[Congressional Record Volume 144, Number 3 (Thursday, January 29, 1998)]
[Senate]
[Pages S206-S208]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 REMARKS OF GOVERNOR CECIL H. UNDERWOOD ON THE SIGNIFICANCE OF ENERGY 
                        RESEARCH AND DEVELOPMENT

  Mr. BYRD. Mr. President, on yesterday, Wednesday, January 28, the 
Governor of the State of West Virginia, Cecil H. Underwood, appeared 
before the Interior Subcommittee of the House Appropriations Committee 
to testify about the significance of energy and research development. I 
ask unanimous consent that the text of Governor Underwood's remarks be 
printed in the Record.
  There being no objection, the text of the remarks was ordered to be 
printed in the Record, as follows:

    Testimony of Cecil H. Underwood, Governor of the State of West 
 Virginia, to the Interior Subcommittee of the House of Appropriations 
                      Committee, January 28, 1998

       Thank you, Mr. Chairman, for the opportunity to testify 
     today about the importance of energy research and development 
     (R&D). I bring to your deliberations the perspective of a 
     governor of an energy-producing state, which also relies on 
     energy-intensive industries for its economic foundation. I 
     also come before you with a regional perspective as the 
     chairman of the Southern States Energy Board.
       By way of further introduction, as governor, I have become 
     a leading advocate of the use of technology in moving our 
     state forward. As I have said many times throughout West 
     Virginia, technology is the vehicle that will drive our state 
     into the 21st century. Applications of technology are opening 
     new avenues for meeting the energy needs of our people, our 
     businesses and our industries. Energy R&D will be crucial in 
     the creation and application of the technologies that will 
     fuel our economic engine in the years to come.
       Our collective transition into a new century and millennium 
     makes us more cognizant of other economic transitions that 
     are underway. We are moving toward a more global economy, 
     toward a technology-driven and information intensive economy, 
     toward boundless applications of new technology and toward 
     economic diversification that builds upon our industrial 
     foundation.
       As we move toward the exciting opportunities of the new 
     times, our nation must be careful that it does not move away 
     from energy-intensive industries that still are economically 
     vibrant and vital or from energy sources that can help meet 
     the growing needs of the future. As with all real progress, 
     though, our success in economic transition depends on our 
     abilities to explore new ways to address traditional 
     challenges.
       Our preparation for the future is complicated also by new 
     proposals that seek to improve our physical environment but 
     that may have a devastating impact on the economic 
     environment in many parts of the country, including West 
     Virginia and the chairman's home state of Ohio. The 
     environmental restrictions that may be imposed and the 
     resulting economic impact on many areas make the need for 
     energy research and development that much more urgent.
       As governor of an energy-producing state, I sense that 
     urgency more acutely, especially as such R&D would be 
     critical to efforts in three main areas: helping our domestic 
     energy producers meet the challenges of new regulations and 
     an economy in transition; exploring ways that energy 
     producing companies and traditional industries, which use 
     significant amounts of energy, can become environmentally 
     responsible while maintaining economic vitality; and 
     developing new markets for traditional energy resources and 
     new applications to meet changing market opportunities.
       Energy-related R&D is a crucial investment in the future of 
     my state and our country. It is critical to preparing the 
     industries of our region for the challenges and opportunities 
     of the new times ahead in the 21st century.


             energy issues of the future for west virginia

       The best way to determine an appropriate course of action 
     is to determine first the goal or destination sought. So I 
     begin my evaluation with what my state and our nation must do 
     with a description of where I want us to be in 12 years.

