Remarks by
Dr. James Markowsky
Assistant Secretary for Fossil Energy
U.S. Department of Energy
to the
National Mining Association
Fall Board and Annual Members Meeting

Washington, DC
September 25, 2009

Good morning and thank you for a warm welcome.

It’s a particular pleasure for me to be here; it feels very much like coming home. As many of you may know, I am a coal industry alumnus, having spent 30 years with American Electric Power Service Corporation prior to retiring as Executive Vice President in 2000.

During my AEP career, I was involved with the engineering, design, construction, and operation of the company’s coal-fired plants, including the 70-MW pressurized fluidized bed combustion development program. My last job at AEP was running the Power Generation program.

I also had the privilege of working closely with Jack Katlic, who ran AEP’s Fuel Supply Division. Some of you may remember that Jack served a term as Chairman of the National Coal Association, a predecessor of NMA, in the early 1990s, and was a very dynamic and charismatic leader.

So I’m very familiar with the coal industry in particular and the mining industry in general, and have a great respect and appreciation for your importance to the U.S. economy.

It is an importance based not only in the direct and indirect economic and employment impacts you provide, but also in the vital energy you supply to the U.S. economy.

It goes without saying that an abundant, affordable, and environmentally acceptable supply of domestic energy is essential to long-term economic growth and energy security.

Maximizing this supply means fully utilizing all of America’s energy assets. Both Secretary Chu and I are firm believers in a diverse and versatile domestic energy supply portfolio that includes renewables, nuclear power, and our nation’s traditional fossil resources, especially coal. There is no doubt the nation has historically benefitted from having access to a diverse domestic energy supply, especially for electric power production.

During the past decade, coal has provided close to 50 percent of annual U.S. electricity generation and about 32 percent of the total energy we produce each year. In both cases, this is more than any other single energy resource.

The Energy Information Administration says coal should continue to provide the largest share of energy for electricity generation for the foreseeable future, still accounting for 47 percent (in the business as usual case) of the total by 2030. However, under a Waxman-Markey scenario, coal’s total percentage would be lower.

But we’re all aware of the environmental challenge facing coal, particularly in regard to greenhouse gas emissions and climate change. Not meeting this challenge effectively could prove a huge – and perhaps insurmountable – obstacle to maintaining one of America’s great basic industries and fully utilizing, for the benefit of the U.S. economy, our vast domestic coal resources.

This challenge essentially underscores a major reason I’m at the Office of Fossil Energy. It presents an opportunity for me to apply my coal knowledge, experience, and understanding in a way that will hopefully assist the development of technologies essential to keeping coal a viable U.S. energy option, both now and in the future.

This is the task facing both industry and government – to ensure we can continue to rely on coal as a primary energy source. But at the same time, we must make certain this reliance is both economically and environmentally sustainable.

This objective is one of my major priorities as Assistant Secretary for Fossil Energy. And it is also a priority for Secretary Chu, who is 100 percent behind our efforts to develop competitive technologies for coal-based carbon capture and storage.

So let there be no doubt – the Department of Energy and the Office of Fossil Energy are committed to maintaining coal as a viable fuel for the future. Both the financial resources allocated, and the research programs currently underway, underscore this commitment. Let me explain.

At the core of its activities, FE is pushing aggressively to accelerate the development, demonstration, and deployment of advanced combustion, emission control, and carbon capture technologies. We are doing this both as part of our normal, ongoing R&D, but also as a result of new initiatives put forth by President Obama and Congress, particularly in the area of CCS.

The President and Congress emphasized their support for carbon capture and storage by investing $3.4 billion in CCS and related programs through the American Reinvestment and Recovery Act (ARRA). These appropriations are helping fund activities targeted at expanding and accelerating commercial deployment of CCS technology.

Additionally, the President requested $404 million for DOE’s multi-pronged Coal R&D Program for Fiscal Year 2010 - $180 million of which is directed specifically to the carbon sequestration program. Combined with the ARRA appropriations, there is a total of nearly $4 billion focused on clean coal technologies and CCS.

In addition to these direct funding sources, DOE has available a Loan Guarantee Program to support innovative carbon capture projects, among other things.

Last year, DOE announced a solicitation for up to $8 billion in Federal loan guarantees for coal-based projects that avoid, reduce or sequester air pollution or greenhouse gas emissions. Although these projects are still awaiting approval, we actually received $8.3 billion in loan requests for coal projects, illustrating the immense interest in and support of CCS technology by industry.

Collectively, all of these commitments represent the largest dollar investment in CCS ever. And they are vital to important cost-share programs, like the Clean Coal Power Initiative (CCPI), the Industrial CCS Program, and FutureGen.

As you may know, CCPI – which received $800 million under ARRA – is a collaboration between government and industry and focuses on component and subsystem testing at commercial scale.

The program is currently focused on developing power generation projects that utilize CCS technologies. We are currently evaluating these projects and expect to make announcements in this regard early in November.

The Industrial CCS Program is our latest cost-share venture. It is focused on advanced CCS technologies that capture, sequester or provide beneficial use of CO2 emissions from large industrial, non-power sources. At the same time, the program promotes the development of storage options, such as deep saline and geologic formations.

