Remarks by Justin Swift
Deputy Assistant Secretary for International Affairs
Office of Fossil Energy
to the
British Energy Association Annual Meeting
Workshop on Carbon Sequestration
London, United Kingdom
June 16, 2005

Good morning all. 

Thank you for inviting me to specifically discuss U.S. policy on cleaner fossil fuels and carbon sequestration. 

Based on what I've read in the press since arriving, it's safe to say that interest in U.S. policy is not universal as it regards greenhouse gas emissions and climate.

Many critics quoted were asserting that we really have no policy at all.
We do have policies.  And they are robust.  So your interest and this forum are appreciated. 
President Bush has made substantial financial and policy commitments to reconciling the concerns associated with climate, with energy and with economic sustainability, especially where they overlap in my portfolio of responsibilities.

The commitment to technology development alone in the Office of Fossil Energy, where I work, is $2 billion across 10 years, most of which has already been appropriated by Congress. 

The Department of Energy's activities also support U.S. participation in the multi-lateral Carbon Sequestration Leadership Forum and the International Partnership for a Hydrogen Economy.  The U.K. is a member of both. 

In the aggregate, both memberships represent more than two-thirds of the world's economic activity and more than two-thirds of its greenhouse gas emissions, whether present or projected, whether from developed or developing nations.  And all are committed to cooperation in developing the means to slow, then reverse, then eventually eliminate most greenhouse gas emissions. 

It is a substantial commitment…even at current exchange rates. 

Like the United Kingdom, like all responsible governments, the United States is engaged in coming to terms with what a distinguished executive of the World Energy Council once called the facts and the physics of energy.
The facts and the physics of energy which shape all reliable forecasts say:  

• That alternative sources, including nuclear generation, can't do it all – not now, not in the next 25 years; 
• And, that fossil fuels will be indispensable to developing and developed nations alike for the foreseeable future. 

The International Energy Agency's world outlook of last fall brought forward some specific notations to the point: 

• Economic growth means world energy demand will increase 60 percent through 2030;
• Fossil fuels will be required to satisfy 90 percent of the increase;
• Total carbon dioxide emissions will grow by more than 60 percent;
• And, the majority of added CO2 will come from developing nations shortly after 2020;
• But…the step of implementing carbon dioxide capture and sequestration to power generation alone could cut those CO2 projections by a little more than 20 percent. 

The citizens of every nation want a healthy environment, want stable and reliable energy and want prospering economies. 

Conservation and efficiency will be important in shaving demand.  But demand will rise. 
And every nation will have to rely on oil and gas and coal for the foreseeable future.  And demand will be met by fossil energy.  

In the United States, the Bush Administration's policies recognize:

• The pivotal importance of coal to our Nation's energy, economic and environmental security – and the world's; 
• But, most important, that the environmental threats inherent in greater coal use must be eliminated in order to move forward.  

 
Coal is 95 percent of America's presently recoverable hydro-carbon reserves and almost 70 percent of the world's reserves.  U.S. coal contains almost as much useful energy in British thermal units as the world's proven reserves of oil.  And world coal contains more than twice the energy of the world's combined proven reserves of oil and natural gas. 
And so, the President made emissions-free coal technology and abundant coal keystones of our National Energy and Climate strategies. 

The overall climate strategy is to slow, then stop and then reverse the growth in CO2 emissions. 

The President set a voluntary national goal of reducing by 18 percent the amount of CO2 produced per unit of gross domestic product by 2018 – a reduction of carbon intensity that is the equivalent taking 70 million cars off the road. 

And industry has been responding.  Last year our Nation's principal electric-power producers pledged reductions of up to 5 percent by 2012 through their seven trade associations.  Their baseline is the period 2000 through 2002. 

In the Office of Fossil Energy our assignment is to develop and integrate a range of advanced technologies which will stop and reverse those emissions.
Our goal is to: 

• Transform coal into an ultra-clean source of electric power and hydrogen;
• And, by making coal a source of the green energy carrier hydrogen, help inaugurate a steady transformation of the way the world works.  

It can be done by the diligent application of science and good engineering to problems and objectives that are well-defined – a method of moving forward that has served both our nations well in times of war and peace. 

To express the U.S. approach in words first used by your great statesman Churchill:
"…once a need is defined in terms of simple reality it is nearly always possible for the scientific experts to find a solution." 

Our effort to create solutions in Fossil Energy takes place under the heading of the President's Coal Research Initiative.  We contribute to the President's policies in five areas:  

• Through basic activities in the Carbon Sequestration Program for the low-cost capture and storage of CO2 and low-cost production of hydrogen or hydrogen-rich liquid fuels;  
• Through simultaneous activity by our domestic Carbon Sequestration Partnerships whose members are paving the way for safe, permanent storage; 
• Through the President's $1 billion Clean Coal Power Initiative which is focused on advancing the core technology of coal gasification and combined-cycle power generation that we call IGCC;  
• Through the $950 million FutureGen Project to integrate in one plant for the first time the parallel advances in carbon capture and storage, poly-generation and IGCC;
• And, finally, through providing policy and technical leadership to the international Carbon Sequestration Leadership Forum. 

