Hill Heat

E&E Daily:

While most panelists agreed it was not likely that a full bill capping greenhouse gas emissions would pass this session, they said a great deal could be accomplished in laying the groundwork this year.

Tom Kuhn, president and CEO of Edison Electric Institute, predicted there will be a floor vote in the Senate this year on a climate bill. “No matter what happens on those votes, that will set the marker for what we do in the future,” he said, especially if there is White House involvement.

David Parker, president and CEO of the American Gas Association, agreed with Kuhn. Despite a general disagreement the energy industries have with the climate bill sponsored by Sens. Joe Lieberman (I-Conn.) and John Warner (R-Va.), he said, future legislation could be even harder on the industry.

“Warner is retiring this year, and then the question is, ‘Who comes into play?’” Parker said. Potentially, Sens. Barbara Boxer (D-Calif.) and Bernie Sanders (I-Vt.) – who both favor greater emission limits than those in the Lieberman-Warner bill – could lead the next attempt to pass climate change legislation under a Democratic president, he said.

“Who would you rather have writing a bill in the Senate? I might guess it may set a tone for business to fully work with the Senate this year,” he said.

Achieving workable legislation will require educating policymakers and the public a great deal more on energy markets, panelists said.

Parker said he was worried that “the polar bear habitat is going to really drive this [climate change] debate. We all have a big education job to do and I think we need to do it collectively.”

CLIMATE: Boucher says White House open to mandatory controls (11/08/2007) Ben Geman, Greenwire senior reporter

A House Democrat writing legislation to require greenhouse gas limits said today that White House officials have privately indicated that President Bush might sign such a bill, despite the administration’s public stance against mandatory controls.

Rep. Rick Boucher (D-Va.) told a business forum that White House officials have not put up a “red light.”

But he outlined several big “ifs.”

“If a bill is presented to the White House that has a bipartisan foundation, if it is industry supported, if it is structured in such a way that it will not cause economic dislocation and that is digestible by the economy, that legislation will be welcomed, it would receive serious consideration and potentially be signed into law,” Boucher said at a climate change forum hosted by the Business Roundtable.

He later told reporters he has been speaking about climate legislation with Bush’s principal climate advisers, including Jim Connaughton, chairman of the Council on Environmental Quality.

CEQ declined to respond directly to Boucher’s comment. “The president has made clear which policies he supports to combat climate change, and he is still waiting on Congress to pass his ‘20 in 10’ legislation,” the agency said in a statement. “We will take a look at all proposals and make our views known as they work their way through the legislative process. We aren’t going to speculate about anything that hasn’t been introduced yet.”

“20 in 10” refers to a White House initiative to curb gasoline use by 20 percent in 10 years through increased use of alternative fuels and greater auto efficiency.

Boucher chairs the Energy and Air Quality Subcommittee. He and Rep. John Dingell (D-Mich.), chairman of the full Energy and Commerce Committee, are planning a cap-and-trade system to control carbon dioxide and other gases that are contributing to global warming. Their plan will seek to curb U.S. emissions between 60 percent and 80 percent by 2050.

Boucher, a coal industry ally, has emphasized that his measure would not cause economic harm. State pre-emption at issue

Boucher would not say whether the bill he is writing would “pre-empt” state efforts – such as those in California and among Northeast states – to enact limits on greenhouse gases. But he suggested that the issue could resolve itself to some degree.

He noted that blocs of states had begun their own efforts to control sulfur dioxide when Congress passed the landmark Clean Air Act amendments of 1990 but that these efforts abated when the federal SO2 cap-and-trade plan was established.

“The regional consortia just dropped away, and they really never materialized beyond whatever stage they had assumed at the time we passed the bill,” Boucher said.

“To some extent I think that is going to happen again,” he added. “Once we put a carbon dioxide control in place, a greenhouse gas control in place, that has nationwide application, I really think you are going to see many of the regional blocs say ‘okay, we are satisfied.’” He added, however, that there could be exceptions and California might be one of them.

Boucher’s comments underscore inevitable regional tensions on climate issues. In a nod to lawmakers from the Northeast and California, Senate climate legislation includes a provision that allows states to set stronger rules than the federal government. Concerns with Senate plans

Boucher said any measure that forces coal-fired power plants to curb emissions too fast – before carbon capture and sequestration can be widely deployed – would cause major shifts to natural gas and drive up prices.

Boucher said the upcoming climate bill will provide a “somewhat forgiving, a gentle introduction to controls” until carbon capture and storage is ready, which he said would be around 2025. Before that, he said, coal-fired utilities will need other options available to meet obligations, such as purchase of offsets.

“The schedule prior to 2025 has got to be more forgiving,” he told reporters. “The schedule after 2025 can be very rigorous.”

Boucher said Senate proposals would impose major limits too fast. “I don’t think the Senate bills adequately address that need because the control schedule is quite severe in the early years, before we have carbon capture and storage available,” he said. “If they default to natural gas, real harm to the economy occurs.”

He did not single any specific bills out for criticism. The Senate Environment and Public Works Committee is currently working on climate legislation sponsored by Sens. Joe Lieberman (I-Conn.) and John Warner (R-Va.).

A major group of labor unions, the AFL-CIO, is concerned the Lieberman-Warner measure’s targets for 2020 are “overly aggressive” (E&E Daily, Nov. 8).

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.