The Subcommittee will consider different clean coal technologies available today, including carbon capture and sequestration, and in the near-term, that can help reduce carbon dioxide emissions from coal-fired power plants.
Ted StevensSenatorMr. Chairman, thank you for holding this hearing today on clean coal technologies.In the United States alone, coal fired power plants satisfy more than half of the nation’s energy needs and this percentage is likely to increase in the future. Coal is both abundant, inexpensive, and represents one of our most important natural resources.It is a stable commodity and a key component in satisfying the United States’ growing energy demands. Coal production is an important element to our national security. Without it, we would be increasingly reliant on unstable or unfriendly nations for our energy needs.Most people don’t realize that half the coal in the U.S. is located in Alaska. Access to it is denied because of a provision that was placed in federal law back in the days when the projection was that we were entering into a new ice age. The decision was made to prohibit the extraction of coal in Alaska unless the original contour of the land was restored. But if you take out the coal you have to melt the ice, and if you melt the ice it is hard to replace the act of God and freeze it back so you have the same elevation and the same contours. We haven’t had a new coal operation in Alaska for a long time.Continued reliance on imported energy from volatile regions of the world is not a solution. We must increase our domestic production in order to remain globally competitive and we must do so in an environmentally responsible manner. New technologies to make this possible are on the horizon. Carbon capture and sequestration is just one of many processes already in development. Ground breaking research is being conducted to develop new ways to burn coal in order to maximize energy yield and employ cleaner and more efficient processes.One of these processes, which we will hear about today, is called Integrated Gasification Combined Cycle or IGCC. The IGCC process is a promising new technology which has the potential to increase efficiency by 40%. However, this process is not conducive to all regions because of its limitations on the type of coal which can be used. Solutions must be found that will accommodate these differences and we must continue to research and develop other methods.In my State, Agrium Incorporated is developing coal gasification at its Nikiski fertilizer plant. This process would allow the plant to switch from natural gas to coal as a chemical feedstock. This coal gasification project will allow Agrium to not only produce the fertilizer and ammonia currently in production but also clean diesel fuel. In addition, the excess energy produced by this project, estimated at 75 megawatts, could be injected into the existing power grid of the surrounding community. Agrium is also evaluating carbon sequestration, which can be utilized in existing oil and gas fields to yield additional energy supplies.Like many of the alternative energy technologies currently in development, no one single solution will solve the problem of meeting energy needs in a responsible manner. However, we should continue to explore the benefits clean coal can continue to offer our economy. I look forward to hearing our witnesses’ testimony and their response and their insight into how we can achieve this goal.
Witness Panel 1
Mr. Joseph ChaissonDirector of Research and TechnologyClean Air Task ForceBefore the Science, Technology, and Innovation Subcommitteeof theSenate Committee on Commerce, Science, and TransportationHearings on Clean Coal TechnologiesTestimony of Joseph M. ChaissonTechnical and Research Director, Clean Air Task ForceApril 26, 2007
Before the Science, Technology, and Innovation Subcommitteeof theSenate Committee on Commerce, Science, and TransportationHearing on Clean Coal TechnologiesTestimony of Joseph M. ChaissonTechnical and Research Director, Clean Air Task ForceIntroductionMr. Chairman and members of the subcommittee,My name is Joseph Chaisson. I am Technical and Research Director of the Clean Air Task Force (CATF). Thank you for the opportunity to testify today on advanced coal technology and the environment.Founded in 1996, CATF is the only major national environmental advocacy organization with an exclusive focus on protecting the Earth’s atmosphere and human health from air pollution and climate change. This singular focus enables CATF to field deep analytic and strategic resources equal to the significant and complicated atmospheric challenges we face over the next fifty years.Over the past several years, one of CATF’s major activities has been to work with state and regional environmental groups, state governments and private project developers in several parts of the country to facilitate early domestic deployment of coal gasification technology – with carbon capture and geologic sequestration (storage) where currently feasible. We have briefed numerous Congressional offices – accompanied by state environmental partners -- about the promise of coal gasification technology. Another related CATF focus has been exploring how to remove barriers to promising advanced coal gasification and carbon capture technologies that have not yet entered the market. This “hands on” project facilitation and market entry work provides us with a useful perspective on what is happening on the ground in today’s marketplace.In this testimony, I will briefly restate the importance of moving forward radically cleaner coal technology than is deployed today; highlight current market developments on the ground which the subcommittee may not be aware of; and, finally, discuss key challenges to radically cleaner technology, and what the federal government might do to help tackle those challenges.I. The Current and Projected Environmental “Footprint” of CoalCoal-fired power generation is today one of the planet’s most environmentally destructive activities. It is responsible for most of the nation’s sulfur dioxide emissions that, even after recent regulatory reductions, will still take 15,000 lives prematurely in the US each year by EPA’s own estimate. It contributes substantially to nitrogen oxides, which add to smog, haze, and crop and ecological damage. It emits most of the nation’s manmade mercury air pollution. Current coal mining practices have scarred land and threatened water and habitat. Coal power generation consumes and discharges enormous quantities of water, while generating nearly 100 million tons of toxic wastes each year, the disposal of which is not regulated by the federal government. Finally, coal power generation is responsible for nearly 40% of the planet’s man-made emissions of carbon dioxide that contribute to global warming.Despite these problems, coal fired power generation is likely to be relied on for decades to come and is projected to expand dramatically. World electric demand is expected to triple by 2050, coming largely from developing countries like China and India. Most analyses agree that this underlying demand growth will substantially outpace even the most aggressive energy efficiency policies. Renewable energy, while it should and will be widely deployed, faces significant physical, environmental and economic challenges that will practically limit its share of total electrical supply for several