    How much more hydrogen do we anticipate we will need to decarbonize 
industry? According to expert analyses by the International Energy 
Agency,\4\ the Energy Transitions Commission,\5\ and Shell,\6\ this 
pathway requires the world to produce and use about 600 million metric 
tons of hydrogen per year by 2050. This is almost ten times the amount 
of hydrogen produced today. And to reach this level, production needs 
to steeply increase in the next decade and then continue to grow at a 
steady rate.
---------------------------------------------------------------------------
    \4\ https://www.iea.org/etp/publications/etp2012/facts/
widerbenefitsof2ds/.
    \5\ https://www.energy-transitions.org/mission-possible.
    \6\ https://www.shell.com/energy-and-innovation/the-energy-future/
scenarios/shell-scenario-sky.html.
---------------------------------------------------------------------------
    For hydrogen to play an essential role in decarbonizing industry, 
policymakers must focus on providing conditions that (1) stimulate 
rapid and wide-scale hydrogen production and its uptake as the primary 
fuel source for major industrial fuel consumers, including heavy 
manufacturers and heavy transport; and (2) enable a transition from 
fossil fuel-based hydrogen production to production that is based on 
renewable energy sources.
    As mentioned earlier, right now most hydrogen is produced for use 
in the petrochemical sector, and most of it is produced using natural 
gas as a feedstock in a process called steam methane reforming (SMR). 
Unfortunately, SMR also produces a lot of carbon dioxide emissions. So, 
while there is capacity to ramp up production at these facilities, 
without carbon capture and storage (CCS), this production pathway 
cannot play a long-term role in industrial decarbonization using 
hydrogen.
    SMR can, however, be part of the hydrogen story in the near term, 
in much the same way that our current fossil fuel-dominated power grid 
is part of the story for electric vehicles (EVs). EVs currently run on 
power provided by a mix of sources. The market for EVs is rapidly 
developing as more and more consumers demand them; simultaneously the 
electricity grid is becoming cleaner, and therefore EVs are running on 
greener power. In much the same way, SMR production can get more 
hydrogen to market and increase its uptake by driving down prices, 
while at the same time lower-emission hydrogen production methods 
displace SMR hydrogen production.
    Currently, the commercially available alternative to SMR is 
hydrogen produced through electrolysis: grid-based electricity is used 
to split water molecules into hydrogen and oxygen. Just like EVs that 
run on grid-based power, this hydrogen is as ``clean'' as the electric 
power used to produce it. The more renewable electricity available to 
power hydrogen production, the more quickly the industrial sector can 
move into a decarbonized, hydrogen-based future.
    To scale up hydrogen production as quickly and broadly as needed, 
federal policymakers can play a key role in stimulating the growth of 
the market by (1) reducing the risk associated with investment in large 
hydrogen production operations, and (2) helping kick-start regional 
hydrogen markets. Policy solutions could include the following:
           Policy or financial incentives/mandates for low-
        carbon hydrogen production, including natural gas-based 
        production that includes CCS;
           Government procurement policies that require 
        sourcing of hydrogen to power government operations;
           Policy or financial incentives/mandates to increase 
        hydrogen uptake by industrial users, ensuring that SMR-based 
        production includes CCS;
           A shift of federal subsidies away from oil 
        exploration and development and toward investment in hydrogen 
        infrastructure, which includes hydrogen production facilities 
        and the transportation and distribution infrastructure needed 
        to expand delivery routes to industrial users;
           Investment in infrastructure or investment loan 
        guarantees for hydrogen transportation and distribution 
        infrastructure to expand delivery routes to industrial users;
           Feed-in tariffs and tax credits to stimulate 
        hydrogen production and deployment of more renewable 
        electricity sources to the electricity grid;
           Investment support programs to reduce the costs 
        associated with fuel-switching at industrial facilities;
           Safety regulations governing hydrogen production, 
        transport, and use, similar to those for fossil fuel markets;
           Investment in research and development for new, 
        sustainable hydrogen production pathways;
           Policy or financial disincentives for industrial 
        facilities to use carbon-intensive resources such as coal or 
        natural gas;
           Policy or financial disincentives for investment in 
        carbon-intensive electricity generation; and
           Border adjustments for imported products in energy-
        intensive, trade-exposed industries that are manufactured using 
        carbon-intensive pathways.
    In summary, federal policymakers have a number of tools in the 
toolkit to reduce investment risk in hydrogen production and grow the 
market to the scale necessary to decarbonize industry. And the good 
news is that many of these tools have been applied to great effect in 
similar markets. For example, the solar investment tax credit has 
enabled that industry to expand at an annual growth rate of 50% since 
2006, which has brought the price of solar power down dramatically and 
facilitated deployment of thousands of megawatts of clean electricity 
onto our nation's power grid. Today, we have the same opportunity with 
hydrogen. If we are truly serious about decarbonizing industry, 
hydrogen will be a critical part of the solution.

