Remarks by
Robert W. Gee
Assistant Secretary for Fossil Energy
U.S. Department of Energy
to the
Conference on Prospects for Cleaner
Fossil Fuel Systems in Sustainable Development
in
Ankara, Turkey
May 27, 1999
President Demirel, Ambassador Parris and other esteemed guests. It is an honor to represent our Secretary of Energy, Bill Richardson, and the United States at this prestigious event and to welcome you here today on behalf of the United States Department of Energy.
I'd like to thank the many organizations who brought us here today and in particular, I'd like to thank the World Energy Congress and the members of the Turkish National Committee.
We have many countries represented here today. Your presence reflects three fundamental tenets that are at the core of this conference - and which I want to discuss today.
First, your presence underscores your clear understanding of the link between economic growth and prosperity, and the availability of reliable, affordable energy.
Second, it reflects your recognition that fossil fuels are the cornerstone of the world's energy supply - and will remain so for well into the next century, quite likely for generations to come.
Third, I see your presence here today as reaffirming your commitment to technology as the link between a more prosperous economic future and a cleaner, healthier environment. It is possible to have both.
Those three messages - the tie between energy and economic growth, the continued reliance on fossil fuels, and the prospects for cleaner, more affordable fossil fuel technology - are three messages I believe in strongly. They are why I accepted President Clinton's nomination to be the Energy Department's fossil energy assistant secretary. They are why I am extremely pleased to be here today and to help open this conference.
First, let me talk about global energy demand.
Every projection shows a sharp rise in the world's appetite for energy in the coming years. The only question will be how steep will the demand curve be. Taken on average, most projections predict that the world will likely double its energy use by 2030. By the time the next century comes around, our grandchildren and their global neighbors will likely be consuming 4 times the amount of energy we consume today.
Think about that for a moment. The availability of energy - where it is produced, how it moves, how much it costs - has shaped much of the world's policies and politics for the last quarter century. It has fueled high expectations and, in many cases, been the focal point of regional conflict. Think about a world that demands quadruple the energy it consumes today - and think how and where this coming world will obtain that energy.
Almost everyone agrees, at least those who see the future in realistic terms, that the majority of tomorrow's energy - like yesterday's - will come from fossil fuels. Today, more than 80 percent of the world's energy consumption is fueled by coal, oil and natural gas. That figure is unlikely to change for 40 or 50 years - or perhaps longer.
In fact, it is quite likely that the proportion of the world's energy demand that is supplied by fossil fuels will actually go up. That is certainly the case in the United States. Today, our nation relies on coal, oil and natural gas for 85 percent of our energy demand. In the next 20 years, we see energy demand rising by 20 percent. And even though we see large increases in the use of renewable and other alternative energy resources, fossil fuels actually grow to nearly 90 percent of our energy consumption by 2020.
That growth in energy and fossil fuel demand is mirrored throughout much of the world. In many countries, the growth trend is even more pronounced.
Talking only in percentages, however, sometimes doesn't convey the true significance. Take oil, for example. Oil demand is expected to grow by 2 percent annually over the next 20 years. Two percent doesn't sound like much. But consider that by 2020, that growth rate means that the world will likely consume 25 million more barrels of crude oil per day than it does now.
Even that figure needs to be put into context to fully understand it. The significance is that 25 million barrels per day is more oil than is currently produced in all the countries of the Persian Gulf. And one has to ask: how many more Persian Gulfs are there to be found?
Yet, I think an even more difficult challenge confronting the world is not WHERE energy will be found - but HOW it will be used.
Energy is the source of economic growth, but energy use is also the principal contributor to environmental concerns - smog, acid rain, airborne particles and, over the longer-term, the very real threat of global climate change.
Energy is the key to economic progress, but how we extract and consume energy is the key to environmental progress and to the health and well being of our citizens.
In the United States, we have approached environmental quality from two major perspectives:
First is to impose strict environmental standards, set in law, administered at both the Federal and State level.
Second is to provide financial support at the Federal level - often in cooperation with States, and almost always in partnership with the private sector - to develop technologies that can meet those standards more effectively and at lower costs.
Let me give you one example of this dual approach to environmental improvement.
In 1990, the United States decided that it must take further steps to reduce the amount of sulfur dioxide emitted by its power plants as a way to lessen the affects of acid rain. As some of you may be aware, our U.S. Clean Air Act Amendments sharply restricted the amount of sulfur dioxide and nitrogen oxides that could be released from coal-fired power plants - in fact, in the case of sulfur dioxide, cutting emission levels in half over a 10-year period.
But the legislation went even further. It imposed a nationwide cap on emissions of sulfur dioxide from power plants - a permanent ceiling of 8.9 million tons per year. Never again, despite economic growth and increasing energy demand, could the Nation's population of power plants emit more than that level.
But at the same time, the U.S. Government shared in the costs of developing new technology - cleaner, more efficient environmental control technology.
In the program I now oversee, technology was developed that cut the cost of nitrogen oxide controls from more than $3000 per ton of NOx removed 10 or 15 years ago to less than $200 per ton today - well over a 10-fold reduction. The costs of a flue gas scrubber were reduced by more than half. The efficiency of coal combustion processes was enhanced.
As a result, if technology had been frozen at the time the new legislation went into effect, only 10,000 megawatts of new electric generating capacity could have been added to our Nation's power fleet without exceeding the sulfur cap. However, with the high-efficiency, super-clean systems emerging from the Federal government's cost-shared partnerships with industry, it now appears possible that more than 100,000 megawatts can be added.