decades. Natural gas is relatively expensive and its reserves are far more limited than coal. Finally, nuclear power faces considerable hurdles of scale, economics and environmental opposition. For these reasons among others, China is building as much new coal capacity each year as the entire UK power grid, and coal power generation in India is projected to grow rapidly - matching current US coal consumption by 2020 and China’s current coal consumption by about 2030. The United States faces both growing demand for electricity and an aging power plant fleet; coal will remain economically attractive to meet some portion of electricity demand growth and to replace some existing power plants.Turning to climate, numerous analyses performed or commissioned by such bodies as the Intergovernmental Panel on Climate Change, the European Union, the National Commission on Energy Policy, academic institutions such as Harvard, MIT, and Princeton University as well as environmental organizations such as Friends of the Earth-UK have concluded that, even with aggressive energy efficiency, renewable energy development and in some cases nuclear expansion, coal fired power generation is likely to remain a significant part of any 2030-2050 global power supply. Accordingly, each of these studies has identified the critical importance of transitioning coal use to technologies that minimize health-related air emissions and allow for the removal and storage of carbon dioxide, and to begin to demonstrate and scale up those technologies on a commercial basis as soon as possible.In short, the planet is unlikely to be able to live without coal for some time to come. But, at the same time, the planet, from an environmental standpoint, can’t stand to live with coal as it is currently used to produce electricity. This leaves only one path forward: we need to change how we use it – and we need to do so as quickly as possible.II. What Is to Be Done?An environmentally responsible coal policy would do the following:
Commercializing IGCC is of special importance. Because it is an inherently cleaner process – the gas it produces from coal must be free of most contaminants to power a gas turbine – IGCC reduces deadly sulfur and nitrogen oxide emissions to very low levels – approaching those achievable by natural gas combined cycle power plants. Gasification is the only coal power generation technology that can virtually eliminate mercury air emissions and capture most of the coal mercury content in a concentrated form that can potentially be sequestered from environmental release; IGCC is the only way we can continue to use coal to produce power without adding significantly to the global mercury burden. Total solid waste from gasification is typically half the volume generated by conventional coal plants, and gasification water use is substantially lower as well.Underground coal gasification (UCG), a promising further advancement in IGCC would gasify the coal directly within the deep, unmineable coal seams. This process can potentially eliminate the environmental impacts of current coal mining and transportation practices, as well as significantly reduce the challenges of coal waste management.Finally, IGCC is the key enabling technology for capture and storage of carbon dioxide from coal power generation and will be essential to meeting any reasonable climate stabilization target. While it is possible to retrofit a coal combustion plant with carbon capture technology, it is expensive and inefficient to do so today, costing twice as much for plants using bituminous coal as capturing carbon from an IGCC plant and reducing plant efficiency by as much as 40%. While development of more cost-effective coal-combustion carbon capture alternatives is important, current efforts are very early in the technology development stage, and it is unclear whether and when cost-effectiveness will be fully demonstrated for this technology. If we are to turn the world coal tide to a near-zero carbon footprint in the next 20 years, IGCC power generation is likely to be the most availing path forward based on current information.III. Recent Market DevelopmentsThe good news about cleaner coal power and carbon capture is the many recent coal gasification market developments, nearly all of which are too new to be reflected in academic studies and many of which are being conducted by companies not well represented by Washington trade groups or research organizations. When we “look out the window” at these market developments, we see a substantially different situation than is typically presented in available studies or by traditional institutions.Key highlights include the areas listed below. It should be noted that the coal gasification market developments described below do not reflect a complete survey of recent developments, but rather are intended to illustrate the contrast between the relatively static and out-of-date study characterizations of coal gasification technology with today’s rapid pace of market development.Emergence of new “full system” IGCC vendorsPrior to last summer, GE was the sole “full systems” IGCC vendor capable of offering all major IGCC components (that is, gasifier, combustion turbines and steam turbines) in a single package. Since that time, Siemens and Mitsubishi have developed full system commercial IGGC offerings, significantly expanding vendor choice for potential IGCC project developers. Siemens emerged as a full systems vendor last summer when the company acquired the Future Energy gasifier. NRG’s recent selection of Mitsubishi as the technology supplier for their proposed domestic IGCC plants introduced the entry of Mitsubishi as a full systems vendor.Emergence of new coal gasifiersUp until last summer, there were only three serious commercial coal gasifier offerings: the GE (Texaco technology), ConocoPhillips (E-Gas technology) and Shell gasifiers. These gasifiers have different characteristics that affect their suitability for various coal types, with Shell appearing most suited to low-rank coals (sub-bituminous and lignite). These gasifiers are also estimated to vary significantly in cost. Nearly all IGCC studies and academic literature have been restricted to analysis of these gasifiers.Several additional coal gasifiers have moved into the marketplace over the past year:
- Ban the construction of new coal combustion plants due to their inherently unacceptable air, water, solid waste and climate impacts.
- Rapidly commercialize the use of integrated coal gasification combined cycle (IGCC) for electric power generation, because it has a much smaller environmental footprint for air emissions and waste than does coal combustion.
- Rapidly demonstrate the feasibility of large-scale geologic storage of carbon dioxide and then require all new coal power plants to capture and sequester at least 90% of their coal carbon content.
- Demonstrate and deploy advancements such as underground coal gasification, that could further shrink IGCC’s environmental footprint by substantially minimizing mining impacts and waste management
- Reform coal mining practices worldwide, impose effective federal regulation of coal plant solid waste disposal and reduce coal generation water use and associated impacts to the minimum practical levels.
- Increase the energy efficiency of IGCC power generation to the maximum practical levels over time.
- Establish effective carbon dioxide emissions controls.
