Remarks by
Robert S. Kripowicz
Acting Assistant Secretary for Fossil Energy
U.S. Department of Energy
to the
National Coal Council
in Washington DC
on
May 3, 2001

I want to bring you up-to-date on several coal matters at the Department of Energy.

It probably goes without saying that things are a little different at the Energy Department these days for those of us who are involved in the coal program.

We're not walking around with bags on our heads. People actually talk to us. And when they use the word "coal" they don't whisper anymore.

And I guess, most importantly, they are actually using the words "coal" and "national energy policy" in the same sentence.

This is quite a change for us.

You really don't know how remarkable it is to wake up in the morning and read in the Washington Post that the Vice President has referred to coal as (quote) "the most plentiful source of affordable energy in the country".....and that (quote) "we must support efforts to improve clean coal technology."

There IS a new, more positive view about coal and coal technology. And that view is beginning to permeate through the industry.

I liked Bill Raney's quote in the same Washington Post article. Bill, as many of you know, is president of the West Virginia Coal Association. He reacted to the Vice President's positive coal remarks by saying "Bless his heart" - and I guess when you're talking about this particular Vice President, you say that literally.

Then he went on to say "We've been something of the whipping child for some time now. This is kind of like your dad when he compliments you when you were growing up. We've got people in Washington talking to us now."

And he's right. This Administration is talking TO you - and they are talking ABOUT you.

Secretary Abraham is, in fact, at this moment talking about a new clean coal initiative contained in the President's FY 2002 budget request. He is testifying before the House Interior Appropriations Subcommittee about the Administration's budget proposal.

Now, a lot of press reports have focused on programs where the Administration's budget request went down. And yes, there is not a lot of the "status quo" in the budget request. The Administration was very clear in stating that not every energy problem can be solved by spending a lot of taxpayer money. Where there are questions about the proper government role, the budget request does NOT insert an automatic "placeholder."

But there is clear support for clean coal technology. The Administration included in the 2002 budget $150 million for a "clean coal power initiative" which will be the "downpayment" on the President's commitment to invest $2 billion on clean coal technology over the next 10 years.

Now I don't want to give the impression that, because this Administration is a strong believer in coal and clean coal technology, that a new clean coal initiative is going to be a cakewalk through Congress. Already we are beginning to see the anti-coal forces line up against it.

It is important that we make 2 major points when we talk about the President's new clean coal commitment:

One is that it is based on a solid - and successful - technical foundation. The Clean Coal Technology Program that we ran from 1986 to 1993 - which this Council helped shape - was a highly successful program.

Of the 38 projects that ultimately received joint government-industry support, 22 have produced commercially viable technologies. There have either been domestic or international sales, or the technology continues to operate at the plant site with private sector financing.

Another 3 or 4 are still in the design or construction phase, so it's too early to pass judgement. And another 2 or 3 demonstrated pollution controls -- like coal reburning -- that we still believe have a good chance to move into commercial use as emission requirements tighten.

So it would not be unreasonable to state that there is a good chance that, maybe, 30 of the 38 projects are going to produce commercial successes.

If someone had said back in 1986 that we would be guaranteed a nearly 80 percent success rate for a high-risk, first-of-a-kind demonstration program, there would have been no question that it was a good investment.

And some of those successes have had major benefits. Low-NOx combustors, for example, were largely an untried technology when the program began. Now they are in use, or being installed, on 75 percent of the coal-fired power plants in this country.

I've heard some critics claim that the Clean Coal program produced no commercial successes. Well, perhaps they should check with companies like Alstom Power - formerly ABB. A few weeks ago, we announced that a specific type of low-NOx burner the company demonstrated in the Clean Coal program had now topped more than $1 BILLION in commercial sales.

I'm a government employee...so what do I know about business?....but in my books, one billion dollars of sales means that someone is buying it...and to me, that translates into a commercial success.

Or consider selective catalytic reduction as another example. Before the Clean Coal program, this NOx control technology was a high-cost and - with U.S. coals - a high-risk proposition. Now, costs have been cut in half. We know the technology works with domestic coals. And by 2002, 30 percent of U.S. coal power plants will have them installed.

