Remarks by
Robert S. Kripowicz
Acting Assistant Secretary
for Fossil Energy
U.S. Department of Energy
to the
NATIONAL COAL COUNCIL
Semi-Annual Meeting
Washington, DC
November 19, 1998

Thank you, Linn (Draper).

Secretary Richardson sends his apologies for not being here today. This is a meeting I know the Secretary would have attended if his schedule had permitted. He has made a point of seeking out members of the energy industry and getting to know them - and their issues - better.

I know from the meetings I have attended with him, that he has paid particular attention to the fossil fuel industry. He met with representatives of the coal industry this past September a few days after joining the Energy Department.

And if any of you heard his remarks at the World Energy Congress in Houston - his first speech after becoming Energy Secretary - you heard him address coal NOT from the standpoint of how to back it out...but from the standpoint of how to ensure that it stays part of our future energy mix.

A few weeks after the Houston conference, the Secretary traveled to our Federal Energy Technology Center to see some of the research we're doing in coal technology. He was, by the way, only the 2^nd Secretary of Energy to visit either the Morgantown or Pittsburgh sites. He used the occasion to announce a new research program we have started to trace the chemical and physical origins of fine particulates - "PM2.5". This is part of an effort we have underway to determine whether we can distinguish the level of fine particulates from coal-burning plants compared to emissions from other energy and industrial sources. That's going to be a very valuable source of data for EPA and states as they struggle to put together cost-effective implementation plans.

While he was at our Center, Secretary Richardson saw several other aspects of coal research that, quite frankly, no Secretary of Energy had ever seen before. In fact, now that I think about it, he probably holds the distinction of being the only Cabinet official ever to actually SEE a low-NOx burner in operation.

My point is that our new Secretary is making an attempt - maybe more than any previous Secretary - to become engaged with the coal industry. And much of his attention has been directed toward advances in coal technology. That's going to be important as he becomes increasingly engaged within the Administration on such issues as future environmental standards and climate change.

######

We have had a lot of discussion at the Department about the future role we see for the National Coal Council...particularly with your new Executive Director and your new Chairman.

Historically, as many of you know, the Council has largely focused on broad policy issues - some involving those issues directly under DOE's purview, others that have been broader.

Certainly, there are some "big ticket" items in front of us - electricity restructuring...the continuing policy development that's occurring in the environmental area...and inevitably the issue of climate change. These are areas where we will need the Council's involvement.

As I've looked over the Council's past efforts, I've seen some fairly high level endorsements of technology - and clearly, many of your reports have contained general recommendations for more work in coal R&D.

But what we're going to need in the coming months and years is assistance at the next level of detail. There are clearly more worthwhile programs and projects than we can afford. And we're going to have make some tough choices about where our future technology efforts should go.

We going to be looking for the Coal Council to help guide us in making those choices. We're going to ask you to help us as we develop a technology roadmap for the coal, power and fuels industry. Perhaps there is a way for the Council to serve as something of a peer review group as we move in some different R&D directions that I will describe in a moment.

I think the Council can serve a valuable role in this respect. Because technology is going to permeate through every one of the "big ticket items" I mentioned.

For example, as we move toward electricity restructuring, we have to be concerned about the impact on R&D. How will it be carried out in a deregulated, highly competitive environment? Who will do it? What will happen to government-industry R&D partnerships? Will there be gaps that should be filled by the Government? What about distributed generation technologies, for example?

As we look toward the future challenges of tighter Clean Air regulations - PM2.5, NOx and ozone, perhaps mercury and other air toxics - technology will become critical in determining how the coal industry fares.

Can technology respond to future challenges, such as climate change, in a way that retains the economic advantages that coal currently enjoys? Or are we beginning a long process in which coal is eventually priced out of the market due to lack of affordable compliance technology?

I can tell you that there are a lot of people who are ready to write this program off - a lot of people in Congress and a lot of people who are trying to influence Congress.

There are a lot of people who would like to say "good riddance" to coal and who believe eliminating coal R&D is one way to do it.

This year, for the first time, our R&D budget took a severe hit on the floor of the House of Representatives, with $50 million being cut from the fossil energy program. Thanks to Chairman Regula from Ohio, Congressman Doyle from Pennsylvania, Congressman Mollohan from West Virginia and a few others, we were able to get the funding restored.

But there was a clear tone in the floor debate that funding for coal and other fossil fuel research was simply money being wasted on subsidizing companies that are damaging our environment and threatening our health - and that there were no practical "results" from our programs.

We have to change that viewpoint. And to do it, we need a technology R&D program that has been shaped by industry, one that responds to industry's needs, and most importantly, one that industry can endorse.

So I want to see this Council become more engaged in shaping our R&D portfolio.

We are in something of a transition period in our technology program. We are at the threshold of completing our major demonstration efforts - particularly those in the Clean Coal Technology Program. This program has established the baseline for 21^st century technology....but now it is time to begin building on that baseline.