As all three of these gasifiers are well suited to low-rank coals, they provide a much more competitive set of market offerings for projects using these coals and should reduce pre-inflation low-rank coal IGCC project costs. This point is particularly important as some critics have suggested that some conventional gasifiers are not well-suited to low rank coals, and that there may not be an economic path for low-rank coal use.“Next Generation” IGCC plant developmentAt least four “next-generation” IGCC projects are moving forward in the US, in addition to the “hybrid” coal gasification plants described below. These projects are AEP’s Meigs plant in Ohio and Mountaineer plant in West Virginia, Duke Energy’s Edwardsport plant in Indiana and BP’s Carson Refinery Hydrogen project in California.These projects all use the most advanced available combustion turbine (for example, GE’s 7FB) and are a major “scale-up” from the several IGCC plants built at refineries in Europe about five years ago. They are also much larger than the two early demonstration plants built in the US (Wabash Station in Indiana and Polk Station in Florida) about a decade ago. These projects will typically have about 600 MW of generating capacity. The BP Carson project will use petroleum coke (a coal-like refinery waste product) and will include 90% carbon capture, which reduces plant output to about 500 MW. The BP Carson project will be the first commercial project in the US to include and demonstrate “full” carbon capture.Several additional “next-generation” plants may also be moving forward, but at a slower pace, including additional AEP-proposed plants in Kentucky and NRG’s proposed Huntley plant in New York State.These “next generation” plants are important for several reasons, including lower inflation adjusted costs and higher operating efficiencies. They also are driving significant detailed engineering design work, including in the case of Duke and AEP, serious engineering analysis of options for adding carbon capture to these plants at some future time, and provisions that can economically be built into the initial plant to facilitate carbon capture retrofit. The good news is that this very significant amount of engineering work will provide much more detail than is currently available on next generation costs, performance and carbon capture retrofit feasibility. The bad news is that this information remains proprietary and is not yet available in open literature.“Hybrid” ProjectsSome independent IGCC project developers like the ERORA Group and Summit Power are developing coal gasification projects that produce both electric power and substitute natural gas, typically allocating about 50% of the project coal syngas to each of these products. The ERORA group is developing projects in Illinois (Taylorville) and Kentucky (Cash Creek) and Summit Power is developing projects in Oregon and Texas.These developers are pursing “hybrid” projects because they have economic advantages over next-generation “power only” IGCC plants, including reduced overall project cost, high availability – particularly in projects using several of the new Siemens gasifiers -- and attractive overall project economics for power generating companies that have existing natural gas power plants by allowing them to have coal based fuel pricing for both their new coal generation and some portion of their existing natural gas generation.Some of these projects are close to final permitting and full financing. Several projects plan to include some carbon capture and will initially use the captured carbon for enhanced oil recovery (EOR). At least one project is exploring full carbon capture and sequestration. In many respects these projects reflect efforts by project developers to overcome current economic barriers to stand-alone IGCC plants.Advanced Coal GasifiersSeveral innovative coal gasification technologies are conducting process demonstrations and could be commercially available within the next two years. Two examples among several such systems being developed include Great Point Energy’s catalytic coal gasifier (a technology originally explored in the 1970’s) and Texas Syngas’ molten metal bath gasifier. Both technologies can potentially be produced modularly in a factory and both appear to have potential to reduce gasification costs compared with traditional gasifier designs.Underground Coal GasificationUnderground coal gasification (“UCG”) is just beginning to be recognized as a potential option for utilizing coal. UCG is a gasification process conducted in deep coal seams. Injection and production wells are drilled into the coal seam and are then linked together. Once linked, air and/or oxygen is injected and the coal is ignited in a controlled manner to produce hot, combustible coal syngas that is captured by the production wells, brought to the surface and cleaned for power generation and/or production of liquid hydrocarbon fuels or substitute natural gas. This technology has been used at a minor level since the early 1900’s and DOE conducted many pilot UCG projects in the 1970’s.A successful modern pilot project was conducted about six years ago in Chinchilla, Australia by the Ergo Exergy Technologies, Inc. and the first modern commercial UCG electric power production project started up this January in Mpumalanga, South Africa. I understand that two commercial UCG projects producing hydrogen for chemical plants have been developed in China. The GasTech Company is developing the first North American pilot UCG project in Wyoming. The initial GasTech project will be conducted in the Powder River basin and will use a coal seam 950 feet deep. Current estimates are that the pre-clean-up syngas will be produced for about $1.90/mmbtu (as compared with current US gas forward prices of about $8.00/mmbtu for the next several years).UCG technology is potentially quite significant for several reasons:
- The Future Energy gasifier, developed in the former East Germany and recently acquired by Siemens, should be well suited to low rank coals and shows promise of being quite economically competitive.
- The British Gas Lurgi (BGL) gasifier is an evolution of the Lurgi gasifiers used extensively in South Africa and at the Dakota Gasification plant in the US. This gasifier should also be well suited to low-rank coals.
- The Mitsubishi gasifier is partially oxygen blown, should also be well suited to low-rank coals and shows promise of being quite economically competitive.
Once this technology emerges from the pilot/demonstration stage, which will be necessary to clarify technology costs, it may be deployed rapidly if it proves to be more economic than conventional pulverized coal plants or advanced above-ground gasification system IGCC’s. LLNL has recently produced a summary of current UCG knowledge that is available at https://eed.llnl.gov/co2/11.php.IV. A Key Technology GapDeveloping a practical and very-low cost method of capturing carbon dioxide from existing power plant flue gases would be an enormous boost to global efforts to reduce carbon dioxide emissions and may be the only practical opportunity to significantly reduce future carbon dioxide emissions from the rapidly developing coal power plant “fleet” in China and India. Current technologies that can accomplish this task are too expensive and consume far too much energy to be practical to apply broadly throughout the world. While current research in this area is focused primarily on what are essentially incremental improvements in existing technology systems, a “break through” technology is needed. Potential “high-risk/high-reward” breakthrough technologies, like structured fluids, have been identified (in this case by MIT researchers) but there appear to be no relevant sources of Federal support for