Remarks by Jeffrey Jarrett
Assistant Secretary for Fossil Energy
to the
National Council of Coal Lessors Annual Meeting
Washington, DC
April 25, 2006

Thank you, Nick. It’s a pleasure to once again be with the National Council of Coal Lessors.
  
Like many of you, I’ve spent most of my career working on the production end of the coal business – focused on mining, reclamation and all the issues associated with it.  But in my new job I am at the other end of the coal cycle - dealing with the consumption end of the coal business. 

At the Department of Energy, we recognize one important truth: In this country, and in the world, we have an insatiable demand for energy!  In 20 years the total U.S. energy demand is forecast to increase by about 27 percent. 

For the rest of the world, which will need much more energy than we now consume, to serve more people in improved economic circumstances, total demand will increase by 64 percent!

With these types of statistics we cannot become complacent about our energy future.  Because as we all know, our nation’s national security is tied to our energy security.

For the sake of our economic and national security we must ensure affordable, reliable and clean sources of energy for America.  This includes reducing our dependence on foreign sources of energy – including the natural gas that is a source of electricity for many American homes and the crude oil that supplies gasoline for our cars.  To help achieve this objective, the President has initiated the Advanced Energy Initiative to change how we power our homes, offices and automobiles.

How will we change?  The answer, as it always has been, is through human ingenuity -- advances in technology.
Intelligence and imagination have allowed us to tap oil and natural gas resources deeper in the ground, deeper underwater and in more inhospitable places than ever before.

That will continue as new technologies allow us to develop oil and gas resources with minimal environmental impact in parts of the Rocky Mountain region, on the Outer Continental Shelf, and in Alaska. 

Technology is allowing us to take greater advantage of “unconventional” domestic natural gas resources such as coal-bed methane, which now accounts for nine percent of all gas produced in the U.S. 

And research now underway on the structure and behavior of methane hydrates could, in the long term, add a substantial supply of natural gas from hydrates to our domestic reserves.

Technology has made solar and wind power sensible technology choices in certain circumstances today. Further R&D breakthroughs will continue to drive down costs and encourage more widespread applications of these technologies.

Technology has made nuclear power plants safer, more secure and more efficient. It has transformed the transportation sector, providing far cleaner fuels for far more efficient vehicles, and it has made industry and society overall much more energy efficient, producing more goods and services while using less energy and emitting less pollution for an ever-expanding economy. 

While these renewable and alternative fuels offer promise for America’s energy future, they supply only a fraction of today’s energy needs.  Coal, oil and natural gas today supply about 85 percent of the total energy consumed in the United States and in the world at large.  The Energy Information Agency forecasts that in 20 years, coal, oil and natural gas will still account for about 85 percent of U.S. total energy consumption – and roughly the same numbers apply for total world energy consumption. 

We have to be realistic and recognize that until the alternatives are economically viable, domestic coal MUST continue to sustain America’s prosperity and our way of life.  

Coal accounts for nearly a quarter of our total energy consumption and for well over half of our total electricity generation.  With the increased demand for energy, the demand for coal will also increase by a projected 37 percent. Coal production is expected to increase from more than 1.1 billion short tons in 2004 to more than 1.5 billion tons by 2025 – an increase of over 400 million tons in 20 years.  

In addition to being the lifeblood of the economy of and the livelihood for many Americans, coal remains our most abundant domestic energy resource – we have a 250-year domestic supply at current consumption rates, and the entire world has a nearly 200-year supply.  As the President recognized in his State of the Union Address and through his Advanced Energy Initiative, coal is abundant and affordable and is a key source of energy for the indefinite future.

We all know that coal hasn’t always had the prominent place it deserves in popular energy discussions.  But the times are changing!  Under the President’s and Secretary Bodman’s leadership, there is a new, more positive view about coal and coal technology.  And that view is beginning to permeate through the industry and government. 

Things are a little different at the Energy Department these days for those of us who are involved in the coal program.  When people say the word “coal” they don’t whisper anymore.  They are actually using the words “coal” and “national energy policy” in the same sentence. 

That’s because technology has made coal and other fuels far cleaner today than they were a generation ago. While our economy and population have been growing, pollution has been declining. Electricity generated from coal has risen 177 percent since 1970, yet emissions of small particulates, sulfur dioxide and nitrogen oxide declined significantly over the same period.

With every advance in coal technology, coal becomes a more indispensable energy source for the future - Coal truly is becoming “Clean Coal.”

Based on what we have accomplished so far, anyone with knowledge of the energy and environmental field should be an optimist about our future prospects. 

