Remarks by
Patricia Fry Godley
Assistant Secretary for Fossil Energy
U.S. Department of Energy
at the
Washington Coal Club
Washington, DC
February 11, 1998

Good afternoon.

It has become somewhat of a tradition for the Fossil Energy Assistant Secretary to appear before the Washington Coal Club around this time of the year to talk about the budget. I guess it's something like the Coal Club's version of the State-of-the-Union address. And if that is the case, I am pleased to report today that, like the Union, the State-of-the-DOE-Coal-Budget is good.

Coal R&D in the Department -- as evidenced by our FY99 budget proposal -- is alive and well. Our budget request for Coal R&D in FY 1999 is up nearly $23 million over the current year appropriation -- a 21 percent increase. I recognize that our request may have sur prised some people....particularly those who wondered how coal would fare in a new era of climate concerns and fierce competition for R&D dollars. But -- speaking frankly -- I think our FY99 coal budget reflects some pragmatic thinking on the part of Secretary Peña, Deputy Secretary Moler, and especially Under Secretary Moniz.

You're going to begin hearing this month a lot about the "Comprehensive National Energy Strategy." Secretary Peña has promised to produce one this spring....a draft is now available from DOE's Web Site....and public hearings in three cities across the country are taking place this week and next. I'll be at the Houston meeting tomorrow. The "Comprehensive National Energy Strategy" -- or CNES, as we call it -- reflects the same pragmatism as our FY 1999 budget: specifically, that fossil fuels -- including coal -- power our economy. And no credible energy strategy can realistically postulate that this Nation...or the world...is going to change its energy mix dramatically for well into the 21st century.

Coal is a very important component of our energy future. And because it is, it will be a very important part of our forthcoming energy strategy. And it is very much a part of our FY99 budget.

VIEWGRAPH ONE

I've put this viewgraph up to place the increase in the coal budget in some sort of context.

As you can see, for the most part, the other elements of our R&D portfolio remain essentially at level funding. There are some major changes in Fossil Energy outside of the R&D program -- in the Strategic Petroleum Reserve and the Naval Petroleum and Oil Shale Reserve budgets. But in the R&D portion of our program, Coal R&D stands out because it is the one that receives a significant funding boost.

Before I go on, let me emphasize...fiscal stringency is still the watchword in the Department of Energy. Every one of the dollars in the FY99 column was hard-fought and hard-won. We are still strong advocates of natural gas, and we haven't backed off on our belief that R&D remains essential to our domestic oil industry. We think our budget requests will keep these programs healthy.

But Coal is where our significant budget increase is...and that should send two strong messages:

• One -- That we're not ready to write coal off, and

• Two -- We continue to believe that new technology keeps coal in our energy mix, and the key to new and better technology is a sustained federal commitment to R&D.

I don't know how many of you were at Chairman Regula's hearing a couple of weeks ago. I was there, along with Under Secretary Moniz and Dan Reicher from the Office of Energy Efficiency. It was a general discussion of energy strategy, and we followed several state and industry witnesses.

I was especially struck by the testimony of Chairman Keese of the California Energy Commission. He reported that, as of about 3 years ago, state utilities in California were spending about $160 million a year on R&D. This past year, with deregulation and restructuring on the horizon, they spent exactly ZERO on R&D. Not a single dollar.

The California example sends a warning shot that should be heard by those who say there's no Federal role in energy R&D. It underscores the need for the Federal Government to sustain commitments to public-private R&D partnerships.

And I'm pleased to report that in about another week, the immediate past president of the Coal Club, George Rudins, will be in California -- on behalf of the Department -- to sign a Memorandum-of-Understanding with the California Energy Commission establishing a new framework for cooperative R&D in a variety of energy technologies.

The FY99 budget shows that as we look toward the future of these partnerships, coal is very much a part of the R&D agenda. So let me take a few minutes and describe what exactly is in this budget for Coal R&D.

VIEWGRAPH 2

This is generally the way our Coal budget breaks down. The major budget headings are familiar to most of you. But there are two particular elements within these headings that I want to discuss -- "Vision 21" and "Carbon Sequestration." These are the two areas where the budget increases occur.

What is "Vision 21"?

It's a catchy name -- particularly coming from a program that has given you such technologies as "SNRB" and "SNOX"....or my personal favorites, "HIPPS" and "LEBS."

But "Vision 21" is more than a name. It is a strategic concept that will tie together, and guide, much of our current and future R&D program.