such research.V. Challenges to Advanced Technology DeploymentSeveral problems are constraining rapid deployment of advanced coal gasification technologies and associated carbon capture, including the recent substantial increase in large energy project costs; the lack of an economic incentive to build IGCC projects with full carbon capture today; and Federal advanced coal research, development and deployment programs that are not adequately funded or sufficiently broad.Recent large energy-project cost inflationFor several reasons, including massive infrastructure development in China and very large investments in Persian Gulf oil and gas projects, the construction cost of large energy projects has significantly increased over the past two-to-three years. In some cases, this cost inflation may have doubled project costs – including some domestic proposed coal plants. While it is not clear how long costs will continue to rise or for how long they will remain inflated, it does not appear that this cost-inflation period will be short.The current cost-inflation environment will also affect the economics of carbon capture and sequestration for new coal projects, raising the estimated costs from roughly 1.5 cents/kwh to about 2.5 cents/kWh. This suggests that if this cost environment prevails, carbon capture will begin to be economic at a carbon emissions price of about $40 per ton of CO2, at least initially.No economic incentive to build new coal plants with full carbon capture todayWhile the technology exists to develop new coal IGCC plants with full carbon capture and sequestration today, as is being demonstrated by BP’s Carson project, there is no economic basis to do so except possibly in the very few cases (like BP’s Carson project) where all captured carbon can be used for enhanced oil recovery. This disincentive to adding CCS to new coal plants will continue until captured and sequestered carbon is worth roughly $40/ton of carbon dioxide.Limitations of Federal Advanced Coal Research, Development and Demonstration ProgramsWe have not conducted a serious review of the relevant Federal “clean coal” research, development and demonstration programs, but we have observed several “disconnects” between such programs and both promising market activity and needed “breakthrough” technology. We note that all EPACT financial support for new IGCC projects has been awarded to next-generation commercial IGCC projects, which in nearly all cases are being proposed by large investor-owned utilities. In contrast, no innovative “hybrid” IGCC/SNG projects being developed by independent project development companies were awarded financial support. We also note that none of the promising advanced coal gasifiers being developed that we are aware of are receiving significant DOE support nor are these advanced gasifier concepts listed in the various technology evolution “road maps” developed by DOE and others. And as we noted above, no Federal programs exist today that would provide financial support for new IGCC project developers seeking to include full carbon capture and sequestration in their projects.MIT’s Future of Coal Study reviewed current DOE clean coal research, development and demonstration programs and outlines one approach to expanding and better targeting these programs. We see MIT’s proposals as a good starting point for discussion, but believe they would not be sufficient to address all research, development and demonstration gaps or “disconnects” we have observed.VI. What Can the Federal Government Do to Accelerate Deployment of Needed Technology?Several Federal actions could accelerate development and deployment of the advanced coal technology needed to address climate change and dramatically reduce coal’s environmental impacts:
- It can avoid most of the adverse environmental impacts associated with coal mining and transportation;
- It leaves coal residuals (ash and some other constituents) underground;
- It can potentially reduce coal gasification costs – perhaps significantly; and
- It can open up large amounts of deep coal reserves that are currently not economic to mine. Lawrence Livermore National Laboratory (LLNL) estimates that UCG could potentially triple domestic economic coal reserves.
- Carbon capture costs may be somewhat lower than with above-ground gasification and a significant fraction of captured carbon can potentially be stored in the underground gasification cavities created by a UCG project.
The recent MIT Future of Coal Study outlines one approach for expanding DOE’s advanced coal programs and suggests that such programs need to be funded at levels as high as $800-$900 million per year. Beyond MIT’s recommendations, it would be useful to review current research and market activity in this field to identify promising technologies that are slipping through the cracks in current DOE programs to help develop more effective programs. It is also critically important that appropriate support be established for developing “breakthrough” technology in critical areas like practical, low cost carbon capture at existing power plants.In summary, I believe that the technology we need to transition coal use to much more environmentally sustainable systems could be either deployed or developed promptly if effective Federal advanced coal technology policies were implemented.
- Establish a production tax credit or some other form of equivalent financial incentives for new coal power plants with full carbon capture and sequestration. These incentives would be in effect until a national carbon emissions reduction program has been established that creates a carbon emissions allowance price sufficient to offset carbon capture and sequestration costs. At current energy project prices, such a production tax credit would likely need to be at least 2.5 cents per kWh.
- Establish a carbon emissions performance standard at some future date for new fossil power plants that would require significant carbon capture and sequestration for new coal power plants.
- Establish effective carbon emissions controls.
- Significantly expand and broaden DOE’s advanced coal research development and demonstration programs.
Mr. Roberto R. DenisSenior Vice PresidentSierra Pacific ResourcesTestimony of Roberto Denis, Senior Vice PresidentSierra Pacific ResourcesBefore theSenate Commerce Subcommittee on Science, Technology and InnovationApril 26, 200710:00 AMIntroductionChairman Kerry, Senator Ensign, members of the committee, thank you very much for the opportunity to be with you today. My name is Roberto Denis and I’m senior vice president of energy supply for Sierra Pacific Resources, a holding company that serves most of the electrical energy needs of Nevada. Our company has been taking significant steps to lessen our carbon footprint while at the same time meeting the ever increasing demand for energy in one of fastest growing regions of the country.There are many factors that make this an especially difficult task. These involve managing the tradeoffs between renewable energy and fossil fuel plants, different fuel types, self generation versus market purchases, the commercial application of current and emerging technologies and of course, the cost of energy to our customers.Company ProfileSierra Pacific Resources is the holding company for two utility subsidiaries, Nevada Power Company and Sierra Pacific Power Company that provide electricity to 1.2 million electricity customers in Nevada and around the Lake Tahoe area of California. We are interconnected to the western transmission grid and are significant participants in the western power markets since we currently purchase about half the energy we deliver. It is noteworthy that Nevada was a major victim of the meltdown in the western markets several years ago when