Remarks by
Spencer Abraham
Secretary of Energy
U.S. Department of Energy
to the
National Coal Council
in
Washington, DC
November 21, 2002

Good morning, everyone. It is a pleasure to be here with you today.

I want to take a moment to thank Wes Taylor for a great job during his term as Chairman, and I also want to thank all of you who serve on the council for making your expert advice on coal issues available to me.

Your advice will continue to be important to me -- and to succeeding energy secretaries -- because coal is going to continue to be a prominent element in the nation's energy portfolio for many years to come.

The words "coal" and "electricity" go together in the American mind - and each is becoming more reliant on the other. Americans enjoy low-cost electricity in no small measure because low-cost coal today accounts for more than half of all electricity generation. And the electricity sector is by far the country's largest coal customer, accounting for more than 90 percent of U.S. coal consumption.

Our Administration appreciates the contribution that people such as you and others in the coal industry -- make to our economy. Coal has underpinned our economy almost from our country's beginning, and the American people owe the men and women who worked -- and work today -- in America's coal fields, a debt of gratitude.

Coal is the fuel that helped build America. It powered the Industrial Revolution of the 19th century. It became the backbone of our low-cost electricity generating capacity in the 20th century. The question before us now is, what role coal will play in the 21st century, and there is a wide range of opinion on that.

There are some who would probably prefer to move away from coal quickly and completely because they do not believe environmental concerns can be overcome. Others would like to see the role of coal reduced over time, as other energy sources become economically practicable. We, however, believe that we can successfully address the environmental challenges coal use presents -- and that it will continue to serve as the most important fuel for electricity generation in the 21st century.

I'd like to take a minute to illustrate the continuing importance of coal by noting some projections revealed in the Energy Information Administration's Annual Energy Outlook for 2003, which was released this week.

Last year's EIA 20-year projections stopped at the year 2020, but this year's extend out to 2025 - and the projections for coal continue to grow in the all-important area of electricity generation. The new outlook sees coal's role in electricity generation growing by about 33 between this year and the year 2020. And it further projects an increase of another eight percent from 2020 to 2025.

EIA has also increased by nearly half its previous projection for growth in coal-fired electricity generation capacity by 2020, and projects capacity additions will increase by another two-thirds between 2020 and 2025.

Overall, EIA projects that coal will retain its current place as the source of roughly one-half of our electricity.

The revision in growth projections for coal is due to its low cost -- and to projected increases in the price of natural gas.

The only challenge to coal's continuing role, as we all know, is environmental. For the sake of the continued health of the coal industry - the American economy - and America's energy security -- we must work together to find ways to use the 250-year supply of low-cost coal that lies beneath our feet in a safe and environmentally friendly fashion.

This Administration wants to invest with you in research and development to find the new technologies that will accomplish just that - in order to keep low-cost coal at the center of electricity generation.

I believe we are already off to a great start.

Reliable, low-cost energy is one of the great blessings taken for granted by the American people. Most people know very little about how electric power gets to the wall outlet into which they plug their appliances. But there are three things Americans, in their wisdom, do know: they don't ever want that energy supply interrupted - they don't want to pay too much for it - and they don't want it at the expense of the environment or the health and safety of our communities.

They would be very reassured, I think, if they knew how hard our people are working and how much money is being invested in laboratories and in coal fields across the county to make sure the power keeps coming while the environment gets cleaner.

President Bush's Clear Skies Initiative, for example, is designed to address the multi-pollutant issue, reducing emissions of NOx, SOx and mercury by an average of 70 percent.

Our clean-coal technology initiative is a great example of a program designed to fulfill the promise of Clear Skies. We propose to develop the technologies we need to assure clear skies, adequate supplies of energy and a healthy coal industry by making private companies vital components of our public-private research and development efforts.

