Hill Heat

2:36 Kerry: Today we’re looking at sequestration; we’re planning on having a hearing soon on gasification, maybe early next year. Climate change is on everyone’s tonguetips these days, with varying degrees of understanding. Al Gore and I held the very first hearings on global warming in 1989. We then went to Rio. And now we’re here, twenty years later, without a whole lot of progress, without any major federal commitment. That in itself is pretty stupefying. Scientists were warning us to keep concentrations below 550 PPM. We’re now seeing stark reevaluations. The IPCC study had a cutoff date of 2005. We’ve had two years of subsequent data. With respect to insect infestation in northern forests, understanding the importance of tropical forests, the melting of Antarctic and Greenland ice sheet, 100 billion metric tons per year, the super El Nino effects, the melt of the floating ice sheets, exposing more ocean to warming, therefore not a cycle of reflection but of absorption. Things are changing and changing fast. Now they’re estimating we can only tolerate 450 PPM. What’s already in the atmosphere will continue to do damage for 80 to 100 years. This kind of gathering is really important. We’re looking at coal as a critical component. We have huge amounts of it in the United States and China has huge amounts. At the rate we’re going we’re going to get to 600-900 PPM. Everyone’s talking about CCS. Today we want to hear the thoughts of those here. We need to know what’s the ability to capture, the ability to store. I’ll be introducing legislation today to establish 3-5 demonstration facilities and establish an interagency process to establish a regulatory framework. Most people suggest we can only do this if we kick into high gear demonstration projects. So we welcome our panel.

2:42 Dorgan: The question is not whether we engage in CCS but how. We’re going to continue to use coal but the question is how. In ND we have the only synthetic gasification project. We capture 50% of the CO2 and use it for enhanced oil recovery in Canada. The President’s budget did not request nearly enough money. We need to invest in the R&D. I’ve increased the funding by 30%. I think it’s essential to provide the funding for the research. I met a fellow with a company in Massachusetts engaged in algae issues. This guy used for 17 years in our national labs then the funding ran out. The algae feeds on CO2 and produces a superfuel. Wouldn’t it be interesting if we unlocked the mystery of all of this? We don’t do the research, we’re not going to unlock the opportunities. Capturing and sequestering carbon is essential in my judgment.

2:46 Kerry We’re going to pop out at 3 o’clock for a meeting with 30 CDOs on this very subject.

2:47 Stevens: I’m looking forward to the bipartisan work on creating demonstration projects.

We’re relying more and more on countries not exactly favorable to the United States. If we can develop more coal plants and we can do it in an environmentally sound way it makes sense for the United States.

2:49 Herzog I’ve been working on CCS for over 17 years. Coal is a critical fuel for the world. However, coal is responsible for about 40% of the world’s CO2 emissions. CCS is the critical technology to reduce emissions while maintaining affordable energy…It seems both prudent and relatively inexpensive to establish technological readiness now.

2:54 Fox Kinder Morgan is one of the largest pipeline companies in the world. We have extensive experience in transporting CO2 and injecting it into the ground. Capture is the most costly component. Post-combustion capture has been around for 60 years, is well established, but is expensive. Pre-combustion capture seek to reduce costs by removing nitrogen from the system. Pre-combustion capture could be used with IGCC plants. Combustion fuel with oxygen produces a very hot flame and existing steel cannot handle it. CO2 has been transported safely by pipeline for over 30 years. None of the leaks in the last twenty years have produced injuries.

Geological storage may be the most difficult challenge. The technology was not developed to store CO2 for long periods. Not much is known about saline aquifers, the main storage option. They need to be classified and monitored. Non-technical barriers like liability are very contentious. Another topic in the IOGCC report is ownership of the site—surface vs. mineral rights. The current tax structure does not support the development of a CCS pipeline structure.

2:59 Benson Safe and secure sequestration can be achieved. Two mechanisms are responsible for trapping and we know they work because they are the mechanisms responsible for the existence of oil and gas sources. In practice there is a great deal of engineering involved in safe sequestration. The question of scale cannot be ignored. Today there are three projects. Thousands will be needed. Worldwide public and private research efforts continue to make progress. There is an urgent need for large demonstration projects. Who will be responsible for long-term monitoring and liability? Scientific research has a role to play to provide a framework. Naturally occuring secondary trapping mechanisms provide greater security.