Enron and others were found to be illegally manipulating the power purchase market in California.Our State’s high growth rate is also a very important consideration. We have been adding about 55,000 new customers per year, an annual growth rate of 5%, which is much higher than the electric industry as a whole. Investing to meet this growth is a constant challenge. Our company owns nine power plants with a diverse mix of fuels including coal and natural gas. For ten years, Nevada has had a renewable portfolio standard in place and we have been contracting for geothermal, wind and solar energy and expect to be making direct investments in renewable energy projects as well for years to come. Because of our state’s rapid economic growth plus the hard lessons learned from being over reliant on the power purchase markets during the Enron years, Sierra Pacific Resources is committed to delivering a diverse power portfolio that protects against the volatility of fluctuating fuel costs and swings in the purchased power markets. Over the next several years we intend to invest more than $1 billion annually to add to our generating capacity and build the infrastructure necessary to support the strong growth.Renewable Energy: An Important Source of PowerOur utility in northern Nevada, Sierra Pacific Power Company leads the nation in use of renewable energy as a percentage of total energy consumed. In 1997, Nevada enacted one of the nation’s first Renewable Portfolio Standard (RPS) laws. It required all electric providers in the state to acquire renewable electric generation or purchase renewable energy credits so that one percent of the energy consumption of each utility was produced from renewable sources.In 2001, the state amended the RPS law to become the country's most aggressive renewable portfolio standard. The law then required that 15 percent of all electricity consumed in Nevada be derived from new renewables by the year 2013, with five percent of that amount coming from solar energy. . In June 2005, the Nevada legislature extended the deadlines and raised the requirements of the RPS to 20 percent of sales by 2015. The bill also allows utilities to receive credits toward meeting the state's RPS by investing in certain energy efficiency measures capped at one-quarter of the total standard in any particular year. The law phases in the renewable energy commitment over time as follows: 9 percent by 2007, increasing to 12 percent by 2009, 15 percent by 2011, 18 percent by 2013 and 20 percent by 2015.We are committed to renewable energy and believe that such investment needs to be stimulated; in that regard, we call upon Congress to extend the Investment Tax Credit (ITC) and the Production Tax Credit (PTC) for all types of renewable energy for at least 8 years and to remove the outdated provision which excludes utilities from participating in the ITC for renewables. This nation needs the financial strength of the nation’s utility industry if we are to substantially attract the investment of large sums of capital to renewable energy.This year, state regulators approved three new geothermal contracts that will bring an additional 73 megawatts of renewable energy to our customers. Two major Nevada solar projects, including the largest solar thermal plant built anywhere in the past 15 years, will this year begin delivering a total of 74 megawatts of power. Just this past Monday, I attended an event at Nellis Air Force Base in Las Vegas celebrating the beginning of construction for the largest solar photovoltaic system ever to be built in North America. I can assure that our company, in cooperation with our state leaders, is doing everything possible to be at the forefront of renewables development. By year end, Sierra Pacific Resources will lead the nation in the generation of solar and geothermal energy in relation to total electric energy consumed.Energy Conservation ProgramsSierra Pacific Resources places a high priority on helping our customers conserve energy. It is our goal to achieve 50 percent of our energy savings from our residential customers. Our demand side management (DSM) program will result in the installation of 2 million compact fluorescent light bulbs each year. This is accomplished through a buy down subsidy we provide local retailers who sell these energy saving light bulbs. We perform energy efficiency audits for our customers and help almost 23,000 per year to improve the efficiency of residential AC units. We continue to work with the gaming properties to convert the bright lights along the famous Las Vegas strip to efficient lighting. We have a program to improve energy efficiency of swimming pools and outdoor water features. One quarter of the RPS goal of 20 percent by 2015 may come from DSM programs. Below is a projection of our DSM goals by company.Includes both Sierra Pacific Power Company and Nevada Power Company200720082009Budget36,553,00045,265,00044,886,000MWh Saved205,220242,417233,750Sales MWh28,771,76529,639,96530,756,233Customers1,127,1321,160,9461,195,774$/Customer$32.43$38.99$37.53kWh Save as % of Sales0.71%0.82%0.76%Fossil Fueled GenerationDespite years of experience coupled with one of the most aggressive renewable energy programs in the nation, it must be noted that Sierra Pacific Resources cannot meet our future energy demands solely from new wind, solar or geothermal. By 2008, we expect to be about 75 percent reliant on natural gas as the source of fuel for the power we sell. This dependence is due to the addition of more than 2,800 megawatts of new, efficient combined cycle natural gas generation. We are concerned however about the price stability of natural gas which was the fuel choice for the majority of new power plant additions during the past decade.Ely Energy CenterLast year we announced that we were pursuing the development of the Ely Energy Center, a four unit coal power complex totaling 2,500 megawatt in eastern Nevada. This facility will utilize the newest high efficiency, supercritical boilers, water saving dry cooling and the latest emission-control technologies. The first two, 750-megawatt units located near Ely, Nevada will not be completed until 2011 and 2013, respectively. The project is an important part of our company’s ongoing strategy to maintain a balanced energy portfolio that is in the best interests of the state. Ely will also be the catalyst for the development of more renewable energy resources (particularly wind energy in the mountains of eastern Nevada) by providing transmission access to northern and southern Nevada via a proposed 250-mile transmission line between our two companies. This transmission line that would not be economically justifiable to serve a stand alone renewable energy project. Therefore, this project and its associated transmission should provide the opportunity to develop additional renewable projects that would not otherwise be developed in Nevada.It also is important to point out that, as new generation is developed, Sierra Pacific Resources is decommissioning older, less-efficient coal and natural gas plants, a move that conserves the use of natural resources and mitigates our CO2 emissions. After the Ely facility is built, we are planning to retire three aging coal units at the Reid Gardner Station in southern Nevada. And, with the anticipation of Ely, Nevada Power will not participate in efforts to restart the coal-fired Mohave power plant that was shuttered in 2006. These actions combined with the aggressive development of renewables will insure that even when the first two units of the Ely Energy Center are completed, our company’s carbon footprint will mirror that of a utility that burns 100% natural gas.Climate Change LegislationAs you can tell, we at Sierra Pacific Resources have not been waiting for