We need to begin pushing coal technology into new directions - using advances in computer technology, in bioengineering, and in combustion and environmental technology.

As I look at our priorities in the coming years, two areas emerge: one that addresses the long-range economics of coal and how those economics stack up against competing energy sources....and one that addresses what COULD be the real "showstopper" for coal - climate change.

In the area of economics, I believe -- in the long-run -- the best way for coal to stay competitive is to begin viewing it as more than just a fuel for power generation.

It doesn't make a lot of sense to extract only a third of the energy in coal and throw the rest away as we are doing today. And even as we develop technologies that double today's power generating efficiency - pushing it up to the 60 percent range - we still face the prospects of discarding a third or more of the energy value of coal.

Our view is that the coal plant of the future won't treat that third of coal's energy content as a waste product. Instead, it will see it as a value-added commodity - something that can be captured and converted to industrial process heat, or chemically reconfigured into liquid fuels or chemicals.

The coal plant we envision in the 2015 time period and beyond would remain, at its core, a power generation facility. But where local and regional markets dictate, it would be flexible enough to be configured into a multi-product energy complex -- power, heat and fuels -- using fully 80 percent or more of the energy value in coal.

In our research program, we've called this concept "Vision 21." And much of our research is being oriented to develop the modules that ultimately would make up this complex.

Now, there may be some of you who are thinking, "if he's talking 15 or 20 years into the future, he's way ahead of anything that's going to be useful to me."

I would respond by saying that while Vision 21 may be 15 or 20 years into the future, many of the technologies that will make it happen will become commercial much earlier.

For example, we have awarded new research contracts in membrane technology that could give us a breakthrough in low-cost oxygen separation....and that could be a major advance for a number of oxygen-intensive industries.

Another part of this program is the development of new techniques for separating impurities from the gas stream. This could lead to better particulate capture devices or perhaps to more effective air toxic removal systems.

So, Vision 21 is more of a "direction" than a "destination." The key, of course, is to keep moving in the RIGHT direction. And that's where we need your help.

The other new direction we are moving is in R&D on carbon sequestration.

Improving efficiency - like we see in the Vision 21 program - only gets us started in reducing greenhouse gas emissions. If you look at the issue of climate change, reducing emissions is only a step. The real challenge will be to reduce carbon concentrations in the atmosphere.

And to indicate how difficult that will be, consider this: just stabilizing carbon concentrations in the atmosphere at DOUBLE their current level would require cutting global emissions by almost 70 percent from 1990 levels - a staggering target.

If the world ultimately takes on the challenge of reducing concentrations, carbon sequestration may be the best hope - and maybe in the long run, the ONLY hope - for coal's long-term future.

There are some huge opportunities. The ocean and deep sea floor are vast sinks for carbon dioxide. We've begun a research effort with Japan, Norway and Canada to test the viability of pumping CO2 deep into the ocean off of Hawaii.

There is the potential for sequestering CO2 in geological formations. The Norwegian oil company, Statoil, is already doing just that.... injecting almost one million metric tons of recovered CO2 into an undersea sandstone reservoir.

We will be looking at options in the future for injecting carbon dioxide into coal seams...and perhaps using it to displace natural gas that could be captured as an energy source. And farther into the future, we could see new farming techniques and bio-engineering that could lead to crops that absorb more carbon and yield more products.

Our research into this area, as I said, has just begun. We have run our first competition and selected 12 projects ranging from CO2-absorbing algae grown on artificial reefs or encased in bioscrubbers to new chemical processes and membranes that separate concentrated CO2 from coal gasification and other fossil fuel plants.

In short, we see sequestration research moving into the mainstream. Some of the more progressive companies are beginning to view carbon capture and disposal or recycle as the core of future profit centers. Congress also has begun to see the merits of sequestration research and has put the first core funding into our program....not as much as we would have liked, but a start.

I would hope that the coal industry would see sequestration research as a way for the industry to be viewed as part of the solution, rather than as part of the problem.

In the FY 2000 budget and beyond, we hope to expand our work in both the Vision 21 concept and carbon sequestration. We hope to see these programs grow - not just in terms of Federal funding but in their acceptance and participation by industry. But we understand clearly that this will happen only if industry believes we are moving in the right direction.

So that's where this Council comes in. We will be working in the coming months with your leadership to determine how you can play a role in setting our new R&D directions. I suspect that rather than asking for lengthy, exhaustive studies, we are going to focus more on solid technical and market analyses, perhaps in the form of white papers or short, quick-turnaround reviews of our specific programs and goals.

In short, we're asking the Council to begin taking on something of a new direction - assuming a greater role in the planning and execution of our R&D efforts - certainly serving as a "sounding board" for our efforts to move into new R&D areas.

We will be working with Linn and Bob and with many of you in the coming weeks to put our thoughts together and define some specific new directions we would like the Council to take. Again, speaking for Secretary Richardson and the Department, we look forward to our continued efforts to tap fully the expertise and talents of this Council.

Thank you for being here today.