3:05 Burruss Fossil fuel usage will continue in both industrialized and developing nations. Models that stabilize concentrations at 550PPM suggest emissions must be cut by 70%. A critical issue is the integrity of the geological seals. Saline reservoirs have the potential for very large capacity but the utility of these reservoirs is unknown. On the topic of terrestrial sequestration, lthough we know naturally stored carbon in soils are prone to rerelease, the processes are poorly known.

3:10 Hannegan Advanced plants will be crucial to the future of US electricity production. With aggressive development and deployment of low-carbon plants, it is feasible to return emissions to 1990 levels by 2025. Advanced coal technologies is a key part. IGCC technology is still relatively new. It’s important to avoid choosing between coal technology options. In addition to the challenge of capturing CO2, there are storage issues. That includes permitting, public acceptance, legal liability, and possible new uses of CO2.

3:16 Wolfe I would like to begin by introducing Sealaska. We have over 17000 native shareholders that are descendants of the original inhabitants of southeast Alaska. We are sequestering carbon to preserve the earth’s natural functions. Any framework must encourage both sequestration and ecological benefit. Forests effectively sequester carbon. Providing carbon offset savings over fossil fuels will encourage forest management practices. Active forest management supports the principle we should first maintain what we have. The entire carbon forest budget must be taken into account so purchasers get what they are paying for. This must be done with the appropriate verification protocols. The ultimate reason to manage climate change is to preserve the world’s natural functions.

3:20 Stevens This carbon sequestration must be a diversified effort.

Wolfe I believe that the ability of forests to sequester and store carbon is part of an overall strategy.

Stevens Is it just standing forests?

Wolfe Younger forests are better at taking up carbon. We need to look at the total carbon budget, looking at standing forests and wood products.

Stevens Alaska has half the coal in the United States. Is it possible for the sequestration to take place there?

Benson Yes. There are significant resources in Alaska where CO2 could be sequestered in deep unmineable coalbeds.

Stevens Is methane sequestration possible?

Benson The issue of permafrost melting is significant but I’m not familiar with a strategy to manage those emissions. They have the global warming power about 22 times higher than CO2.

Stevens Should we have demonstration projects on methane?

Benson Remedial strategies to avoid methane emissions would be a good idea. It would be quite difficult to capture methane emissions from melting permafrost.

Stevens There’s a young scientist at the University of Alaska who discussed the potential to capture large amounts of methane.

Hannegan If you’re successful at harnessing natural gas from permafrost, you can use the CCS technology at those plants as well.

Stevens The amount projected of methane to be released is remarkable.

3:27 Ensign Demonstrations?

Herzog One saline formation is very different from others. There are lots of different characteristics.

Ensign Have you identified potential sites?

Herzog There’s a large set of aquifers in the Midwest, some in the Southeast. We think three projects could cover a lot of the different aspects of the formations.

Benson There’s been an atlas created. Outside of the Northeast and the coastal plains of the Southeast there are many attractive targets for sequestration.

Ensign Let’s say we have a 400 MW coal-fired power plant. How much physical volume of CO2 would that generate?

Burruss A 400-500 MW power plant would generate 300 million tons of CO2 per year. In subsurface volume as a fluid, over 20-50 years, that kind of project would use the equivalent of about a 1-2 billion barrel oil field.

Hannegan The largest existing post-combustion unit is about 50,000 tons per year. How you handle different kinds of coals needs to be dealt with.

Ensign If we’re talking about more coal plants, do we have that volume available? It looks like the other types of aquifers would have to be used.

Bensign 4000 Olympic-sized swimming pools is one coal plant per year. At the low end of the range in the US there are 3000 billion tons of capacity. Regionally the numbers can be quite different. The bottom line is that the numbers work.

Ensign If we can make a difference into the future we may not need every coal plant to have its carbon captured. Combining that with nuclear, other sources of energy, you can make a serious dent.

Hannegan The challenge with retrofitting can’t be understated. We’re primarily looking at new units.

3:34 Klobuchar Title VIII of Lieberman-Warner establishes a framework for CCS.

