Remarks by Mark Maddox
Acting Assistant Secretary for Fossil Energy
to the Joint Workshop of the International Energy Agency
Working Party on Fossil Fuels
and the
Carbon Sequestration Leadership Forum
Paris, France
July 12, 2004

The Importance of National and International Legal Frameworks
for the Future of Carbon Dioxide Storage

Thank you Claude Mandil for your welcome to Paris: And good morning everyone.

This joint meeting of the International Energy Agency's Working Party on Fossil Fuels and key participants in the Carbon Sequestration Leadership Forum represents a convergence of organizations and organizational goals that can help put the world on firmer footing in energy and environmental policy than it has now.

And so, an early word of thanks is due those who put our program together.

And a strong expression of gratitude is due the Forum's presenters who will follow me – Sergio Garribba of Italy, chair of the Stakeholder Working Group; and Tania Constable of Australia, chair of our all-important Task Force on Legal, Regulatory and Financial Issues; and those who worked with them.

They have been asked to undertake difficult labors and great challenges on short deadlines in the year since the Forum was organized. And they have responded magnificently.

In the U.S. vernacular, they've done the heavy lifting.

Their work on behalf of the Forum goes directly to three of IEA's formal objectives:

• To improve the world's energy supply;
• To assist in the integration of international environmental and energy policies;
• And, to promote rational energy policies in a global context through cooperation with non-member countries, industry and international organizations.

IEA's activity and authoritative projections have been pivotal in bringing into international discussions of greenhouse gases a willingness to recognize:

• That world economic growth, especially in the populous developing nations, means a corresponding and explosive rise in energy demand that cannot be denied or turned aside;
• That, in the first part of this century, most of the energy for developed and developing nations alike will have to come from fossil fuels;
• That much of it will come from increased coal use for electric power;
• That it is no wonder all of our countries are struggling to achieve significant reductions in emissions;
• And that something more effective is needed.

In the matter of greenhouse gases and primary energy and electric power, the world requires constructive alternatives and flexibility - alternatives that deal with energy security, economic security, and environmental security.

It requires an approach that can engage nations at all stages of economic development to the mutual benefit of all.

The Carbon Sequestration Leadership Forum is dedicated to developing one such constructive alternative and doing so quickly. Developing the means of carbon capture and safe storage offers the world an opportunity to grow and to avoid possible harm.

To briefly refresh your recollections, the member nations are representative of developed, transitional and developing nations on every populated continent and in most regions of the world.

The Forum involves the leading economies of Europe, Asia, South America and North America as well as the most populous nations of India and China. Most members are also in the International Partnership for the Hydrogen Economy. In broad approximations, the Forum's member nations account for:

• About 75 percent of the world's gross economic product, plus at least 70 percent of projected growth through 2025;
• Almost 70 percent of the world's energy demand, plus 70 percent of the projected increase in demand;
• And 70 percent of the world's carbon dioxide emissions, plus more than 70 percent of the projected increase.

In energy resources, the reserves of Forum members represent approximately:

• 15 percent of world petroleum;
• 40 percent of natural gas;
• And, at least 85 percent of coal;

In fact, the reserves of Forum nations constitute at least 65 percent of all the fossil energy available to the world.

The Forum provides a means of forming multilateral and bilateral partnerships to sponsor the rapid research, development and deployment of technologies that capture and safely store large quantities of carbon dioxide that would otherwise be associated with energy use.

Our non-binding activities will be marked by the potential to progressively eliminate the emission of greenhouse gases into the atmosphere; and to move the world toward their ultimate stabilization in our century while - at the same time - providing sustained and sustainable economic growth for all.

The essence of our several enumerated goals and objectives can be broadly summarized this way: The Forum's purpose is to link science and technology with a body of ready-to-use, non-binding concepts in legislation, regulation and financial incentives that individual nations can voluntarily apply to their needs and, at the same time, satisfy any obligations they may have under existing or proposed agreements between and among nations.

