[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
THE ROLE OF COAL IN A NEW ENERGY AGE
=======================================================================
HEARING
before the
SELECT COMMITTEE ON
ENERGY INDEPENDENCE
AND GLOBAL WARMING
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
APRIL 14, 2010
__________
Serial No. 111-16
Printed for the use of the Select Committee on
Energy Independence and Global Warming
globalwarming.house.gov
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SELECT COMMITTEE ON ENERGY INDEPENDENCE
AND GLOBAL WARMING
EDWARD J. MARKEY, Massachusetts, Chairman
EARL BLUMENAUER, Oregon F. JAMES SENSENBRENNER, Jr.,
JAY INSLEE, Washington Wisconsin, Ranking Member
JOHN B. LARSON, Connecticut JOHN B. SHADEGG, Arizona
HILDA L. SOLIS, California GREG WALDEN, Oregon
STEPHANIE HERSETH SANDLIN, CANDICE S. MILLER, Michigan
South Dakota JOHN SULLIVAN, Oklahoma
EMANUEL CLEAVER, Missouri MARSHA BLACKBURN, Tennessee
JOHN J. HALL, New York
JERRY McNERNEY, California
------
Professional Staff
Michael Goo, Staff Director
Sarah Butler and Aliya Brodsky, Chief Clerk
Bart Forsyth, Minority Staff Director
C O N T E N T S
----------
Page
Hon. Edward J. Markey, a Representative in Congress from the
Commonwealth of Massachusetts, opening statement............... 1
Prepared Statement........................................... 3
Hon. F. James Sensenbrenner, Jr., a Representative in Congress
from the State of Wisconsin, opening statement................. 5
Hon. Jay Inslee, a Representative in Congress from the State of
Washington, opening statement.................................. 6
Hon. Marsha Blackburn, a Representative in Congress from the
State of Tennessee, opening statement.......................... 7
Hon. Emanuel Cleaver II, a Representative in Congress from the
State of Missouri, prepared statement.......................... 7
Hon. Shelley Capito, a Representative in Congress from the State
of West Virginia, opening statement............................ 8
Hon. John T. Salazar, a Representative in Congress from the State
of Colorado, opening statement................................. 10
Hon. John Shadegg, a Representative in Congress from the State of
Arizona, opening statement..................................... 10
Prepared Statement........................................... 12
Hon. John Sullivan, a Representative in Congress from the state
of Oklahoma
Prepared Statement........................................... 14
WITNESSES
Mr. Gregory Boyce, Chairman and Chief Executive Officer, Peabody
Energy......................................................... 16
Prepared Statement........................................... 19
Answers to Submitted Questions............................... 119
Mr. Steven F. Leer, Chairman and Chief Executive Officer, Arch
Coal, Inc...................................................... 53
Prepared Statement........................................... 55
Answers to Submitted Questions............................... 123
Michael Carey, President, Ohio Coal Association.................. 65
Prepared Statement........................................... 67
Preston Chiaro, Chief Executive for Energy and Minerals, Rio
Tinto.......................................................... 93
Prepared Statement........................................... 95
Answers to Submitted Questions, Mr. Jeff Hopkins............. 126
HEARING ON THE ROLE OF COAL IN A NEW ENERGY AGE
----------
WEDNESDAY, APRIL 14, 2010
House of Representatives,
Select Committee on Energy Independence
and Global Warming,
Washington, DC.
The committee met, pursuant to call, at 9:37 a.m., in room
210, Cannon House Office Building, Hon. Edward J. Markey
(chairman of the committee) presiding.
Present: Representatives Markey, Inslee, Cleaver, Salazar,
Speier, Sensenbrenner, Shadegg, Sullivan, Blackburn, and
Capito.
Staff present: Ana Unruh Cohen, Morgan Gray, and Jonah
Steinbuck.
The Chairman. Good morning and welcome to the Select
Committee on Energy Independence and Global Warming. This
morning the Select Committee is meeting to assess the present
state of the coal industry and to explore how coal can continue
to play a role in a new energy age.
Coal was mined in this country before it even was a
country. The first 13 States appeared on a United States flag
after coal mines appeared on our maps. Coal has helped power
America for nearly 300 years. And just like millions of other
American families over the years, the Markeys had a close
personal relationship with coal. After my grandfather got off
the boat from Ireland in 1902, he got a job hauling coal for
the Locke Coal Company in Malden, Massachusetts for the next 30
years. And when I was a boy I spent many cold winter mornings
shoveling coal into our furnace at home.