Congress to impose carbon controls before we developed our own carbon mitigation and reduction program. In addition to striving to meet a 20% RPS goal and replacing our older natural gas units with highly efficient combined cycle plants and building new state of the art supercritical coal units, we have also implemented aggressive energy conservation programs. All of these measures will be needed if we are to face the challenge. Like Sierra Pacific Resources, many other utilities in the nation are also moving to implement carbon reduction strategies.Should Congress eventually conclude however that these voluntary efforts are not sufficient; we would favor federal legislation which imposes an economy wide approach to carbon control with trading mechanisms for allowance distribution. Should Congress impose a cap and trade regime as is reflected in most of the legislation that has been introduced, we believe that caps must be applied with great care to avoid inequitable distribution of carbon allowances.As the fastest growing state for nineteen of the past twenty years and with expected high growth anticipated far into the future, a simple cap would relative to other states, severely and unfairly disadvantage Nevada's economy. Additionally, Nevada has for many years imported a large proportion of its electricity. After the serious market disaster created by the California energy crisis and with all western states growing far faster than the electric supply can accommodate, it is clear that consideration must be given in any capping mechanism to both the historic use of carbon by a utility (really by a group of customers) (whether self generated or not) and the growth of the state's economy. If Congress adopts a cap and trade system, it must allocate carbon emission allowances for growth states (as was done for SO2 allowances in the 1990 Clean Air Act Amendments) and for power purchased and not just self generated. CO2 emission allowances must be distributed taking into account both historic and projected use of carbon.CO2 Capture and Sequestration and IGCC TechnologiesWe particularly urge the Congress to be mindful that the most knowledgeable source about our collective ability to capture and store CO2, the Electric Power Research Institute (EPRI), estimates that even with the most aggressive technology development actions that can be realistically contemplated, there will be NO ability to effectively capture and sequester carbon until at least 2020.Thus, any policy choices that may be made by the Congress should recognize that EVERY economically viable set of generation strategies to serve the electric needs of the US economy until then must include coal, clean supercritical coal or when viable, IGCC. As recognized in the recent MIT study, instead of excluding the most viable domestic energy source, we must focus on seeking technological solutions to mitigate any adverse effect of the current and future use of coal.Much has been said of the recent MIT study on the future of generation in a carbon constrained world. It is important to remember that the MIT study did NOT recommend that the United States should stop building coal fired generation. Its conclusion, with which we agree, was that new coal units must utilize the best commercially available technologies and must be built to accommodate retrofits when new large scale carbon capture and sequestration (CCS) technologies are demonstrated feasible. Our new Ely coal complex will do just that. The first two units are being designed so that when CCS is available we will have a physical facility that can be retrofitted to enable us to capture the CO2 and identified the land for a CO2 storage site. Additionally, we are working with the Electric Power Research Institute (EPRI) and 25 other utilities to fund a pilot-scale demonstration project in Wisconsin of a promising new CO2 capture technology for pulverized coal units. American Electric Power has already announced plans for scale-up of this technology at two of its coal-fired plants in West Virginia and Oklahoma. We hope we will be able to deploy these emerging technologies by the time the final two units of our Ely complex are scheduled to be constructed.While Integrated Gasification Combined Cycle (IGCC) offers promise in the near term, it has been shown to be more economic using eastern bituminous coals. The use of IGCC with western subbituminous coals which have different characteristics and contain higher moisture has not yet been proven commercially viable. Quoting from recent testimony given by EPRI’s Mr. Stuart Dalton:“The COE cost premiums…vary in real-world applications, depending on available coals and their physical-chemical properties, desired plant size, the CO2 capture process and its degree of integration with other plant processes, plant elevation, the value of plant co-products, and other factors. Nonetheless, IGCC with CO2 capture generally shows an economic advantage in studies based on low-moisture bituminous coals. For coals with high moisture and low heating value, such as subbituminous and lignite coals, a recent EPRI study shows PC with CO2 capture being competitive with or having an advantage over IGCC.”The Piñon Pine Clean Coal Technology ProjectIndeed, Sierra Pacific has a history with gasification of coal. In 1992, near Reno, we partnered with US Department of Energy in one of the few western Clean Coal Technology Projects. The Piñon Pine Project attempted to extract synthetic gas from coal under pressure and burn the synthetic gas stream in gas fired turbines. Because of significant challenges, the Piñon Pine Project was not completed until late 2001 and at a cost of $335 million. It was never able to operate commercially because of problems we encountered with the first-of-a-kind technologies used in the plant. Ultimately, the plant was abandoned and converted to a pure natural gas facility. Our company ventured and lost millions of dollars on this experiment.I would like to quote from Dr. Bryan Hannegan’s recent Testimony before the Senate Energy and Natural Resources Committee given on March 22, 2007. In expressing EPRI’s view on the MIT report he said:“EPRI stresses that no single advanced coal generating technology (or any generating technology) has clear-cut economic advantages across the range of U.S. applications. The best strategy for meeting future electricity needs while addressing climate change concerns and economic impact lies in developing multiple technologies from which power producers (and their regulators) can choose the one best suited to local conditions and preferences.”I would also like to submit with my testimony a copy of the EPRI report entitled “Technologies for a Carbon Constrained World” that was first released to the public in February, 2007.ConclusionClearly, innovative technological advances must be supported and encouraged and successful outcomes must be embraced, but in the meantime we should not stop the development of new generation needed to serve customers today and in the immediate future. Walking away from coal-powered generation altogether would mean higher prices for consumers and an even greater national reliance on energy imports. Our nation’s energy independence must include the use of coal, our most plentiful energy resource, in the production of new, environmentally responsible electric generation. We must be careful to avoid arbitrary efforts to pre-ordain winners in the race to develop new generation technologies. Ours is a large and geographically diverse industry and winners must be market driven if we are to best serve our customers. We believe this is an appropriate and responsible approach to addressing environmental concerns while keeping our commitment to deliver reliable power to our customers. Thank you.