President Bush is an optimist, and his energy plan has from day one been founded on technology.  As he himself has said, we are on the verge of spectacular technological advances that will redraw the energy and environmental landscape beginning in our lifetimes.  Coal is no exception!

The Office of Fossil Energy has taken a lead role, in partnership with industry, university researchers, state governments, independent energy organizations, foreign governments and others in researching and developing technological advances that are making coal a cleaner, more efficient source of affordable energy every day.

Whether it’s through improving existing technologies, employing new technologies or accelerating future technologies, if a technology is important, we’re working on it, often leading cooperative international R&D efforts. And in all cases we are partnering with industry and scientific and technology leaders. 

The various R&D projects currently underway are mutually supportive; while each project and program is aimed at a specific technological goal with a specific energy/environmental benefit to be met according to a specific timetable, all the projects are designed to contribute in one way or another to our ultimate goal: a completely emissions free coal-based plant that maintains coal’s favorable cost advantage over competing fuels.

For example, coal plants have a useful life of at least 40 years.  Our existing fleet of over 600 coal fired power plants have an average age of 38 years.  That means there are coal plants currently operating that were built as far back as the 1960s, just about the time we as a nation began to take pollution emissions seriously.

In the decades since that environmental awakening, the federal and state governments have passed pollution control legislation and the coal power industry has met the challenge by retrofitting technological improvements to older plants and incorporating new technology in each new plant as it was built, with impressive results, as I mentioned earlier.  At the same time, there are plenty of improvements still to be made to our existing fleet of plants. That’s the business of our Innovations for Existing Plants program, which is aimed at short- and mid-term goals.

Under this program we aim by next year to develop cost-effective technologies that reduce mercury emissions by 50 to 70 percent, and eliminate microscopic particle emissions.

By 2010, we plan to test technologies for cutting mercury and nitrogen oxide emissions by an average of 70 percent, and for increasing the recycling of coal plant waste products by 66 percent.   We’re also researching advanced technologies for water management, which is becoming an increasingly important issue in power generation.

As I mentioned, these plants are rapidly approaching the end of their useful life (at least 40 years).  So in addition to improving existing technologies, we are focusing on employing new technologies – particularly to new power plants that will be supplementing and replacing the existing fleet.  We are currently doing this through our Clean Coal Power Initiative for the commercial demonstration of new technology;

CCPI has progressed steadily since its announcement by the President in 2002, providing government co-financing with utility partners for new coal technologies that can help utilities reduce greenhouse gases from coal plants by boosting coal combustion and power plant efficiency.

To take one example from the 10 CCPI projects that have been selected after two rounds of competitive solicitations, the “Mustang” project in New Mexico will demonstrate a multi-pollutant control process that can remove virtually all sulfur dioxide and nitrogen oxide emissions and 90 percent of mercury emissions -- and turn coal byproducts into useful fertilizer.

We are also far along in research, development and demonstration of power plants that are more efficient and recognize and deal with the prospects of living in a carbon constrained world.  Advanced Integrated Gasification Combined Cycle, or IGCC, technology, in essence, converts coal to its constituent gases and then burns the gas. The IGCC process is inherently clean, highly efficient and versatile. It is potentially capable of generating electricity, steam, and a broad range of chemicals including ultra-clean transportation fuels. And it could virtually eliminate atmospheric emissions of nitrogen oxides, sulfur dioxides, mercury and other pollutants.

With IGCC, carbon dioxide emissions may eventually be reduced by half compared to conventional coal technology, with the remaining half ready for capture and permanent underground storage. 

As we move along our R&D path for coal gasification, we have specific  hurdles to leap. We have to perfect new technology while steadily bringing down costs. Later on, we’ll have to develop new gas-related technologies and integrate them with fuel cells

Fuel cells are usually thought of as a feature of automotive vehicles of the future. But they also have the potential to be a very important feature of our stationary power generation future, both as an integral part of future power plants and as a “distributed generation” supplement to the electricity grid -- a local power source for commercial and public buildings, hospitals and residences, for energy-intensive telecommunications facilities, and other uses.

Fuel cells are inherently efficient, quiet, and virtually pollution-free. Combined with the kind of IGCC system described earlier, fuel cells will make possible zero-emissions, coal-based power with nearly double the efficiency of today’s coal-fired plants  - and higher efficiency means greater environmental benefits.

Our fuel cell program is working today to develop fuel cell modules that can operate at one-tenth the capital cost of today’s systems, and hybrid fuel cell-turbine systems that operate at up to 60 percent efficiency on coal. Compare that to the average 33 percent efficiency rate at today’s coal power plants.

