Statement of
Mr. George Rudins
Deputy Assistant Secretary for Coal and Power Systems
U.S. Department of Energy
to the
Subcommittee on Energy and Air Quality
Committee on Energy and Commerce
U.S. House of Representatives
June 24, 2003

Mr. Chairman and Members of the Subcommittee:

I am pleased to appear before the Subcommittee today to discuss the great potential new technology will play in helping the Nation meet ever increasing demands for energy in the most efficient and environmentally responsible manner possible.

With much of the Nation's attention again focused on the security of global energy supplies, it is important to remember that we remain an energy-rich country.

Today, coal is an indispensable part of our Nation's energy mix. Because of its abundance and low cost, coal now accounts for more than half of the electricity generated in this country.

Coal is our Nation's most abundant domestic energy resource. One quarter of the entire world's known coal supplies are found within the United States. In terms of energy value (Btus), coal constitutes approximately 95 percent of U.S. fossil energy reserves. Our nation's recoverable coal has the energy equivalent of about one trillion barrels of crude oil - comparable in energy content to all the world's known oil reserves.

At present consumption rates, U.S. coal reserves are expected to last at least 275 years.

Coal has also been an energy bargain for the United States. Historically it has been the least expensive fossil fuel available to the country, and in contrast to other primary fuels, its costs are likely to decline as mine productivity continues to increase. The low cost of coal is a major reason why the United States enjoys some of the lowest electricity rates of any free market economy.

America produces over 1 billion tons of coal per year. Nearly all of it (965 million tons) goes to U.S. power plants for the generation of electricity.

According to the Energy Information Administration, annual domestic coal demand is projected to increase by 394 million tons from the 2001 level of 1.050 billion tons to 1.444 billion tons in 2025, because of projected growth in coal use for electricity generation.

Largely because of improving pollution control technologies, the Nation has been able to use more coal while improving the quality of the air. While annual coal use for electric generation has increased from 320 million tons in 1970 to more than 900 million tons, sulfur dioxide emissions from coal have dropped from 15.8 million tons annually to 10.7 million tons in 2000, the most current year available. In addition, particulates from coal-fired plants declined some 60 percent over the same period according to the Environmental Protection Agency.

Because coal is America's most plentiful and readily available energy resource, the Department of Energy (DOE) has directed major portions of its R&D resources at finding ways to use coal in a more efficient, cost-effective, and environmentally benign manner.

National Benefits of Clean Coal

It is not widely known how far clean coal technologies have come in reducing emissions from coal-fired power plants, or how far we can go over the next few years. For example, in 1970, overall coal-based electric power generation emission rates were 4.4 pounds SO2/million British Thermal Units (mmBtu) and 0.95 pounds NOx/mmBtu. In 2000, the rates were 1.0 pounds SO2/mmBtu and 0.44 pounds NOx/mmBtu.

The ability to meet today's emission limits, and the cost of that compliance, has been greatly improved. For example, in the 1970's, most options for significantly reducing smog-forming nitrogen oxide (NOx) pollutant emissions were untried and expensive - in some cases, costing as much as $3,000 per ton of pollutant removed. Now, the cost of the retrofit low-NOx burners is estimated at less than $200 per ton. Similarly, the costs of flue gas desulphurization units - or "scrubbers" - have been dramatically reduced and their reliability greatly improved.

New government-industry collaborative efforts are getting underway pursuant to both our traditional R&D program and the President's Coal Research Initiative. These programs will continue to find ways to improve our ability to limit emissions from power generation, at lower costs. The goal for future power plant designs, such as FutureGen, discussed later in my testimony, is to remove environmental issues from the fuel choice equation by developing coal-based zero emission power plants. Moreover, the focus is on designs that are compatible with carbon sequestration technology.

The Next Generation of Power Plants

In the 1970's, the technology for coal-fired power plants was generally limited to the pulverized coal boiler--a large furnace-like unit that burns finely ground coal. As part of DOE's Clean Coal Technology Program, DOE and industry have demonstrated higher fuel efficiencies and superior environmental performance. For example, rather than burning coal, it could be gasified - turned into a combustible gas. In gaseous form, pollutant-forming impurities can be more easily removed. Like natural gas, it could be burned in a gas turbine-generator, and the turbine exhaust used to power a steam turbine-generator. This "combined cycle" approach raised the prospects of unprecedented increases in fuel efficiency. Gasification combined cycle (IGCC) plants built near Tampa, Florida (TECO Project), and West Terre Haute, Indiana (Wabash River Project), are among the cleanest, most efficient coal plants in the world. The Wabash River Project, which is a repowering of an existing coal-fired unit, resulted in a 30-fold decrease in SO2 and a 5-fold decrease in NOx emissions. These projects have recently completed their demonstration phases and are entering commercial operations.

The progress to date in developing IGCC systems, especially with the two clean coal demonstration projects now in commercial service, has laid the foundation for broader application of IGCC and continuing advances in IGCC technology - the ultimate manifestation of which is FutureGen.

FutureGen - Zero Emissions From Cutting Edge Technology

Earlier this year, President Bush and Secretary of Energy Abraham announced plans for the United States to build with international and private sector partners a prototype of the fossil fuel power plant of the future called FutureGen. It is one of the boldest steps toward a pollution-free energy future ever taken by our nation and has the potential to be one of the most important advances in energy production in the first half of this century.

This prototype power plant will serve as the test bed for proving out the best technologies the world has to offer. Virtually every aspect of the prototype plant will be based on cutting-edge technology.