    Ms. Castor. Outstanding. Thank you to all of you for your 
very helpful testimony.
    At this time I would like to recognize Ms. Bonamici for 5 
minutes for questioning.
    Ms. Bonamici. Thank you very much, Chair Castor. Thank you 
for the accommodation.
    Thank you all for your very enlightening testimony.
    According to the Intergovernmental Panel on Climate Change, 
limiting warming to 1.5 degrees Celsius above preindustrial 
levels would require unprecedented rates of transformation in 
many areas, including the energy and industrial sectors.
    So we know that the industrial sector is notorious for 
being challenging to decarbonize. It is going to require both 
reducing the demand for energy, by improving efficiency of 
industrial production, and eliminating additional emissions 
from the industrial processes. So it is really a two-part step 
there.
    In northwest Oregon, the district I am honored to 
represent, the industrial sector is turning to mass timber as 
an alternative to steel and concrete. Cross-laminated timber, 
when harvested using sustainable forest practices, can 
sequester and store massive amounts of carbon dioxide.
    First Tech Federal Credit Union in Hillsboro, Oregon, 
recently built one of the largest CLT structures in the 
country. There are still questions about the lifecycle 
assessments of CLT, but the material raises the possibility of 
storing massive amounts of carbon in buildings for decades, 
perhaps in perpetuity.
    Also in northwest Oregon, we have an affordable housing 
complex called The Orchards, 150 units of affordable housing 
built to passive house standards. It has seen about a 90 
percent reduction in energy used for heating and about a 60 to 
70 percent reduction overall in their energy costs.
    And I wanted to ask you, Ms. Hight, it is my understanding 
that Rocky Mountain Institute Innovation Center is a net zero 
building, meaning that it produces as much energy as it uses in 
a year.
    Are there sufficient incentives for new construction to use 
materials that are less emissions intensive in a circular 
economy model where materials that are extracted, produced, and 
used can be recovered or repurposed or reused more 
thoughtfully? And if not, how could Congress promote these 
efforts to reduce energy demand?
    Ms. Hight. Thank you for the question.
    In fact, I was at our Innovation Center in Basalt last 
week, and something that is so amazing about that building is, 
it is in Snowmass, Colorado, which is one of the harshest 
environments in the U.S., and it has no HVAC system and it has 
a very limited, small heating system. We actually have sort of 
a square on the ground for where the HVAC would have gone. So 
it is quite an extraordinary building, and I encourage all of 
you to visit it whenever you are in the area.
    So there are a number of different opportunities for really 
stimulating the sort of construction that you are talking about 
in Oregon. Some of the things that my building colleagues have 
shared with me, since this is not my area of expertise, is 
really thinking about how we can set some clear Federal targets 
for building sector greenhouse gas emission reductions.
    So this would be targets related not only to the greenhouse 
gas emissions that are emitted by the buildings themselves when 
they combust things but also the energy use at those buildings. 
Building codes and clear guidance for States to require all new 
construction to be all electric and zero carbon as well. Tax 
incentives to stimulate investment and efficiency upgrades for 
existing buildings.
    So recognizing that not everything is going to be brand 
new, we need to retrofit some of the existing buildings as 
well.
    Appliance standards, and, of course, investment in research 
and development so that we can really develop new technologies 
like the ones you cited in Oregon with the laminated timber.
    Ms. Bonamici. Right. Thank you so much.
    And that leads me, research and development leads me to a 
question to Mr. Crabtree.
    In your testimony, you discuss the value of strengthening 
investments in research and development, demonstration, and 
deployment of carbon capture utilization, storage, and removal, 
CCUS technologies. I have been on the Science, Space, and 
Technology Committee throughout my time in Congress, and we 
have spent a significant amount of time talking about the value 
of research and development, including in CCUS.
    So can you discuss how we can get this technology closer to 
market deployment and avoid that sort of commercialization 
valley of death that can happen? How can we accelerate the 
widespread use of CCUS?
    Mr. Crabtree. Representative Bonamici, thank you for the 
question. It is a very good question. And your committee, the 
Science Committee, the House Fossil Energy R&D Act is actually 
something endorsed by the Coalition.
    The essential, especially in the industrial sector, if you 
take the top three, globally, sectors responsible for carbon 
emissions, steel, cement, and basic chemicals, in that order, 
the steel plant in the United Arab Emirates is the only 
facility in the world operating at commercial scale right now. 
So it is really important that in addition to the 45Q tax 
credit, which is a deployment incentive, that we have both a 
larger program of RDD&D, but also that we prioritize some of 
these key sectors for which we do not yet have the commercial 
deployment.
    And the legislation that just passed out of your committee 
takes us a big step in that direction, but that valley of death 
is the result of having a very good R&D program up to the point 
where a company or a project developer wants to put that 
technology into the marketplace at commercial scale and then 
Federal policy drops off the cliff, until that point where they 
somehow magically are able to develop the technology and then 
they can use a tax credit.
    And so I think, especially in Federal RDD&D, we need to 
bring the demonstration back into it and increase resources for 
later stage demonstration of those technologies.
    Ms. Bonamici. Thank you so much.
    I see my time has expired. I yield back.
    Thank you, Chair Castor.
    Ms. Castor. Thank you.
    Ranking Member Graves, you are recognized for 5 minutes.
    Mr. Graves. Thank you, Madam Chair.
    Ms. Hight, I appreciate you bringing up the issue of sort 
of this whole chain and ensuring that we quantify emissions 
from start to finish. And oftentimes folks look at just one 
component.
    If we carry out policies in the United States that are 
uncompetitive, and if manufacturing migrates to China as we 
have seen in many, many cases, in general, based on what we 
have seen, does that result in a greater emissions profile or a 
lower emissions profile as compared to manufacturing in the 
United States?
    Ms. Hight. Well, I would argue that in particular with 
hydrogen, we have a huge opportunity to carve out a new 
competitive industry in the U.S.
    Mr. Graves. And I got that in your testimony and certainly 
do appreciate it and think it needs to be part of our solution.
    But right now, as we see the migration, the migration that 
has occurred, looking at kilowatt hour emissions in China 
compared to the United States, transportation emissions, and 
things along those lines, are we better off producing 
domestically or importing from China?
    Ms. Hight. Well, given that we are not taking into account 
the carbon footprint of the goods that we are importing 
currently, I think that we are better off manufacturing in the 
U.S. using green production processes, including use of 
hydrogen and some of the technologies discussed today.
    Mr. Graves. Thank you.
    And I would actually say, if you look at statistics, you 
will note that not just with green practices, just by flatout 
comparing apples to apples, manufacturing in the United States, 
manufacturing in China, looking at their fuel sources, looking 
at our fuel sources, emissions profile to emissions profile, 
and of course transportation emissions to transportation 
emissions, you will find over and over again that we have lower 
emissions in the United States for the same widget as they do 
over there. And so I think it is an important point to make.
    Mr. Crabtree, you talked a good bit about carbon capture 
storage, and certainly it is great seeing the United States 
playing a role in that technology.
    Would you consider the United States to be a leader in 
carbon capture technology in terms of R&D, or are we somewhere 
behind others?
    Mr. Crabtree. I would consider the United States the world 
leader not only in R&D, but also deployment.
    Mr. Graves. And what role do you believe that plays in our 
long-term objective of reducing emissions and hitting targets 
that have been established?
    Mr. Crabtree. Well, so I think the modeling that is perhaps 
clearest in suggesting the role that carbon capture needs to 
play in meeting midcentury decarbonization is the IEA, the 
International Energy Agency modeling which looked at the two-
degree scenario and concluded that between now and 2050, a 
full--nearly 15 percent of all emissions reductions need to 
come from carbon capture, and by 2050 it needs to be up to 20 
percent annually. Nearly half of that needs to come from 
industrial sources.
    Mr. Graves. Great. Thank you very much.
    Dr. Gregory, I was laughing whenever you were talking about 
concrete and cement. My father is an engineer. My entire life, 
if we misused the terms cement or concrete or interchanged, it 
was like nails on chalkboard to him. He couldn't--he was like, 
``No, no, stop!''
    Dr. Gregory. My kids don't make that mistake either, 
anymore, anymore.
    Mr. Graves. Thank you for being here.
    You made mention earlier about access to natural gas, and I 
might have screwed up a little bit exactly what you said. What 
role does access to natural gas for some of the concrete 
industry folks play in emissions strategies as we move forward, 
I guess now and as we move forward?
    Dr. Gregory. Sure. For cement plants, the temperatures they 
need to reach in order to make cement is 2,700 degrees 
Farenheit. And so right now they are using entirely fossil 
fuels. And so that is either coal or natural gas sources.
    Certainly natural gas is the lower CO2 option 
out of both of those. So having good access to natural gas is 
important for those plants.
    Mr. Graves. Thank you.
    And so whenever policies are carried out that are 
obstructing natural gas infrastructure, preventing pipelines 
from being built, what happens?
    Dr. Gregory. I think that will play a role in the 
development of new plants. For existing plants, the short 
answer is I think it loses an opportunity in order to lower 
CO2 emissions with cement plants.
    Mr. Graves. And if we stop producing these resources 
domestically, what happens?
    Dr. Gregory. The natural gas or the cement?
    Mr. Graves. Cement. I am sorry.
    Dr. Gregory. Then we would have to get it from other 
countries.
    Mr. Graves. And going back to my question to Ms. Hight, 
what is your understanding of emissions profile when it is 
produced in other countries and sent here versus produced 
domestically?
    Dr. Gregory. There is a whole range. But if you look at 
China, which makes more cement than the rest of the world 
combined--they make over 50 percent and the U.S. makes about 2 
percent of the world's cement emissions--generally they have a 
higher carbon footprint associated with production of cement 
than the U.S. does.
    Mr. Graves. So would you agree with the statement that from 
end to end, if we produce that cement domestically, that you 
are going to have a lower emissions profile than we would if we 
were to, again, end to end, have it manufactured in China and 
sent here?
    Dr. Gregory. That is correct.
    Mr. Graves. Thank you.
    Madam Chair, yield back.
    Ms. Castor. Ms. Brownley, you are recognized for 5 minutes.
    Ms. Brownley. Thank you, Madam Chair.
    Dr. Gregory, in your opening statement you talked about 
some solutions towards sustainable development, and you talked 
about measurement and reporting, you talked about performance-
based standards.
    Is there any example of that within the United States or 
outside of the United States where that is working well and 
proving productive?
    Dr. Gregory. I think a good first step has been in the LEED 
green building standards. There are points that projects can 
get for using products that have what is called an 
environmental product declaration, which is essentially a 
measurement of the footprint of that building product. And the 
whole idea behind that was to get firms to start measuring this 
and then use that as an incentive for that to be used in a 
project.
    The challenge has been there is no decision that is 
actually made based on the reporting of that information. They 
are just trying to get those reports done.
    And so concrete is actually--it seems very simple, you 
know, I mentioned it just has those few different ingredients, 
but you can combine them in almost infinite ways to get 
different performance.
    So the next step of actually making decisions based on 
those EPDs has proved much more challenging. And so there has 
been legislation that is proposed in a couple of States, 
California and Washington. They haven't included concrete 
because of this need to shift to more performance-based 
specifications.
    So there is a lot of discussion about how you actually 
implement that that we are involved in, and so there are some 
opportunities, but nothing that is really implemented yet to 
say let's make decisions based on performance-based 
specifications in government projects yet.
    Ms. Brownley. Thank you.
    And, Mr. Crabtree, you also referenced successful policies 
from other places with regards to carbon storage and carbon 
capture. Can you point to any of those specifically?
    Mr. Crabtree. Representative Brownley, thank you for the 
question.
    Actually I think overseas the examples of commercial 
demonstration are very compelling. The Section 45Q tax credit, 
as reformed by Congress last year, is widely considered the 
best incentive available today in the world for carbon capture. 
In New York this week, there were international leaders talking 
about 45Q, and they were talking about carbon capture.
    That said, there are specific funds, for example, the 
ArcelorMittal steel plant that we visited in Belgium, they are 
accessing EU funds to support not only the demonstration of 
production of ethanol from waste emissions, which is an 
extraordinary thing, but also very specific decarbonization 
opportunities in their integrated steel mill process that 
aren't related to carbon capture.
    And I think that gets back to your colleague's previous 
question about that valley of death. If there is a real gap, we 
need to improve our incentives, but we also need to provide 
more direct resources, I think this has been said by others, 
cost share and other support for the specific demonstration of 
core technologies that we are going to have to sector by sector 
to decarbonize.
    Ms. Brownley. And so if the United States decided that we 
were going to fully deploy a carbon capture infrastructure 
nationwide--so, I mean, what do you see are some of the 
barriers, particularly as it relates to permitting and other 
regulatory changes that would have to happen?
    Mr. Crabtree. Well, so if you are talking about the 
infrastructure to create a truly national system of 
CO2 pipelines, we have a pretty successful history 
of building pipelines to date, over 5,000 miles in various 
systems, regional systems so far. I do believe that as we 
deploy in States with larger proportion of Federal lands, it is 
challenging to build linear infrastructure on Federal lands.
    And the USE IT Act doesn't change any Federal statutes, but 
what it does do is it would bring together States, Federal 
agents, land agencies, States, Tribes, and key stakeholders, 
industry, environmental advocates, and others, to try to work 
proactively to think through the siting of pipeline 
infrastructure and try to accelerate the process of siting 
that.
    I would say that the bigger challenge of building a 
national network to move CO2 at the scale needed to 
address the climate challenge is we need a Federal role in 
financing extra pipeline capacity to build out that system in 
parts of the country that do not yet have it.
    Ms. Brownley. Thank you. Thank you for that.
    And last question before my time is up.
    Ms. Hight, is the cost of renewable hydrogen becoming more 
competitive? And I guess if you could cite is there anyplace 
where hydrogen is being used where it is cost competitive 
compared to other energy sources?
    Ms. Hight. Yeah. Thank you for the question.
    So hydrogen is still more costly than other fuels today, 
especially transportation fuels. But when you think about it, 
hydrogen is three times as energy intensive as gasoline. So it 
translates to roughly a price of about $5 a gallon for a 
kilogram of hydrogen. So it is still more expensive, but not 
prohibitively so.
    And this sort of chicken or the egg problem I talked about 
before, about needing to sort of stimulate the market in order 
to bring that price down, is a key solution.
    In terms of renewable hydrogen, there are places in the 
U.S. today, including the State of Texas, where I hail from, 
where there is renewable hydrogen that is able to produce from 
renewable wind power, which is at an affordable cost, and they 
are deploying that.
    Ms. Brownley. Very good.
    Thank you, Madam Chair. I yield back.
    Ms. Castor. Mr. Griffith, you are recognized for 5 minutes.
    Mr. Griffith. Thank you very much. I appreciate it.
    Let me state up front, I am all for research and making 
sure that we are researching everything that we can. I do think 
we need to have some research parity so that we have our fossil 
fuels and our renewables both being researched at a high level.
    Would you agree with that, Dr. Gregory?
    Dr. Gregory. Do you mean--what kind of research?
    Mr. Griffith. Dollars, dollars.
    Dr. Gregory. Research on what aspects of fossil fuels?
    Mr. Griffith. Oh, what we can do to make it cleaner, make 
better. And all kinds of research.
    Dr. Gregory. Sure. Yeah.
    Mr. Griffith. And the reason I bring that up is, is that we 
have got a number of things that I have been interested in over 
the years. I have a professor at Virginia Tech who has been 
working on trying to figure out how you extract rare earth 
minerals out of coal. As a result of that, they figured out how 
to do some other things.
    They are not quite ready for primetime on the rare earth, 
but they have sold the technology to some Indian steel mills, 
because what they have done is they have been able to make it 
so that the carbon that they are mining in India, out of their 
coal, can be used for steel production at a better rate and 
they have lowered the carbon footprint or they are lowering the 
carbon footprint at these steel mills, and that makes a lot of 
sense to me.
    We also have chemical looping which is, again, not quite 
ready for mass production. But the cost of--we were talking 
about carbon capture and sequestration--the cost there, about 
60 percent of it is the capture. Chemical looping reduces that 
cost and you automatically just have the CO2 that 
you are getting, as opposed to having to try and separate 
everything else.
    And then we have a technology that is being developed also 
in conjunction with a company in my district and Virginia Tech 
where they have--and I will have to see if I--make sure I get 
the language right here--but they have exhaust gas enters--this 
would be MOVA Technolgies--exhaust gas enters the filter full 
of various chemicals, it passes through a series of chambers, 
each filtering out one pollutant. When it is finished, the gas 
is cleaner and the chambers each contain just one material, 
which then allows them to use those materials to be recycled 
into our industrial systems and again reducing the overall 
carbon footprint.
    It takes money to get these kinds of researches from the 
drawing board or these technologies from the drawing board to 
the finished product. Wouldn't you agree, Dr. Gregory?
    Dr. Gregory. Absolutely.
    Mr. Griffith. And then last, but not least, Dr. Gregory, in 
your testimony you said that unfortunately the current Clean 
Air Act New Source Review program, as interpreted by the courts 
and some prior administrations, actually penalizes companies 
for increasing the efficiency of its facilities. And this time 
I am going to have to agree with you. And I have a bill to fix 
that.
    Because what happened was, when they created the New Source 
Review in 1977, they picked up--or when they added that to the 
Clean Air Act--they picked up language from another section of 
the code, identical language.
    Unfortunately, the EPA has interpreted those two sections 
differently. And what happens--and most people don't realize 
this--what happens is companies don't know what the term 
``modification'' means because of its different 
interpretations.
    And whether they are right or they are wrong--I have a 
furniture company--I am sure this applies to cement, too--but I 
have a furniture company in my district--and some of the 
members of the committee have heard this story before, but it 
is a real life example--where they have a conveyer belt that 
probably stretches about the length of this room that they no 
longer need. But the furniture goes all the way out to the end 
of the conveyer belt and comes back, because at one point in 
time they had a paint or lacquer process at the end of the 
conveyer belt.
    They are afraid to change the conveyer belt and become more 
efficient because they are afraid it would trigger the entire 
facility having to be placed under New Source Review and be 
totally modified, where currently they don't have that problem. 
So they deal with the inefficiency.
    Is that true in the cement industry, as well, and concrete?
    Dr. Gregory. It is a similar thing, where companies want to 
be able to invest in energy efficiency improvements but are 
concerned about what other things that that triggers.
    Mr. Griffith. Yeah. And, unfortunately, one of my 
colleagues in one of the hearings we had on the Energy and 
Commerce Committee said: I thought by now we would have gotten 
this problem resolved.
    And I looked at him, and I thought: You know, what you 
don't realize is, if we could take one bite of the apple at a 
time, over the course of 10 or 15 or 20 years you probably 
would have a lot of this resolved.
    But when you are a company and you are looking at having to 
swallow that apple whole, you decide you can't start because 
you don't have the resources or the ability to finish. Is that 
something you have run into as well?
    Dr. Gregory. It is the same situation, just like you said, 
where trying to make simple improvements in energy efficiency 
can often have unintended consequences. So, yeah.
    Mr. Griffith. So I think one of the things that we should 
do in this committee is try to look at things like that, 
because there are things we can do. We all want to make the air 
cleaner. There are things that we can do, that we can 
accomplish to do that where Democrats and Republicans can come 
together in a bipartisan way and make our environment better 
and keep our economy strong.
    I appreciate it very much, and I yield back.
    Ms. Castor. Mr. Casten, you are recognized for 5 minutes.
    Mr. Casten. Thank you, Madam Chair.
    You don't have to spend more than about 30 seconds 
understanding the CO2 issues we are facing to know 
that we have got to get to zero CO2 yesterday. The 
hard question is, how?
    And I am delighted to have this panel, because if you are 
really honest about the ``how'' question, you have to sail into 
the fact that there are things like fertilizer, like cement, 
like steel, like silicon that we do not know how to make 
without using fossil fuels right now, and we need to focus on 
that. So thank you for being here.
    And, oh, by the way. I don't know how to make a solar panel 
on a concrete pad without steel and silicon.
    I was proud to introduce H.R. 4230, the Clean Industrial 
Technology Act, specifically to stand up an agency at the 
Department of Energy to do that research, to put about $650 
million in the deployment, cosponsored with Representative 
McKinley and Chairwoman Johnson in the House.
    I am pleased to report that the Senate, the version that is 
led by Senators Whitehouse and Capito, passed out at committee 
yesterday. So we are moving along. And anybody, please, 
cosponsors, we are pushing forward over here.
    I want to start, though, with a question about barriers, 
because a lot of what we are talking about here is R&D. But a 
lot of times, Mr. Gardiner, I know you know this well, we don't 
do the right thing because there are regulatory barriers to 
existing technology.
    So can you help me out a bit, Mr. Gardiner? You suggested 
the need for greater information about how combined heat and 
power and waste heat and power could be utilized. These are 
long questions, but I want to start simple and encourage you to 
follow up with more information, if we can.
    When you design a combined heat and power plant you have an 
almost infinite degree of flexibility with the ratio of heat to 
power that you use in the system. It is easy to do a 25 
megawatt power plant if I can have equivalent efficiencies over 
a huge range of waste heat to recover. The heat is used 
locally, the electricity may or may not be exported, and they 
are subject to wildly different prices.
    Mr. Gardiner, would you agree that there are sometimes 
regulatory barriers that cause you to suboptimize that design?
    Mr. Gardiner. I do. And even more broadly, in some cases, 
never to pursue the combined heat and power project in the 
first place. We have done a lot of research looking at what 
States do and what utilities do in the way of charging what are 
known as standby rates. So you know what these are, 
Congressman, but you have got to be basically, even with a 
combined heat and power plant on your facility, you still need 
to be connected to the grid. And the question is whether you 
should be charged a lot or a little for being connected to the 
grid. And we have discovered in the same States that----
    Mr. Casten. I am sorry, I don't want to be rude, but I want 
to get like 3 or 4 questions. Totally agree. And please provide 
this to us.
    Mr. Gardiner. Be happy to.
    Mr. Casten. Because you know this, I know this, I don't 
think the committee knows it, and let's take more than 5 
minutes to walk through it. But a list of those barriers, and 
if you have any estimate of what cost we impose economically 
and environmentally by that suboptimization nationally, because 
I think those are big numbers.
    Mr. Gardiner. They are.
    Mr. Casten. Second piece. You talked about combined heat 
and power versus waste heat to power. In the old days we called 
them bottoming and topping cycles. Terms change, it is the same 
idea.
    When you build a waste heat to power project on the top of 
an industrial smoke stack or elsewhere, what is the marginal 
fuel use?
    Mr. Gardiner. Zero, because you are basically taking waste 
heat from, let's say, a factory, that would otherwise just go 
off into the atmosphere, you are capturing it and you are 
turning it into productive power. So not only is there no 
additional fuel required, there are no additional emissions. So 
you are getting a lot of electricity.
    In some cases--there is a project I am aware of at an 
ArcelorMittal in northwest Indiana----
    Mr. Casten. And, I am sorry, this is going to be quick, I 
am going to be quick again. Is it safe to say that those 
projects are functionally equivalent to traditional renewable 
energy generation?
    Mr. Gardiner. From their emission standpoint, yes.
    Mr. Casten. Do they have access to the same incentives that 
traditional renewable generation has?
    Mr. Gardiner. They do not. They don't even have--waste heat 
to power doesn't even have access to the investment tax credit, 
which is available to combined heat and power. Congress in some 
way did not insert those words actually in the Tax Code.
    Mr. Casten. Please share that information with us as well.
    I want to pivot in the little time I have left, Dr. 
Gregory, and this may be an opportunity for both of you, I may 
have teed up a sales opportunity for you.
    We recently had a field hearing out at NREL in Golden. NREL 
has a huge facility. They have got wind turbines, they have got 
solar panels, they have got all this neat stuff, and they are 
integrating and showing how to integrate the grid.
    Right at the edge of their property there is a little 
cement plant. You mentioned that runs about 2,700 degrees at 