It basically challenges the coal R&D community with the question "Can you develop the ultimate coal facility?" Not simply the "next generation" facility?....but the ULTIMATE facility. And not just the ultimate "POWER plant"...but the ultimate ENERGY facility -- where every useable BTU in coal or biomass, or perhaps a fuel mix, is extracted and used: for electricity, process heat, fuels, chemicals, or combinations. That's why we add the term "EnergyPlex."

"Vision 21" is not so much a "new start" as it is a new way of thinking about our existing technologies....and working to tie them together in the most flexible way in the future.

As we develop the "Vision 21" way-of-thinking, we are asking the technical community, "is a zero-discharge energy facility possible?" Virtually no SOx or NOx pollutants. No particulates. No wastewater. No solid waste. And the potential for no net emissions of CO2. In other words, no impact on the environment outside of the plant's basic footprint. Is that possible?

With the combined Government-industry efforts, and the work of the best and brightest scientists in the Nation -- we think it is. We think we can develop a coal-based energy facility that's 60% efficient or, with cogeneration, perhaps 80 or 90% efficient.

You may recall that, in the late 1970s, there was a study known as ECAS....the Energy Conversion Alternatives Study. I'm told it was a landmark effort -- a $10 million price tag in 1970-ish dollars, carried out by some of the best minds in the business.

ECAS concluded there were practical limits to the efficiency of certain fossil fuel technologies...and those limits were....well, limited.

Advances in coal combustion technology would never push power plant efficiencies much above 38 or 39%. Gasification technology would top out at about 40 to 42 percent efficiency. And the only way to get anywhere in the neighborhood of 50% efficiency with coal was to develop another one of my favorite fossil energy terms, "magnetohydrodynamics."

Well today, we have a pulverized coal system -- our Low Emission Boiler System, LEBS -- that will achieve 42% efficiencies. We have pressurized fluidized bed technologies that can take us into the 45 to 48% range. We have integrated gasification combined cycle technologies that can move us to 50%, and with advanced fuel cell and turbine technology, begin closing in on 60%.

ECAS was a good study...but it clearly underestimated what R&D can accomplish. And that's why we have set our sights on "Vision 21" -- an energy facility that will clearly "push the envelope" of what is possible.

In that respect, "Vision 21" is the endpoint of an R&D roadmap. It's a goal.

"Vision 21" will probably take on many shapes as our program progresses because it will be based on a series of modules or "technological platforms". We will identify several key modules in our R&D program, then develop them to be interchangeable to meet different needs. Meeting the technical challenges of integrating these modules will be a key part of the "Vision 21" plan.

VIEWGRAPH 3

Here is our vision of one possible configuration for a "Vision 21" facility.

This one starts with a coal gasifier. There may be other approaches -- like one that starts with advanced combustion -- perhaps using concepts in our High Performance Power Systems, or HIPPS, program. But gasification offers some inherent advantages. It is the only advanced power technology capable of coproducing electricity and steam along with hydrogen and other valuable chemicals. That's why the bulk of our funding increase in 1999 goes into the Gasification-Combined Cycle budget.

One key enabling technology for a "Vision 21" concept is lower cost oxygen separation -- using membranes rather than expensive cryogenic plants. So some of the funding increase in FY99 will go for research into oxygen membranes -- some of which are evolving from recently declassified technology used in the nuclear industry for uranium enrichment.

"Vision 21" will probably employ new types of gas cleanup technologies -- certainly hot gas cleanup systems such as the ones in our R&D program today, but probably systems that are even more effective, even more efficient and lower in cost.

So in "Vision 21", we propose to build on current R&D in gas stream cleanup to further extend this technology.

Hydrogen may be a key co-product in a "Vision 21" plant. It can used for a fuel cell or for a coal-to-liquids conversion process....or by 2020 or 2030, we may be much closer to a hydrogen economy. And "Vision 21" will fit right in if we can develop better hydrogen separation technologies. So that's part of our FY99 program.

It is quite likely that "Vision 21" will generate its electric power using fuel cells or fuel flexible gas turbines -- or probably advanced hybrids of these technologies. How will they fit together? What are the technical obstacles that must be overcome to make these hybrid systems function reliably and at peak efficiency? "Vision 21" puts on an R&D path to find out.

We see "Vision 21" as an energy island...much more than just a power plant....much closer to a combination power plant/coal refinery -- producing multiple products. So finding ways to integrate coal conversion technologies into the plant configuration is also a key part of "Vision 21."