Much has changed since those days. We are entering a new
energy age, an age in which technology is making it possible to
harness energy from the wind, the sun, the atom, shale gases
and efficiency measures. Today many Americans are asking if
coal is safe enough, if coal is healthy enough, and if coal is
innovative enough to be part of our shared clean energy future.
Nine days ago in the Upper Big Branch Mine in West
Virginia, 29 miners lost their lives. The incident reminds us
that mining coal is a dangerous job performed by courageous
people. We owe it to the fallen miners and their families to
take a harder look at the entire structure of mining safety,
and today our prayers go out to the families of those who lost
their lives and to all coal miners.
The public is also concerned about how safe the mining and
burning of coal is for our environment and for our health. From
the effects of mountaintop removal to air pollution that causes
asthma and other health effects to mercury levels that spike
near coal fired power plants and catastrophic releases of fly
ash, coal faces a myriad of environmental challenges.
And finally, the burning of coal also releases carbon
dioxide, which traps heat and is causing the Earth's
temperature to rise. Climate change is a serious problem, and
yet some in the coal industry deny that the problem of global
warming even exists and have contributed to organizations that
spread doubts about science and policy. That has led many to
believe the industry is not committed to finding a solution to
our pollution problems.
Meanwhile, the challenges from coal's competition are
growing. Last year coal's share of America's electricity
generation dropped from 49 percent to 44 percent due to
increased competition and decreased demand. In 2009, 40 percent
of all new electricity capacity built was from wind, roughly
the same as natural gas. Meanwhile no new coal plants broke
ground.
While the rest of the energy world is already moving to a
lower carbon future, people wonder whether the coal industry is
stuck in another time.
When Henry Waxman and I were crafting the Waxman-Markey
bill that passed the House last June, we worked with several
members from coal States to better understand the challenges
faced by the coal industry and how to respond to those
challenges. That is why we dedicated $60 billion in assistance
to the coal industry to help design and build the carbon
capture and sequestration plants the industry so desperately
needs. And so the question on the future of the coal industry
is whether the coal industry and coal burning utilities will
embrace innovation, or stand pat and fight change. We have seen
this before. The American automotive manufacturers successfully
resisted new fuel economy standards, claiming that the
technology to turn gas guzzlers into fuel sippers was neither
available, affordable, nor preferable. And eventually the folly
of their strategy of delay became clear. Consumers abandoned
their products and two of the three major American automotive
companies received a U.S. Government bailout in order to
survive.
Today, with the future of the coal industry in your hands,
I challenge you to join us in charting a new path forward to
prevent a perilous outcome for your industry and for the
planet, and I ask that you cease efforts to deny the science,
the global warming, and to stop spending millions of dollars in
misleading the public as to the true science behind climate
change. I ask that you embrace the provisions of the Waxman-
Markey bill that light the way for your industry in the years
ahead and that provide your industry with the billions of
dollars of financial assistance to help transition to a low
carbon economy.
I believe that there is a successful future ahead for the
coal industry centered on safer and cleaner practices for your
fuel, for your workers, and for the Earth. I look forward to
your testimony, and I thank you for coming.
Let me now turn and recognize the ranking member of the
committee, the gentleman from Wisconsin, Mr. Sensenbrenner, for
an opening statement.
[The prepared statement of Mr. Markey follows:]
[GRAPHIC] [TIFF OMITTED] T2589A.001
[GRAPHIC] [TIFF OMITTED] T2589A.002
Mr. Sensenbrenner. Thank you very much, Mr. Chairman. Like
most Americans, I believe that there can and should be a proper
balance between economic prosperity and environmental
sustainability. Everyone wants clean air and clean water and no
one wants a sky high electric and tax bill. But cap-and-tax
programs don't come close to striking this balance. The huge
reliance on offset means that emissions will merely shift
overseas, and every study has shown that cap-and-tax will cause
increases in utility rates, gas prices, and other economically
essential activities.
One statistic from the National Association of
Manufacturers demonstrates the greatest danger of cap-and-tax,
3 to 4 million lost jobs. This is not the balance the American
people are demanding, especially when nearly 15 million
Americans are unemployed.