Another of our research projects is aimed at a new and potentially large market for transportation fuels derived from coal. As the result of improvements to long established coal-to-liquids technology, we can now produce diesel and jet fuels that would be economically competitive at a world oil price in the neighborhood of $40 per barrel. In such a price environment, liquid fuels from coal could help reduce our dependence on imported oil and, incidentally, provide a secure supply of fuels for our Armed Forces, a subject of great interest to the Defense Department.     

Finally, I want to mention our carbon sequestration program because of its immense potential for reducing greenhouse gas intensity.

Carbon sequestration is the capture and permanent storage of carbon dioxide. Our ability to eliminate CO2 emissions from coal-based power plants by permanently capturing and storing them underground will have a significant, beneficial effect on greenhouse gas intensity. That’s why we plan to demonstrate a portfolio of safe, cost-effective greenhouse gas capture, storage and mitigation technologies at the commercial scale by 2012, leading to substantial deployment and market penetration beyond 2012.

By 2018 we should have developed commercial systems for the direct capture and sequestration of greenhouse gases and pollutant emissions that result in near-zero emissions with virtually no effect on the cost of produced energy.

To accomplish this ambitious program, we have formed seven Regional Carbon Sequestration Partnerships in the United States and Canada.

We have also formed an International Carbon Sequestration Leadership Forum to share scientific and technological information and participate in joint projects. The CSLF has drawn the enthusiastic attention of many of the world’s largest coal consumers and now comprises 21 member nations and the European Commission.

Let me emphasize just a couple of additional potential benefits of carbon capture. First, carbon dioxide derived from power plants will be increasingly in demand as a commercial product for injection into mature oil fields, adding to our domestic oil reserves and production and providing revenue to power generators.  And second, research projects currently underway are testing the strong possibility that CO2 injected into active oil fields can be sequestered there, providing a very attractive energy and environmental double-bang for the buck: reduced greenhouse gas emissions and increased oil production.

Finally, let me turn to how we are accelerating future technologies.  The President has placed us on a path to integrate all of these developing technologies into one large-scale plant.  In a mere six years, we expect our work to result in an up-and-running power plant of the future called FutureGen, a coal-fired, 275-Megawatt, fully integrated, power plant and research facility that emits no polluting or greenhouse gases to the atmosphere.zero-emissions, and will produce both electricity and hydrogen while sequestering carbon emissions.  Think about that: virtually no nitrogen oxides, no sulfur dioxides, no mercury, no particulate matter, no carbon dioxide.  Nothing but energy.

The goal is for FutureGen to prove the new technologies we’re working on today and serve as a model for the coal-based power plants of the future. FutureGen will not only assure that coal will be the dominant source of electric power in decades to come, it will also be an important source of the hydrogen that will fuel a hydrogen-based economy of the future.

That is transformational technology – and it’s within our reach.

Clean coal is set to continue its enormous contribution to America’s energy security and to world energy security.  Our energy and environmental advances could benefit not only us but the entire world.

Imagine, for example, what would happen if China, which is building new coal-based power plants at the rate of one a week, were to adopt some of these new power generation and energy efficiency technologies and processes.  We’re working with them on it.  Foreign governments, including China are also keenly interested in the FutureGen project.  Earlier this month, India become the first country to join the government steering committee for FutureGen. As a partner, the Indian government will contribute $10 million to the FutureGen Initiative and Indian companies will be invited to participate in the private sector segment.  India is the first of what we hope will be many international government partners to join with us in the FutureGen project.

There is much more to our coal research program but I’ll conclude here by emphasizing how deeply committed we are to the research underway today.

The President’s energy policy and his related initiatives propose nothing less than to consign to the history books the energy and environmental challenges that preoccupy our country and the world today.

Clean coal will play a big part in bringing us to the day when energy from all sources will be affordable and abundant, and when energy-related emissions from stationary sources will be minor to non-existent.

Clean coal technology is critically important yet the products of our research and development are not eye-catching or fascinating to the public. Energy is merely the outlet in the wall that makes everything else possible. It’s the taken-for-granted everyday miracle of modern life.

The people in the coal industry and the energy industry in general are never going to get a ticker-tape parade for their contribution to American life. But if all of us do our jobs right – and I think we are – energy will continue to be taken for granted by the American people and the other fortunate people of the developed world -- and our everyday miracle will someday come to be taken for granted by everyone the world over. 

I can’t think of any more hopeful and satisfying legacy for anyone in the sciences, government or the private sector than the transformation of our energy and environmental world.