FutureGen will be a cost-shared $1 billion venture that will combine electricity and hydrogen production with the virtual elimination of emissions of such air pollutants as sulfur dioxide, nitrogen oxides and mercury, as well as carbon dioxide, a greenhouse gas.

The Department envisions that FutureGen would be sized to generate the equivalent of approximately 275 megawatts of electricity, roughly equal to an average mid-size coal-fired power plant. It will turn coal into a hydrogen-rich gas, rather than burning it directly. The hydrogen could then be combusted in a turbine or used in a fuel cell to produce clean electricity, or it could be fed to a refinery to help upgrade petroleum products.

It will provide other benefits as well. FutureGen could provide a zero emissions technology option for the transportation sector-a sector that accounts for one-third of our nation's anthropogenic carbon dioxide emissions.

In the future, the plant could become a model for the production of coal-based hydrogen with zero emissions to power the new fleet of hydrogen-powered cars and trucks President Bush spoke about during his State of the Union address and called for by his Hydrogen Initiative. Using our abundant, readily available, low-cost coal to produce hydrogen-an environmentally superior transportation fuel-would help ensure America's energy security.

Carbon sequestration will be one of the primary features that will set the FutureGen plant apart from other electric power projects. Engineers will design into the plant advanced capabilities to capture the carbon dioxide in a form that can be sequestered in deep underground geologic formations. No other plant in the world has been built with this capability.

Once captured, carbon dioxide will be injected deep underground, perhaps into the brackish reservoirs that lay thousands of feet below the surface of much of the United States, or potentially into oil or gas reservoirs, or into unmineable coal seams or volcanic basalt formations. Once entrapped in these formations, the greenhouse gas would be permanently isolated from the atmosphere.

The project will seek to sequester carbon dioxide emissions at an operating rate of one million metric tons or more of carbon dioxide sequestered per year. We will work with the appropriate domestic and international communities to establish standardized technologies and protocols for carbon dioxide measuring, monitoring, and verification.

The FutureGen plant will pioneer carbon sequestration technologies on a scale that will help determine whether this approach to 21st century carbon management is viable and affordable.

In April 2003, the Department's notice of request for information on the plan to implement FutureGen appeared in the Federal Register. Comments were requested by June 16, and we are currently reviewing them. The ultimate success of FutureGen depends on acceptance of the concept of sequestration by the industry that will have primary responsibility for its potential future implementation.

The Department plans to enter into a cooperative agreement with a consortium led by the coal-fired electric power industry and the coal production industry. Under the guidance of a government steering committee, this consortium will be responsible for the design, construction and operation of the FutureGen plant, and for the monitoring, measuring, and verifying of carbon dioxide sequestration.

The Federal Register notice indicates that members of a qualifying consortium must collectively own and produce at least one-third of the nation's coal and at least one-fifth of its coal-fueled electricity. In addition to collectively owning and producing a large fraction of the national coal and electricity, the consortium is expected to be:

(a) Geographically diverse by including both eastern and western domestic coal producers and coal-fueled electricity generators; and,

(b) Be resource diverse by including producers and users of the full range of coal types.

The public's interest is best served by having this broad cross-section of the coal and coal-fueled electricity industries involved in this project. The Department will require that the consortium use fair and open competition in selecting the host site and the plant components. The Department also is seeking the participation of other coal consuming and producing nations in the FutureGen initiative at this week's the Carbon Sequestration Leadership Forum. Broad involvement in the project is desired to achieve wide acceptance of the concept of coal-based systems integrated with sequestration technology.

Although the consortium will be limited to coal and coal-fueled electricity generation owners and producers, and while equipment and service vendors may participate through a competitive selection process for their goods and services, the Department expects the consortium to provide mechanisms for future participation in the project, as appropriate, of interested parties such as state governments, regulators, and the environmental community.

We also expect the consortium to be open, working to expand its initial membership to one that is inclusive and open to other coal and coal-fueled electricity owners and producers. We anticipate placing separate contracts to independently validate carbon dioxide sequestration. An affordable, reliable, and environmentally sound supply of electricity is critical to our nation's future.

Conclusion

The ultimate goal for the prototype plant is to show how new technology can eliminate environmental concerns over the future use of coal and allow the nation to realize the full potential of its abundant coal resources to meet our energy needs. Knowledge from FutureGen will help turn coal from an environmentally challenging energy resource into an environmentally sustainable energy solution.

Coal is the workhorse of the United States' electric power sector, supplying more than half the electricity the nation consumes. It is also the most abundant fossil fuel in the United States with supplies projected to last 250 years or more. The International Energy Agency projects a 50 percent increase in worldwide coal use for electricity generation over the next quarter century.

The fact that coal will be a significant world energy resource during the 21st century cannot be ignored. Coal is abundant, it is comparatively inexpensive, and it will be used widely, especially in the developing world. Global acceptance of the concept of coal-based systems integrated with sequestration technology is one of the key goals of FutureGen.

Our challenge is to make sure that when it is used, coal is clean, safe, and affordable. Technologies that could be future candidates for testing at the prototype plant could push electric power generating efficiencies to 60 percent or more - nearly double the efficiencies of today's conventional coal-burning plants.

Thus, the FutureGen prototype plant would be a stepping stone toward commercial coal-fired power plants that not only would be emission-free but also would operate at unprecedented fuel efficiencies.

This completes my prepared statement. I would be happy to answer any questions you may have.