                       A Vision for the Year 2010

       Our vision for the year 2010 is that West Virginia will be 
     a showcase state for efficient power generation and efficient 
     industrial energy usage. There will be several state-of-the-
     art, highly efficient, environmentally compliant fossil fuel 
     power generation plants in the state. Coal-based generation 
     plants in West Virginia will be in compliance with all clean 
     air regulations, demonstrating technologies developed in the 
     U.S. Department of Energy (DOE) Clean Coal Technology 
     program. West Virginia's manufacturing plants will be highly 
     productive and energy efficient with virtually all waste heat 
     and waste materials reused and recycled.
       Power generation markets in West Virginia will be 
     competitive, deregulated, and electricity rates in West 
     Virginia will be among the lowest in the nation. Residential, 
     commercial and industrial customers, both in and out of the 
     state, will be able to obtain power from the most efficient 
     sources. The power transmission system will have excess 
     capacity, enabling export of additional power from the state; 
     West Virginia generators will have access to the transmission 
     grid at rates that reflect the actual cost of transmission. 
     We believe that in 2010, as is the case today, about 75 
     percent of the power generated in West Virginia will be sold 
     in competitive markets out of state and that growth in demand 
     for power generated in West Virginia will average about 2 
     percent per year.
       Our vision for 2010 is that West Virginia will have a 
     significant involvement in the development and demonstration 
     of environment technologies that enable domestic fossil fuels 
     to remain the country's dominant fuel for generation of 
     electricity. For example, West Virginia projects will 
     demonstrate technologies, which reduce the amount of 
     CO2 introduced into the atmosphere during 
     extraction and use of fossil fuels. Technologies to capture 
     CO2 and sequester it in

[[Page S207]]

     deep underground coal mines and gas reservoirs will be 
     developed and demonstrated in the state.
       Furthermore, West Virginia will be a major technology 
     innovator for non-CO2 producing uses of coal. For 
     example, there will be a growing industry in the state for 
     production of chemicals and advanced carbon materials made 
     from coal-based feedstocks.
       In 12 years, the West Virginia coal mining industry will 
     continue to be highly efficient and use state-of-the-art 
     technologies that minimize environmental and social impacts 
     of mining. Current and past mine sites will be reclaimed and 
     waterways will be protected from acid mine drainage.
       For our basic industries such as aluminum, steel, glass, 
     chemicals, wood products and mining to remain globally 
     competitive in the year 2010, we believe it will be necessary 
     for them to continually improve their productivity by 
     participating in programs such as the U.S. DOE's Industries 
     of the Future (IOF) program. For that reason, West Virginia 
     is working with the Office of Industrial Technologies to 
     develop a state-level IOF program to promote industry, 
     government and academic cooperative projects to improve 
     industrial productivity through energy efficiency, waste 
     minimization and use of new technologies.
       In our vision of 2010, West Virginia's coal and natural gas 
     companies will work together with utilities and high 
     technology companies on collaborative projects to help West 
     Virginia manufacturing industries remain globally 
     competitive.
       For the year 2010, we envision at least 25 percent of West 
     Virginia's fleet and commuter vehicles being powered by 
     alternate fuels, such as natural gas, electric, hybrid 
     electric or coal-based diesel. Natural gas refueling stations 
     and recharging facilities will be conveniently located across 
     the state. Furthermore, we anticipate that West Virginia will 
     be participating in a consortium of mid-Atlantic states 
     developing a high-speed, intercity light-rail transportation 
     system.
       West Virginia will continue to be the largest producer of 
     natural gas east of the Mississippi River, as well as a major 
     storage and transfer area for interstate natural gas 
     transmission systems. West Virginia is becoming a major 
     producer of coalbed methane, and by 2010, no coalbed methane 
     will be flared or vented to the atmosphere. It will be 
     recovered and used for production of heat and power.
       In addition to coal and natural gas, West Virginia will 
     have by 2010 a diversified portfolio of energy sources 
     including coalbed methane, wood residues, waste coal, wind 
     and biomass.