the inlet, I think the waste heat is around 600 or so, roughly?
    Dr. Gregory. Sound about right, yeah.
    Mr. Casten. Mr. Gardiner, can you make power with 600-
degree heat?
    Mr. Gardiner. Yes.
    Mr. Casten. I encouraged my friends at NREL to consider 
reaching out to some people who might know how to do that, 
because I think that having 24/7 renewable energy would be a 
pretty nice thing to have there.
    And I see I am now out of time. So thank you very much. And 
I yield back.
    Ms. Castor. Thank you for making the most of your time, Mr. 
Casten.
    Mr. Carter, you are recognized for 5 minutes.
    Mr. Carter. Well, thank you, Madam Chair.
    And thank all of you for being here. This is certainly very 
important, industrial output and how it relates to our climate 
and to our environment.
    I wanted to ask you, Dr. Gregory, I really appreciate your 
perspective on the lifecycle perspective and your explanation 
of that and how we should be looking at it throughout the whole 
process and the lifecycle carbon output. And I appreciate that, 
especially looking at it from that perspective.
    You mentioned in your testimony that there are Federal and 
State laws that discourage the use of many of these lower 
carbon alternatives. And can you describe a couple of those for 
me?
    Dr. Gregory. I don't know that they explicitly discourage 
it, but they don't actually really provide much incentive to 
use them at all.
    Mr. Carter. Okay. Fair enough. Fair enough.
    I am very interested in biomass. I am from Georgia, the 
number one forestry State in the Nation, and biomass is a big 
part. We have got quite a few plants in our district. And I 
wanted to ask you about that. An alternative like biomass, what 
about that?
    Dr. Gregory. That could play a critical role in being used 
as a form of alternative fuel in cement plants. So instead of 
using the coal or natural gas to heat up that kiln to 2,700 
degrees, biomass or other kinds of waste materials could be a 
critical way to essentially be like a zero carbon source of 
fuel. So that is really important.
    Mr. Carter. Are there any plants that are doing that?
    Dr. Gregory. There are. In the U.S., the current challenge 
is that there are often limitations on the maximum amount of 
alternative fuels that can be used. So, for example, usually in 
the U.S. it is capped at about 15 percent, whereas in Europe 
and other parts of the world they are using 35 percent or more. 
And a lot of that has to do with these tensions between the use 
of those alternative fuels and the Clean Air Act or RCRA.
    And so basically those are opportunities to modify both of 
those in order to encourage more use of alternative fuels 
because that can definitely be done in a way that preserves 
clean air while still lowering the carbon footprint of 
producing the cement through the use of alternative fuels.
    Mr. Carter. Okay.
    Mr. Gardiner, in your opening comment you made, and I just 
caught the tail end of it, so forgive me if I am getting this 
wrong, but you said biomass used under the right circumstances. 
Can you elaborate on that?
    Mr. Gardiner. Yeah. I think that there are a couple of 
issues that one has to think about. We have actually got a 
project underway to look at the carbon accounting associated 
with combusting biomass, because when you burn biomass there 
are greenhouse gases that go up into the atmosphere right away.
    The upside is that they are going to be recaptured at some 
point back into other trees and things that are growing. That 
doesn't necessarily happen right away.
    So that is an example of an issue that has to be thought 
through. I think there are plenty of sources of biomass where 
that is not an issue, but it is a complex issue that needs to 
be sorted through.
    So we want to be sure that--we, in fact, have worked with 
Procter & Gamble, that did a project in Georgia recently on 
biomass that I think they feel very strongly about. I just was 
talking with them this morning about it. And I think they are 
opportunities for biomass to produce renewable heat, which is 
what they were looking for in the context of their production 
plant in Albany.
    Mr. Carter. Do you see it as part of the portfolio of the 
future of clean fuel?
    Mr. Gardiner. Biomass?
    Mr. Carter. Yes.
    Mr. Gardiner. Yes. It is already a gigantic portion of the 
portfolio for renewable heat. It is today the leading source of 
renewable heat in the world. I think it is 75 percent or 
something on that order.
    So it is big. I think there are lots of questions about how 
big it can be, given the scale of what we have to do on climate 
change. How much biomass is really out there that is available? 
And how far can we go? I think those are important questions 
that need a lot more attention and focus.
    Mr. Carter. Dr. Gregory, any disagreement with that?
    Dr. Gregory. No. No.
    Mr. Carter. Let me move on, because I suspect I may get 
some at one point.
    Mr. Crabtree.
    Mr. Crabtree. I just wanted to add, in addition to the 
opportunities with renewable heat and combined heat and power, 
if you are using a biomass feedstock to produce energy and you 
are capturing CO2 on the back end, you have the 
potential to create an energy system with negative emissions, 
and that could be a very valuable way for decarbonizing 
industry if that energy is supplying an industrial process.
    Mr. Carter. Great.
    Ms. Hight.
    Ms. Hight. Sure. Biomass has a lot of hydrogen in it, so 
you break those hydrogen bonds, you make hydrogen energy.
    Mr. Carter. Great. Great. Good. I like this panel. We need 
to invite them back. Good.
    Well, thank you very much. I appreciate your input. Biomass 
is extremely important. As I mentioned, Georgia is the number 
one forestry State in the Nation, we have sustainable forests 
where we are replanting as we cut these trees down. It is a 
byproduct, if you will, of the process by which we use. So I am 
just really high on it. So thank you very much. Really high in 
the sense that I am really----
    Ms. Castor. Okay. I got that. That is a different biomass.
    And it is appropriate now to go to Mr. Neguse from 
Colorado.
    Mr. Neguse. Thank you, Madam Chair. I am sure that is 
coincidental, of course. Representative Carter enjoyed some 
time in Colorado recently for a field hearing that we had in 
Boulder. So you can pardon the faux pas there.
    Thank you, Madam Chair, for holding this hearing.
    And thank you for the witnesses. Just very informed, well-
informed panel, and very thoughtful discourse and discussion 
today.
    And of course, in Colorado, I represent the Second 
District, Boulder, northern Colorado, Fort Collins, and the 
central mountains. We have a number of businesses that are 
engaged in some really cutting-edge technology, some of which 
you all have described.
    One in particular is a very local small business in Boulder 
called Cool Energy, which is a Boulder-based company that has 
developed a sterling engine that converts waste heat to 
electricity to create emission-free power.
    So I just want to give a chance to you, Mr. Gardiner, just 
to kind of expound a little bit more on your exchange with my 
colleague from Illinois with respect to what else you think the 
Federal Government might be able to do to kind of incentivize 
and create an environment in which these kind of technologies 
can continue to advance and grow.
    And I would say one example that you cited, the 45Q issue, 
we are working on a piece of legislation emulating some of what 
Senator Carper had proposed in the last Congress, a bipartisan 
bill on that front.
    But just give you a chance to expound further.
    Mr. Gardiner. Sure. Thank you very much.
    I would say one of the biggest problems is that markets 
don't often reward these technologies for all the benefits they 
offer. If you reduce carbon emissions, nobody is paying you 
anything for that.
    And so I think there is an important role for the 
government to step in and to help create the incentives that 
can't necessarily always replace all of that, but can make a 
step in the right direction.
    So for combined heat and power, and I think we have seen 
this in other technologies that are zero or low carbon, the Tax 
Code has been an important thing. There is an existing 
investment tax credit on combined heat and power, and I think 
that is a helpful financial incentive that helps make up for 
the fact that combined heat and power and waste heat to power 
deliver very low emissions, but the market has no way of 
rewarding them for that.
    So I definitely think the Tax Code, a very good place to 
look. And not only is there an existing credit, but I think 
there are proposals to do things like let the master limited 
partnership provisions apply to things like combined heat and 
power or waste to heat power, which could be an interesting new 
approach.
    Mr. Neguse. Thoughts from other folks on the panel?
    No.
    So, Ms. Hight, just with respect to the work that you do--
and, of course, we are thrilled to be able to have one of your 
installations actually in Boulder, Colorado, and so happy to be 
able to hear from you today.
    As was mentioned, we were in Colorado earlier this year for 
a field hearing that our wonderful chair and fearless leader so 
graciously hosted in Colorado for us. And one of the places we 
went to was NREL, which is just some really incredible 
technologies that they are working on to reduce emissions, 
including hydrogen in the H2@Scale program, which I know, Ms. 
Hight, you will be familiar with.
    So wondering if you can kind of, dovetailing with the 
exchange with Mr. Gardiner, if you could perhaps expound on 
what we could do at the Federal level to better incentivize the 
renewable energy development of renewable hydrogen?
    Ms. Hight. Sure. Thank you for the question. And, yes, I 
think Colorado is very proud to have NREL just down the road 
from us in Golden, and it is a really amazing facility.
    There are a number of things the Federal Government can do. 
I think it comes down to sort of the chicken or the egg, again, 
I am going to come back to that, right, sort of stimulating 
demand, stimulating supply of hydrogen.
    We have the tools available today. We are producing 
hydrogen today, quite a lot of it in the Gulf Coast in Texas. 
We are producing them mostly from natural gas. We need to take 
advantage of that production, expand the amount of hydrogen we 
are producing, while also deploying additional renewables to 
produce more renewable hydrogen.
    The more of this makes it to market, the price comes down. 
And then on the supply side, you work to stimulate uptake by 
the big industries who can use it as a replacement to their 
fossil fuels.
    So I think we really need to look at both halves of the 
equation with a mix of incentives and mandates to get more 
renewable energy onto the grid in particular.
    Mr. Neguse. Thank you.
    With that, I yield back the balance of my time.
    Ms. Castor. Thank you very much.
    Mr. Armstrong, you are recognized for 5 minutes.
    Mr. Armstrong. Thank you, Madam Chair.
    And I am just going to start with I wish more people 
watched these hearings, because this is kind of how Congress is 
supposed to work, I think. And we will have plenty of things to 
fight about as we go through, but in all honesty, I think that 
is really appreciated.
    I will say to Ms. Hight that Mr. Crabtree and I might argue 
with you on the harshest climates in the U.S., which is going 
to be a nice segue into Project Tundra. And I know that is not 
necessarily why you are here, but I want to talk about North 
Dakota, because it is probably--it has the ability to be the 
first zero-emission coal plant in the United States.
    And also for my friend from Virginia, he will be happy to 
know there is research going to it. DOE offered $9.8 million 
just recently to start this project.
    So, Mr. Crabtree, you do--I would call you Brad and you can 
call me Kelly, but I am not sure we can really do that--you 
address carbon as essential in managing industrial emission and 
to meet climate goals. In North Dakota, Project Tundra is this 
initiative. Innovative technologies are being researched to 
retrofit existing plants, and I know you have a ton of 
background in coal as well, and capture over 92.
    While these initiatives show that carbon capture 
utilization and storage is technically viable, how do we make 
these technologies economically and commercially viable?
    Mr. Crabtree. Well, so in the case of--obviously, this is a 
hearing on industrial emissions, but retrofitting coal-fired 
power plants for carbon capture is relevant because of the 
energy intensity of industrial processes and the need for 24/7 
large amounts of energy all the time.
    And we have the example of Petra Nova near Houston, which 
is--it was the second fully commercial carbon capture project 
on a coal-fired power plant in the world, is now the largest, 
and it was built on time and on budget.
    With the project in North Dakota, in terms of making it 
financially viable, right now they are doing the feed study, 
that is where the DOE funding came in. What would really be 
helpful to that particular facility and several more in the 
country right now is there is about $2 billion sitting in the 
48A tax credit program that Congress has already allocated.
    And because of the criteria, the statute, initially it was 
for energy efficiency at power plants, and then Congress, I 
think wisely, added carbon capture later to the statute, but 
they didn't adjust the energy efficiency metric. And when you 
equip a power plant with carbon capture, obviously it takes 
power to run the carbon capture systems, and you can't then 
meet the energy efficiency requirement in the law.
    The irony of this is that the emissions reductions that 
would come from retrofitting the power plant for carbon capture 
vastly exceed the emissions reductions from the energy 
efficiency requirement.
    So I would argue it is important for North Dakota, but in a 
global context, if we could retrofit three or four coal-fired 
power plants with this $2 billion in available resources in the 
48A tax credit, that would be of global significance in 
addressing climate change.
    Mr. Armstrong. Thank you.
    So I am going to go back to that, too, because the first 
time I ever saw this was actually in Weyburn and up there and 
that was going to be used for enhanced oil recovery.
    And I think--and you would be the expert on this--but there 
is a difference between capture and deployment, right? I mean, 
when Weyburn was originally designed, they were going to store 
the carbon, and then they were going to utilize the carbon for 
enhanced oil recovery. And unless it has changed a whole lot, 
that doesn't work really well, because you were talking about 
pipelines earlier and how we deal with that.
    So, I mean, is the technology increasing on storing carbon 
versus then deploying it for other uses?
    Mr. Crabtree. So it is technically feasible to withdraw 
CO2 from a reservoir once you have injected it. And, 
of course, if you doing geologic storage of CO2 
through the process of enhanced oil recovery, you are injecting 
the CO2, you are liberating oil, producing that oil. 
Some of the CO2 comes back up with the oil. The oil 
companies pay for that CO2, so they strip it out and 
reinject it.
    It is actually not easy to get CO2 back out of 
the reservoir. The reality, I would suggest, though, is that 
the volumes of CO2 available to us if we capture 
them are so large that they will exceed the potential for 
utilization. And so I don't think there will be a lot of 
interest or need in taking that CO2 back out of a 
geologic storage situation.
    Mr. Armstrong. And then that will just move me into another 
thing because it will be litigated in North Dakota, and it 
doesn't necessarily relate to CO2 other than it is 
going to be using the same space.
    We also have a really cool project going at Red Trail 
Energy, which is an ethanol plant that is going to do carbon 
capture. So if we ever want to do a field hearing, I would 
recommend Red Trail because it is closer to my house, I could 
have you over for dinner, and Project Tundra really is kind of 
out there anyway.
    But are we watching how different States, the Federal 
Government, is regulating pore space? Because that is going to 
be the next big conversation when we start having these--when 
we start continuing to move forward with this.
    Mr. Crabtree. Yes, I am not sure about Federal regulation, 
of course, because I think we are going to see a lot shake out 
about how States approach it and what works best, especially in 
saline storage. This actually--the Red Trail facility is very 
relevant to this hearing because it is CO2 from 
fermentation ethanol, it is going to be stored in a geologic 
formation. And that really could achieve truly negative carbon 
emissions because the CO2 captured through 
photosynthesis turned into ethanol is not readmitted to the 
atmosphere.
    Mr. Crabtree. Thank you.
    Mr. Armstrong. And I know I am over my time, but just one 
thing. I just think the real issue here is, regardless of what 
we are putting down there once we start litigating how that 
space--or once we start regulating and litigating who owns that 
space and how that space is allowed to be used, it is not going 
to matter whether it is CO2 from methane, 
CO2 for anything, because, I mean, we are going to 
have to watch that going forward.
    So thank you.
    Ms. Castor. I will recognize myself now for 5 minutes.
    So the climate science dictates that we have to reduce 
carbon emissions in the industrial sector. And as we discussed 
today, this is not easy in industry because it is so energy 
intensive and it's trade exposed. And we are very sensitive to 
the fact that the cost of doing business is a real concern for 
competitiveness in the global market.
    Mr. Gardiner, can we do this? What do you think?
    Mr. Gardiner. Absolutely. I think there are lots of 
technologies that are available today. They sometimes have a 
hard time getting into the market because, as we were talking 
about before, sometimes there are barriers, or because there is 
not enough of a pull to bring them into the matter on the 
benefits that they offer on the carbon side and other benefits.
    And, look, for an issue like renewable sources of heat, 
they are out there. We have heard about hydrogen, it is out 
there in small quantities. There definitely are projects that 
are being done today.
    So I think all it takes is, depending on what technology we 
are talking about, it is either figuring out how to create the 
right incentives to get them into the marketplace, get rid of 
the things that are standing in the way. And research and 
development clearly is going to be a huge thing. We are going 
to need that in a very significant way on a very broad range of 
technologies.
    The success we have seen in the electricity sector has 
largely come because we made the clean things cheap. So now 
they are the preferred things in the marketplace, and that is 
driving all the emission reductions that we are seeing in the 
power sector. And we just basically need to do the same thing 
in the industrial sector.
    Ms. Castor. Right. So a lot of you have talked about how we 
reprioritize incentives, borrow from what we have learned, and 
how we have built incentives for renewable energy. Renewable 
energy deployment has also increased due to the demand side, 
policies like State renewable portfolio standards and clean 
energy standards.
    You started to talk a little bit about this with Mr. Casten 
from Illinois. You drew the comparison with renewable thermal 
technologies in addition to financial support. Could you 
explain to the broader audience here renewable thermal 
technologies, first of all, and then what kind of demand side 
policies should be applied?
    Mr. Gardiner. So there is a broad range of renewable 
thermal technologies, some more readily available than others. 
Renewable natural gas. So you are basically taking materials 
that come from wastewater treatment plants, landfills, and 
others, gases, and converting that into something you can 
insert in a pipeline, and it goes off to wherever you want to 
use it.
    Solar thermal. Hydrogen produced from renewable sources is 
renewable thermal energy. You can electrify parts of industrial 
facilities. Research suggests there is pretty good 
opportunities there. And if your electric power is produced 
from renewables, then you have done renewable thermal 
technologies.
    On the demand side, I think two thoughts. One is that we 
see a number of States, I think there are 14 now, that as a 
part of their standards that require utilities to produce more 
renewable electricity, they offer a credit for renewable 
thermal technologies. And it is a fairly diverse set of States, 
including places like North Carolina, Texas, and Nevada.
    So that is an example of using demand--it is not quite a 
demand side policy, but it is an incentive that is helpful.
    In transportation fuels, both the Federal Renewable Fuel 
Standard and California's Low-Carbon Fuel Standard are demand 
policies. They require a certain amount of either low carbon 
fuel or renewable fuel in the fuel mix. That is driving the 
development of renewable natural gas.
    And so there are renewable natural gas projects happening 
all over the place. The challenge is that all of that renewable 
natural gas is really going into the transportation sector and 
not into the industrial sector. But that is a fixable kind of a 
problem.
    Ms. Castor. Ms. Hight, you, prior to Rocky Mountain 
Institute, you did a lot on methane controls globally. There 
must be some red flags here when it comes to methane and the 
industrial sector and things like being more reliant on natural 
gas. What do you say?
    Ms. Hight. So one of the things that we focus on at Rocky 
Mountain Institute is sort of solving this problem of kind of 
the transition from coal-fired generation to natural gas-fired 
generation that we are really facing in the country right now.
    Natural gas does burn cleaner than coal and has less 
CO2 emissions when you combust it. But the 
environmental footprint of natural gas is maybe not so good 
compared to coal when you take into account the methane leaks 
and the process emissions of methane that take place along the 
way.
    So natural gas is going to continue to be part of our 
future. All the models demonstrate that natural gas is going to 
be one of the fossil fuels that are going to be around for a 
while. So we need to figure out how to address the leakiness of 
natural gas, using incentives and regulations that can bring 
those emissions down.
    At the same time, we need to be using the abundant natural 
gas resources we have in the U.S., coupled with carbon capture 
and storage to produce real renewable resources like hydrogen, 
get more of that onto the market, help that market take off, so 
that we can bring more renewable hydrogen onto the grid to 
displace it.
    Ms. Castor. Thank you very much.
    Mrs. Miller, you are recognized for 5 minutes.
    Mrs. Miller. Thank you, Chairwoman Castor, and I really 
mean it. I am so thrilled that we have this panel in front of 
us today.
    And thank you all for being here.
    This issue today is so incredibly important. Innovation is 
key as we move forward in addressing climate change. Rather 
than completely shifting from key hydrocarbon baseload energy, 
such as coal and natural gas, we can use innovation and new 
technology to keep those same affordable forms of energy while 
working to reduce or even eliminate emissions across the board.
    Further, by using these technologies in our industrial 
sector, we can produce more American goods and create jobs here 
in the United States.
    I believe carbon capture is the critical component in our 
discussions on this committee. When the technology is fully 
realized, carbon capture will be able to allow us to continue 
to use the use of key baseload energy, keep energy costs low, 
and keep more jobs here in the United States.
    Mr. Crabtree, what are the biggest obstacles, scientific or 
policy side, to fully developing carbon capture? The math and 
chemistry are there for this solution, so what is holding us 
back?
    Mr. Crabtree. Representative Miller, thank you for the 
question.
    I would say that first and foremost with the current 
generation of technologies in the power sector, carbon capture 
technologies, the challenge is no longer one of technology but 
of policy and of business model. And so the 45Q tax credit is a 
huge step forward. It will provide $35 per ton of every 
CO2 stored through enhanced oil solar recovery or 
$50 per ton of CO2 stored in a saline geologic 
formation.
    The challenge is that those credit values are below what is 
needed to retrofit a power plant in the power sector. Coal is 
more expensive. Natural gas even more expensive than coal in 
terms of carbon capture. So what we need to do is we need to 
complement the 45Q tax credit with additional incentives that 
will reduce the cost of capital of equity and debt.
    For example, making a carbon capture project eligible for 
tax-exempt private activity bonds, master limited partnerships, 
things like that. Also, existing tax credits, enhancing them so 
that they can enable them more monetization. So expanding the 
pool of investors.
    Right now with the 45Q tax credit, unlike with wind and 
solar, it is subject to the provisions of the BEAT tax, so 
there is a whole pool of investors that will not be able to 
supply capital to a carbon capture project.
    There is also--we could provide the same level of tax 
credit transferability to 45Q that the nuclear 45J tax credit 
enjoys. And the wind industry, by the way, is seeking that for 
the production tax credit as well.
    And then, finally, I don't want to repeat myself----
    Mrs. Miller. Do it quickly.
    Mr. Crabtree. The 48A tax credit has $2 billion in it and 
it is available right now, and the Carbon Capture Modernization 
Act would make that available and would put the United States 
even more on the map as a leader in innovation in the power 
sector.
    Mrs. Miller. Thank you.
    While the U.S. has already greatly reduced emissions, how 
could carbon capture help reduce emissions from some of the 
world's biggest emitters, such as China and India?
    Mr. Crabtree. Well, so the average--the coal plant fleet in 
Asia is vastly greater than the one in the United States, and 
the average age of a power plant in Asia is 11 years. So if we 
are to meet midcentury climate goals, there is no alternative 
but to having a cost-effective, widely demonstrated option for 
retrofitting coal-fired power plants on Asia's power plant 
fleet. It is just an absolute must.
    And so maybe our greatest leverage here in the United 
States is to demonstrate in our own marketplace how viable and 
effective it is to manage CO2 emissions from power 
plants by doing projects and doing more of them. And it will be 
also very important to do that with natural gas, not just coal.
    Mrs. Miller. If we were to fully utilize carbon capture, 
could we go to a net zero carbon output while continuing to 
rely on our key baseline fuels?
    Mr. Crabtree. Yes. In fact, the global modeling that gets 
us to zero shows that we have to deploy carbon capture 
literally economy-wide on all power generation on all major 
industrial sources of CO2.
    And then not only that, we have to go negative and we have 
to start taking CO2 out of the atmosphere with 
direct air capture technology, capturing CO2 from 
energy production with biomass. It is an absolute essential 
component of getting to zero by midcentury.
    Mrs. Miller. Thank you.
    Dr. Gregory, proposals like the Green New Deal push to move 
our entire Nation, including our industrial sector, to fully 
renewable schemes. How would that impact the creation of 
concrete and cement?
    Dr. Gregory. A fully renewable requirement on the 
production of cement is challenging without CCUS because it 
requires use of fossil fuels, at least right now, in order to 
do that. That is currently not possible using the current 
technologies that we have.
    Mrs. Miller. Thank you. I yield back.
    Ms. Castor. Terrific.
    Well, I want to thank you all very much for your compelling 
testimony, it is very helpful to the committee.
    Without objection, all members will have 10 business days 
within which to submit additional written questions for the 
witnesses. Please respond as promptly as you can.
    Without objection, I would also like to enter into the 
record a letter from Roxanne Brown, international vice 
president at large of the United Steelworkers, and a letter 
from Paul Noe, vice president of public policy at the American 
Forest and Paper Association.
    [The information follows:]