We just closed the first solicitation for proposals from industry, and we are now evaluating $5 billion worth of proposals. Industry has again shown its willingness to bring its resources to the table. The proposals offer a wealth of new ideas, ranging from advanced power systems to improved mercury controls. Many of the proposals offer private sector financing well in excess of the 50 percent minimum. In fact, of the $5 billion in proposals, industry's share would be $3.5 billion. We have made $330 million available as the first installment of the President's $2 billion clean coal initiative, and we will announce our first selections in January.

The president's Global Climate Change Initiative addresses the greenhouse gas element in the environmental equation. Like Clear Skies, the Climate Change initiative is designed to harness the power of markets and technological innovation. As President Bush has said, "we must act in a serious and sensible way, even while scientific uncertainties remain, to address the factors that contribute to climate change."

The climate change initiative aims to reduce greenhouse gas intensity in the United States by 18 percent in the next 10 years, while sustaining the economic growth we need to finance investment in new, clean energy technologies. It sets America on a path to slow the growth of greenhouse gas emissions and - as the science justifies - to stop and then reverse that growth.

That's where carbon sequestration enters the picture.

Until a few years ago, there were basically only two ways to address the challenge of global climate change. One was to produce and use energy more efficiently. The second was to rely increasingly on low-carbon and carbon-free fuels.

We have made great strides in energy efficiency. We have made substantial progress in bringing down the costs of renewable energy, and we are working to reestablish the nuclear power option. But when you look at most credible projections for escalating energy use around the globe in the next century - and you predict the rising levels of carbon emissions likely to result - you come to an inevitable conclusion: energy efficiency and alternative energy, alone, may not be enough to stabilize global concentrations of carbon dioxide. Not unless you assume that all nations of the world -- developed AND developing -- undertake a massive overhaul of their energy infrastructures in a relatively near - and relatively quick -- time frame.

I'm not here to offer a detailed assessment of the practicability of those assumptions, but I'm inclined to think the odds are strongly against them.

That's why today's research into carbon sequestration is so important.

Carbon sequestration potentially offers the world a third option - an option that we hope will prove affordable - an option we hope can be proven effective and environmentally safe - and most importantly an option that, if validated, will mean that the United States will be able to take advantage of its most abundant and lowest cost energy resource.

But prudent planning requires research and development. It requires that we prove the viability of the concept now, so it is ready in the event the science tells us to deploy it over time.

Five years ago, carbon sequestration was little more than a few "blue sky" ideas on a few drawing boards. But today, we have more than 60 sequestration research projects underway. Our annual budget is approaching 50 million dollars, and our funding attracts another 35 million dollars annually from industry and others. And most importantly, we're beginning to see results.

Already, technology coming out of the laboratory has reduced the cost of capturing carbon from a power plant's exhaust by as much as 10-fold. We're beginning to move into the field to test ways to permanently store carbon gases in geologic formations. We're working with power companies to enhance the carbon uptake of soils and vegetation using the byproducts of their coal combustion plants. We're exploring innovative concepts for turning carbon dioxide into a solid mineral - it takes nature thousands of years to do this, we've succeeded in reducing the time to 30 minutes.

And we're doing all of this with the voluntary participation - and voluntary contributions of financial and human resources - by private companies. That's the essence of the President's climate change initiative - joint government-industry partnerships working together to find sensible, low cost solutions. Some in this room are already working closely with us in this area.

Now, after 5 years of exploratory research, it is time to move our sequestration program into a new and expanded phase.

That is why I am announcing today that the Department of Energy intends to create a nationwide network of regional sequestration partnerships.

These partnerships - 4 to 10 across the country, each made up of private industry, universities, and state and local governments - will become the centerpiece of our sequestration program. They will help us determine the technologies, regulations, and infrastructure that are best suited for specific regions of the country.

We will issue a solicitation notice by the end of this month. We intend to provide up to $2 million per partnership for initial planning. Then as the planning matures, we could provide up to $7 million to conduct early field verification tests and carry out more detailed regulatory and infrastructure planning.

