As it happens, this is the last time I will be with you, at least in my present capacity. The American people spoke two weeks ago and a new President and a new executive team will be taking office in January. One of the components of the job that I will miss is the extraordinary opportunity to talk with a broad cross-section of energy industry leaders such as yourselves.

There will be different views and many policy changes affecting many areas of American life, as always happens when a new Administration takes over. But reality doesn’t change, and facts don’t change. In the coal and power generation sector, we believe we have faced facts squarely and fashioned a clean coal policy and program that is aligned with reality and provides a foundation for the future.

I am confident that the new Administration will find a clean coal program that is well thought out, forward-looking and on the brink of big things – particularly in the area of carbon capture and storage technology – that will allow coal to continue as the foundation fuel for power generation in the United States.

As you well know, we very much rely on coal to meet our vast energy needs.  I don’t think anything that our country uses 1.1 billion tons of in a given year is going to go away any time soon.  Clearly, the better and frankly inescapable answer is to find ways to use this abundant resource more cleanly and efficiently.

Of course, you all know this; in fact, it is the topic of the study you completed earlier this year titled, "The Urgency of Sustainable Coal." 

Over the past five years, the Council has submitted a series of insightful reports to the Secretary of Energy outlining how the United States can use coal to solve some of our most pressing energy needs.  The Secretary and the Department appreciate the thoughtful insights you have provided and on behalf of the Secretary, I want to thank you for your recommendations in this latest report.

The premise of course is that, while coal plays a critical role in meeting both our domestic and global energy needs, the burning of this tremendous resource for electricity generation results in a release of emissions, including carbon dioxide, which contributes to climate change.

Of course, the answer to this dilemma is technology; on having the right technologies ready at the right time, which means aligning the technology development and policy implementation timelines – not an easy task.

I want this morning to:

- First, connect international events with recent developments in the United States that may be of interest;

-Second, update you on specific developments in advanced coal research, development and demonstration in the United States, especially in the critical area of CO2 capture and storage, and

Finally, offer some ideas on the three parallel tracks that must be developed simultaneously and globally if we are to succeed.

By the way, this is a challenge we are capable of meeting.

Let's begin with the brief review of U.S. events that relate to international developments. In April 2007, the President committed America to a new goal: To stop the growth In CO2 and CO2-equivalent greenhouse gases by 2025 and, thereafter, to reverse it.

He explained the decision this way in a speech in the Rose Garden: "We have slowed the growth in emissions….Now is the time for the U.S. to look beyond 2012 and take the next step."

His reference was to a commitment made in 2002 to reduce the carbon intensity of the U.S. economy by 18 percent by 2012. All statistics show we are on track to achieve at least this. In fact, United Nations data show that the U.S. has reduced net greenhouse emissions by three percent since 2000, the second best among 17 major economies.

And this was done using voluntary programs. Only five nations and one grouping of nations were able to reduce emissions at all: France, the U.S., the United Kingdom, the EU-15 and Japan.

The President's National Council on Environmental Quality has further determined that recent steps taken by the federal and state governments will avoid 6-to-10 gigatons of CO2 and CO2-equivalent gases through 2030. Such steps include higher mileage standards for motor vehicles; a requirement to develop and use renewable fuels; and renewable-energy portfolio standards imposed by state governments in power generation.

We believe this to be the world's largest documentable increment of mitigation to date.

The next step referred to by the President – to stop the growth in emissions – foresees a peaking of power plant emissions in 10-to-15 years that will be brought about by accelerated development and deployment of advanced technology.

Our responsibility in the U.S. Department of Energy's Office of Fossil Energy is to develop this technology. Everyone here knows that there are only two ways of significantly moderating CO2 emissions in coal-based power generation. The first way is to increase the efficiency of generation. Reports prepared by the International Energy Agency for the G8 Nations include findings on higher efficiency such as these:

• Maximizing efficiency is a major pathway to reducing CO2;

• Rapid and wide-scale reductions are available through efficiency increases and plant up-grades.