                       Submission for the Record

                      Representative Kathy Castor

                 Select Committee on the Climate Crisis

                           September 26, 2019

                                                September 24, 2019.
Chairwoman Castor,
House Select Committee on the Climate Crisis,
Washington, DC.
Ranking Member Graves,
House Select Committee on the Climate Crisis,
Washington, DC.
    Dear Chairwoman Castor and Ranking Member Graves, On behalf of the 
United Steelworkers (USW), I would like to thank you and the members of 
the select committee for holding this week's hearing on the issue of 
industrial greenhouse gas emissions and the climate crisis. I write to 
you on behalf of the members of the United Steelworkers, North 
America's largest manufacturing union. Our members supply almost every 
sector of the economy, and produce a wide array of products, including 
paper, glass, ceramics, cement, chemicals, aluminum, rubber, and of 
course, steel. They produce these energy-intensive products in 
facilities that are as efficient as any in the world. In fact, over the 
past several decades the industrial sector and its workers have 
undertaken many initiatives to increase their energy efficiency. And 
while the industrial sector can, and must, further improve efficiency 
in order to decarbonize sufficiently to avert the worst potential 
consequences of the climate crisis, it is crucial that any policy 
undertaken to reduce emissions in this sector be developed in a manner 
cognizant of the unique factors that make this particularly challenging 
for industry. To that end, I thank you for allowing me to provide the 
perspective of our members and our union.
    The United Steelworkers have, for decades, been a leader in the 
labor community on environmental issues, including climate change. We 
were the first industrial union to endorse a comprehensive climate 
change bill, and we have actively engaged for years on the development 
of environmental laws and regulations. We continue this work at both 
the state and federal level, working with partners such as the 
BlueGreen Alliance, which our union formed along with the Sierra Club 
in 2006, and which continues to provide a strong and credible voice 
articulating the shared commitment of the labor and environmental 
communities.
    As Congress considers potential policies to address climate change, 
the way in which these policies affect the industrial sector is of 
paramount importance. With the industrial sector accounting for 22 
percent of total U.S. greenhouse gas (GHG) emissions, it must be part 
of any comprehensive decarbonization effort both here and abroad. 
Still, this must be developed in a manner that recognizes the 
challenges this sector--with its large capital cost and embedded 
process emissions--faces. There is great potential for decarbonization 
in the industrial sector while still maintaining production and 
employment, but to achieve this requires significant upfront investment 
in proven industrial energy efficiency technologies; development and 
scaling of technologies such as carbon capture, utilization, and 
sequestration; and strong measures to ensure that additional costs 
placed on American industries by mandates or direct carbon pricing do 
not lead to emissions and job leakage.
                      industrial energy efficiency
    A key goal of the Steelworkers has long been advocating for the 
increased use of industrial energy efficiency technologies such as 
Combined Heat and Power (CHP) and Waste Heat to Power (WHP). CHP 
captures the heat produced in conventional power generation and WHP 
captures the heat produced in industrial processes. Both systems then 
use that heat in other industrial processes as useful energy. These, 
along with on-site renewable generation and other existing efficiency 
measures, are among the most efficient ways for industrial sources to 
reduce demand for external energy sources including electricity, which 
in turn can dramatically reduce energy consumption.
    The Department of Energy found that increased deployment of 
efficiency technologies like CHP, WHP, and on-site renewable generation 
can reduce overall energy consumption in the industrial sector by 15%, 
from 47% to 32%, by 2025. That sort of reduction can make a real 
difference in total national energy consumption and, by extension, GHG 
emissions. These technologies are already reducing emissions and are in 
use in thousands of facilities across the U.S., many of which are in 
industries that Steelworker members work such as steel, oil, and pulp 
and paper. Further deployment can both further reduce emissions and 
bring down the cost of these systems through economies of scale.
    In addition, policies to reduce industrial emissions need to be 
made in the understanding that unlike power generation, which could, in 
theory, be entirely decarbonized by replacing traditional fossil fuels 
with clean energy sources, industrial emissions cannot be entirely 
eradicated that way. Because industry produces process and other 
emissions that are unavoidable, policies to develop effective carbon 
sinks are necessary to achieve net-zero emissions. Carbon capture, 
utilization, and storage is therefore a critical component of any 
climate policy. We support policies--like the Utilizing Significant 
Emissions with Innovative Technologies (USE IT) Act--to make these 
technologies and necessary infrastructure more widely available to 
industry.
    The challenge to further deployment of industrial energy efficiency 
technologies like these is largely one of available funding for 
investment. The benefits of these systems to industry are substantial, 
but they accrue over a long period of time through decreased energy 
costs, however the costs are also substantial and are almost entirely 
upfront. Manufacturers with limited access to capital often simply 
cannot put together the necessary funding in the short term to install 
these systems, even if the benefits outweigh the costs in the long 
term. Any policy that focuses on industrial emissions must include 
measures to lower the cost of investment for manufacturers to drive 
further deployment.
    Many companies and sectors are experimenting with new technologies 
to reduce emissions from the industrial sector. These exciting 
opportunities are costly to research, develop, and deploy; therefore, 
not all companies are able to engage in these activities. We also urge 
Congress to robustly support and fund this type of research at the 
Department of Energy or other relevant agencies to ensure that new 
emissions reduction technologies are developed and commercially 
available to industrial sources as soon as possible.
                           emissions leakage
    While industrial energy efficiency policies and carbon capture can 
provide options to industry to responsibly reduce emissions, many 
policy proposals to address GHG emissions involve some sort of carbon 
price. The Steelworkers have endorsed certain of these carbon price 
policies in the past, notably the 2009 Waxman-Markey bill. Our union 
does not oppose carbon pricing, so long as carbon price policies 
include necessary provisions to address the needs of our members. 
Foremost among these is a comprehensive policy to prevent emissions and 
job leakage.
    The idea underpinning carbon pricing is that the assessment of a 
cost on emissions will provide an incentive to reduce them, either 
through the development of more efficient process or of new products 
which can be made with fewer emissions. This theory is sound, as long 
as those costs cannot simply be evaded by companies offshoring 
production to nations which do not apply a similar carbon price, or 
downstream producers and consumers avoiding the cost by purchasing 
imported goods from such nations.
    In energy-intensive, trade-exposed industries like steel, glass, 
aluminum, chemicals, rubber, and pulp and paper, this threat is 
particularly acute because they are globally-traded commodity-based 
industries, in which even small differences in production costs can 
have a huge effect. A carbon price at almost any level that impacts 
American producers, but not imports will have a huge negative impact on 
domestic production and employment. In addition to those lost jobs and 
production, a carbon price that results in leakage will likely have the 
doubly undesirable effect of making the climate crisis worse, as 
production displaced to countries such as China, whose industries are 
less efficient, will result in more global GHG emissions.
    The Steelworkers are pleased to see that a consensus has seemingly 
formed in the U.S. policy community that any serious carbon pricing 
policy must include a mechanism to prevent this leakage. The structure 
of the leakage prevention policy can vary somewhat based on the type of 
carbon pricing policy enacted, but the end result of any acceptable 
leakage prevention policy must be the enactment of a strong border 
adjustment mechanism.
    The border adjustment, properly applied, will prevent leakage by 
ensuring that U.S. producers do not face a cost disadvantage relative 
to foreign producers. By applying a commensurate carbon cost on 
products consumed in the United States regardless of the country of 
origin, it would be compliant with international trade rules and would 
ensure that the commitment of the U.S. to combating climate change 
would not only drive increased efficiency in domestic production, but 
in foreign production as well.
    As discussed earlier, the speed in which cost disadvantages in 
energy-intensive, trade-exposed industries can affect U.S. production 
in those industries cannot be overstated. As such, it is imperative 
that a border adjustment be fully in place and operational as soon as 
domestic industries face a carbon price. If the structure of the carbon 
price is a carbon tax, the border adjustment needs to be enacted at the 
same time that U.S. producers incur the tax. If the border adjustment 
cannot be stood up in time, the application of the tax on energy-
intensive, trade-exposed industries must be delayed until the border 
adjustment can be applied.
    The application timeline is somewhat different in the case of a 
cap-and-trade system, such as the one proposed in the 2009 Waxman-
Markey bill. In that bill, which USW endorsed, the border adjustment 
was delayed for several years after the carbon price would have been 
applied to allow time for international negotiations. Critically, 
however, during the time between enactment of the carbon price and the 
application of the border adjustment, energy-intensive, trade-exposed 
industries were defended from leakage via the allocation of free 
allowances against the cap until such time as the border adjustment was 
ready. At that point, the allocations would phase out as the border 
adjustment phased in. Our Union's position is that the border 
adjustment should be applied as soon as possible, and if there are 
delays of any sort because of trading rules or other factors, the 
industrial sector must be held harmless via some method, whether that 
method is a delay in the application of the carbon cost on industrials 
or the provision of cost mitigation during the delay.
    However, it is eventually structured to fit in a carbon price 
regime, the application of a strong border adjustment measure to 
prevent emission and job leakage is critical to the successful 
application of the carbon price.
                               conclusion
    Addressing the climate crisis is the defining challenge of our 
generation, and the United Steelworkers are ready to join in that 
effort. We have led the way within the labor community on these issues 
for decades and will continue to do so. However, for these efforts to 
be successful and lasting, they must be designed with an understanding 
of how they will impact America's industrial workers and move American 
industry into the future. The needs of energy-intensive, trade-exposed 
industries must be taken into account through the inclusion of policies 
that will drive innovation and efficiency in those industries, and 
policies including a border adjustment to prevent the loss of 
production and jobs due to carbon leakage.
    On behalf of the United Steelworkers, I would like to thank the 
Select Committee for holding this hearing on this critical aspect of 
addressing the climate crisis. We look forward to continuing to work 
together to meet our shared goal of solving this crisis, while 
maintaining and creating jobs for Americans.
            Sincerely,
                                          Roxanne D. Brown,
                             International Vice President At Large.

                       Submission for the Record

                      Representative Kathy Castor

                 Select Committee on the Climate Crisis

                           September 26, 2019

                                                September 24, 2019.
Chairman Kathy Castor,
Ranking Member Garret Graves,
House Select Committee on Climate Crisis,
Washington, DC.
    Dear Chairman Castor and Ranking Member Graves: Thank you for the 
opportunity to discuss key considerations for U.S. climate policy.
    We appreciate the Committee's outreach to us and other 
stakeholders. Seeking input from stakeholders on such approaches will 
allow for more informed and productive discussion and deliberation.
    The American Forest & Paper Association (AF&PA) serves to advance a 
sustainable U.S. pulp, paper, packaging, tissue and wood products 
manufacturing industry through fact-based public policy and marketplace 
advocacy. AF&PA member companies make products essential for everyday 
life from renewable and recyclable resources and are committed to 
continuous improvement through the industry's sustainability 
initiative--Better Practices, Better Planet 2020. The forest products 
industry accounts for approximately four percent of the total U.S. 
manufacturing GDP, manufactures nearly $300 billion in products 
annually and employs approximately 950,000 men and women. The industry 
meets a payroll of approximately $55 billion annually and is among the 
top 10 manufacturing sector employers in 45 states.
    AF&PA's sustainability initiative--Better Practices, Better Planet 
2020--comprises one of the most extensive quantifiable sets of 
sustainability goals for a U.S. manufacturing industry and is the 
latest example of our members' proactive commitment to the long-term 
success of our industry, our communities and our environment. We have 
long been responsible stewards of our planet's resources. We are proud 
to report that our members have already achieved the greenhouse gas 
reduction and workplace safety goals. Our member companies have also 
collectively made significant progress in each of the following goals: 
increasing paper recovery for recycling; improving energy efficiency; 
promoting sustainable forestry practices; and reducing water use.
AF&PA'S Voluntary Emissions Reductions
    In 2011, as part of the association's voluntary Better Practices, 
Better Planet 2020 sustainability goals initiative, AF&PA set a goal to 
reduce member greenhouse gas (GHG) emissions--measured in carbon 
dioxide equivalents per ton of production--by 15 percent. After meeting 
that goal ahead of schedule, members set a 20 percent reduction goal 
and they now are close to achieving that goal as well, as emissions 
were 19.9 percent lower in 2016 than in 2005.
    To put these and other emission reductions in context, it is 
helpful to consider the U.S. Nationally Determined Contribution (NDC 
that was part of the Paris Accord). Specifically, the U.S. NDC was to 
achieve a 17% GHG mass reduction between 2005 and 2020, and a 26-28% 
GHG mass reduction by 2025, with best efforts to achieve a 28% GHG mass 
reduction by 2025.
    The US pulp and paper industry has already exceeded those targets, 
by reducing direct emissions by approximately 35 percent on a mass 
basis between 2005-2016. Further, as stated above, AF&PA members have 
reduced their direct and indirect GHG emissions by 19.9 percent between 
2005-2016 on an intensity basis.
    In addition to our members' voluntary progress already discussed 
above, AF&PA currently is developing new sustainability goals to 
replace the existing Better Planet 2020 goals. Among others, we are 
working on a new GHG reduction goal.
Industry Innovation
    The industry also is innovating for the future. The industry's 
Alliance for Pulp and Paper Technology Innovation--APPTI--works to 
transform the paper and forest products industry through innovation in 
its manufacturing and products. For instance, a project is underway to 
reduce the energy used in certain paper manufacturing processes by 23 
trillion BTUs, which would lead to significant GHG reductions. This 
project is being carried out by a team led by the Georgia Institute of 
Technology and is funded by APPTI members and the Department of 
Energy's RAPID Institute.
    APPTI identifies high priority, pre-competitive technology 
challenges for the pulp and paper industry and promotes scientific 
research and development projects to address them. Current projects 
under development, if implemented, could achieve significant energy and 
related GHG reductions for the industry
Climate Policy
    AF&PA believes that any comprehensive climate legislation must 
balance environmental, social, and economic concerns to ensure that our 
nation's economy and forest products industry remain globally 
competitive.
    In particular, any legislation should recognize the forest products 
industry's important and unique role in reducing greenhouse gases, 
including sustainable forest management practices, carbon 
sequestration, biomass energy use, electricity generation, and paper 
recovery for recycling. Sustainably managed forests and our products 
sequester and store approximately 14 percent of annual U.S. carbon 
dioxide emissions. Paper recycling reuses a renewable resource that 
sequesters carbon and helps reduce greenhouse gas emissions by avoiding 
landfill methane emissions and reducing the total energy required to 
manufacture some paper products. Any climate legislation should 
recognize early actions taken to reduce greenhouse gas emissions. The 
forest products industry's use of energy efficiency technology such as 
combined heat and power technology also needs to be given full 
consideration.
    The carbon neutrality of biomass harvested from sustainably-managed 
forests has been recognized repeatedly by an abundance of studies, 
agencies, institutions, legislation and rules around the world and 
includes the guidance of the Intergovernmental Panel on Climate Change 
and the reporting protocols of the United Nations Framework Convention 
on Climate Change.
    Prior to 2010, the U.S. clearly recognized forest-based biomass 
energy as carbon neutral. In EPA's Greenhouse Gas (GHG) Tailoring Rule, 
for the first time, no such designation was made, subjecting biomass 
energy used in stationary sources to Clean Air Act permit program 
requirements. In 2011, EPA issued a rule deferring regulation of 
biogenic carbon dioxide emissions while its Science Advisory Board 
(SAB) studied the issue and pledged to complete an accounting framework 
for biogenic emissions from stationary sources by July of 2014, but 
failed to finish the work.
    Numerous EPA documents and policy memos have found positive 
benefits from forest biomass use, including EPA's original draft 
accounting framework (September 2011) and revised draft framework 
(November 2014). Both documents recognize the GHG reduction benefits of 
bioenergy from forest product mill residuals and byproducts, including 
black liquor. In April 2018, EPA issued a policy statement to treat 
biogenic carbon dioxide emissions from the combustion of forest biomass 
at stationary sources as carbon neutral. As the next step, EPA should 
implement regulations soon.
    From a broader perspective, it is critical to recognize that U.S. 
manufactures must compete globally. To the extent that Congress adopts 
laws that increase the domestic cost of production for US based 
manufacturing, those higher costs of production will shift production 
jobs, and economic growth outside of the U.S.
    In turn, since U.S. manufacturers are a more efficient user of fuel 
and natural resources than manufacturers in most other countries, when 
production shifts to outside the U.S., there will be a net increase in 
global GHG emissions.
    In addition, global energy use trends and emissions projections 
indicate the US will continue to be comparatively advantaged as an 
efficient user of fuel and lower emissions intensity for the 
foreseeable future. This data suggests that policies adopted by 
Congress that increase competition remove barriers and lower costs to 
US manufacturing, are the preferred policy prescription for achieving a 
net reduction in global GHG emissions.
    Thank you for seeking our industry's input and we look forward to 
working with the Committee as this process moves forward.
            Best Regards,
                                                  Paul Noe,
 Vice President, Public Policy American Forest & Paper Association.

