Remarks by Mark Maddox
Acting Assistant Secretary for Fossil Energy
to the Aspen Clean Energy Roundtable
Aspen, Colorado
June 10, 2004

"Creating a Policy Framework for Clean Energy"

Thank you, and good morning.

It's a pleasure to be here to discuss one of the top priorities of President Bush's administration – our energy future. "Dependable, affordable, environmentally sound energy for the future" — energy security — is the goal of the President's comprehensive National Energy Policy, announced in May 2001.

The policy is both practical and visionary.

It is practical in that it deals in hard realities and sensible, achievable solutions.

It recognizes that energy security depends on having a number of fuels in our energy portfolio, available from a variety of sources.

It recognizes that fossil fuel consumption will steadily increase here in the United States and worldwide for at least the next 20 years and that, therefore, we must:

• Encourage increased domestic production of oil and natural gas;
• Improve and expand our international energy trade relationships, and
• Promote the continued development of clean coal technologies, as well as advanced nuclear power generation.

It emphasizes the importance of modernization and increased energy efficiency at every step of the energy process – production and transportation, generation and transmission, and consumption

And finally, it stresses the continued development and application of renewable energy sources.

The policy is visionary in that it proposes much more than the usual incremental, at-the-margins improvements in our energy/environment picture that have characterized past policy. The President has proposed over the long term to do more than improve the energy supply and environmental picture.

Our energy policy proposes to eliminate the energy supply and environmental concerns that preoccupy us today, and that are the subject of this Conference.

Advanced technology will help us reach our energy policy's goals, as well as the goals of a number of related initiatives, among them:

• The Clear Skies initiative, which aims at reducing emissions of nitrogen oxides, sulfur dioxide and mercury by 70 percent by 2018;
• The Climate Change initiative, the goal of which is to reduce greenhouse gas intensity by 18 percent by 2012;
• The FreedomCar and Hydrogen initiatives, which are aimed at developing a mass market hydrogen fuel cell-powered passenger car by 2015, as well as the infrastructure to support it, and
• The Clean Coal initiative that has as its ultimate goal nothing less than the development of an emissions-free power plant that operates at unprecedented levels of efficiency and produces both electricity and hydrogen while permanently sequestering greenhouse gases.

The Administration has been successful in attracting bi-lateral and multi-lateral international support and cooperation in partnerships for the development of the hydrogen economy, for carbon sequestration, for clean coal research, for oil and gas exploration and production, and for next-generation nuclear power plants – and we have joined the international partnership called ITER for the development of fusion power.

So, to answer the first question posed by this Roundtable: Is secure, affordable energy possible? The answer is, yes. In fact, given the promising work currently underway in all the energy areas I've mentioned, it is difficult not to be optimistic about the future.

And to the question, Who will lead? The answer is, the United States is leading and will continue to lead the way to a future of clean and secure energy, not just for us, but for the world.

My remarks this morning must be brief so I will concentrate for the next couple of minutes on one hugely promising area for both secure domestic energy supply and enormous environmental performance gains – clean coal; and on one technology that will be crucial as we make the transition to the FutureGen power plant of the future – integrated gasification combined-cycle, or IGCC.

Everyone in coal or power production is familiar with the FutureGen Initiative to some degree. FutureGen is the 10-year, $1 billion project that lies at the heart of the President's $2 billion Clean Coal Power Initiative. It will further advance the already advanced power generation technology of IGCC. It will bring together in one power plant the capability to:

• Generate electricity at efficiency greater than 60 percent;
• Achieve total energy-use efficiency exceeding 80 percent;
• Produce hydrogen to support a hydrogen economy and the development of emissions-free automobiles and transportation – the first step to the end of dependence on imported oil;
• Remove and permanently sequester carbon dioxide, and
• Accomplish all this with virtually zero emissions of any kind – no sulfur dioxide, no nitrogen oxides, no mercury, no particulates, no carbon dioxide; and without significant increase in the cost of electricity or transportation fuel.

While we wait for FutureGen to be built, there is much we can do — and are doing — to improve coal plant performance. We believe IGCC will be integral to coal's future, and the sooner the better.

A study done recently by the National Association of Regulatory Utility Commissioners and DOE's National Energy Technology Laboratory looked into the challenges of IGCC's early deployment. The study concluded that "...the rapid commercialization and deployment of coal gasification in the U.S. electric power sector should be a critical policy objective...of federal and state governments."

The study found that the IGCC demonstrations at the Wabash River plant in Indiana and the Polk plant in Florida are among the world's cleanest, and that both have compiled strong records of reliability.

In fact, EPA data for 2002 confirms that these two are the cleanest coal plants in the United States based on combined control of sulfur dioxide and nitrogen oxide emissions.

In addition, current reliability at Wabash River is 84 percent while at the Polk plant it is 79 percent. In 2002, the Polk plant operated at an average 89 percent capacity factor and won a place among the nation's top 20 coal plants for reliability. The Office of Fossil Energy put IGCC's ultimate reliability at 93 percent.

The NARUC report also notes that the Polk plant has become the low-cost producer on its system, and that the Wabash River plant gives coal a load-following capability it never had before, which opens a new role.

Both plants have remained on-line since their demonstrations were completed, which was not the original intent. The study concludes that the time has come to start thinking about incentives to encourage IGCC adoption.

But there are barriers to rapid adoption of IGCC, and we need to begin addressing ways to:

• Simplify permitting;
• Fashion uniform environmental standards;
• Encourage innovative State regulatory practices that recognize the value of a flexible approach and promote creativity; and
• Establish commonly understood standards of reliability and cost effectiveness.

It's important that the coal and power generation communities begin now to educate Wall Street and the public.

IGCC is too important to languish while the FutureGen project reaches for perfection. It's ready now – and early successes will pave the way for acceptance of plants built on the FutureGen prototype in the future.

Putting IGCC to use now is critical to the environment because success here will lead to worldwide use and global improvement. It is not too much to say that IGCC is indispensable to our Nation's energy and economic security.

I said earlier that, based on technology advances, it is difficult not to be optimistic about the future. IGCC is a perfect example — and it is one of many examples — of technology now being developed and tested that will have dramatic effects on our energy and environmental picture. It is both practical and visionary.

IGCC and associated technologies will be developed and perfected by the private sector in cooperation with our many foreign partners and in partnership with the federal government.

There can be no doubt that together we will enjoy a future of secure, affordable and clean energy.