We want all interested nations to be able to make use of what we produce, not just CSLF members.

The potential benefits of technology development include:

• Curbing and eliminating carbon dioxide emissions in the use of all fossil energy for power generation, not just coal;
• Relieving the pressures now being felt in petroleum and, by some, in natural gas by making possible greater and more varied use of coal - the most abundant resource;
• Enhanced oil recovery, which will add to supply;
• Supplementing natural gas supply by harvesting methane displaced by carbon storage in unmineable coal seams;
• And, bringing on development of the hydrogen economy, which ultimately could stabilize energy markets and decarbonize economic activity.

But none of this can go very far unless we develop the outlines of national and international legal frameworks — a useable and useful template of legislation, regulation and financial incentive.

The Forum seeks to develop on a non-binding basis frameworks that will:

• Unequivocally recognize the need to manage carbon;
• Establish carbon management as practicable and effective in varied forms and at each stage of the cycle — capture, transport, injection and post-closure;
• Ensure public safety and environmental safety and, thereby, public confidence;
• Provide the combination of stakeholder confidence and investment incentives that will foster rapid development and deployment;
• Offer all nations common ground on which to proceed;
• Engender trust and confidence within nations, between nations and among nations;
• And, make provision for existing rights and obligations under international agreements and law.

Later this morning, Tania Constable's presentation will summarize progress in this all-important area.

Later this week, the task force will gather in London to work on a set of principles that our Policy Group will further prepare for consideration by the Forum's Ministerial Meeting in Melbourne this September.

Our intent is to present for endorsement by our participating energy ministers, secretaries or directors general:

• 10 specific technological projects of wide application potential for collaborative and cooperative research and development;
• A roadmap for technology development that can lead to international recognition of carbon capture and storage as an option in dealing with greenhouse gases;
• And a set of non-binding principles on Legal, Regulatory and Financial Issues.

Our proposed draft of 15 non-binding principles is comprised of four overarching principles with companion principles on capture, transportation, injection and post-closure activity. There are approximately 60 specific observations and recommendations on best practices spread among them.

The Forum is proceeding with a sense of urgency. This sense is due to the pressure of growing demand for new generating capacity; and to the rising recognition accorded flexibility in dealing with concerns about rising greenhouse gases. The best way to do this is to begin deploying the newest forms of advanced technology as soon as possible.

One such technology is ultra-supercritical generation with pulverized coal. Another is the combination of coal gasification and combined-cycle generation that we call IGCC – integrated gasification combined-cycle generation.

Some advocate ultra-supercritical generation and some advocate gasification.

But our real shared need is to have a diversified portfolio that provides the kind of flexibility that will let us respond to all developments, even the kind we cannot now reasonably foresee. This means moving forward with both — with a portfolio of technologies.

Gasification will be one of the most effective methods of implementing carbon management in the years to come. Its potential directly supports the evolution of the hydrogen economy – the ultimate decarbonization of most energy use and economic activity.

However, even now gasification is competitive with traditional generation in reliability and efficiency. It is superior environmentally and comes with the capability to get even better with minimal additional costs.

In fact, if traditional gasification costs are compared to potential future compliance costs, gasification becomes superior.

Every effort should be made beginning now to foster deployment of both these advanced technologies as soon as possible: For the world will find itself living 50 years, or more, with the choices it makes today and tomorrow.

The Forum has come a long way since organizing last year and is on the verge of beginning accelerated research, development and deployment.

We believe our work can help transform the way the world produces and uses energy; and, in so doing, transform the world itself.

In closing, I'd like to put the Forum's effort in context with observations from a series of talks by my boss, Secretary Abraham, and I quote him directly:

• "Energy is too precious a commodity to waste...
• "Carbon sequestration...acknowledges a simple and indisputable fact: Fossil fuels will continue for the foreseeable future to be the world's most reliable and lowest-cost energy resources.
• "When these technologies are developed, we will all exceed our targets.
• "If they are not developed, we will all fail."

Thank you.