    Ms. Castor. I would like to remind everyone, we do have a 
request for information that is out. We are looking for the 
policy proposals to help build our National Climate Action 
Plan, the recommendations that will go to the Congress next 
spring. So I encourage you to check that out and share it 
widely. And thank you again for being here today.
    The hearing is adjourned.
    [Whereupon, at 3:36 p.m., the committee was adjourned.]
                              ----------                              


United States House of Representatives Select Committee on the Climate 
                                 Crisis

 Hearing on September 26, 2019, ``Solving the Climate Crisis: Reducing 
             Industrial Emissions Through U.S. Innovation''

                        Questions for the Record

        David Gardiner, President, David Gardiner and Associates

                                                 November 22, 2019.
Hon. Kathy Castor,
Chair, Select Committee on the Climate Crisis,
Washington, DC.
    Dear Chair Castor, Thank you for inviting me to testify before the 
Select Committee on the Climate Crisis in September. I appreciated the 
opportunity to provide information to the Select Committee on combined 
heat and power (CHP) and waste heat to power (WHP). Thank you as well 
for your thoughtful follow-up questions and those of the Honorable Sean 
Casten. Please find attached my responses to your questions.
            Sincerely,
                                    David Gardiner,
                  President, David Gardiner and Associates.
                       the honorable kathy castor
    1. How can existing Federal procurement policies be updated to 
prioritize decarbonization in the industrial sector?
    The federal government is the nation's largest energy consumer and, 
as a result, can and should be a leader in decarbonizing its own energy 
use, especially throughout the Department of Defense, the largest 
energy user within the federal government. The military has recognized 
the importance of combined heat and power (CHP) to ensure resilience of 
its installations. For example, Army Directive 2017-07 says ``The Army 
will reduce risk to critical missions by being capable of providing 
necessary energy and water for a minimum of 14 days.''\1\ CHP can 
provide heat and electricity when the grid is down, so the Army is 
seeking to build microgrids and CHP projects. Among other CHP projects, 
the Army broke ground in November 2017 on a 2 MW CHP project at 
Picatinny Arsenal, a military research and manufacturing facility 
located in New Jersey. The CHP system will provide steam for heating 
and numerous ammunition manufacturing processes as well as 2 MW of 
electricity, which will be able to operate even when the grid is 
down.\2\ Congress should do all it can to support these efforts and 
those at other government installations.
---------------------------------------------------------------------------
    \1\ Secretary of the Army, ``Army Directive 2017-07 (Installation 
Energy and Water Security Policy),'' Feb. 23, 2017. https://
www.asaie.army.mil/Public/ES/doc/Army_Directive_2017-07.pdf.
    \2\ J.E. "Jack" Surash, PE, Acting Deputy Assistant Secretary of 
the Army for Energy & Sustainability, ``The U.S. Army's pivot to energy 
and water resilience,'' October 22, 2018. https://www.army.mil/article/
212756/the_us_armys_pivot_to_energy_and_water_resilience.
---------------------------------------------------------------------------
    In addition, Federal procurement policies could establish a goal to 
reduce emissions from its suppliers, as Walmart has done by adopting 
its Project Gigaton goal. Under such an approach, procurement policies 
could give preference in awarding contracts to product manufacturers 
who have decarbonized their industrial processes. In 2017, California 
adopted AB 262 under which suppliers' emissions performance will be 
taken into account when an agency is contracting to buy steel, flat 
glass, and mineral wool (insulation) for infrastructure projects.\3\ 
Such an approach could be adopted at the federal level for a variety of 
products with significant carbon emissions. This would also encourage 
manufacturers to reduce their emissions further while ensuring a large 
federal market.
---------------------------------------------------------------------------
    \3\ California. Legislature. Assembly. Public contracts: bid 
specifications: Buy Clean California Act. A.B, 262. 2017-2018. 
California State Assembly: October 16, 2017. https://
leginfo.legislature.ca.gov/faces/
billTextClient.xhtml?bill_id=201720180AB262.
---------------------------------------------------------------------------
    Many in manufacturing are already prepared for such a move as the 
private sector has given increased attention to reducing its emissions 
and increasing energy efficiency: a 2018 study of 160 of the largest 
manufacturing companies with U.S. facilities found that 79% of these 
companies had greenhouse gas (GHG) targets, while 43% had energy 
efficiency (EE) targets.\4\ Signatories to the Renewable Thermal Energy 
Buyers' Statement have also demonstrated their interest in reducing 
their GHG emissions and are actively seeking ways to expand and 
accelerate the renewable thermal energy market.\5\ Renewable thermal 
technologies will benefit from the same policies that have helped to 
advance other renewable energy sources such as wind and solar.
---------------------------------------------------------------------------
    \4\ Alliance for Industrial Efficiency, ``Committed to Savings: 
Major U.S. Manufacturers Set Public Goals for Energy Efficiency,'' June 
26, 2018. https://chpalliance.org/resources/alliance-report-finds-
majority-u-s-manufacturers-make-commitments-save-energy-reduce-
emissions/.
    \5\ Renewable Thermal Collaborative, ``The Renewable Thermal Energy 
Buyers' Statement,'' https://www.renewablethermal.org/buyers-
statement/.
---------------------------------------------------------------------------
    Utilization of CHP and waste heat to power (WHP) can help both the 
federal government and manufacturers to decarbonize. Conventional 
electric generation is very inefficient, with roughly two-thirds of 
fuel inputs lost as wasted heat from the process. Additional energy is 
lost during transmission from the central power plant to the end user. 
By generating both heat and electricity from a single fuel source at 
the point of use, CHP lowers emissions and increases overall fuel 
efficiency--allowing utilities and companies to effectively ``get more 
with less.'' CHP can make effective use of more than 70% of fuel 
inputs. As a consequence, natural gas-fired CHP can produce electricity 
with about one-quarter of the GHG emissions of an existing coal power 
plant. WHP, which uses waste heat from industrial processes to generate 
electricity with no additional fuel and no incremental emissions, 
reduces emissions and offsets costs associated with purchased power.
    As I noted in my written testimony, according to the Department of 
Energy, the chemicals, petroleum refining, food, paper, and primary 
metals industrial sectors have the greatest potential for CHP 
installation, creating a significant opportunity to cut industrial 
emissions while increasing competitiveness.\6\
---------------------------------------------------------------------------
    \6\ United States Department of Energy, ``Combined Heat and Power 
(CHP) Technical Potential in the United States,'' March 2016. https://
www.energy.gov/sites/prod/files/2016/04/f30/
CHP%20Technical%20Potential%20Study%203-31-2016%20Final.pdf.
---------------------------------------------------------------------------
    Fueling CHP and WHP systems with renewable natural gas can help to 
further reduce emissions. CHP systems can run on renewable fuels, such 
as biomass--forest and crop residues, wood waste, or food-processing 
residue--or biogas--manure biogas, wastewater treatment biogas, or 
landfill gas. Renewable natural gas (RNG), or biomethane, is a 
pipeline- quality gas that is fully interchangeable with natural gas 
and compatible with U.S. pipeline infrastructure and can be used to 
fuel CHP systems. Over time, CHP systems can evolve and use different 
types of fuel. A system using natural gas today may run on RNG in the 
future.
    2. Are there environmental, health, safety, or other risks and 
tradeoffs to pursuing industrial efficiency and renewable thermal? How 
can they be mitigated?
    In addition to the land-use considerations addressed in question 7, 
pursuing additional CHP deployment at industrial sites could raise 
concerns about air quality as onsite emissions can increase, however 
this can be addressed through existing Clean Air Act regulations. WHP 
uses waste heat from industrial processes to generate electricity with 
no additional fuel and no incremental emissions.
    The use of any type of combustible gas carries inherent risks, 
though the nation's natural gas delivery system has historically had 
excellent performance and natural gas utilities remain vigilant and 
committed to continually upgrading this crucial infrastructure based on 
enhanced risk-based integrity management programs.\7\ There are 
additional challenges presented when injecting RNG into the natural gas 
pipeline network including variability in composition and supply of 
gas, the potential impact on end use applications, and odorization and 
leak detection. RNG quality standards can help to ensure that RNG will 
not harm the distribution company's infrastructure or customer end-use 
equipment and will also prevent harm to human health and safety.\8\ 
Several utilities in the United States have already developed gas 
quality standards that specifically address RNG, demonstrating that 
such challenges should not be a barrier to RNG deployment.\9\ 
Interconnection guidelines can also provide clarity when connecting RNG 
projects to gas pipeline systems and uniform standards can offer 
consistency for projects across jurisdictions. The Northeast Gas 
Association released an Interconnect Guide for RNG in New York earlier 
this year, and while the report is specific to one state, the framework 
it presents could be adopted by other states.\10\ Though adding RNG to 
the gas distribution system requires careful planning, this need not be 
an impediment to additional deployment.
---------------------------------------------------------------------------
    \7\ American Gas Association, ``An Increase in Safety Leads to a 
Decrease in Emissions,'' 2019. https://www.aga.org/globalassets/2019-
increase-in-safety-leads-to-a-decrease-in-emissions-v.3.pdf.
    \8\ M.J. Bradley & Associates, ``Natural Gas Utility Business 
Models for Facilitating Renewable Natural Gas Development and Use,'' 
July 2019, p. 2. https://www.mjbradley.com/sites/default/files/
RNGLDCOptions07152019.pdf.
    \9\ Id.
    \10\ Northeast Gas Association, ``Interconnect Guide for Renewable 
Natural Gas (RNG) in New York State,'' August 2019. https://
www.northeastgas.org/pdf/nga_gti_interconnect_0919.pdf.
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    3. You mentioned in your testimony that CHP and WHP also have the 
benefits of being distributed energy resources and advancing the use of 
microgrids. Could you expand upon how these benefits help facilities 
obtain more reliable power and become more resilient?
    Distributed energy resources allow energy to be created close to 
where it is consumed, reducing the use of electric transmission and 
distribution systems, reducing line loss of electricity and thereby 
saving money. Distributed energy resources can also provide increased 
reliability and resiliency, not only for facilities that host such 
resources, but also for a host facility's surrounding community. 
Facilities that are critical infrastructure--assets, systems, and 
networks that, if incapacitated, would have a substantial negative 
impact on national security, economic security, or public health and 
safety \11\--are particularly well suited to utilize distributed energy 
resources as access to energy is a high priority for ensuring that 
critical facilities can continue to deliver services and assist in 
recovery.\12\ In addition to the general benefits of distributed energy 
resources, CHP and WHP systems provide further benefits in that they 
typically run and are maintained continuously, providing a consistent 
source of heat and power unlike intermittent resources such as wind and 
solar, and have lower emissions than diesel or oil generators. These 
systems may also be connected to a microgrid, allowing several 
buildings or facilities to keep the lights on during a grid power 
outage.
---------------------------------------------------------------------------
    \11\ Uniting and Strengthening America by Providing Appropriate 
Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) 
Act of 2001. Pub. L. 107-56 at Sec. 1016(e). 26 Oct. 2001. https://
www.congress.gov/bill/107th-congress/house-bill/3162/text.
    \12\ United States Department of Energy Better Buildings, 
``Distributed Generation (DG) for Resilience Planning Guide,'' January 
2019, p. 4. https://betterbuildingsinitiative.energy.gov/sites/default/
files/attachments/DG%20for%20Resilience%20Planning%20Guide%20-
%20report%20format .pdf.
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    Investments in microgrids have been encouraged by some policymakers 
at the state and federal level. When a traditional electric grid has an 
outage or needs to be repaired, all users of the grid are impacted. A 
microgrid is a local energy grid that can disconnect from the 
traditional grid and operate on its own during a traditional grid 
outage.\13\ To function independently, a microgrid requires either 
battery storage or a form of distributed generation such as CHP or WHP. 
CHP systems provide 39% of the energy in existing microgrids.\14\ 
Microgrids are used by universities, military installations, 
municipalities, and public institutions, helping to maintain their 
reliability of electric and thermal energy supply and to improve their 
resiliency against extreme weather and power outages.\15\ In some 
locations, a number of critical facilities such as hospitals, fire and 
police stations, emergency shelters, and gas stations can be connected 
and configured to operate in isolation from the larger utility grid, 
even during extended outages.\16\
---------------------------------------------------------------------------
    \13\ United States Department of Energy, ``How Microgrids Work,'' 
Jun. 17, 2014. https://www.energy.gov/articles/how-microgrids-work.
    \14\ Greentech Media, ``US Microgrid Growth Beats Estimates: 2020 
Capacity Forecast Now Exceeds 3.7 Gigawatts,'' Jun. 1, 2016. https://
www.greentechmedia.com/articles/read/u-s-microgrid-growth-beats-
analyst-estimates-revised-2020-capacity-project#gs.fmnot7GL.
    \15\ Id.
    \16\ United States Department of Energy, ``CHP for Resiliency in 
Critical Infrastructure,'' May 2018, p. 3. https://
betterbuildingsinitiative.energy.gov/sites/default/files/attachments/
CHP_Resiliency.pdf.
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    Whether used to power a single building or as part of a microgrid, 
CHP systems have additional benefits over other types of backup power, 
such as onsite diesel generators. CHP systems generally run and are 
maintained continuously, avoiding the need to call a generator into 
operation that may not have been used recently. In addition, CHP 
systems frequently run on natural gas delivered directly via pipelines, 
avoiding the need for a fuel delivery as well as resulting increased 
emissions from diesel or oil.\17\ Many critical infrastructure 
customers such as hospitals, universities, municipalities, and data 
centers have successfully deployed CHP and WHP systems, increasing 
their resiliency against natural disasters, emergencies, or other 
events that may impact the electric grid. Power outage protection can 
be designed into a CHP system that efficiently provides electric and 
thermal energy on a continuous basis.
---------------------------------------------------------------------------
    \17\ United States Environmental Protection Agency, ``Valuing the 
Reliability of Combined Heat and Power,'' January 2007, p. 2. https://
www.epa.gov/sites/production/files/2015-07/documents/
valuing_the_reliability_of_combined_heat_and_power.pdf.
---------------------------------------------------------------------------
    CHP systems can improve the resiliency of critical infrastructure. 
If the electric grid is impaired, CHP systems can continue to operate, 
providing electric and thermal service without interruption. This can 
mitigate the impacts of an emergency by keeping critical facilities 
operational until power is restored. In addition to providing power and 
heat to a host facility to keep the facility operational, such host 
facility may also be able to provide services to their local community 
to aid in the recovery effort.
    Case studies have demonstrated the benefits of CHP systems during 
severe weather events that result in electric grid service disruption. 
During and after Superstorm Sandy in the northeast United States, 
numerous facilities with CHP systems were able to remain operational. 
For example, South Oaks Hospital in New York was able to provide 
critical services for two weeks relying solely on its CHP system and 
admitted displaced patients, offered refrigeration of vital medicines 
to those who had lost power, and welcomed the local community to 
recharge phones and electronic devices at its facility.\18\ In New 
Jersey, The College of New Jersey was able to disconnect from the 
electric grid for a week and the campus continued to operate despite 
the grid disruption. In addition, the College's equipment was used to 
assist the state's largest utility in reestablishing service after the 
grid outage: the utility was able to use the College's equipment to 
back-feed one of their power lines to bring it back in service.\19\ 
Louisiana State University has also benefitted from a CHP system, the 
university never lost power during Hurricane Katrina, allowing the 
school to continue to operate and allow administrative offices of other 
institutions to relocate to the main campus.\20\
---------------------------------------------------------------------------
    \18\ ICF International, ``Combined Heat and Power: Enabling 
Resilient Energy Infrastructure for Critical Facilities,'' March 2013, 
13.
    \19\ Id. at 18.
    \20\ Id. at 24.
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    4. You mentioned that most of the policies for renewable heat occur 
within the European Union. Could you elaborate on some of these 
policies and how they could be applied in the United States?
    Unlike the United States where policies have focused almost 
exclusively on renewable electricity and transport, the European Union 
Renewable Energy Directive (RED) takes a more comprehensive approach by 
requiring 20% of European Union final energy consumption to be met by 
renewables in 2020, with contributions from electricity, transport, and 
heating and cooling. Individual countries have also seen success in 
increasing renewable heat by setting ambitious targets, utilizing 
existing infrastructure to achieve economies of scale, and providing 
financial incentives.
    District heating can facilitate the deployment of renewable heat 
because of economies of scale and siting of facilities, though 
government policies facilitating use of additional renewables are still 
necessary. Denmark, Finland, and Sweden are three countries with 
extensive district heating systems that also have ambitious long-term 
targets to switch to renewables. This combination of infrastructure and 
policy has made these countries leaders in the deployment of renewable 
heat: in 2015, the share of renewables in heat consumption was 39.6% in 
Denmark, 52.8% in Finland, and 68.6% in Sweden, with biomass comprising 
the main source of renewable heat in each country.\21\
---------------------------------------------------------------------------
    \21\ International Energy Agency, ``Renewable heat policies: 
Delivering clean heat solutions for the energy transition,'' 2018, p. 
21. https://www.iea.org/publications/insights/insightpublications/
Renewable_Heat_Policies.pdf.
---------------------------------------------------------------------------
    France and Germany also have ambitious targets for heat's role in 
their transitions to the greater use of renewable energy. France has 
distinct measures for different sectors: its commercial and industrial 
program includes subsidies for both project support and project 
execution and supported 3,600 projects from 2009-2015.\22\ In the 
residential sector, tax credits of 30% of capital costs are the main 
incentive for renewable heat development along with a reduced value 
added tax (VAT) rate.\23\ In Germany, the focus has been on buildings 
rather than industrial process heat: building code obligations for 
renewable heat in new construction and a subsidy program with extra 
incentives when linked to energy efficiency improvements have driven 
additional deployment of renewable heat.\24\
---------------------------------------------------------------------------
    \22\ Id. at 29.
    \23\ Id.
    \24\ Id. at 31.
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    The United States does not have specific targets, nor a clear 
policy, for renewable heat at the federal level. However, some states 
have adopted renewable heating and cooling plans or have provided 
incentives, demonstrating that programs in the U.S. are possible. For 
example, Vermont established a goal to increase the share of renewable 
heat from 20% to 30% by 2025, New York offers a range of incentives for 
biomass heating systems, air and ground source heat pumps, and 
biodiesel blended with conventional heating oil, New Hampshire requires 
a specific portion of its renewable portfolio standard (RPS) come from 
heat,\25\ and 14 other states offer a credit for renewable thermal 
energy as part of their state renewable electricity standards.\26\ 
Other state-level incentives include sales tax exemptions and 
rebates.\27\ While some states have taken the lead in increasing 
renewable thermal, not all states choose to participate, creating a 
patchwork of policies and a dearth of incentives to promote renewable 
heat in some areas. A further challenge is that many of the state 
programs are only focused on buildings and there is less support for 
accelerating the use of renewable thermal technologies in the 
manufacturing sector.
---------------------------------------------------------------------------
    \25\ Id. at 40
    \26\ Clean Energy States Alliance, ``Renewable Thermal in State 
Renewable Portfolio Standards,'' July 2018. https://www.cesa.org/
assets/Uploads/Renewable-Thermal-in-State-RPS-April-2015.pdf.
    \27\ International Energy Agency, ``Renewable heat policies: 
Delivering clean heat solutions for the energy transition,'' at 40.
---------------------------------------------------------------------------
    Setting ambitious targets for renewable heat deployment and 
providing financial support for projects has been successful in 
European countries and has begun at the state level in the U.S.. 
Additional support at the federal level could help to further increase 
the use of renewable heat in the country.
    5. You mentioned that the high upfront capital costs of CHP and WHP 
systems make it difficult to compete for limited investment capital. 
How can the Federal government incentivize companies to make these 
investments? What types of financial instruments would be most 
effective?
    A 2015 United States Department of Energy study found that some of 
the key economic and financial barriers to the accelerated adoption of 
CHP included internal competition for capital, the ``split-incentive'' 
between capital improvement and operation and management budgets, 
securing low-cost financing due to financial risks, and lack of 
financing instruments such as Master Limited Partnerships.\28\ 
Regulatory barriers such as utility business models that result in rate 
designs that unfairly charge partial requirements customers and do not 
appropriately recognize the value of the services the CHP systems 
provide to the grid were also acknowledged by the Department.\29\
---------------------------------------------------------------------------
    \28\ United States Department of Energy, ``Barriers to Industrial 
Energy Efficiency,'' June 2015, p. 95. https://www.energy.gov/sites/
prod/files/2015/06/f23/EXEC-2014-005846_5%20Study_0.pdf. See also 
United States Department of Energy, ``Barriers to Industrial Energy 
Efficiency: Report to Congress,'' June 2015, p. 9-10. https://
www.energy.gov/sites/prod/files/2015/06/f23/EXEC-2014-
005846_6%20Report_signed_0.pdf.
    \29\ Id. at 103-104.
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    Installation of CHP systems typically requires a significant 
upfront investment which can eclipse long-term benefits. Insufficient 
capital and internal competition for capital prevent many facilities 