Coal is the most abundant energy resource in the United
States and it generates nearly half of our country's
electricity. Coal power plants built today emit 90 percent
fewer pollutants like sulfur dioxide, nitrogen oxide, and
mercury than plants built in the seventies. Emissions from coal
power plants has dropped 40 percent since the seventies,
despite the fact that coal use has tripled and the United
States has nearly one-third of the world's total coal.
Last week the World Bank approved funding for a new coal
fired power plant in South Africa. There was heavy criticism
from some environmentalists about this project, but the World
Bank officials said that the benefits clearly outweighed the
concerns. Faced with frequent blackouts and an aging
infrastructure, the South African Government said that the
energy reliability of the plant would lift the economy and the
standard of living for South Africans.
The U.S. Treasury Department also noticed that there were
no near-term viable low carbon energy alternatives for South
Africa. Coal is the only resource that could possibly keep this
Nation's economy on track. Despite this realization the United
States abstained from the World Bank vote.
China is the world's biggest user of coal, burning nearly
three times more than the U.S. China is also the world's
largest emitter of carbon dioxide, but China is not willing to
commit to an international agreement to cut CO2
emissions.
The administration is trying to sell cap-and-tax on the
false premise that it will create so-called green jobs. The
President is correct when he says that his proposal to impose
higher energy prices on American manufacturers will create
jobs, but those jobs won't be green. However, they will be red.
As China's reliance on coal continues to grow with the surging
economy, cap-and-tax will kill United States manufacturing and
ship even more of our precious jobs to China.
It is neither advantageous nor possible to abandon coal,
but that is precisely what cap-and-tax proposes to do. The
policy is proof that President Obama intends to make good on
his campaign promise when he said, ``If someone wants to build
a coal-fired power plant they can, it is just going to bankrupt
them because they are going to be charged a huge sum for all
that greenhouse gas that is being emitted.''
At least for the foreseeable future the world cannot meet
its energy demands without coal, but the new technology can
help lessen the environmental impacts of coal use. Researchers
continue to advance carbon capture and storage technology,
which holds the potential to drastically cut CO2
emissions from coal use. The test project at the We Energies
power plant in Pleasant Prairie, Wisconsin, last year
successfully captured 90 percent of carbon dioxide emissions.
As we speak, groundbreaking will begin on another test project
in Bucks, Alabama. The 25 megawatt Barry power plant is
expected to capture between 100,000 and 150,000 metric tons of
carbon dioxide per year. The CO2 will be transported
by pipeline to a site about 10 miles away where it will be
injected for permanent underground storage in a deep saline
geologic formation. This project will attempt to demonstrate
start to finish carbon capture and storage and is one of the
most important test projects underway that will advance
development of this critical technology.
While carbon capture is part of the energy balance that
Americans demand, so are proven technologies like nuclear power
and renewable technologies like wind and solar. Americans want
a healthy mix of energy technologies that keep the environment
clean and the economy humming, and that is why Republicans have
always supported an all of the above approach to energy.
I would like to welcome our witnesses today, and I look
forward to the testimony of Ohio Coal Association President,
Mike Carey, who will tell us more about the importance of coal
in his State and for our country and about President Obama's
war against coal.
I have to apologize for leaving this hearing, but the
Constitution Subcommittee, which I am also the ranking member
of, starts at 10 o'clock. So I will read the testimony and I
will help defend the Constitution in the meanwhile. So thank
you.
The Chairman. I thank the gentleman very much.
The chair recognizes the gentleman from Washington State,
Mr. Inslee.
Mr. Inslee. Thank you. I really appreciate the leadership
being here in this industry. I just want to note three
headlines that are in the papers in the last week. One 2 days
ago a glacier collapsed in Peru, crashed into a lake, caused a
tsunami, destroyed 20 homes, and injured 50 people. A third of
the glaciers in Peru in the Andes have now disappeared because
of climate change.
Second headline, two more glaciers disappeared in Glacier
National Park. Glacier National Park will be glacier free
within a century if climate change continues unabated.
Third headline, 29 miners lost their lives in the Upper Big
Branch Mine in West Virginia. And I think those three stories
have something in common, which are the cost of coal without
sequestering carbon dioxide.