Our goal is straightforward - we want to know which sequestration technology is likely to be most effective in a particular region. Will it be injecting carbon gases into active or abandoned oil fields? Or perhaps into coal seams or deep brine-filled reservoirs? Will it be processes that make forest and crop lands more productive? Or will it be new, novel concepts just now emerging from our laboratories?

But equally important, we want to begin planning the permitting processes that will be necessary -- on the state and local level. And we want people to begin thinking about the pipelines and other infrastructure that might be needed. We want to be ready if the science tells us that large-scale carbon reductions are necessary in the future.

I also want to announce today a specific government-industry sequestration project - one also intended to ensure that we have sound data.

We have given the go-ahead for a research project headed by American Electric Power and Battelle to begin studying the suitability of deep underground sites in the Ohio River Valley that might one day be used to store carbon dioxide safely and permanently.

The focus will be on the deep saline formations that lie thousands of feet below the surface - well below the aquifers commonly used for drinking water. These saline formations underlie all or parts of 35 states. Theoretically, they could hold all of the carbon dioxide emitted by the nation's coal-burning power plants for the next 100 years.

The AEP-Battelle project is especially important because it will examine one of the largest of these formations that lies beneath the largest concentration of fossil fuel plants in the nation.

At this point in the project, there won't be any actual carbon dioxide injection because we want to move deliberately. We want to go as far and as fast as the science takes us. Our goal is to develop a suite of carbon management options that we know are safe, affordable, and effective. Again, our emphasis is to do our scientific and technological homework today so that we will be ready to move appropriately in the future.

In light of these developments, I'm sure you can agree on the importance of my request for an update of your previous report on carbon sequestration.

In the earlier report, you recommended "the U.S. Government...in partnership with the entire coal industry, implement an even fuller and more aggressive carbon management program with a major component being research and development of cost-effective CO2 sequestration technologies." You will also note that we saw the merit of your far-sighted recommendation - and acted on it.

It is my hope that the follow-up report I have requested will build on your recognition of the importance of carbon sequestration research and development and serve as a blueprint for industry, as well as promoting additional public-private partnerships to support voluntary reduction of greenhouse gases and carbon sequestration.

The visionary character of this Administration's energy plan is easily its most overlooked aspect. Perhaps the trouble is that it is so practical in its approach to the challenges that, when overcome, will change the way we live. It is practical because the president knows, as you know, that visionary rhetoric unaccompanied by hard work and tangible results isn't worth very much. In the world of energy and the environment, which means the world of science and technology, the uninitiated always talk impatiently about the need for "breakthroughs," as if they happen every day - all you have to do is specify the kind of breakthrough you want and wait for the doorbell to ring.

But more thoughtful observers know that breakthroughs are the end result of a thousand small advances in knowledge. They take time and they don't occur very often.

And they are most likely to occur in an atmosphere of cooperation and trust that frees the genius of the American people to tackle a problem and find a solution.

Working together, we will apply our resources of capital, experience and expertise to overcome any environmental and energy challenges we confront. We will succeed because we will allow the American people -- and the vibrant economy that is their greatest invention - the room to continue to grow and prosper.

The projects that grow out of the National Energy Plan

• For an emissions-free coal energy plant of the future
• For distributed electrical energy
• For a modernized energy infrastructure
• For remarkable leaps in energy efficiency
• For a hydrogen fuel-cell vehicle, and eventually
• For a hydrogen economy

are visionary.

We will continue to make incremental progress, and the breakthroughs we need will come, in time, on the backs of those increments.

Years ago, carbon sequestration was viewed as utterly impractical. Today, after patient investigation, we see real potential. The same might be said for hydrogen or perhaps for breakthroughs as yet unimagined. Patient investigation today leads to new energy options for the future.

I am convinced that, with the right technology, coal will fulfill the projections for use in the 21st century which I mentioned earlier. We are prepared to make the necessary investments in technology, and to work with industry to be sure the coal retains its prominent energy role - and continues to make its powerful contribution to America's energy security.