from installing CHP systems, even when such a system has an attractive 
financial return.\30\ A company may also be hesitant to make 
investments outside of its core business and may require an even higher 
rate of return compared to other, more familiar capital 
investments.\31\ Internal accounting practices that separate plant 
operation and maintenance budgets from capital improvements, resulting 
in costs and savings accruing to different budgets, can also make it 
difficult to demonstrate the financial benefits of a system.\32\ 
Facilities may also have a hard time finding favorable financing for a 
long-term investment in the facility upgrade.\33\
---------------------------------------------------------------------------
    \30\ Id. at 95.
    \31\ Id. at 96.
    \32\ Id. at 97.
    \33\ Id.
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    First signed into law in 2005 as part of the Energy Policy Act, the 
federal Investment Tax Credit (ITC) has played, and continues to play, 
a critical role in driving energy innovation and technological 
leadership in the United States. The federal ITC has helped to create 
thousands of jobs, lower electricity prices for families and 
businesses, reduce carbon emissions, and maintain the country's 
competitive edge in emerging energy technologies. Section 48 and 
Section 25D of the ITC provide tax credits that cover renewable energy 
technologies such as CHP, micro-turbines, solar energy, geothermal, 
fuel cells, and distributed wind energy. Increasing, or at the very 
least maintaining, this tax credit will continue to allow American 
businesses to realize energy and cost savings, support clean energy 
jobs, and reduce carbon and other GHG emissions.
    While the ITC has helped to support the deployment of CHP systems, 
WHP systems have not been able to benefit from this policy. Despite the 
fact that WHP is a zero-emission energy resource, these systems 
currently do not currently qualify for the Section 48 ITC. There are 
key differences between CHP and WHP systems that prevent WHP from 
accessing the ITC as written: while CHP systems capture waste heat 
generated in the production of electricity for thermal uses, WHP 
systems capture waste heat and energy from thermal processes and 
operations and convert that energy into electricity. The exclusion of 
WHP systems from the federal ITC puts such projects at a competitive 
disadvantage. The proposed Waste Heat to Power Investment Tax Credit 
Act would rectify this problem by allowing an energy tax credit for 
investments in WHP property.\34\
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    \34\ United States. Cong. Senate. Waste Heat to Power Investment 
Tax Credit Act. 116th Cong. 1st sess. S. 2283. Washington: 2019. 
https://www.congress.gov/bill/116th-congress/senate-bill/ 2283?r=2&s=1.
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    Loan programs can also be an effective policy to support additional 
CHP deployment. For example, the LIFT America Act creates a loan 
program to support the deployment of distributed energy systems for 
states, institutions of higher education, and electric utilities as 
well as a technical assistance and grant program to disseminate 
information and provide technical assistance to nonprofit and for-
profit entities for identifying, evaluating, planning, and designing 
distributed energy systems.\35\  As discussed in question 3 above, 
distributed energy systems have significant reliability and resiliency 
benefits, especially for facilities that are critical infrastructure.
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    \35\ United States. Cong. House of Representatives. Leading 
Infrastructure for Tomorrow's America Act. 116th Congress. 1st sess. 
H.R. 2741, Secs. 33303-33304. Washington: 2019. https://
www.congress.gov/bill/116th-congress/house-bill/2741/text#toc-
H364FAC1BA8D742599CF5C109 84A7AF57.
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    Federal grants could also help to increase CHP deployment in the 
United States and such legislation has previously been proposed. The 
Job Creation through Energy Efficient Manufacturing Act would require 
the Department of Energy to establish a Financing Energy Efficient 
Manufacturing Program that provides grants for energy efficiency 
improvement projects in the manufacturing sector.\36\ Entities eligible 
for grants would include state energy offices, nonprofit organizations, 
electric cooperative groups, or certain entities with a public-private 
partnership.\37\ The grant recipients would then distribute subgrants 
to nongovernmental, small or medium sized manufacturers located in the 
state in which the recipient is located to carry out projects that 
improve the energy efficiency of the manufacturers and develop 
technologies that reduce electricity or natural gas use by the 
manufacturers.\38\ By improving the efficiency of industrial plants, 
policies such as this Act will reduce carbon and other GHG emissions, 
reduce energy costs for manufacturers making them more competitive, and 
create jobs.
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    \36\ United States. Cong. Senate. Job Creation through Energy 
Efficient Manufacturing Act. 115th Cong. 1st sess. S. 1687. Washington: 
2017. https://www.congress.gov/bill/115th-congress/senate-bill/1687. A 
similar bill was also introduced in 2018, see United States. Cong. 
House of Representatives. Job Creation through Energy Efficient 
Manufacturing Act. 115th Cong. 2d sess. H.R. 5042. Washington: 2018. 
https://www.congress.gov/bill/115th-congress/house-bill/5042/text.
    \37\ Id.
    \38\ Id.
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    Historically, tax policies have been able to stimulate investments 
in both conventional and clean energy projects. However, conventional 
energy technologies have access to low-cost capital through types of 
financing mechanisms that are not available to CHP projects. A Master 
Limited Partnership (MLP) is a business structure that provides tax 
advantages to the partners in the business, permitting investors to 
trade shares and thereby allowing energy projects that qualify as MLPs 
to have lower cost of capital.\39\ Congress should adopt bipartisan 
legislation to allow clean energy projects to qualify as MLPs, as they 
do not qualify under current law.
---------------------------------------------------------------------------
    \39\ Id. at 98.
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    To the extent any technology neutral tax credit regimes or economy-
wide tax systems such as cap and trade are being considered, it is 
essential to ensure that the emissions for CHP systems are 
appropriately calculated. For example, with regard to technology 
neutral approaches on tax credits, the model in the Clean Energy for 
America Act calculates the emissions rate for CHP using both electrical 
and useful thermal energy.\40\ If a carbon pricing regime is under 
consideration, allowance structures must appropriately account for the 
savings realized by CHP systems.
---------------------------------------------------------------------------
    \40\ United States. Cong. Senate. Clean Energy for America Act. 
116th Cong. 1st sess. S. 1288. Washington: 2019. https://
www.congress.gov/bill/116th-congress/senate-bill/1288/text.
---------------------------------------------------------------------------
    In addition to financial and tax barriers, regulatory barriers that 
impact project economics can also restrict capital outlays for CHP 
systems. Though CHP and WHP systems can operate independently from the 
electric grid, many facilities that install such systems still 
interconnect with the electric grid to provide backup power during 
scheduled or unscheduled outages. Public utilities implement standby 
rates to recover infrastructure costs related to providing this backup 
power service and ensure that CHP host sites have power available when 
it is needed. However, in many cases, these rates are burdensome, 
inflexible, unpredictable, or lack transparency.\41\ By ensuring that 
standby rates better reflect the actual costs that a CHP or WHP system 
imposes on the electric grid, utilities can be compensated for costs 
while still encouraging investments in these systems.
---------------------------------------------------------------------------
    \41\ Alliance for Industrial Efficiency, ``Standby Rates: Barriers 
to CHP Deployment on a National Scale,'' May 2018. https://
chpalliance.org/wp-content/uploads/2018/05/Standby-Rates-One-
Pager_5.9.19.pdf.
---------------------------------------------------------------------------
    Though standby rates are approved by state utility regulators, 
federal policies could help to make standby tariffs and rates simple, 
transparent, and consistent. For example, the HEAT Act directs the 
Department of Energy to establish model rules and procedures for 
interconnection and its associated costs and procedures for determining 
fees or rates for supplementary power, backup or standby power, 
maintenance power, and interruptible power supplied to facilities that 
operate CHP and WHP systems.\42\ This legislation would establish a 
federal framework to help states develop solutions to meet growing 
energy demands efficiently and economically through the use of CHP and 
WHP, strengthening local economies and supporting national energy 
policy goals.
---------------------------------------------------------------------------
    \42\ United States. Cong. Senate. Heat Efficiency through Applied 
Technology Act. 116th Cong. 1st sess. S. 2706. Washington: 2019. 
https://www.congress.gov/bill/116th-congress/senate-bill/2706.
---------------------------------------------------------------------------
    The ability of equitable standby tariffs to unlock the potential of 
CHP and WHP has been acknowledged by utility regulators at the national 
level. The National Association of Regulatory Utility Commissioners 
(NARUC) recently recognized the significance of standby rates to the 
viability of CHP and WHP projects as well as the potential of CHP and 
WHP to improve system reliability and resiliency. In a 2019 resolution, 
NARUC ``encourages regulators to consider whether the cost of standby 
rates discourages further deployment of CHP and WHP, and could harm CHP 
and WHP facility competitiveness; and encourages Commissioners to 
assure that standby rates for partial requirements customers 
acknowledge that: (a) effectively coordinating CHP and WHP with grid 
system operations reduces demand and costs; and (b) CHP and WHP have 
the potential to improve system reliability and resiliency.'' \43\
---------------------------------------------------------------------------
    \43\ NARUC Board of Directors, ``Resolution on Standby Rates for 
Partial Requirements Customers,'' February 13, 2019. https://
pubs.naruc.org/pub/758747DC-F64E-BFD7-D411-817D44D3E571.
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    6. During the hearing, you mentioned that you have a project 
looking at the carbon accounting associated with combusting biomass. 
Could you elaborate on the sources of emissions studied? Were emissions 
outside of combustion, such as tree removal and transport, taken into 
account? Could you share the findings of this project?
    The Renewable Thermal Collaborative (RTC) serves as the leading 
coalition for organizations--businesses, cities and universities--that 
are committed to scaling up renewable heating and cooling at their 
facilities and dramatically cutting carbon emissions. Our partner in 
the RTC, World Wildlife Fund, is leading a project to help large 
thermal energy buyers evaluate whether biomass, considered from a 
lifecycle perspective, emits greater or fewer carbon emissions than 
other fossil fuels. There is growing recognition that automatically 
assuming carbon neutrality for bioenergy is inadequate to account for 
climate impacts, particularly for forest biomass as a fuel where the 
time lag between emission and uptake from regrowth can take up to a 
century for slow-growing trees. Nor is there yet consensus on the best 
way to account for this biogenic carbon. However, the World Resources 
Institute intends to create new accounting guidelines for land sector 
emissions and removals within the Greenhouse Gas Protocol \44\ over the 
next few years. The Greenhouse Gas Protocol is a voluntary standard for 
accounting that is widely used and accepted globally for emissions 
reporting. Until we have accepted accounting practices, it will be 
difficult to reach agreement on these challenging issues.
---------------------------------------------------------------------------
    \44\ http://ghgprotocol.org/.
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    In the meantime, RTC's biomass project has been reviewing 
accounting options and developing a method (called GWPbio) for 
comparing biomass to other fuels to help large thermal energy buyers 
make sound investment decisions. Because the project is still underway, 
we do not have final results yet. However, the decision tool that is 
being developed adopts a lifecycle approach and considers emissions 
from many sources, from the traditional footprint including combustion, 
cutting, processing and transporting the wood product, to its biogenic 
impact, that considers the type of wood species, their regrowth rate 
(shorter is better for carbon), the amount of carbon and duration it is 
stored in a product (e.g., furniture vs fuel) and direct and indirect 
land use impacts of above and below ground carbon as well as soil 
carbon, among other attributes.
    The decision tool is expected to be publicly available at the end 
of Q1 in 2020.
    7. Could you expand upon what issues need to be considered when 
determining whether sources of biomass are appropriate for renewable 
thermal to reduce greenhouse gas emissions? Taking into account land-
use considerations and the multiple uses of biomass, what is a 
reasonable scale for using biomass for renewable thermal?
    Several key issues that need to be considered when determining 
whether sources of biomass are appropriate for renewable thermal to 
reduce greenhouse gases are outlined in the second paragraph of the 
answer to question 6. In addition to the GWPbio tool under development, 
the Greenhouse Gas Protocol for the land sector will be a definitive 
resource when completed.
    In short, there is not yet a consensus on the reasonable scale for 
using biomass for renewable thermal energy or for other needs. The U.S. 
Department of Energy Oak Ridge National Laboratory completed the 
Updated Billion-Ton Report Study \45\ in 2016 to estimate the amount of 
biomass available in the US. The study was a US-wide assessment of 
bioenergy feedstock availability. It considered issues of access, 
maintaining base case soil health and other factors, but did not 
explicitly apply sustainability criteria or standards in its analysis. 
The RTC has some work underway to develop criteria to filter against 
the results of the Updated Billion-ton Study results. However, a robust 
scientific study developed and carried out with stakeholder input and 
peer review is needed. For now, and until WRI completes the land sector 
Greenhouse Gas Protocol, a sound approach would use waste materials and 
materials that are harvested from sustainably managed forests, 
considering climate and forest health, including biodiversity. Forest 
Stewardship Council controlled wood supply would provide a sound 
sustainability filter.
---------------------------------------------------------------------------
    \45\ U.S. Department of Energy Oak Ridge National Laboratory. 
Updated Billion-Ton Study (2016). https://www.energy.gov/sites/prod/
files/2016/12/f34/2016_billion_ton_report_12.2.16_0.pdf.
---------------------------------------------------------------------------
    In addition, we would note that some states have analyzed these 
issues extensively as part of their rulemakings to determine 
appropriate crediting of biomass thermal energy products in their 
Renewable or Alternative Portfolio Standards. Massachusetts' 
Alternative Portfolio Standard, for example, offers credits for biomass 
thermal projects under these guidelines. However, as outlined in a 
report from the Clean Energy States Alliance on these issues, states 
have taken different approaches to biomass in their standards. The RTC 
is only beginning to assess how the states have addressed these issues 
so does not endorse any particular approaches which the states may have 
taken.
    David Gardiner and Associates is happy to share with the Committee 
any additional studies or reports we develop that address these issues.
                       the honorable sean casten
    1. In terms of designing a combined heat and power plant there can 
be a lot of flexibility in terms of how a system can be utilized to 
produce various ratios of heat to power. However, these two products 
can be subject to very different regulatory regimes that can in turn 
influence how a system is designed and its ultimate efficiency as you 
discussed in your testimony before the Committee. How can regulation at 
both the state and federal level create barriers that can incentivize 
CHP developers to sub optimize design of a plant with regard to overall 
efficiency?
    Conventional electric generation is very inefficient, with roughly 
two-thirds of fuel inputs lost as wasted heat from the process. 
Additional energy is lost during transmission from the central power 
plant to the end user. By generating both heat and electricity from a 
single fuel source at the point of use, CHP lowers emissions and 
increases overall fuel efficiency. When electricity and thermal energy 
are provided separately, overall energy efficiency ranges from 45-55%, 
but, though efficiencies vary for individual CHP installations, a 
properly designed CHP system will typically operate with an overall 
efficiency of 65-85%.\46\ Because they combust less fuel to provide the 
same energy services, CHP systems reduce all types of emissions, 
including greenhouse gases, criteria pollutants, and hazardous air 
pollutants. As a consequence, natural gas-fired CHP can produce 
electricity with about one-quarter of the GHG emissions of an existing 
coal power plant. WHP, which uses waste heat from industrial processes 
to generate electricity with no additional fuel and no incremental 
emissions, reduces emissions and offsets costs associated with 
purchased power.
---------------------------------------------------------------------------
    \46\ United States Department of Energy, ``Combined Heat and Power 
(CHP) Technical Potential in the United States,'' March 2016, p. 3-4. 
https://www.energy.gov/sites/prod/files/2016/04/f30/
CHP%20Technical%20Potential%20Study%203-31-2016%20Final.pdf.
---------------------------------------------------------------------------
    Industrial and manufacturing facilities often have large thermal 
loads in comparison to their electric power needs. Installing a CHP 
system to meet such facility's entire thermal load would create the 
most energy and emissions savings: the optimal way to size a CHP system 
for a facility is by matching the thermal output of the system to the 
baseload thermal demand of the facility.\47\ However, when a CHP system 
is deployed at such a facility, the CHP system is frequently not sized 
to meet the entire thermal load, but instead is capped at the electric 
demand of the facility because it is either impossible to sell the 
excess electric power or difficult to sell the excess electric power at 
a price that reflects its value. Regulations that prohibit the sale of 
excess power to the grid, prohibit wheeling \48\ or the sale of excess 
power to another facility, or that do not appropriately value such 
power create this sub-optimization of CHP deployment. The inability to 
sell excess power, or to sell excess power at a competitive price, can 
be a deterrent to CHP projects sized to meet facility thermal 
loads.\49\
---------------------------------------------------------------------------
    \47\ Id. at 11.
    \48\ ``Wheeling'' in the electric market is the interstate sale of 
electricity or the transmission of power from one system to another. 
See U.S. Department of Energy Office of Electricity Delivery and Energy 
Reliability, ``United States Electricity Industry Primer,'' July 2015, 
p. 91. https://www.energy.gov/sites/prod/files/2015/12/f28/united-
states-electricity-industry-primer.pdf.
    \49\ United States Department of Energy, ``Barriers to Industrial 
Energy Efficiency,'' June 2015, p. 101. https://www.energy.gov/sites/
prod/files/2015/06/f23/EXEC-2014-005846_5%20Study_0.pdf.
---------------------------------------------------------------------------
    Policies that allow facilities that install CHP systems to sell 
excess electric power would help to encourage additional deployment of 
CHP and would result in increased energy efficiency by creating thermal 
and electric energy in one system. Policy options include power 
purchase agreements (PPAs) with a local electric utility which 
typically guarantee that a CHP system owner can sell power at a 
predetermined rate for a certain number of years. However, state 
utility regulation that does not provide fair treatment to all of the 
benefits and costs of CHP may curtail the attractiveness of these types 
of agreements.\50\ Third-party PPAs are another policy option where a 
CHP system owner can sell excess electricity to neighboring facilities, 
however in many states CHP system owners are not able to deliver excess 
electricity to nearby plants that are under common ownership or sell 
excess power except to the electric utility that serves the CHP site, 
creating a potential barrier to CHP deployment.\51\ In general, rules 
that prohibit or diminish the value of excess power sales leave large 
amounts of energy and emissions savings unrealized.
---------------------------------------------------------------------------
    \50\ Id.
    \51\ Id. at 102.
---------------------------------------------------------------------------
    2. Given than waste heat to power represents a zero marginal fuel 
use source of energy with emission equivalent to those of renewable 
sources, how should federal incentives treat these projects? Should 
they receive similar support to other zero-carbon sources of energy?
    Waste heat to power (WHP) systems capture waste heat, a byproduct 
of industrial processes, and use it to generate electricity with no 
additional fuel and no incremental emissions. WHP is a clean form of 
energy that uses leftover heat from industrial, commercial and 
institutional operations to generate electricity for use onsite or for 
export to the electric grid. WHP systems capture waste heat from 
sources such as exhaust stacks, pipes, boilers and cement kilns, which 
would otherwise be lost to the atmosphere, and convert the waste heat 
into electricity. Because WHP generates electricity with no additional 
fuel or combustion, WHP is effectively a ``zero emission'' energy 
resource. Like wind and solar energy, waste heat is a resource we 
already have, but it just needs to be captured and used. However, the 
resource is underutilized in the U.S.: as of 2016, the U.S. Department 
of Energy determined existing WHP capacity to be 469 megawatts and the 
WHP technical potential to be 7,624 megawatts, meaning that the U.S. 
was utilizing around six percent of this resource.\52\
---------------------------------------------------------------------------
    \52\ United States Department of Energy, ``Combined Heat and Power 
(CHP) Technical Potential in the United States,'' March 2016, p. 18, 
28-29. https://www.energy.gov/sites/prod/files/2016/04/f30/
CHP%20Technical%20Potential%20Study%203-31-2016%20Final.pdf.
---------------------------------------------------------------------------
    As of 2016, of the 40 states that had some form of portfolio 
standard, either an RPS, alternative portfolio standard (APS), or 
energy efficiency resource standard (EERS), 32 states included WHP 
systems.\53\ While this recognition at the state level is important, it 
also demonstrates that WHP is not fully recognized for all of the 
benefits it delivers.
---------------------------------------------------------------------------
    \53\ U.S. Environmental Protection Agency Combined Heat and Power 
Partnership, ``Portfolio Standards and the Promotion of Combined Heat 
and Power,'' March 2016, p. 16-32. https://www.epa.gov/sites/
production/files/2015-07/documents/
portfolio_standards_and_the_promotion_ of_combined_heat_and_power.pdf
---------------------------------------------------------------------------
    Despite being a zero-emissions technology, WHP does not currently 
qualify for the federal Investment Tax Credit. CHP and WHP have some 
key differences that prevent WHP from accessing the ITC as written. CHP 
systems capture waste heat generated in the production of electricity 
for thermal uses, whereas WHP systems capture waste heat and energy 
from processes and operations and convert that energy into electricity. 
WHP should receive support just as other zero-carbon sources of energy 
do.