• Integrated gasification combined cycle generation (IGCC) and advanced steam cycles such as ultra-supercritical generation will play an important role in increasing efficiencies worldwide;

• At least 1.7 gigatons of CO2 emissions a year could be avoided through steps to raise worldwide efficiency – a larger reduction than that sought by the Kyoto Protocol;

• And, the higher efficiencies of IGCC and ultra-supercritical generation will be necessary to enable widespread carbon dioxide capture and storage.

IEA-recommended steps for increasing efficiency include retirement and replacement of the least-efficient plants; up-grading of mid-rank plants; pre-combustion coal preparation; improving plant performance; and requiring that all new plants be state of the art.

In addition, as you are aware, a previous NCC study estimated that efficiency upgrades and retrofits to existing coal-based plants could avoid about 200 million tons of CO2. Efficiency increases are prominent in the Hokkaido declarations of the G8 nations and the Major Economies Meeting which set forth the areas in which the parties reached agreement. They were singled out as a low-cost way to reduce greenhouse gas emissions and elevate energy security.

The other way to mitigate CO2 emissions in coal-based power is carbon dioxide capture and storage – or CCS. CCS has come to be seen as indispensable in dealing with concerns about energy and climate.

Not long ago the director of the International Energy Agency said it will be the most important technology in reducing CO2 emissions. Research, development and demonstration of carbon dioxide capture and storage is the responsibility of the Office of Fossil Energy, as you know. Our work is done on a cost-sharing basis with industry, academia and others in the private sector.

We specify objectives and the private sector, including many companies represented here today, responds with technology proposals. We have more than 70 active and on-going projects in the Carbon Sequestration Program, which includes capture and monitoring, mitigation and verification.

We have invested almost $500 million since 1997. We began with $1 million and the current appropriation is about $120 million. Investment grew by a factor of almost 50 during the Bush years – it has grown by $429 million to date.

The increases reflect the importance the Bush Administration assigns to CCS. Let's take a brief look at the first C in CCS – capture.

Our National Energy Technology Laboratory has work in progress on a range of capture technologies: On pre-combustion, post-combustion, and oxygen combustion and on technologies for new construction and retrofit.

We are looking at solvents, sorbents, absorption, adsorption, membrane separation, chemical looping and other applications. We are looking at improving performance with existing materials and at creating more effective new materials.

In July, we awarded $36 million to 15 projects that will further the development of cost-effective retrofit technologies.

Perhaps 145,000 megawatts of U.S. coal-based generating capacity may be suitable for retrofit – approximately 45 percent of capacity.

On the Storage side…

Large-scale tests and demonstrations of storage will begin next year under the Regional Carbon Sequestration Partnerships, which also are part of the Carbon Sequestration Program. The partnerships encompass 42 states of the United States and four Canadian provinces. They span most of the North American land mass. There are seven partnerships because partnership boundaries were delineated by pertinent and common geologic features.

Their membership is comprised of more than 350 unique entities – the power and energy producers of a given region as well as related enterprises, universities and academics, state geologic surveys and public interest groups. To date the partnerships have identified 3,500 gigatons of potential geologic storage in the U.S. and Canada and 3.8 gigatons of CO2 a year subject to capture at power plants and other stationary sources. The ratio of emissions to storage capacity is more than 900 years.

Each partnership has conducted multiple small-scale field validation tests to assess promising reservoirs. Next year they will begin eight large-scale injections into their most promising reservoirs in the Deployment Phase – Phase Three of the program.

One partnership will conduct two tests – one in the U.S. state of North Dakota and one in the Canadian province of British Columbia. There will be seven tests involving deep saline reservoirs and one of storage linked with enhanced oil recovery. Two injections are currently scheduled to begin in 2009, four in 2010 and two in 2011. They will range from 250,000 tons per year to one million tons a year.

In total, 16 million metric tons will be injected and monitored during the tests. CO2 for injection will come from natural deposits, ethanol production, natural gas processing and, in two cases, eventually from coal-based power generation.

Two partnerships have announced plans to use new capture technologies in their demonstrations. One will use ammonia-based capture and the other oxygen combustion.