Herzog New projects will be less expensive than retrofitting but retrofitting would be possible.

Fox Trucks are three times as expensive as pipelines. You’ll either put it in pipelines or possible ships. We would need more infrastructure, on the order of $3 billion for one Permian Basin-degree system. Professor Sokolow broke down the emissions problem into seven wedges. You’d have to build about 40 of these in the United States. We certainly know how to pipeline CO2 safely. The coal plants don’t want to clean up CO2 to what is pipeline specs. We haven’t really addressed that.

Burruss One issue with pipelines and retrofitting is that the largest coal plants are along the Ohio and Mississippi River valleys. But the largest reservoirs are in west Texas and along the Texas coast. So to connect the two we need new pipeline infrastructure or we need new co-located plants.

Hannegan The energy penalty in capturing CO2 from pulverized coal is around 30%, but we see that can be brought down to 10-15%.

3:43 Stevens Why does the Ultragen project propose 25% CO2 capture?

Hannegan The 25% is a 200MW fully captured element of the 800MW plant.

Stevens Would the Ultragen project qualify under the current law?

Hannegan HR6 requires 85% capture and half a million tons. Ultragen 2 would treat 50% of the flue gas with 90% capture. The third project would qualify.

Stevens Can we sequester the carbon at the point of production?

Benson As we look to the future, colocation will be a very desirable attribute.

Stevens Twenty years ago we ran into the problem of line loss. Why haven’t we moved forward with colocation?

Burruss The only way we can go forward is to make the decision where to locate large demonstration projects.

Stevens Is it finally going to be a question of cost? What is the best use of the investment now?

Hannegan We’ve done some very detailed analysis. It involves making some significant R&D investments today. We’ve contrasted an approach which waits until the carbon constraints arrive with one that starts now. The underlying work behind this analysis contains detailed dollar amounts and investment priorities.

Benson We need to be building the fundamental research base, not just the demonstration projects. Small-scale pilot tests are important, complementary to the big-scale projects. All three are very important now.

3:50 Kerry How do you structure that investment?

Benson The DOE Office of Science is a very good model. Use-inspired fundamental research.

Kerry How urgent is what kind of investment?

Benson We need to do this yesterday.

Stevens Do we need a Los Alamos style project?

Hannegan The scientists and technology sector are in large agreement about what’s needed. We’ve developed a very specific roadmap.

3:52 Kerry Did MIT work through any of these best practices?

Herzog We’ve been in meetings with EFRI, the Coal Utilization Research Council, etc. There are some differences but the basic thrust is similar. I think there’s a pretty good agreement in the community about what the gaps are in our knowledge in order to move forward. In the Finance Committee we had an argument whether we know how to do this.

Fox We operate plants that capture CO2 right now. The Dakota Gasification Company is capturing CO2. This is something we know how to do.

Hannegan The examples he cited are from chemical plants, which are not electric power plants. We are at a much smaller scale of investment. The difficulty is in capturing CO2 from a pulverized coal plant.

Kerry But we do know that we have the technical capacity. The real issue is the efficiency and cost. Some private entities are moving forward, right?

Hannegan At a small scale, yes.

Kerry Why should the government be involved if the private sector is moving forward?

Burruss You raised the basic issue in your opening statement. The question is urgency. If we don’t do this fast enough to affect global warming, there’s not much point.

Kerry Also we’re much better equipped to handle the liability questions. Do we have the capacity to sequester?

Burruss The known capacity in oil and gas reservoirs, about 100 billion tons of CO2. But that doesn’t get the job done if we need to capture 90% of all industrial processes.

Kerry If you don’t argue with the science, you can’t be half-pregnant on this thing. That said, it seems to me you’ve got about ten years to get it right, to reduce your goal from 550 to 450, it seems we’ve got a very small goal. What do we do?

Benson The DOE atlas does include saline aquifers, about 3000 billion tons of CO2. If you took all the stationary sources you could sequester all the emissions for hundreds of years.

Kerry We were talking about the energy bill and the transportation piece, we’re hoping to get that done in December.

Hannegan Our work, looking at the electricity sector, a significant portion would come from CCS. In terms of transportation, if you’re able to de-carbonize the electricity sector early, we can provide energy to other sectors.