Other nations also provide indispensable policy and technical leadership.  Strong contributions are made by Australia, Italy, Norway, the United Kingdom and Canada. 
The Forum represents a worldwide mobilization of intellectual resources whose purpose is to achieve international recognition that CO2 capture and sequestration is an acceptable way of dealing with greenhouse gases. 

The effort is gathering momentum.  

Our Carbon Sequestration Program to develop the basic technology is growing. 
Appropriations are up by factor of five to $45 million a year through the Bush years to date, and this year we're asking Congress for $67 million. We have more than 80 specific projects at laboratory, pilot or field scale that include: 

•  Pre- and post-combustion capture of carbon dioxide;
• Sequestration in all its forms, especially geologic and terrestrial;
• Reliable and accurate measurement, monitoring and verification to ensure safe, long-term storage; 
• Basic research at the National Energy Technology Laboratory;
• And, potential breakthrough concepts. 

In the critical area of capture technology, we continue to examine many cost-lowering applications of great promise.  
Four of these are: 

• A clathrate – or molecular – application that separates synthesis gas to deliver a concentrated stream of CO2 for sequestration and a concentrated stream of hydrogen for zero-emissions use;
• Advanced scrubbing;
• Chemical looping;
• And advanced membrane separation. 

In sequestration, a 9,000 foot test well has given us a successful start on characterizing the geologic-storage potential of the Ohio Valley, our region of heaviest coal use. 
Other sequestration activities include: 

• The Frio Project in Texas – it is tracking the behavior of a small amount of CO2 in a deep saline formation; 
• A West Virginia project to explore the potential for sequestration in an  unmineable coal seam with by-product recovery of  methane as a supplemental energy;
• Norway's Sleipner Project in the North Sea – it is sequestering one million tons a year in a deep saline formation and developing improved technologies for monitoring, measuring and verification;
• And, Canada's Weyburn Project – it now requires almost two million tons of CO2 a year for enhanced oil recovery and also is developing improved verification technologies.

The marriage of sequestration with enhanced oil recovery at Weyburn is proving safe and long term.  As concerns rise about oil prices, oil supplies and oil reserves, this application will be of increasing interest.

One study told us that applying CO2-based recovery to depleted and declining oil fields in six regions of the U.S. could produce an additional 43 billion barrels of oil.  At present, our total domestic reserve of recoverable oil is only 22.7 billion barrels. 

Weyburn has a flip-side that is often overlooked.  It has enabled the CO2 supplier to eliminate 30 percent of its emissions while adding another profitable item to a line of profitable by-products.  The CO2 comes from the Dakota Gasification Company, which uses the low-rank coal lignite to produce pipeline gas.  

Also gathering momentum are our Regional Carbon Sequestration Partnerships, a parallel effort in preparedness.  They now span most of the North American land mass. 
We have just added the Canadian provinces of Alberta and British Columbia and the Partnerships now cover 40 states, four provinces of Canada, three Indian Nations and more than 230 organizations, including some of our most prestigious research institutions and universities. 
 
The Partnerships recently completed a highly successful Phase One.  Among the achievements was establishment of NATCARB -- our first national database.  NATCARB identifies industrial-scale CO2 emissions by source and location.  It also shows their relationship to probable geologic storage and sources of terrestrial up-take. 

Soon we will award $100 million in grants to conduct Phase Two activities through 2010.  These activities will include testing technologies and evaluating geologic reservoirs and other sinks. 

The overall preparedness effort also includes organizing the governmental and institutional arrangements necessary for permitting, regulation and the other details of ensuring safe, permanent storage. 

Proposals made in response to the Phase Two solicitation identified reservoirs with the potential to hold more than 250 years worth of total present CO2 emissions from U.S. power generation – 600 billion metric tons. 

This activity takes place in preparation for FutureGen and other carbon capture technologies in development – applications that will be suitable for use in traditional power production and on other large-scale industrial sources whether they burn oil, coal or natural gas.  

IGCC is the core technology for FutureGen, but it has another role in U.S. policy as well. 
IGCC is also an advanced and deployment-ready power-generation technology that holds pollution to what the National Academy of Science has characterized as "de minimus" levels and attains 40 percent thermal efficiency. 

Our present coal-based fleet averages 33 percent, a significant part could use up-grading or re-powering and the demand for baseload power is rising.  IGCC deployment will enable significant reductions in carbon intensity.  It will allow power producers to capitalize on the rule of thumb that every 1 percent gain in efficiency enables a 3 percent reduction on CO2 per kilowatt hour. 

And the Bush Administration is encouraging deployment. 

However, market entry has been delayed by regulatory reluctance to move a new technology into the market, by capital costs that are somewhat higher than competing technologies and by the lack of appropriate packages and performance guarantees. 
All of these hurdles soon may be lower because: 

• Technology suppliers are positioning themselves to offer turnkey packages;
• Discussion seems to be rising among power producers; 
• And Congress has included deployment incentives in pending energy legislation. 