 EPRI House Testimony Carbon Capture and Sequestration, March 6, 2007 (Subcommittee on Energy and Air Quality)
Mr. Michael W. RencheckSenior Vice President for Engineering, Projects, and Field ServicesAmerican Electric Power
Dr. Gregory J. McRaeHoyt C. Hottel Professor of Chemical EngineeringMassachusetts Institute of Technology
Mr. John M. WilsonChief Operating Office for the Environmental Systems and Services GroupSiemens CorporationPrepared Statement ofJohn M. WilsonChief Operating OfficerSiemens Environmental Systems and ServicesSiemens Power GenerationBefore the Senate Subcommittee onScience, Technology and Innovationof the Committee on Commerce, Science and TransportationApril 26, 2007Prepared Statement ofJohn M. WilsonChief Operating OfficerSiemens Environmental Systems and ServicesSenate Committee on Commerce, Science and TransportationSubcommittee on Science, Technology and InnovationApril 26, 2007Clean Coal TechnologyGreetings, Chairman Kerry and Ranking Member Ensign and Subcommittee members. My name is John Wilson; I am the Chief Operating Officer of Siemens’ Environmental Systems and Services business unit which was created out of a company with over 90 years of experience in air pollution control technology. I am honored to be here today to discuss the current state of clean coal technology from an infrastructure suppliers’ perspective.Today I am speaking primarily on behalf of the power generation business at Siemens. For the last several years, I was the vice president of strategy for the Power Generation Group, headquartered in Orlando, Florida, and Erlangen Germany, which is a 10 billion dollar segment of Siemens 100 billion dollar global infrastructure business.Before I speak specifically to clean coal issues, I’d like to direct the Subcommittee’s attention to a unique global project and recently published report entitled “Megacity Challenges” that is based upon research conducted by two independent organizations with the support of Siemens. The goal of the project was to carry out research at the megacity level to gather data as well as perspectives from mayors, city administrators and other experts on infrastructure challenges, like energy supply and delivery systems, in which this Subcommittee takes great interest. Over 500 public and private sector experts from 25 cities were interviewed. The results were fascinating, including the projection that by 2030 over 60% of the world’s population will live in cities. The key megatrends identified in this report that are guiding Siemens’ priorities are: healthcare challenges, urbanization and associated mobility challenges, scarcity of clean and reliable natural resources such as clean air and water, and reliable energy supplies. Siemens has been investing in the technologies that address these massive shifts that are driving the current and future needs of society. In addition to the energy infrastructure technologies that I will focus upon today, other examples of our forward-looking technologies include efficient lighting, automation and controls, intelligent traffic controls, water purification and efficient technologies for buildings and rapid transit.Siemens’ power generation business has grown to its current size by consolidating some of the best known names in the power generation industry, such as Westinghouse, KWU, Parsons, Wheelabrator, Bonus Energy, and the Alstom industrial turbine business. Our technology portfolio in this business sector is comprehensive, and we will invest over $600 million in research and development in the next fiscal year in technology enhancements that will improve both efficiency and overall performance.Siemens recognizes that clean coal does not have to be an oxymoron, because there are many technologies that can facilitate the safe environmental use of coal, both today, and into the future, as an integral part of a balanced energy supply portfolio. As part of our strategy, we have been working jointly with the Department of Energy on several key efficiency and CO2 capture technologies which will play a role in the continued use of coal. Areas of cooperative research include:· Development of hydrogen fueled gas turbines for gasification plants, possibly one approach for reducing the carbon footprint of power generation (FutureGen Alliance);· Ion Transport Membrane (ITM) for improved efficiency in gas separation. Efficient, low cost gas separation is a key enabling technology as part of a CO2 mitigation strategy;· Oxy-Fuel Turbine: This is a new turbine design that capitalizes on advances in gas separation and hydrogen turbine design, providing a unique pathway for CO2 separation, and ultimately, CO2 sequestration;· USC (ultra-supercritical) steam turbine materials–developing better materials for more efficient, higher temperature and pressure steam turbines.The continued usage of coal will be an integral part of any solution in power generation in our lifetimes, because coal currently provides 50% of the United States’ generation needs. According to the Energy Information Agency, this usage will grow to almost 60% by 2030. Compare this demand trend to that for renewable energy, which, excluding hydropower, makes up a little more than 2% of capacity in the United States. For some of the world’s largest economies, coal represents the dominant domestic energy resource. Today, Siemens’ generating equipment provides over 25% of electricity worldwide, and we also provide services to our customers to maintain and upgrade their equipment.The United States’ fleet of 325,000 megawatts of coal-fired generating capacity was built over generations, and cannot be replaced quickly. Unlike commodities or consumer goods, power plants are massive in scale, take years to build, and require decades to recover their costs. Economics and regulatory requirements demand that we efficiently extract the most energy from this installed base. Currently, in the United States, the average age of a coal fired power plant exceeds 40 years (and is increasing).SOX, MERCURY, NOX AND PARTICULATE MATTERToday with appropriate engineering design, we can routinely reduce criteria pollutants from these existing power plants by 90% compared to an uncontrolled power plant; for some pollutants 99% reduction is the norm. Modern air pollution control technologies that are readily available today, with no substantial investment in research and development, can reduce emissions of criteria pollutants from any coal fired plant to levels that are projected to be achieved by Integrated Gasification Combined Cycle (IGCC) plants. The attached table in Appendix One compares the performance of retrofit air pollution controls to IGCC performance. Even though the performance is basically the same at this point, Siemens recognizes the need to invest in multiple technological pathways, and so Siemens not only provides the technology for the world’s highest efficiency supercritical steam power plants, along with total emissions controls, it also has gas turbines and gasification technology for IGCC plants (to be discussed later herein).Although substantial fossil fuel plant upgrades are available, in fact very little of the fleet has the emissions control that would be required for a new power plant. For example, while most units have particulate controls, about one-third of capacity has SO2 scrubbers, most have low-NOx burners, and only one-third of the capacity in the Eastern United States has advanced NOx controls. Our business in retrofitting SO2 air pollution controls to existing plants has recently boomed in the US, with many states regulating existing units under consent decrees.Today, all new plants will include either wet or dry flue gas desulphurization as required by the Clean Air Act Amendments. Trading in SO2 credits is an incentive for the implementation of new, high efficiency flue gas desulphurization (FGD) systems. FGD systems also efficiently recycle the sulfates extracted from the process streams. Over 90% of the sulfates extracted from FGDs are recycled for use as wallboard in the construction industry. The largest single-stage FGD system in the United States utilizes Siemens” technology, and was installed at the Big Bend Plant near Tampa, Florida.In addition to sulfur, burning coal can generate a great deal of particulate matter, or dust. The technology of capturing dust has been available for decades as electrostatic precipitators -- or bag houses – that have been widely applied in the power generation sector. According to the American Coal Ash Association, nearly 71 million tons of fly ash is collected today, with over 40% of this is recycled for uses in concrete products, cement, and agriculture.More recently, small particulate matter and aerosols less than 2.5 microns in size have been identified as serious health hazards, and therefore, to meet even tighter ambient air quality standards, there has been a renewed interest in improving the performance of these emission control devices. Siemens emissions control technology products include wet electrostatic precipitator (WESP) designs that can meet the most stringent requirements. WESPs and bag house filtration systems can yield greater than 99% particulate capture and achieve compliance with the most stringent air quality requirements.Mercury is a unique chemical element exhibiting no health benefits at any concentration (lead is another); mercury can damage the central nervous system, endocrine system, kidneys, and other organs. In the United States, mercury has been identified as a hazardous air pollutant to be regulated. Today, coal plants in the United States emit between 30 and 50 tons of mercury per year. Siemens provides technology to capture mercury, incorporating some of the same design features for particulate capture.NOx, which contributes to visible smog and is a respiratory health concern, is also emitted from automobiles and is one of the more challenging pollutants to control because it is formed from the nitrogen and oxygen in the atmosphere at high heat. Several technologies are now available for NOx control, including third- and fourth-generation low NOx burners that minimize the creation of NOx, and selective catalytic reduction technologies, or multi-pollutant technologies, that convert NOx back to stable nitrogen and water vapor. Siemens offers new, advanced burner designs to reach 75% NOx reduction compared to uncontrolled emissions, and can provide advanced catalysts, or multi-pollutant technology, to reduce NOx by over 95%.