Each large-scale test of the Deployment Phase is intended to lay the foundation for future commercial demonstrations by validating a region's principal reservoir. It will also validate that sequestration can be commercially applied in many different geologies.

Of equal importance, the partnerships also are developing formal procedures and scientific principles necessary to establish a regulatory and statutory basis for the successful practice of safe and permanent long-term storage. Activities will include qualifying projects, permitting, injection, post-injection monitoring and successful closure.

A panel of independent experts assembled by the International Energy Agency found earlier this year that the Regional Carbon Sequestration Partnerships constitute the world's most ambitious capture and storage program. The experts found that it will significantly advance the cause of CCS in the U.S., in Canada and internationally.

This past summer the G8 Nations called for advancing CCS internationally. They called for 20 major demonstrations by 2020. Under our current research program, the U.S. will support at least 10 of these. Seven will come from the Regional Partnerships. Others will come from a Third Round of the of President's Clean Coal Power Initiative – CCPI – and from the restructured FutureGen Project.

Both CCPI and the FutureGen Project were reoriented this year toward commercial-scale capture and storage to pull the technology forward. Round Three of CCPI will provide $340 million for demonstration of capture technologies capable of 90 percent capture efficiency and of storing – or providing for beneficial reuse – at least 300,000 tons of CO2 a year.

The restructured FutureGen Program seeks to foster commercial-scale deployment of CCS technology.

FutureGen demonstrations will be expected to capture and store up to 1 million metric tons of CO2 a year in a deep saline reservoir. Capture efficiencies will target 90 percent.

Following extensive input from industry, the Department issued a Funding Opportunity Announcement in June and received several proposals by the early October deadline date. We now are in a rigorous review process of those applications and intend to make a final selection of project(s) by year-end.

This completes my review of U.S. activity in research, development and demonstration.

In the U.S. market, Duke Energy began construction this year on its landmark scale-up of IGCC to 630 megawatts. This plant will replace 160 megawatts of very old, coal-fired capacity in the state of Indiana. It will produce 45 percent less CO2 per kilowatt hour and deliver 10 times more power. Study is underway on possibly linking it with CCS.

Other IGCC plants and advanced coal systems are under construction around the world. Capture technologies are being tested at pilot scale and readied for scale-up in many nations. Storage and storages technologies are under development. And many plans for near-zero emissions plants are moving forward.

We have opened the door on a new era in energy security and climate security. To move through that door and to enjoy the benefits of this era we quickly have to move these technologies through what an IEA report to the G8 Nations called the "valley of death" and then, into commercial use.

In the valley of death, technologies languish and go unused due to high investment costs, due to a belief there are significant risks and due to the lack of either technology-push or market-pull to move them forward.

The way through the valley is to proceed simultaneously on parallel paths symbolized by a triangle with legs of equal length and importance – technology development, policy and markets. Right technologies influence policy and markets. Good policy influences markets and technology development and up-take.

Our jobs are to get the technology right. The world has embarked on a drive to complete its electrification. We are moving in common directions. We are accelerating deployment of advanced coal-generating technologies. We are accelerating development and deployment of CCS. The next few years will yield enormous amounts of experience in design, construction and operations. Lessons learned will abound.

Now is that time to think about how to share that kind of information widely and frequently. We need to explore opportunities to expand information sharing and collaboration. We need to maximize our participation, especially from industry, in this collaboration, if we are to see the potential of carbon capture and storage technology realized. We need to increase industry participation in the Carbon Sequestration Leadership Forum, the International Energy Agency, particularly their Clean Coal Centre and Greenhouse Gas Programme, and other international bodies. And we need to know from industry how we in government can best participate within industry to advance CCS. Advances in carbon capture and storage technology and the collaboration to leverage that technology into the market place is a foundational step to mitigating climate change and ensuring energy security, not just in the United States, but for the world.

This work could not be successful without the direct participation of industry and other interested parties through venues such as the National Coal Council. The time that you take to support this advisory committee, a committee with the purpose of providing advice and recommendations to the Secreatry and the Department, is greatly appreciated. It is a service to the Nation. Thank you for your service.

And, thank you for your attention.