Fossil Energy's informal tracking of new plants shows 87,000 megawatts of new coal-based capacity in planning or proposed for construction over the next 20 years. About 10 percent is IGCC at present.  

The National Academy of Science identified IGCC as an enabling technology because it can bring on other changes.  It also estimates that IGCC at attainable efficiency of about 60 percent could cut carbon intensity by 40 to 50 percent. 

Further elevating IGCC's performance and fitting it for the FutureGen Project are primary objectives of the $1 billion President's Clean Coal Power Initiative. IGCC activities under the initiative include:

• Raising efficiencies and lowering costs – both capital and operating;
• Adapting it to all ranks of coal;
• Adapting it to carbon-dioxide capture and hydrogen production;
• Improved oxygen production to support gasification and non-gasification activity such as technology that adapts other fossil fuels to sequestration;
• And generally seeking the most advantageous balance of efficiency and costs. 

Two rounds of solicitations have commissioned $2.8 billon in demonstration projects -- $2.3 billion of it financed by private sector participants.  We rely heavily on industry involvement in setting the course of our research and development and demonstration activities.  We need the private sector's judgment about the market's practical requirements and its creative insight in developing immediately useful technologies.  We want its foresight and drive in identifying problems and developing new applications.  And we want our demonstrations to put in place the manufacturing base for wide and rapid commercial deployment.  

All of this effort converges on the $950 million FutureGen project  -- the Carbon Sequestration Program, the Regional Carbon Sequestration Partnerships and the President's Clean Coal Power Initiative. 

FutureGen will integrate their gains in one place for the first time to become the world-first zero emissions coal plant.  It is meant to test a variety of applications.  It will measure the practicality of concepts and test the utility of the hardware.  FutureGen will be a commercial scale plant of 275-megawatts organized around IGCC that will:

• Deliver ultra-clean, hydrogen-rich liquid fuels and hydrogen to support other uses;
• Deliver other commercial by-products;
• Eliminate all harmful pollutants, mercury included;
• And, while doing this, capture and sequester CO2 at a rate of one million metric tons per year. 
  
  Our tentative schedule for FutureGen is:
• Site selection in fiscal year 2007;
• Initial construction activity in FY 2008;
• And full-scale operation in FY2012.  

We see FutureGen as the prototype power plant for the 21st century. 

Linked to carbon sequestration and safe and long-term storage, it can steadily arrest and then reverse the 30 percent of world CO2 emissions that come from power generation.
Linked with enhanced oil recovery, it can extend significantly the life of the world's petroleum reserves. Linked with the low-cost production of hydrogen in large volumes, it can enable policy-driven displacement of the internal combustion engine which will moderate petroleum demand and eliminate significant amounts of CO2.  

Participation in FutureGen will be open to members of the Carbon Sequestration Leadership Forum, which includes India and China. 

The Forum, with its many avenues of multi-lateral and bi-lateral cooperation, has the potential to be a prime mover of technology transfer in the cause of moderating greenhouse gas emissions and rising dependence on imported petroleum 
This is the kind of thing President Bush has in mind when he says, as he said this spring: 
"…[at the] G-8 meeting in July…I'm going to work with…our friends and allies…to help developing nations…like China and India to develop and deploy clean energy technology.
"We need to find practical ways to help these countries take advantage of clean coal technology."

Involving the developing nations on a cooperative basis would be no small achievement – one that has escaped more formal approaches to date.   

This, then, is how the Bush Administration stands with regard to the facts and the physics of energy and Mr. Churchill's simple reality. 

It is not a token effort. 

Nor is it a go-it-alone effort as some critics would have the world believe. 

In April the European Commission's new Energy Commissioner entered these points into discussion during a carbon sequestration conference: 

• Europe will be 80 percent dependent on imported natural gas and 90 percent dependent on imported oil by 2030; 
• Coal for electric generation is important to Europe's energy mix in terms of security and diversity of supply;
• Carbon dioxide storage can extend the productive life of oil and gas fields in the North Sea. 

He also listed in order of importance the Commission's seven priorities for energy R&D from 2007 through 2013.  The first three were: 

• CO2 capture and storage technologies for zero-emissions power generation;
• Clean coal technologies;
• And, finally, hydrogen and fuel cells.

The Energy Ministers of IEA member countries met last month.   The communiqué on their discussions included a call for the worldwide use of cleaner energy systems and it used clean-coal technology as the example of first reference. Among other things, the communiqué called for:  

• Reducing the environmental impact of growing reliance on fossil fuel;
• Getting better use of today's technologies;
• Accelerating development of tomorrow's;
• Increasing the efficient, cleaner use of fossil fuels;
• And identifying and deploying cost-effective low-carbon and non-carbon fuels.

The simple reality is that technology can make it possible to rely on oil and gas and coal and also deal with greenhouse gases without:

• Risking disturbance of the climate;  
• Or collapse of the global economy;
• Or, ruinous imbalances in world energy markets. 

And, for most nations, only technology can make it possible.  The world is beginning to find common ground on these important questions, and now is the time to move forward. 

Thank you for your invitation and your attention.