Kerry What are the top priorities?

Fox We need to fund the larger demonstration projects but also do some of the smaller projects.

Hannegan The first is the demonstrations. The second is the regulatory scheme to give investors confidence. The third is environmental aspects are important. Monitoring and verifying. The key regulatory issues include the ownership of the CO2. Who owns the pore space? The transfer of liability.

Kerry It seems to me that you can’t ask the company to assume the risk of liability. You’re going to have to do something like the Anderson Act with nuclear. I don’t know how you do it otherwise.

Hannegan There’s the economic risk given that these coal plants are billion-dollar investments, now with significant increase in the capital outlays.

Kerry Are there any other new technologies we should look at?

Benson I think capture with geological storage is the primary candidate out there.

Hannegan There are some enterprising folks out there, such as the Texas plant capturing CO2 at the minemouth and producing a carbonate material.

Kerry Why doesn’t the USGS have a role?

Burruss The simple reason is we don’t have the budget or the authorization. We believe we have the best expertise to do storage assessments.

Kerry The DOE atlas I’m told is useful but doesn’t have the sufficient resolution.

Burruss That’s a fair statement but could the USGS do the assessment? We can’t assess for commercial projects. But we can assess capacity. Part of it is the basic question of the storage capacity of saline aquifers. It’s unknown.

Kerry What are the known risks?

Herzog Leakage, but it’s a fairly low danger. It could be dangerous in high concentrations. But the biggest risk is that it would go back out.

Kerry Acidification?

Herzog Acidification isn’t a big risk but leaching other materials into drinking water could be a problem.

Hannegan The promise of biomass and CCS coming together is very promising. As a long term objective there’s some synergy worth pursuing.

4:15 Thune The critical role of clean coal and CCS in ensuring our energy independence. I know the focus has been on geological carbon storage but I’d like to highlight carbon sequestration. Altering crop planting practices, stopping erosion, changing grazing practices. 40-60 billion tons of CO2 over the next decades. It’s going to require leadership from the private and public sectors. One question: the carbon offset issue the range is $5-$20 a ton. According the Fox’s testimony the cost of CCS is $11-$57 a ton.

Herzog In terms of the types of cuts from 60%-90% the technology is going to be competitive with other kinds of mitigations. At first it would be more expensive but there’s a lot of technology in the pipeline that need to be nurtured with R&D.

Hannegan We’ve identified R&D that will bring costs down from $50 a ton. Investment in R&D before the applying the carbon constraint provides the best benefits.

Wolfe At $20 a ton private land owners can get quite motivated in forest management.

4:20 PM Kerry Thank you very much. We stand adjourned.

From EE News:

The Energy and Natural Resources Committee yesterday cleared in a largely bipartisan fashion the first major energy bill of the Democratic-controlled Senate, but only after a testy battle over coal-based transportation fuels highlighted the divisive nature of such debates.

After several hours of back and forth, the committee approved the underlying bill, 20-3. It deals with biofuels, energy efficiency and carbon sequestration. Only three Republicans voted against the bill: Sens. Craig Thomas (R-Wyo.), Richard Burr (R-N.C.) and Jim DeMint (R-S.C.).

But even with the overwhelming committee vote, it appears the legislation could be the subject of several heated fights as it moves to the floor, especially over a renewable portfolio standard (RPS) and coal-to-liquids (CTL) technology.

Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) told reporters after the vote he does not know exactly when the bill will come to the floor. He does, however, anticipate floor time before the Memorial Day recess.

Aides for Majority Leader Harry Reid (D-Nev.) said there is no specific schedule for the bill, adding it will not be on the floor next week as the Senate is expected to take up the Water Resources Development Act (see related story).

A refining industry lobbyist said he thinks Reid may have to shelve the energy package until after the recess, citing the possibility of a sprawling debate. The lobbyist noted the fierce coal-to-liquids battle that is certain to resurface on the floor. The source also noted the full Senate must deal with Bingaman’s plan for a renewable portfolio standard, which the committee sidestepped, and the possibility of multiple amendments on ethanol and other issues.

“This bill is not ready for primetime,” the lobbyist said.