               potential barriers to achieving the vision

       There are several potential barriers to West Virginia 
     achieving its vision for 2010 relative to power generation 
     and industrial energy efficiency. We have serious concerns 
     with the Environmental Protection Agency's emissions 
     standards for NOx, as proposed on November 7, 
     1997. Likewise, our state is also concerned about how, as a 
     result of the Kyoto Conference, new restrictions on 
     greenhouse gases--in particular CO2--could have a 
     devastating impact on the cost of energy production and the 
     economy of our state.
       EPA's proposal prescribes an overall NOx 
     reduction of 44 percent from West Virginia sources. This 
     would require power plants in the state to reduce their 
     NOx emissions by as much as 85 percent from 1990 
     levels and other industrial/manufacturing sectors by 25 
     percent to 70 percent. The impact on the state could be 
     severe, jeopardizing up to 11,000 jobs in the manufacturing 
     and power generation industries--more than 12 percent of West 
     Virginia's industrial work force.
       There is growing concern around the world about global 
     climate change due in part to burning fossil fuels. West 
     Virginia expects to do its part to prevent global climate 
     change, but we strongly believe that greenhouse gas emissions 
     standards should be equitable worldwide and based on science. 
     Allowing developing nations to have an unfair advantage over 
     developed nations on the amount of emissions allowed puts the 
     United States--and more specifically states, such as West 
     Virginia--at a competitive disadvantage. Consideration must 
     be given to potential economic impacts of precipitous 
     CO2 reductions and R&D programs developed to 
     ensure the energy security of the country.
       As a competitive electricity industry evolves and various 
     federal and state-level legislative restructuring bills are 
     considered, it is important that West Virginia be able to 
     export power. There should be no barriers to the sale of low-
     cost West Virginia electricity to customers in other states. 
     The cost of transmitting electricity should reflect the 
     actual marginal costs of transmission. Flat rate (postage 
     stamp) pricing schemes for transmission would weaken West 
     Virginia's advantage of being a low-cost electricity producer 
     located near the major East Coast load centers.
       Exporting West Virginia power to out-of-state customers 
     requires adequate transmission capacity and fair transmission 
     pricing policies. West Virginia should be included in the 
     dialogue on formation of regional transmission groups and 
     procedures for operating the transmission system.
       Formulation of sound energy policy requires a thorough 
     knowledge of the relative costs of producing and consuming 
     power from various fuels and with various technologies. For 
     example, the true environmental costs of renewable energy 
     sources such as wind, hydro and photovoltaic need to be 
     understood better. Furthermore, the cost of externalities 
     such as a military force to guarantee access to offshore 
     sources of crude oil is not reflected in the domestic price 
     of petroleum products.


         research and development needed to achieve the vision

       Research must be conducted on cost-effective technologies 
     to minimize emissions of greenhouse gases, NOX, 
     particulates and other pollutants associated with the use of 
     fossil fuels. Such research could be conducted through 
     cooperative university, industry and government agreements, 
     but the R&D priorities must be determined by industry. An 
     excellent model for developing industry-led research agendas 
     is the U.S. DOE's Industries of the future program run by the 
     Office of Industrial Technologies. The U.S. DOE Clean Coal 
     Technology program is also a model of industry/government 
     cost-shared research that encourages commercial 
     implementation of new technologies to improve efficiency and 
     ameliorate environmental impacts of coal-based power 
     generation. Such technologies are important to the energy 
     security of the country in the event crude oil supplies are 
     interrupted or the price of natural gas increases sharply.

 Research and Development Related to Power Generation and Transmission

       Several fields present compelling opportunities to explore 
     strategies and new approaches that would: increase efficiency 
     and reduce the costs of producing electricity with new 
     technologies such as low NOX burners, fuel cells, 
     coal gasification combined cycle, cofiring with biomass or 
     natural gas, etc.; improve efficiencies on retrofit 
     technologies, reduce pollution emissions and extend the life 
     of existing power plants; continue investment in certain 
     clean coal technologies to further reduce costs, improve 
     efficiency and reliability and minimize emissions; optimize 
     all aspects of power plant operation toward increased 
     efficiencies; and explore ``in-situ'' utilization of existing 
     coal reserves.
       Develop technologies for eliminating NOX 
     emissions from diesel engines; explore technologies for 
     capturing, utilizing and sequestering CO2; design 
     pollution permit trading systems that treat fixed and mobile 
     sources equitably; improve and validate mathematical models 
     of pollution transport and global climate change phenomenon; 
     increase the reliability and capacity of existing 
     transmission line right-of-ways with use of improved power 
     electronics, high-temperature super conductors, voltage 
     control, protection against sudden voltage collapse, improved 
     system stability and real-time monitoring of line 
     temperatures; reduce further the cost of high-voltage DC 
     transmission lines; improve understanding of how electric 
     power markets work. (Studies to determine the actual costs of 
     transmitting power so economically efficient, i.e., marginal 
     cost, transmission-pricing schemes can be devised); and 
     assess economic and scientific impacts of rule making.