Finally, "Vision 21" will guide much more than the development and integration of the modules depicted on this viewgraph. It will also set the direction for research into a host of supporting disciplines. For example, we will likely need new materials for the gas separation membranes, new types of chemical sorbents for the hot gas cleanup step, and new types of catalysts for more efficient fuel and chemical production. We will need advanced control and sensor technologies because many of the process steps in a "Vision 21 EnergyPlex" will be unlike anything found in today's plants.

We must realize that we are developing a whole new breed of energy facility. Nothing like it exists today. And as all of you know, moving something from drawing board concept -- or in this case, from an image on a viewgraph -- to a functioning commercial plant is not only a 20-year process, it is a sequence of progressively larger and more complex engineering units, pilot plants, and demo plants.

I'm not so idealistic as to believe that, all of a sudden, in the next 20 years, balanced budget or not, a huge pot of money is going to magically appear for us to build all of the test facilities that ultimately will lead to "Vision 21." It's not going to happen....not even given the positive trend in the 99 budget.

So we will have to look to other techniques. We have to begin capitalizing on the extraordinary advances made in computer technology to simulate complex engineering processes.

We have the capability today to simulate the fundamentals of a thermonuclear explosion on a computer. And that remarkable advance now means that we no longer have to explode nuclear bombs in the Nevada desert. Might it be possible to simulate new coal technologies on a computer so accurately that major construction projects might not be necessary -- or at least reduced in number? Could that shorten the development timetable? We don't know, but with "Vision 21," we plan to find out.

So "Vision 21" is really a strategic blueprint. It focuses our efforts on a long-range goal. It takes what we are doing today and identifies where R&D gaps exist that stand between us and the ultimate way to use coal.

And it may turn out that, in the 21st century, the ultimate way to use coal will be a way that adds next to nothing to the earth's balance of greenhouse gases. That means "Vision 21" will be linked to carbon sequestration.

RETURN TO VIEWGRAPH 2

Carbon sequestration research is the other major increase in our FY 99 budget. In 1998 -- this year -- we have a very small, exploratory program in carbon sequestration....less than $2 million.

In 1999, we've added $10 million over our FY98 figure for enhanced sequestration research in our Advanced Research program. So the total in this program for FY99 is about $12 million for carbon sequestration.

We will also be exploring some more fundamental sequestration mechanisms in our Advanced Research and Technology Development Program. That will add another $2-3 million.

So we are proposing around $14 to $15 million in total sequestration related research in fiscal year 1999. That's a significant effort -- about 12% of our total coal program. Why the emphasis?

Simply put, it may turn out that affordable sequestration is the best way to keep coal in our future energy mix. If global climate change becomes the environmental issue of the 21st century -- and every sign tells me that it will be -- then carbon sequestration may become the single most important technological advancement for the coal industry. It may well dictate whether the industry survives 20 or 30 years down the road.

VIEWGRAPH 4

In 1999 we envision 3 types of research:

1. One will be research on traditional approaches to sequestration, such as putting captured CO2 from power plants into geological formations....for example, into depleted oil and gas wells, unmineable coal seams or into the deep ocean.

   We're already seeing a few examples of this. Statoil is injecting CO2 into an aquifer in the North Sea. Plans are underway to pipe CO2 from the Great Plains coal gasification plant in North Dakota into Canada for use in an oil recovery project. We need to understand how effective these approaches are and how much sequestration may be possible. Consider that 30 percent of U.S. power plants are located in coastal states potentially close enough for deep water sequestration.

2. The second category of research will be on ways to enhance the absorption properties of natural carbon sinks, such as forests and algae.

3. And the third R&D category will involve novel concepts that could produce revolutionary new approaches. Is it possible, for example, to develop advanced chemical or biological processes that mimic the photosynthesis of Nature? Twenty-five years ago, at Argonne National Laboratory, scientists were working on an "artificial leaf." Could something like that become the basis for an affordable CO2 scrubber?

These are exciting prospects. They involve much more than just the traditional disciplines we've employed historically in our R&D program. And perhaps that is the true challenge of the FY 1999 budget. We are moving into a new R&D era in which mechanical and chemical engineering will be joined by bio-engineering and advanced computer processing.

It will be an R&D climate in which the end-products will not only be new power plants, but whole new ways to think about energy production.

So if you come away from my presentation -- and come away from our FY 1999 budget -- with the impression that we see fossil fuels as fuels of the future, then you've received exactly the message that is reflected in this budget.

With that, let me ask if you have any questions.