Or take power generation. If it wasn't for the Clean Coal program, we probably wouldn't have the Tampa Electric power plant, or the Wabash River plant - both gasification-based combined cycles. Now, based on those plants, we can legitimately make the claim that the technology exists to make coal as clean as natural gas in generating electricity.

All of this translates into economic benefits. And we have struggled for some time in the Department to try and put a dollar figure on what it means to the national economy to have lower cost, more effective technology. So we were very pleased when Southern Company - who ought to know - took on the same task.

They analyzed the investments made by the government in clean coal technology - both research and demonstration - and calculated the benefits to the nation's ratepayers and consumers. Their admittedly conservative estimate came out to $100 BILLION.

Add up all the money the government has spent in clean coal research, development and demonstration in the last 20 years, and it comes to just over $4 billion. That money, of course, leveraged a much larger number by the private sector.

Again, if someone had said to me back when I was on the Appropriations Committee, if the government will invest $4 billion in new technology, we'll guarantee you a $100 billion return in economic benefits, I would have said "show me where to send the check." And I suspect most Members of Congress would have said the same thing, too.

So, I believe the clean coal track record is good - and that the Clean Coal Technology Program has produced remarkable successes that translate into dollars and, I guess you could say, good sense.

Now that leads me to the second point we have to make to counter the critics: Why do we need to spend more?

The answer to that is two-fold. First, there are new challenges.

Environmental standards have tightened. New requirements are being imposed for pollutants, such as mercury, that were not regulated during the initial program. The digital economy has created new power demands that no one predicted 8 years ago.

The Vice President estimated in his remarks earlier this week that we will need the equivalent of 1300 to 1900 new power plants over the next 20 years - roughly 65 a year for the next two decades.

That is an enormous challenge. But it becomes an even greater challenge if many of today's coal plants are retired prematurely. Or if they can't upgrade. Or if new ones cannot be built.

The new emphasis on clean coal technology reflects this Administration's view that we can keep coal in our energy mix without compromising environmental progress. And keeping coal in our energy mix is good for the economy and good for this country's global competitiveness.

The second point is that while there are new environmental challenges, there are also new technologies. It has been 8 years since our last clean coal competition, and there have been significant new advances in technology.

Last year, Congress took that into account when the House and Senate appropriations committee took $95 million of funding from the previous Clean Coal program and directed the Department to run a new competition. It was to be called the Power Plant Improvement Initiative - and it reflected Congress' concern that the problems in California were a clear warning sign to the rest of the nation.

The $95 million was to be used for coal-based demonstration projects that could, in their words, "help assure the reliability of the Nation's energy supply from existing and new electric generating facilities." Industry would again be asked to come to the table with good ideas and the cost-sharing to back them up.

A lot of skeptics questioned whether either would happen - would there be good ideas and would industry be willing to cost-share new projects?

Today, we are providing answers to both questions.

Secretary Abraham will be announcing at his Congressional hearing that the Department has received 24 proposals - for projects valued at $535 million. The federal share of the proposed projects is more than $250 million - well above the $95 million we have to offer. Projects would be sited in at least 15 States - recognizing that not every proposer clearly identified a specific site.

We are releasing the list of proposals today, and an abstract describing the project that each of the proposers prepared.

There will be copies on the back table for you to pick up if you are interested.

As the Secretary is saying to Congress this morning, "the response tells us....that industry stands ready to come to the table...and that President Bush's clean coal commitment is clearly consistent with the power industry's priorities."

The $95 million being offered this year is a precursor to the President's clean coal program that starts in FY 2002.

We have heard from several companies that did not submit proposals this time, that they will be coming forward in future competitions.

So the interest is there - and for the first time in a long time, that interest is from BOTH the private sector and the government.

Now, I haven't said much about the Vice President's energy task force. It's due to have its report out this month - probably around the middle of the month. Coal and clean coal technology will play a key role in it, but that's about all I can tell you at this point.

Suffice it to say, there are a lot of dedicated people working very hard on fashioning an energy policy that is realistic, farsighted, effective and fiscally responsible. And I'm not going to get out in front of any of them here today - especially the one that is the most dedicated and working the hardest AND the one who has said some very positive things about coal....the Vice President.

I will say only this - Bless his heart.