    Research and Development Related to Industrial Energy Efficiency

       West Virginia is working through the national industries of 
     the Future program to implement an IOF-WV program to identify 
     and conduct multidisciplinary projects, which will be of real 
     benefit to West Virginia's aluminum, steel, glass, chemical 
     and wood products industries. At a recent IOF-WV Symposium in 
     Charleston, the five industry groups were asked to brainstorm 
     the question, ``What specific projects should be undertaken 
     to increase productivity and reduce costs through improved 
     energy efficiency, reduced waste, use of new technologies, 
     better inventory and management systems, etc.?'' There were 
     33 project ideas from the aluminum industry group, 21 from 
     the steel industry group, 15 from the glass industry group, 
     26 from the chemical industry group and 16 from the wood/
     forest products group. Over the next year, the IOF-WV program 
     will expand to include metal casting and mining.
       Their suggestions for the fields of R&D include: strategies 
     to reduce the cost of power for West Virginia's energy 
     intensive manufacturing industries, e.g., better energy 
     demand management systems; new systems for improved on-line 
     process monitoring and improved sensors and controls; 
     development of better waste minimization and recycle 
     strategies, e.g., industrial wastewater treatment 
     technologies; product designs for recycling materials and 
     wastes; more effective recovery and use of industrial waste 
     heat; better strategies for cross industry use of waste and 
     by-product from one process or company as feedstock for 
     another; streamlined environmental permitting processes; and 
     evaluation of proposed mining sites in terms of potential 
     acid water production, subsidence and impacts on roads, 
     bridges and scenic areas.


            funding for energy and industrial efficiency R&D

       Deregulation and competition in the electricity industry 
     could lead to reduced spending by the private sector on long-
     range energy related R&D. The federal government must provide 
     leadership with incentive programs to co-fund development and 
     implementation of a spectrum of energy technologies. The DOE 
     and the states will need to develop cooperative R&D programs 
     appropriate to the needs and resources of individual states.
       All stakeholders must make investments in energy R&D. 
     Although generation is being deregulated, transmission and 
     distribution of electricity will remain regulated. State and

[[Page S208]]

     federal laws on restructuring of the electricity industry can 
     authorize wire charges or other fees to develop a pool of 
     funding for energy R&D projects. The energy industries in 
     West Virginia must play leading roles in developing resources 
     to support R&D on environmentally compliant technologies for 
     fossil-based power generation. Investment in implementing 
     these technologies also will be required.
       To retain the interest and involvement of West Virginia 
     companies in the Industries of the Future program, it is 
     necessary that we make rapid progress toward funding for 
     joint projects, which will benefit their future survivability 
     and competitiveness. We are currently working with five 
     industry sectors (aluminum, steel, glass, chemicals and wood/
     forest products) and plan to add metal casting and mining. A 
     budget of about $1,750,000 per year would be required to run 
     a meaningful state-level IOF program.
       State and federal incentive programs that encourage 
     companies to invest in new technologies that save energy and 
     minimize emissions should be expanded. The U.S. DOE's 
     existing program in National Industrial Competitiveness 
     through Energy, Environment, Economics (NICE-3) Is an 
     effective mechanism to encourage private-sector Investment in 
     new energy efficient technologies.
       The U.S. DOE's State Energy Program provides funding 
     directly to the states, permitting them the flexibility to 
     support energy initiatives that are uniquely Important to 
     their situations. In West Virginia, a cornerstone of the 
     State Energy Program is our work with industry to identify 
     process modernization opportunities. These industrial 
     projects yield meaningful cost-savings and environmental 
     benefits that are key to the long-term health of our nation's 
     industries. International trade treaties require that our 
     industries become more competitive. West Virginia became the 
     first state to institute a state level Industry of the Future 
     program.
       Another Important component of our energy program is the 
     promotion of alternative fuels. Through the State Energy 
     Program, we are supporting alternate fuels training programs, 
     as well as development of a compressed natural gas fueling 
     infrastructure. West Virginia was one of the first states to 
     Initiate a statewide Clean Cities program. The overall goal 
     of the State Energy Program is to enhance our nation's energy 
     security.


                                Summary

       In summary, production and utilization of fossil fuels, 
     generation and transmission of electricity and energy 
     intensive manufacturing industries dominate the economy of 
     West Virginia. We envision our low-cost electricity and 
     manufacturerd goods as being critical to the energy security 
     and industrial competitiveness of the nation throughout the 
     next century. The energy research needs and agenda outlined 
     in this paper are of great Importance to our state. We are 
     committed to participating in partnerships and coalitions to 
     develop resources and to carry out the R&D program. West 
     Virginia wishes to participate fully in the energy/
     environment/economic policy debates. We very much appreciate 
     the opportunity to present our thoughts to the Interior 
     Subcommittee of the U.S. House of Representatives 
     Appropriations Committee and look forward to further 
     discussions and actions.

                          ____________________