Our program hasn't stopped, however. In fact, we now foresee a day when virtually no sulfur or nitrogen oxide pollutants will be emitted from a power plant.
We see the possibility of a virtually pollution-free plant - with pollutants that had once been released to the atmosphere now being chemically changed into commercial products, such as fertilizer or chemicals.
We see the possibility of pushing power generation efficiencies to a new plateau - well above today's 33 to 35 percent averages. Technologies such as gasification combined cycle are now being demonstrated that, in their ultimate commercial versions, could achieve efficiencies in the range of 48 to 50 percent. With further technological improvements, we see the possibility of pushing efficiencies to nearly 60 percent - perhaps within the next 15 years.
And, if we can combine power generation with process heat applications and possibly, the co-production of fuels and chemicals, we can push overall THERMAL efficiencies into the 80 to 85 percent range.
We call this concept our "Vision 21 power plant of the future." It represents a bold target. But we believe this direction - pushing outward the boundaries of efficiency and environmental performance - represents the future of power generation.
Our Secretary of Energy, Bill Richardson, spoke to an advisory panel of coal experts a couple of weeks ago, and he told them that, in his opinion, the future for coal is as bright and promising as it is for solar, wind or geothermal energy. From what I've seen in our research laboratories, I certainly agree.
But I also don't believe that power efficiency or improved environmental controls assure the future role of coal and other fossil fuels in the United States, or globally.
If the world is ultimately to come to grips with the growing levels of carbon gases in the atmosphere, efficiency alone may not be enough. We may have to do much better - particularly if global energy demand grows at the pace we project.
That means we must look for ways to capture and dispose of carbon dioxide and other gases. Carbon sequestration - in my opinion - may hold the real key to whether the world continues to benefit from low cost fossil fuels.
If we put the Kyoto Protocol aside for a moment, and look at the really long term - 30, 50 or 70 years into the future - carbon sequestration could offer one of the best options for reducing the buildup of greenhouse gases, not only in this country but throughout both the developed and developing world. It is the only climate change option that won't require a wholesale changeover in our energy infrastructure.
Sequestration research and development is in its first year of real federal funding at the Energy Department. We're just getting started -- but already we're seeing ideas that were just idle curiosities a year or so ago begin to attract real attention in both government and industry.
Exhausted oil and gas reservoirs could store much of the carbon captured from power generation for most of the 21st Century. Coal seams are also an option. So too are deep, unusable saltwater aquifers. And the ocean floor, which is the world's largest repository of dissolved CO2, represents a literal "sea of possibility."
This is a whole new area of research for us - but it's going to get a higher priority in our program as we move forward.
We are placing a lot of emphasis in our program on HOW we generate electricity and fuels in the future. But we also cannot overlook the WHERE of energy production.
As I said earlier, there may not be many more Persian Gulfs to be found. But there is clearly a lot more we can do to produce oil and gas we know already exists - not only in our country but in other regions of the world.
The great untapped oil resource of the world may not be the new fields that we discover, but the nearly two-thirds of the oil we leave behind in fields already located and being produced.
Technology is also allowing us to into environments that were considered beyond our reach just a few years ago. The development of 3-dimensional seismic technology and improvement in production methods have helped transform the oil and gas industry - opening up resources in the deep offshore and now in other geologically complex setting.
Advances in computerized technology - from simulating an oil recovery process to guiding a drill bit - have improved predictability, led to fewer dry holes, and reduced costs.
Today, we are looking to technology to squeeze more oil and gas from existing resources and to open up new resources - like methane hydrates.
As in our coal and power generation programs, there is a common thread that runs through all of these efforts. It is a partnership with the private sector - a sharing of risks, both technical and financial. Our programs in oil and gas exploration and production - like those in power generation - are carried out by our private sector in cost-shared partnerships with the government.
It is this shared partnership that allows us to look beyond today's capabilities - to concepts that are too high risk for any one company to pursue on its own.
But if they are successful, these high-risk concepts are also high payoff. And because the private sector is involved throughout the development process, there is a clear pathway from laboratory to marketplace.
We believe the model of government-industry partnerships works. We believe they will work throughout the energy sector not only in our country but globally.
In that regard, I want to commend all of you and your governments in efforts undertaken to date with reform and privatization of your energy sectors. This is not easy work. Energy assets are vital to national security. Devising policies that ensure the interests of the nation are protected, while at the same time providing incentives to investors require cautious and deliberate consideration.
In the U.S. we are also in the midst of reform in our electric utility sector. We are introducing competition that will allow commercial and residential customers to select their own suppliers. We are also wrestling with how to balance the interests of the utilities and businesses against the public good of consumers and their right to receive safe, reliable service at reasonable prices.
These are the same concerns each of your governments is grappling with as you decide how much and how quickly to privatize.
Although this is not an easy task, I encourage all of you to continue your efforts. Access to reliable, affordable supplies of energy is vital to socio-economic development, government stability, and the social well-being of all of our citizens. I am confident that you will discover, as have we, that privatization with the proper blend of government regulatory oversight can be both the swiftest and most affordable means for meeting the escalating energy demands of the 21st century.
With privatization, you have ahead of you a cross-sectoral catalytic engine that can drive economic growth and prosperity while protecting our global environment.
Thank you for your attention.
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