At the close of the markup, the ranking member of the committee, Sen. Pete Domenici (R-N.M.), said lawmakers will continue to try to move the bill in a bipartisan manner, but he also admitted it may take a while to get the legislation past the Senate.

“When it gets to the floor … you should not expect such a short session of the Senate, it will be there for quite a few days,” Domenici said.

Bingaman several times during the course of the markup emphasized he does not view the measure as a comprehensive energy bill. More opportunities for lawmakers to move their energy priorities will present themselves, he said.

“We have a number of areas we were trying to address, this is not a comprehensive energy bill,” Bingaman added. CTL debate dominates markup session

Much of the debate yesterday centered on an amendment offered by a pair of coal-state senators that would have created a new federal mandate for the use of CTL.

After a 90-minute debate on the matter, the panel – in a 12-11 party-line vote – defeated the amendment from Sens. Craig Thomas (R-Wyo.) and Jim Bunning (R-Ky.) that would have established a coal program to mirror the existing federal mandate for biofuels.

The amendment attempt seemingly ended a bipartisan truce that reigned over the committee’s first effort of the 110th Congress to create an energy bill. Bingaman and Domenici had tried to keep CTL a renewable portfolio standard off the table during the markup.

Early on, Bingaman attempted to assure lawmakers they would have an opportunity to offer their proposals either on the floor or in other legislation down the road. But Thomas said he decided the markup was the appropriate venue to move his CTL bill.

“That’s what this committee is for, to deal with these issues,” Thomas said after the vote. “We’re going to continue to work on it.”

Bingaman told reporters after the markup that he expected the CTL issue to again become a point of contention when the bill is brought up before the full Senate.

The Thomas-Bunning bill would create a new federal mandate requiring the use of 21 billion gallons of coal liquids by 2022. Additionally, in an effort to deal with the environmental concerns, the senators included a provision stating that the greenhouse gas emissions levels of CTL fuels would not exceed that of conventional gasoline.

That language did little to assuage committee Democrats, who balked at the legislation over lingering questions about GHG emissions and the feasibility of carbon sequestration from CTL.

“If we move forward fast with coal-to-liquids, and we don’t have carbon capture [and] carbon sequestration ducks in a row, we’re setting ourselves up for a disaster,” said Sen. Jon Tester (D-Mont.).

But Republicans argued that even as Congress attempts to deal with climate change, it must also deal with pressing energy security concerns. “There is a reality that we’re facing, and that is the reality of energy security,” said Sen. Larry Craig (R-Idaho). “Here’s an opportunity to vote for U.S. coal and against Saudi oil.”

Bingaman questioned whether the committee had done enough research to endorse such a significant mandate for CTL, essentially the same level as the mandate for advanced biofuels. And three Democrats who have previously endorsed the use of CTL – Sens. Byron Dorgan (N.D.), Ken Salazar (Colo.) and Tester – said they could not support the amendment either because of the timing or their concerns on how it would affect GHG emissions. All three ended up voting against the amendment but said they could support other CTL language in the future.

The committee did adopt a Bingaman amendment, 15-8, that would create a program to study large-scale capture of carbon from industrial sources. Bingaman touted the provision as a potential step toward testing the feasibility of carbon sequestration from CTL development.

The amendment authorizes $100 million per year over five years for the program. But the language also states that only projects that capture at least 85 percent of CO2 would be eligible for the grants.

The majority of committee Republicans voted against the amendment, arguing it would essentially delay the use of CTL for five years or more. “Senator Bingaman has found a nice way to stop the development of coal-to-liquids by an amendment that puts into place something that we don’t even understand how to do,” Domenici said. Panel adopts measures on GHG standards, biofuels studies

Only one other amendment during yesterday’s markup broke the committee along party lines and required a voice vote.

That amendment – sponsored by Bingaman – would require that any renewable fuel facility built after the bill is signed into law should produce fuels that achieve at least a 20 percent reduction in lifecycle GHG emissions.

Bingaman described such a target as “very achievable” and said the Renewable Fuels Association – the main lobbying group for the biofuels industry – has endorsed the language.

Yet Domenici called the provision largely unnecessary, given that the committee has already received assurances that cellulosic ethanol and other advanced biofuels produce fewer emissions than conventional gasoline.