                        Questions for the Record

Jeremy Gregory, Research Scientist and Executive Director, MIT Concrete 
                           Sustainability Hub

                       the honorable kathy castor
    1. How can existing Federal procurement policies be updated to 
prioritize decarbonization in the industrial sector?
    I recommend simply asking suppliers of construction materials for 
government projects to report on the environmental impacts and 
performance of their products across the full product lifecycle, along 
with steps being taken by the supplier to improve the product's 
environmental impact profile over time. If the projects involve 
buildings that are seeking LEED certification, this can be used to 
achieve points in the materials and resources portion of the rating 
system. Many suppliers do not think to lower the environmental impacts 
of their products because they do not measure the impacts and are not 
asked to report them. Changing these practices will likely cause them 
to lower their environmental impacts as a means of differentiating 
themselves in the marketplace.
    2. Are there environmental, health, safety, or other risks and 
tradeoffs to pursuing solutions for low-carbon cement and concrete? How 
can they be mitigated?
    In some cases, there are immediate opportunities to reduce the 
carbon footprint of cement and concrete--simply by switching to more of 
a performance-based system for materials selection. Portland limestone 
cement, for example, is a proven material that provides the same 
performance benefits of traditional cement formulations while reducing 
the emissions profile by approximately 10%. In other cases, it is too 
early to tell what the long-term impacts of alternative formulations 
will be over the lifecycle of specific projects. There will almost 
certainly be performance trade-offs with different solutions (e.g., 
changes in strength, durability, constructability, etc.) and these need 
to be considered by engineers and concrete producers when changing 
concrete mixtures. However, there are unlikely to be significant health 
and safety issues directly resulting from the use of low-carbon cements 
and concrete because the industry knows the importance of developing 
solutions that do not affect workers or the users of structures 
containing concrete.
    3. You mentioned that biomass could be used as an alternative fuel 
in cement plants. Could you expand upon what issues need to be 
considered when determining whether sources of biomass are appropriate 
for use in cement plants to reduce greenhouse gas emissions? Taking 
into account land-use considerations and the multiple uses of biomass, 
what is a reasonable scale for using biomass in cement plants?
    Biomass and other nontraditional nonhazardous secondary materials 
provide excellent sopources of fuel for cement kilns due to the unique 
operating characteristics of cement kilns. Indeed, many facilities have 
also incorporated biomass sources into their fuel mix, from switchgrass 
and nut shells to used railroad ties.
    With respect to technical considerations when selecting biomass or 
other alternative fuels for use in kilns, key considerations include 
the heat value of the fuel (paper, plastic, fibers and fabrics, for 
example, have very positive profiles) as well as the contaminant 
characteristics. Because of the extremely high temperatures and long-
residence time for kiln fuels, these fuels offer favorable, and often 
better heat and emissions characteristics than traditional fossil 
fuels. The high heat and energy efficiency of modern cement plants 
allows for a high-level of conversion of fuel to energy.
    From a resource use perspective, increased use of biomass and other 
alternative fuels is a net positive for both the environment, the 
economy, and society. Cement kilns can convert waste biomass streams 
into a valuable fuel commodity, without complicated chemical processing 
to create fuels. For some of our members that have chosen to grow 
switchgrass or other high-heat value biomass sources, the land used to 
cultivate the fuel provides a valuable ecological habitat and a natural 
buffer between the plant operations and the community.
    With respect to potential scale of use, we see a considerable 
opportunity to increase the use of biomass and other alternative fuels 
within the cement industry. Today, for example, US cement kilns use 
derive roughly 15 percent of their kiln fuel from biomass and other 
alternative fuel sources (used tires, solid waste, etc.) while the 
average fuel mix in Europe ranges from 35 to 60 percent.
    To get there, however, we are going to need to take a hard look at 
the federal and state permitting processes for alternative fuel use in 
specific kilns. Current EPA rules, and sometimes state regulations, can 
make it difficult to incorporate nontraditional fuels into the fuel 
mix. While EPA has provided limited exemptions for some biomass 
streams, regulatory burden and fear of inconsistent enforcement can 
create concerns.

                        Questions for the Record

   Brad Crabtree, Vice President of Carbon Management, Great Plains 
                               Institute