CARBON DIOXIDE AND OTHER GREENHOUSE GASESAny fossil fuel used in any application will have CO2 emissions associated with the process. Because of CO2’s potential role in global warming, reducing or mitigating emissions is a central strategy for Siemens. Siemens offer the tools to manage all the emissions from power plants. And while emissions of CO2 are linked to climate change, other emissions including methane and particulates are also factors of concern for climate change. The technology to address emissions of criteria pollutants that impact climate change (NOx, CH4, particulates) are available as described above.Carbon dioxide, however, is radically different. None of the current capture technologies that are used for the priority pollutants can be directly applied to CO2 capture. The best way today to address the reduction of CO2 in the power generation fleet is the same as for automobiles, by essentially increasing the output of the fleet without increasing the fuel used. The current United States fossil fleet operates at approximately 33% efficiency (with the remainder of that energy lost as heat to the environment). If we could improve that fleet efficiency by even just one percentage point, we could reduce CO2 emissions by 50 million tons per year, with no loss in net generation. The most efficient coal plants today can reach well over 40% efficiency, and if the entire United States fleet were operating at that efficiency, nearly one-quarter of the CO2 emissions from power generation would be eliminated. Siemens offers advanced technology to improve the efficiency of any power plant, thus indirectly reducing the CO2 generated for each unit of electricity produced.INTEGRATED GASIFICATION COMBINED CYCLE (IGCC)As an alternative to the discussed technologies to capture emissions post-combustion, some of the next generation of clean coal power plants are proposing pre-combustion coal gasification to capture these same pollutants during the fuel processing steps. The most desirable part of the fuel is the energy content in the form of CO and hydrogen, which is extracted in gasification, leaving behind most of the pollutants. Siemens offers gasification for applications such as power generation (IGCC) as well as for production of synthetic fuels.Siemens has demonstrated 320,000 hours of gas turbine operation with gasification processes at scales ranging from 8 MW to over 300 MW. Our current product strategy is to provide a 630 MW IGCC plant here in the United States. To broaden its portfolio in this sector, Siemens recently acquired one of the longest demonstrated and commercially offered technologies for gasification for the production of petrochemical liquids or for conversion to synthetic natural gas, and for power generation applications.The DOE clean coal initiative has focused on pre-combustion capture of emissions, along with CO2 capture. The debate on pre-combustion versus post-combustion capture has now fully developed, with the industry planning demonstration projects for both technologies underway. One feature of gasification is that carbon can be effectively extracted from the concentrated high pressure gas stream leaving the gasifier, resulting in reduced energy losses and less adverse impact on the cost of electricity. Post-combustion capture operates similarly using solvents, like an amine, or ammonia, to capture the CO2 from the exhaust gases at much lower pressures, after they have had all the other pollutants removed. Neither of these processes has been commercially demonstrated on a full-scale power generation facility, however we are working to demonstrate this application on existing power plants.Nearly every scenario we have explored reveals that all CO2 recovery comes at a cost of energy, sometimes substantial amounts of energy. Increased research, along with demonstration projects are needed to find ways to reduce the energy intensity of CO2 capture and removal for both pre -combustion and post-combustion capture. Equally important, we must also resolve the issue of carbon storage, because if there is no long-term storage for the carbon, then CO2 capture and recovery is moot. We agree with the MIT study, The Future of Coal, that CO2 Capture and Storage (CCS) is “the critical enabling technology that would reduce CO2 emissions significantly while also allowing coal to meet the world’s pressing energy needs”.As an Original Equipment Manufacturer (OEM), we are also aware that our customers and end-users are sometimes reluctant to upgrade or repair facilities to improve plant efficiency which may trigger new reviews. Output-based efficiency standards could be used as a tool to encourage upgrades and to improve environmental and output performance. Such an approach has been used for gas turbine emission regulations in the recent New Source Performance Standards updated in February 2005.To close, Siemens believes that there are currently many technologies to provide the nation with cleaner coal power generation, and that what is needed is a meaningful commitment from the Government to encourage greater efficiencies. We urge increased support for research, development and deployment of more efficient end-use technologies, low or zero-emitting technologies, and cost effective carbon capture and storage technologies. We also urge support for incentives to encourage private sector risk taking for the development and deployment of these technologies.Appendix OneComparison of Retrofit Projects and IGCCParameterUnitsRecent AQCSIGCCSO2% Removal95 - 9999SO2Lb/MMBtu0.03 - 0.180.03PMLb/MMBtu0.010 – 0.0150.011PM10Lb/MMBtu0.015 - 0.030.011HCLLb/MMBtu0.00001 - 0.0030.0006HCL% Removal97 - 9895HFLb/MMBtu0.00001 - 0.00026N/AMercuryLb/TBTu0.28 - 2.20.56-0.74LeadLb/TBTu0.9 - 16.210.2