Many of you here are very familiar with FutureGen, a project to which DOE has committed just over $1 billion. This IGCC facility will be the nation’s first commercial scale, fully integrated CCS project. It promises to provide valuable lessons for future CCS development and deployment, fulfilling one of our key objectives.

All of these initiatives fulfill our program priorities for clean coal technology and CCS development, which are concentrated in three important areas:

• Affordable CO2 capture, not only from coal, but also from fossil-based industrial facilities and natural gas plants;

• Safe and effective long-term geologic storage of CO2, through establishment of a firm scientific and technical basis, and,

• More efficient and reliable coal-based power plants through the application of new technologies and materials.

In one sense, these initiatives represent a continuation of the historic leadership role DOE’s Coal Program has played in the development of advanced coal technologies. As a result of this research – pioneered by the National Energy Technology Laboratory in partnership with industry, academia, and others – nearly three out of four coal-based power plants in this country today are equipped with technologies that can trace their roots back to the Coal Program.

But they also – and perhaps more importantly – address the challenge to coal’s future mentioned earlier. The importance of this cannot be over-emphasized.

Global economic and demographic growth will continue to drive demand for fossil fuels – including coal – in the years ahead. Because of its abundance and versatility, coal is the fastest growing fuel source, accounting for more than a quarter of total world energy consumption and more than 40 percent of global electricity consumption.

That’s the good news. But everyone here is well aware of the continuous and growing international concern about coal’s CO2 emissions and their role in global climate change.

The practical reality is that world economies currently generate just shy of 30 billion tons of CO2 annually, with the U.S. accounting for about 6 billion tons of this total.

DOE and the International Energy Agency project that by 2030, CO2 emissions by developed countries – fueled largely by coal use – will increase by 30 percent, while those of developing nations will double.

Meanwhile, the political reality includes the following:

• The G-8 has called for developed nations to reduce emissions 80 percent from 1990 levels by 2050.

• The Intergovernmental Panel on Climate Change (IPCC) has said the key to preventing global warming is to keep CO2 emissions below 450 parts per million (the current level is 380-390 PPM). This would require developed countries to cut their emissions at least 25 percent below 1990 levels by 2020.

• Legislation (HR 2454) passed by the House requires a 17 percent cut in greenhouse gas emissions by 2020 and an 83 percent cut by 2050, utilizing a cap-and-trade system.

Whatever one thinks about these and other proposed emissions reduction strategies, the reality is the call for drastic CO2 reductions is taking place in an atmosphere of high international urgency. This is being pushed to some extent by the upcoming December 2009 United Nations Climate Change Conference in Copenhagen. And there is no doubt any of these reductions would be difficult to achieve – both from a cost and energy penalty perspective – with today’s available technology.

For example, today’s commercially available CCS technologies will add around 70-to-80 percent to the cost of electricity for a new or existing pulverized coal plant (post-combustion), and around 35 percent to the cost of electricity for an IGCC plant.

The advances we are pursuing are targeting the reduction of these costs to less than a 30 percent increase for pulverized coal plants (post-combustion), and less than a 10 percent increase for new IGCC-based plants (pre-combustion).

So we believe there is the very real possibility of meeting aggressive CO2 reduction targets – and simultaneously maintaining a viable coal industry and economic growth. The key is developing and employing a portfolio of CO2 control options, of which CCS is a primary example.

This point was emphasized in a recent National Research Council report, which underscored why America needs to keep moving forward on CCS and other technologies to meet both energy demands and environmental objectives.

Keeping in mind the urgency I referred to earlier, our goal is to – by 2020 – achieve the commercial deployment of CCS technologies as part of a balanced energy portfolio and begin to show progress toward meeting the goal of CO2 stabilization.

While we plan on doing our part, we can’t forget that climate change is a global problem. Its successful management requires an unprecedented level of international technical, political, and scientific cooperation. Nations need to join together, pool resources, exchange technical expertise and information and work for the common good if climate change is to be successfully confronted.

While the UN and other international initiatives are making important contributions in this regard, the Carbon Sequestration Leadership Forum is at the forefront of global cooperation in CCS technology development. CSLF members – including the United States through DOE representation – are committing billions of dollars to CCS technology and demonstration projects.

In the final analysis, climate change is a serious and somewhat daunting challenge. Some would say it is the most significant global challenge thus far in this century. The steps we are undertaking are ambitious and, in many respects, difficult.

But they reflect the seriousness of the situation – for maintaining a healthy and thriving coal industry; achieving the desire of all Americans for a quality environment; and laying the foundation for the nation’s continued economic prosperity. For the sake of all these equally important objectives, we must work together and we must succeed.

President Obama accurately summarized the situation in addressing the UN Climate Change Summit earlier this week.

He said the time we have for addressing the climate change issue is running out. But he spoke optimistically about our ability to reverse the tide of increasing CO2 emissions and reaching the targets set for 2020 and beyond. And he pointed specifically to the investment we are making in capturing carbon from coal plants as a key part of the solution.

I know everyone here shares the goals for progress – for coal, the economy, and the environment – I’ve outlined today. There are other things we can share as we move forward on this journey – ideas, cooperation, collaboration, and tireless effort. Doing so will enable us, in common purpose, to develop solutions that will benefit America for many generations to come.

Thank you.