                       the honorable kathy castor
    1. In this committee, we've talked, often with frustration, about 
how China has cornered key parts of the clean energy market, such as 
batteries and solar panels. Has China cornered the market in carbon 
capture for industrial emissions, or is this an opportunity for the 
United States to take the lead and export critical technology to China 
and other countries?
    According to the Global Carbon Capture and Storage Institute 
(GCCSI), China has commenced construction of one large-scale carbon 
capture and storage facility and another seven large-scale projects are 
in different stages of development. By contrast, the U.S. has 13 
operating commercial-scale facilities that capture carbon dioxide (CO2) 
from a variety of industrial and power generation sources and have a 
combined annual capture capacity of over 25 million metric tons. Thus, 
the U.S. remains the clear leader in the deployment of carbon capture, 
the commercial use of captured carbon and its safe and permanent 
geologic storage in oil and gas fields and saline formations, and we 
have the potential to expand that global leadership role. GCCSI 
recently updated its database of large-scale carbon capture and storage 
projects under development globally by adding ten new projects, eight 
of which are in the U.S.
    The U.S. oil and gas industry has globally unmatched experience and 
expertise with large-scale CO2 injection and storage that dates back to 
1972. Multiple other U.S. industries collectively have decades of 
experience capturing and managing CO2 at commercial scale. And American 
innovators, entrepreneurs and investors are on the cusp of a 
technological and economic transformation in the beneficial use of 
captured CO2 and carbon monoxide (CO) to produce low and zero-carbon 
fuels, chemicals, advanced materials, and products.
    However, if we are to maintain and strengthen America's global 
leadership position, Congress must build on last year's landmark 
bipartisan reform and expansion of the Section 45Q tax credit by 
enacting a broader portfolio of federal incentives and other policies 
for carbon capture, much as has successfully been done for other low 
and zero-carbon technologies, such as wind and solar. The 70-plus 
companies, unions and NGOs that participate in the Carbon Capture 
Coalition recently reached consensus on just such a policy portfolio 
for American leadership on carbon capture. The Coalition's Federal 
Policy Blueprint was submitted to the Committee for the record at the 
hearing.
    2. Several labor unions are members of your coalition. Why is the 
topic of industrial efficiency and carbon capture so important to them?
    Carbon capture technologies can enable the decarbonization of 
critical economic activities, while avoiding the closure of existing 
industrial and manufacturing facilities and power plants and helping to 
achieve the emissions reductions needed to meet midcentury climate 
goals. Key sectors of our economy suited to carbon capture deployment 
support a high-wage, highly-skilled jobs base vital to the livelihoods 
of working Americans and to the stability and well-being of entire 
communities and regions that depend on them. Therefore, economywide 
deployment of carbon capture represents a central and necessary 
objective of a broader federal climate strategy and policy framework 
for labor unions, and it is the reason why unions have participated 
actively in the Coalition since its founding in 2011.
    3. What is the biggest challenge for industrial carbon capture and 
what policy would make the greatest impact?
    While industrial carbon capture from high-purity industrial sources 
of CO2 such as ethanol, natural gas processing and ammonia production 
have now become economically viable under the reformed federal 45Q tax 
credit, many industrial processes produce less pure streams of CO2 and 
have higher costs of capture. These industries also tend to produce 
low-margin commodities that are vulnerable to global competition, and 
they are thus highly sensitive to any increases in costs of production 
associated with implementation of emissions reduction technologies such 
as carbon capture. Moreover, some of the most carbon-intensive 
industrial sectors, such as refining, chemicals, cement, and steel 
production, have deployed few and, in some cases, no examples of carbon 
capture and utilization technology at full commercial scale, which 
means that the first large-scale projects in these industries will be 
more costly and involve more commercial risk to project developers and 
their investors who are the early adopters.
    Following last year's reform and expansion of the Section 45Q tax 
credit, there is no longer one single policy that would have the 
greatest impact, but rather we now need to take a page from the policy 
success of wind and solar by enacting a broader portfolio of federal 
policies to enhance and build on 45Q as noted in the response to 
question 1 above. The first component of this broader federal policy 
portfolio includes technical fixes and enhancements to 45Q and other 
existing incentives, as well as new incentives to reduce the cost of 
capital in financing carbon capture projects (see response to question 
10 below for more detail). Second, now that we have the revamped 45Q 
credit as a cornerstone federal incentive for deployment, it is crucial 
that federal policymakers devote attention to ensuring that CO2 
transport infrastructure becomes an important element of broader 
federal infrastructure policy to ensure that we have robust 
infrastructure in place across the country to transport CO2 from where 
it is captured to where it can be geologically stored and put to 
beneficial use (see response to question 9 for more detail.) Finally, 
Congress can help ensure that the next generation of carbon capture and 
utilization technologies with lower costs and improved performance make 
their way into the marketplace by continuing to advance bipartisan 
RDD&D legislation such as the USE IT Act, Clean Industrial Technology 
Act and the Fossil Energy R&D Act, which would provide dedicated 
federal funding for research, development and demonstration of capture 
and utilization technologies in key industrial sectors.
    4. You mentioned that Federal procurement policies will play an 
important role for creating early markets for industrial carbon capture 
projects. Could you expand upon which types of industrial products 
would be best suited for government procurement? Which of these have 
potential for carbon utilization?
    The Carbon Capture Coalition has identified as a priority the 
development of federal procurement policy for low, zero and even 
carbon-negative electricity, liquid fuels and products produced through 
carbon capture, utilization, removal and storage. While the Coalition 
has yet to develop specific policy recommendations, Coalition 
participants recognize the important role that federal procurement 
policy has played in providing demand-side support for other low and 
zero-carbon technologies, complementing the role of tax credits and 
other financial incentives on the supply side to help drive private 
investment in commercial technology deployment.
    Carbon capture and utilization in industrial settings is 
multifaceted, so federal procurement policies not only need to support 
market development for different non-energy products, but also for 
electricity and a wide range of liquid fuels. For example, utilization 
of waste steel plant CO emissions to produce low carbon ethanol, jet 
fuels and chemicals is currently being commercialized in China and 
Europe and could readily be deployed in the U.S. with the right mix of 
policy support. Also, low and zero carbon-electricity and hydrogen are 
critical to decarbonization of industrial sectors, and government 
procurement policies can help stimulate deployment of carbon capture in 
power generation and in hydrogen production for industrial heat and 
other applications.
    In addition, key industrial commodities such as steel and cement 
lend themselves to government procurement policies. Infrastructure and 
construction constitute a significant component of market demand for 
such commodities, and federal funding for projects plays a major role 
in these markets. Because the purchase of these commodities represents 
a small percentage of total project costs, the federal government can 
provide a meaningful premium in the marketplace for lower-carbon steel, 
cement and other commodities manufactured with carbon capture and/or 
incorporating carbon utilization, without significantly increasing the 
total federal contribution to such projects.
    Finally, federal procurement policies can play an especially 
important role in establishing markets for products derived from the 
utilization of captured CO2 and its precursor CO that have a 
smaller carbon footprint than their traditional counterparts. 
Considering both technological maturity and potential market size, 
building materials, fuels, chemicals and plastics produced from 
captured carbon are examples of promising areas where procurement 
policy could make a real difference in fostering deployment. Beyond 
reductions in carbon emissions, there are additional benefits to many 
of these technologies, including military readiness. Direct air 
capture-to-fuels applications, for example, could enable the military 
to produce fuels around the world through the capture of CO2 
from ambient air.
    5. Are there environmental, health, safety, or other risks and 
tradeoffs to pursuing carbon capture utilization and storage? How can 
they be mitigated?
    Carbon capture, pipeline transport and geologic storage of 
CO2 have been undertaken at scale for nearly a half century 
in the U.S., and over a billion tons of CO2 have been 
injected into geologic formations over that time period without 
significant environmental incidents. Industry currently purchases and 
manages on the order of 65-70 million metric tons of CO2 
annually for injection. Environmental, health and safety risks are 
known, minor, well-managed and regulated. The transport, use and 
geologic storage of that CO2 is enabled by just over 5,000 
miles of existing CO2 pipelines in 11 states, the operation 
of which over decades has involved no fatalities or major environmental 
accidents. Few industries on this scale have a comparable safety and 
environmental record.
    6. You mentioned the importance of the 45Q tax credit for carbon 
capture projects. Beyond 45Q, what policies does the Carbon Capture 
Coalition recommend for creating markets for industrial carbon capture?
    This question is already addressed in responses to questions 1, 3, 
4, 9 and 10, especially questions 4 and 10.
    7. You mentioned in your testimony visiting two overseas 
demonstrations of CCUS at steel production facilities. Could you talk 
about what you learned from these visits that could be applied to 
facilities in the United States? Why do you think these innovative 
applications were demonstrated in other countries and not in the United 
States? What made these countries better environments for testing these 
technologies?
    U.S. state and federal officials and representatives of industry, 
labor, NGO and philanthropy recently had the opportunity to visit the 
world's only large-scale carbon capture facility at a steel plant in 
the United Arab Emirates and a commercial-scale carbon utilization 
project under construction at a steel mill in Belgium and to consider 
how these technologies and business models could be applied here in the 
U.S. The direct reduction ironmaking process used by Emirates Steel in 
the UAE is widely deployed in the U.S. The specific HYL technology from 
Energiron produces a pure stream of CO2 that can be readily 
configured for capture and compression, and it is currently installed 
at a steel plant in Louisiana, potentially creating a near-term 
opportunity in the U.S. In Belgium, the ``Steelanol'' project under 
development between the U.S. company LanzaTech and global steel 
producer ArcelorMittal to produce ethanol from steel mill CO emissions 
could also be pursued in the U.S. under the right policy circumstances.
    In both the UAE and Belgium, the commitment of resources by Abu 
Dhabi (through the Abu Dhabi National Oil Company) and the European 
Union, respectively, and the economic opportunity to add value to 
existing energy and industrial production through carbon capture and 
utilization provided the impetus to these projects and made their 
development feasible. Here in the U.S., the existing 45Q tax credit, 
coupled with targeted federal resources and incentives for early 
commercial technology demonstration in key industrial sectors such as 
steel, cement, chemicals, etc., would enable similar steel and other 
large-scale industrial carbon capture projects to move forward. 
Specifically for carbon utilization-to-fuels pathways such as LanzaTech 
and ArcelorMittal's CO-to-ethanol process, incentive support for low-
carbon fuels through the Renewable Fuels Standard or some comparable 
federal policy would be needed for deployment to proceed.
    8. Are there ways that carbon capture can help industrial 
facilities with reliability and resilience?
    Many types of industrial facilities are very energy-intensive and 
require cost-effective, reliable electricity and industrial heat on a 
24/7 basis. Installing carbon capture on coal and natural gas power 
generation can decarbonize electricity inputs to industrial production 
without impacting supply or system reliability. Similarly, steam 
methane reforming of natural gas with carbon capture currently provides 
the lowest-cost source of zero-carbon hydrogen, thus enabling cost-
effective, on-demand provision of near zero-carbon heat to industrial 
processes.
    9. You mentioned that expanding infrastructure for the transport of 
carbon dioxide will be crucial for bringing down the costs of 
deployment of CCUS. Can you describe the existing carbon dioxide 
pipeline infrastructure in the United States and how and where it would 
need to be expanded to accommodate the volumes projected for deep 
decarbonization?
    Currently, the U.S. has just over 5,000 miles of existing 
CO2 pipelines in 11 states, and CO2 has been 
safely transported and injected for injection and geologic storage at 
scale since 1972. The bulk of today's CO2 transport 
infrastructure is concentrated in several pipeline networks, with the 
largest centered on the Permian Basin of Texas and New Mexico and other 
smaller networks on the Gulf Coast and in the Northern Plains, with the 
remainder consisting of single source-to-sink pipelines in several 
states.
    For carbon capture to realize its full potential to contribute to 
midcentury emission reductions as borne out in modeling by the 
International Energy Agency (IEA) and Intergovernmental Panel on 
Climate Change (IPCC), a national system of CO2 transport 
infrastructure will need to be developed on a scale comparable to 
systems now in use to transport oil and gas. This will entail scaling 
up existing regional CO2 infrastructure hubs substantially, 
establishing new hubs in areas of concentrated industrial and energy-
related emissions and geologic storage potential (e.g. Louisiana Gulf 
Coast and industrial Midwest), and developing new long-distance, large-
volume CO2 trunk lines and associated feeder lines to 
regions not currently served by infrastructure for carbon management, 
including the Upper Midwest, Midwest and coastal regions.
    The Carbon Capture Coalition has urged Congress to make 
CO2 transport infrastructure a core component of broader 
federal infrastructure policy, specifically recommending a federal role 
in leveraging private capital investment through:
           Low-interest federal loans to finance extra pipeline 
        capacity and realize economies of scale;
           Support for large-volume, long-distance 
        CO2 trunk line demonstration projects to support 
        development of key regional hubs; and
           Encouragement to state and local governments to 
        designate anthropogenic CO2 pipelines as ``pollution 
        control devices'' to enable tax abatement.
    The Investing in Energy Systems for the Transport of CO2 
Act of 2019 (INVEST CO2 Act) recently introduced in the 
House incorporates the Coalition's recommendations for a federal role 
in helping to finance the buildout of national CO2 transport 
infrastructure.
    10. You mentioned that carbon capture projects are difficult to 
finance due to the high cost of debt and equity and the risk involved 
in the investment. Which government financing mechanisms would best 
lower these costs and risks?
    As noted above, the Coalition recommends a portfolio of policies to 
expand the pool of eligible investors and projects, reduce investment 
risk, and make capital available to projects on more favorable terms. 
The following policies involve technical fixes and enhancements to the 
existing 45Q tax credit, improvements to other existing complementary 
incentives and new financial incentives.
    First and foremost, Congress should extend now the authorization of 
45Q beyond the current deadline for beginning construction at the end 
of 2023 in order to provide the kind of longer-term planning and 
investment horizon that has helped spur private investment, commercial 
deployment and cost reductions for other low and zero-carbon 
technologies. The newly-reformed 45Q credit provides a foundational 
incentive for early commercial carbon capture deployment, but 
significant delays by the IRS in providing guidance have reduced the 
time period available to plan, engineer, permit and finance large-
scale, capital intensive carbon capture and utilization projects from 
six years to just four.
    In addition, technical fixes and new policy options to enhance and 
complement 45Q would further incentivize private investment in the 
deployment of carbon capture technologies. The technical fixes 
identified below offer many potential near-term deployment benefits to 
the carbon capture industry:
           Eliminating the 25,000-ton minimum annual capture 
        threshold in 45Q that inadvertently risks precluding most 
        carbon utilization projects from eligibility;
           Preventing the disallowance of 45Q and the 48A tax 
        credit under the Base Erosion and Anti-Abuse Tax--BEAT (a 
        technical fix already afforded investors claiming the 
        Production Tax Credit for wind energy and the Investment Tax 
        Credit for solar energy), which otherwise risks reducing the 
        pool of available investors in carbon capture projects; and
           Enabling developers of power plant carbon capture 
        retrofit projects to access available 48A tax credits by 
        incorporating needed technical fixes provided for in the Carbon 
        Capture Modernization Act. (The legislation would address a 
        conflict in current law that makes the tax credit unworkable 
        for potentially eligible projects.)
    The Coalition also recommends several new policy options to help 
the carbon capture industry achieve economywide deployment:
           Providing enhanced transferability for the 45Q 
        credit in statute by including additional taxpayers who are 
        involved in the carbon capture transaction to be allowable as 
        transferees (modeled on the transfer provision in Section 
        45J(e) of the Advanced Nuclear Tax Credit);
           Establishing a revenue-neutral refundable option for 
        45Q to enable a greater diversity of companies and business 
        models to benefit from the tax credit; and
           Creating an ``American Energy Bond'' option to allow 
        project developers to make interest payments in the form of tax 
        credits, if they invest bond proceeds in qualified energy 
        infrastructure projects, including carbon capture and 
        utilization.
    Providing for the eligibility of carbon capture and utilization 
eligible for federal financial incentives that have proven effective in 
other industries can further reduce the cost of capital and complement 
and reinforce the deployment potential of the 45Q credit. The Carbon 
Capture Improvement Act would make carbon capture and utilization 
projects eligible for tax-exempt private activity bonds, and the 
Financing Our Energy Future Act would also allow carbon capture and 
utilization projects to become master limited partnerships, thus 
affording the tax advantages of a partnership coupled with the benefit 
of being able to raise equity in public markets.
    Finally, ensuring the widespread availability of infrastructure to 
transport CO2 from where it is captured to where it can be stored or 
put to beneficial use will reduce costs and increase investor 
confidence in proposed capture and utilization projects. As referenced 
in the response to question 9, the Investing in Energy Systems for the 
Transport of CO2 Act of 2019 (INVEST CO2 Act) would provide for a 
federal role in providing low-cost financing to support the deployment 
of CO2 transport infrastructure and ensure that such 
infrastructure is built with sufficient capacity to stimulate private 
investment in ongoing development of capture and storage projects over 
time.
    11. You mentioned that there is potential for using biomass as a 
feedstock for power generation and capturing the carbon dioxide on the 
back end to create negative emission energy for industry. Could you 
expand upon what issues need to be considered when determining whether 
sources of biomass are appropriate for power generation with carbon 
capture to reduce greenhouse gas emissions? Taking into account land-
use considerations and the multiple uses of biomass, what is a 
reasonable scale for using biomass for power generation with carbon 
capture?
    While IPCC modeling indicates that deploying atmospheric carbon 
removal strategies at significant scale--including bioenergy with 
carbon capture to achieve negative emissions--is necessary to meet 
midcentury climate goals, the Carbon Capture Coalition does not take a 
position regarding the appropriate future scale and scope of biomass 
utilization in bioenergy production with carbon capture relative to 
other negative emissions strategies, including direct air capture 
deployment. However, existing biofuels production and biomass power 
generation in U.S. provides ample opportunity to deploy carbon capture, 
use and geologic storage of biogenic CO2 emissions to demonstrate the 
commercial potential for larger-scale negative emissions energy 
systems--without expanding beyond current levels of biomass feedstock 
use in energy production. If we are even to have the option of scaling 
up negative emissions energy systems in the post-2030 period, it is 
important that federal policymakers support commercial demonstration of 
bioenergy with carbon capture now at biofuels and biomass power 
facilities using existing feedstock supplies. In the meantime, federal 
policymakers and stakeholders can and should continue to work to forge 
agreement on policies that can help ensure long-term sustainable 
biomass utilization in the context of midcentury decarbonization.

                        Questions for the Record

            Cate Hight, Principal, Rocky Mountain Institute

                       the honorable kathy castor
    1. What is the biggest challenge to deploying renewable hydrogen 
for industrial processes? What single policy would be most effective at 
addressing this challenge?
    Today's biggest challenge is that industry does not use a lot of 
``renewable'' hydrogen because there is not enough of it on the market 
for it to be cost-competitive. The existing market is predominantly 
supplied by hydrogen produced through steam methane reformation (SMR), 
without consideration of the carbon footprint of this process. And 
hydrogen producers don't want to take on the financial risk of ramping 
up production if they don't have a sure market to allow them to recover 
costs. To increase hydrogen supply and bring down the cost, regulations 
and/or financial incentives could be used to stimulate low-carbon 
hydrogen production, including that produced using zero-carbon 
electricity and also though SMR with associated carbon capture and 
storage (CCS).
    2. You mentioned government procurement of hydrogen as a potential 
policy solution. What considerations are important when designing 
procurement policy for hydrogen? How should the source of hydrogen play 
a role?
    Government demand for hydrogen, articulated through procurement 
policies focused on procuring more hydrogen as well as products 
produced using hydrogen fuel (such as steel), can play a key role in 
stimulating hydrogen production. Such policies should focus on sourcing 
low-carbon hydrogen, including that produced though zero-carbon 
electricity and also though steam methane reformation (SMR) with 
associated CCS. In addition, The long-term goal should be for all 
hydrogen to be produced using renewable electricity; in the near term, 
however, the goal should be to build the supply of hydrogen to bring 
down the price. Additionally, the government should continue to invest 
in Department of Energy (DOE) programs, such as H2@Scale, to continue 
to drive development of hydrogen pathways.
    3. Are there environmental, health, safety, or other risks and 
tradeoffs to pursuing the use of hydrogen? How can they be mitigated?
    Hydrogen has been safely produced and used in the American 
industrial sector for more than half a century. As with every fuel, 
safe handling practices are required, but hydrogen is non-toxic and 
does not pose a threat to human or environmental health if released. In 
addition, when used to generate power and for several other industrial 
applications (e.g., steelmaking), hydrogen produces only water as a 
byproduct, and does not release air pollutants or particulate matter. 
The environmental impact of hydrogen production depends on the 
production pathway. Hydrogen can be produced through electrolysis using 
any power source, the cleanest being renewable power. Hydrogen can also 
be produced through reforming of fossil fuels including natural gas; 
this process releases carbon dioxide that must be captured. In 
addition, one would need to account for the environmental impact 
associated with the production, transmission and distribution of the 
natural gas to the hydrogen production facility.
    4. You mentioned the similarities between hydrogen use and electric 
vehicles. Could you elaborate on how the Federal government can help 
the hydrogen market grow while simultaneously incentivizing lower-
emission hydrogen production for this growing market?
    The similarity between growing the hydrogen market and in the EV 
market relates to the fuel sources used to create both markets. Right 
now, EVs are simply powered by the mix of power offered on the grid; 
widespread availability of power at a reasonable price has enabled the 
EV market to take off, while simultaneously the grid is becoming 
greener and a larger share of that power is being provided by renewable 
sources.
    The development of the hydrogen market should follow that same 
dynamic. Right now, over 90% of the hydrogen produced in the US in 
produced through SMR, but the goal is to produce more hydrogen using 
electrolysis powered by low-carbon electricity. The focus now needs to 
be on building hydrogen supply so the price can come down, the demand 
can increase, and additional investments can be made in renewable 
hydrogen production. This will require applying CO2-capture at existing 
SMR facilities, and also regulations and financial incentives, 
including renewable energy mandates, tax credits, loan guarantees, and 
feed-in-tariffs. On the demand side, clear regulations, direct 
investment, and loan guarantees for building additional transportation 
and distribution infrastructure can make hydrogen easier for industry 
to access. Financial incentives can be used to stimulate hydrogen use 
by large industrial facilities, and investment support programs can 
help reduce the costs associated with fuel-switching at these 
facilities.
    5. Are there ways that hydrogen can also help industrial facilities 
with reliability and resilience?
    Hydrogen has the potential to be used as stationary power (for 
buildings), backup power, storage of energy harvested through wind and 
solar processes, and as battery-like portable power (most commonly used 
in forklifts today). Energy stored in hydrogen fuel cells allows for 
the seamless transition of energy within the power grid in the event of 
a power station failure or a black-out situation. In addition, Power-
to-Gas (P2G) is the only technology capable of providing storage at 
terawatt-hour scale without location limitations. Renewable electricity 
is used to create hydrogen, which then is stored in a storage system 
like tanks, caverns, or the natural gas grid. Using the natural gas 
grid would allow for very large amounts of renewable hydrogen to be 
stored very economically, as very little new infrastructure needs to be 
build. Effectively, this hydrogen reservoir could be used as back-up 
capacity for when there are production disruptions or shortages in the 
power grid.
    6. How do other countries view the use of hydrogen as a 
decarbonization strategy? What policies have they implemented and what 
can we learn from them?
    Many countries are planning to use hydrogen as a mechanism to 
decarbonize. The scale of these applications and the role they play in 
the economy varies quite substantially. Australia for instance has a 
number of highly developed pathways focusing on the production and 
export of hydrogen in addition to use in heavy transport applications. 
Japan, Korea, China, and Germany have announced ambitious goals for 
deployment of hydrogen fuel cell electric vehicles; China plans to have 
1 million fuel cell electric vehicles on its roads by 2030. Some 
nations are setting targets for the type of hydrogen used in industry: 
in 2018, France announced a target of 20-40% low-carbon hydrogen use in 
industrial applications. In addition, there is a large effort in Europe 
through the European Commission's Fuel Cell and Hydrogen joint 
undertaking. This effort is a public private partnership to develop 
multiple hydrogen pathways, including using existing natural gas 
pipeline networks to transport hydrogen.
    7. You mentioned that government investment in hydrogen 
infrastructure for transportation and delivery will be needed to scale 
up hydrogen use in industry. Can you comment on how existing hydrogen 
infrastructure would need to be expanded? How would the footprints of 
hydrogen and carbon dioxide infrastructure overlap? Are there synergies 
we can take advantage of?
    Current hydrogen production is largely concentrated in areas where 
oil and gas refineries are located, and integrated with other 
(petro)chemical facilities that use the hydrogen as feedstock. This 
infrastructure will need to be expanded into additional geographies as 
hydrogen production expands across the US. However, there is promise in 
using existing the nation's extensive natural gas pipelines to carry 
hydrogen instead. Current research supports blending of 20% hydrogen 
into natural gas streams without changes to pipeline infrastructure. 
This percentage could be higher if natural gas pipeline is retrofitted 
to carry the smaller hydrogen molecules.
    Hydrogen and carbon dioxide infrastructure could overlap as 
transportation and pipeline infrastructure is developed. Storage and 
utilization approaches for CCS could in some instances co-locate with 
hydrogen production technologies such as SMR, but the development of 
large-scale carbon dioxide storage, in geologic formations for example, 
will require the transportation of CO2 in the future. As such, planning 
for these infrastructure projects and indeed identification of storage 
capacity might offer potential for synergies in the development phases.
    8. You mentioned that biomass could be used to make hydrogen 
energy. Could you expand upon what issues need to be considered when 
determining whether sources of biomass are appropriate for hydrogen 
feedstocks to reduce greenhouse gas emissions? Taking into account 
land-use considerations and the multiple uses of biomass, what is a 
reasonable scale for using biomass for hydrogen?
    Biomass can be used to produce electricity that is then used to 
power via electrolysis; it can also be gasified to produce hydrogen, 
with appropriate controls to capture the resulting carbon monoxide and 
carbon dioxide byproducts produced. The production of hydrogen from 
biomass will likely be dependent on the relative cost of hydrogen 
production using this fuel source versus steam methane reforming. A 
more viable pathway for biomass in industrial applications may be to 
combust it directly and capture CO2 emissions, rather than using the 
additional energy required to transform it into hydrogen before use.

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