“We’ve been told we have no worries, clearly we’re going to come in better than gasoline. Now all of a sudden in the last week or so we have someone coming along, ‘Well we want to put in an EPA condition,’” Domenici said. “I don’t think we should do it, it’s a far cry from where we started.”

The committee also adopted by a voice vote an amendment from Sen. Jim DeMint (R-S.C.) directing several federal agencies to conduct a study on increasing the ethanol blend in gasoline to more than 10 percent.

The Engine Manufacturers Association and the Alliance of Automobile Manufacturers backed the amendment, saying in a letter to the committee that the use of “mid-level” blends would be “entirely new products that will raise new questions, risks and challenges across a multifaceted range of energy, environmental, legal, safety and economic issues.”

The committee then adopted by a voice vote amendments to establish a research program for electric vehicles and a slew of other noncontroversial measures, including those authorizing studies for the distribution of biofuels, to allow federal agencies to acquire electric vehicles and to promote the use of new materials in industrial processes to improve energy efficiency. Offshore drilling measure shelved

A pair of senators – Dorgan and Craig – offered an amendment that would expand offshore drilling around the United States and neighboring nations. The lawmakers withdrew their amendment without a vote, saying they did not want to jeopardize the bipartisan nature of the legislation. They then expressed interest in pursuing the issue down the road.

“Many are hiding in the illusion that we don’t need more production in our standard fuels, and they are denying the reality that we do,” Craig said.

The bill would allow new oil and gas drilling in the eastern Gulf of Mexico within 45 miles of Florida’s coast. It also includes language granting U.S. companies the right to participate in exploration and production off Cuba’s coast and asking the Interior Department to conduct an inventory of outer continental shelf resources off the southeastern United States.

Even though the language was never voted on, the amendment drew a quick negative reaction from several coastal state lawmakers.

“It would be a really bad idea, it would break faith for those who negotiated in good faith on that issue [last year],” said Sen. Mel Martinez (R-Fla.), in reference to legislation approved last year allowing for new eastern gulf drilling for areas off the Florida coast. Bill’s focus remains on biofuels mandate, efficiency

The centerpiece of the bill that cleared the committee yesterday – the portion that is likely to receive the most attention when the bill hits the floor – is the dramatic expansion of the existing federal biofuels mandate.

The Bingaman-Domenici bill would put in place a 36-billion-gallon biofuels mandate by 2022 as well as provide a series of incentives for the industry’s development, such as loan guarantees for renewable fuel facilities, grants for the creation of renewable fuel corridors and transport of biomass to refiners.

Moreover, the legislation sets specific targets for the use of cellulosic ethanol, specifically hitting a mandate of 21 billion gallons by 2022.

In addition to the biofuels mandate, the legislation includes provisions aimed at spurring research and construction of renewable fuels infrastructure.

The bill would provide a federal loan guarantee of up to $250 million for renewable fuel facilities, grants for creation of renewable fuel corridors and grants for transport of biomass to refiners.

It calls for a 50 percent increase in bioenergy research through 2009, creates seven bioenergy research centers and directs the Energy Department to conduct several studies having to do with additional expansion of biofuels.

The legislation also contains an efficiency component that would codify efficiency standards for several products, boosting programs that spur use of efficient lighting technologies, and increasing conservation in federal buildings.

On the transportation side, the bill sets an overall goal of reducing gasoline use by 45 percent by 2030. The bill provides loan guarantees for plants that make fuel-efficient vehicles and their parts.

Other steps include grants to automakers to help retool current plants to make advanced technology vehicles and authorized funding for new research into batteries and lightweight vehicle materials.

Lawmakers also brought into the fold two carbon sequestration measures.

One of the measures would require the Energy Department, U.S. EPA and U.S. Geologic Survey to conduct a sweeping assessment of the potential for underground CO2 storage in all corners of the country, including Alaska and Hawaii. DOE would be required to estimate potential volumes of oil and gas that could be recovered after the carbon injections, as well as the potential risks if the CO2 leaks back into the atmosphere.

The other portion authorizes DOE to establish seven regional CO2 sequestration partnerships that bring together the work of federal, state and local governments, as well as industry and academia. The programs now run through fiscal 2009; under the bill, it would stretch through 2012.