I appreciate these leaders being here because I want to
note another person in the coal industry, Mr. Don Blankenship,
who I understood said something to the effect that safety
regulators intent to think they are going to protect the safety
of miners is ``as silly as global warming.'' A lot of people
have lampooned that statement, but it is actually very true.
Mining safety is as silly as global warming; they are both
deadly serious and they are not silly at all. And we have some
leaders here if you decide to join with us to try to find a way
to have a policy that will allow coal to be burned in a way
that does not put massive amounts of CO2, does not
treat the atmosphere as a garbage dump, it in fact buries it
underground if you will support those efforts. If you will take
this lifeline that we have now sent the industry in this bill
by sending you billions of dollars to support that research and
development, coal can have a future. If you don't, it won't.
And we are hopeful that we can have a discussion today about
the way you can help us find a way to see if there is a way to
sequester CO2 safely. If not, we are going to go the
way these glaciers are and we are going to see more of those
headlines.
Thank you.
The Chairman. The gentleman's time has expired. The chair
recognizes the gentlelady from Tennessee, Ms. Blackburn.
Mrs. Blackburn. Thank you, Mr. Chairman. I want to join
with others who are extending our sympathies and our thoughts
to the families that have been affected by the mining disaster
in West Virginia. I know my colleague and others are very
concerned and are closely working with those affected families.
I also want to thank you for the hearing that we have today
and thank the witnesses for being here to testify about the
future of coal. We have heard some of the innovative clean coal
technologies, the carbon sequestration that is there. These are
important to those of us who support the use of coal and are
concerned about having the ability to continue to use this
natural resource as we look at our Nation's energy supply. We
have to realize that domestically produced coal directly
employs over 70,000 Americans and it does contribute hundreds
of billions of dollars to our national economy each and every
year. With vast coal resources, the U.S. has a secure source of
energy not subject to foreign embargoes or cartel driven
pricing. It is enough for the next 200 years. And Mr. Markey
has already highlighted 300 years of use with this product that
is right here on American land.
As a chief source of energy coal power contributes
significantly to our high standard of living, quality of life,
by producing abundant inexpensive heat and power. Certainly
those of us in Tennessee are appreciative for the use of coal
and realize that we are receiving electricity that is generated
by TVA; 40 percent of their capacity is generated by coal.
Since the founding of our republic coal has played a
critical importance in our economic and our technological
processes, and we are looking forward to how that is going to
continue and move forward.
We welcome you and I yield back.
The Chairman. Great. We thank the gentlelady. The gentleman
from the State of Missouri, Mr. Cleaver, is recognized.
Mr. Cleaver. Thank you, Mr. Chairman. Let me first of all
welcome Gregory Boyce and Steven Leer, both of whom are from
the State of Missouri. We welcome you to the committee hearing,
and then I will also associate myself with the comments of the
gentlewoman from Tennessee, Ms. Blackburn, in expressing
sympathy with and concern about the people in West Virginia,
Mrs. Capito's district. And while I know that there is a great
deal of push on what is referred to now as Climategate, that
there were those who were hiding data. And then when you add to
it the unusual winter we had even here in Washington, there are
those, the climate change sceptics who say, you know, this is a
big hoax. Although it is counterintuitive, the truth of the
matter is that we have more snowstorms when it is warmer. And
we also, I think, should be aware of the fact that the Center
for American Progress says that in spite of what happened here
in Washington and in areas here on the East Coast, January was
the coldest January we have had since records have been kept
globally.
And so I think we do have an issue that we need to deal
with, and China has 80 percent of its energy supply coming from
coal, 40 percent of the U.S. energy comes from coal. It is
going to be around for a while, there is no question about it.
But just as we look at the tragedy in West Virginia, I think
there are some exciting things happening in West Virginia as
well that I hope others can look at, particularly even in my
own State the American Electric Power's Mountaineer coal plant
in West Virginia is doing some remarkable research in terms of
being able to direct the CO2 underground and they
hope to have a commercial scale demonstration by 2015. It would
be interesting and productive and positive I think for us to
discuss the possibility of whether that is exclusively a West
Virginia deal that can't be reproduced elsewhere or whether it
in fact is something that we can export from West Virginia
across the country.
We have some unique problems in the Midwest, but we are a
heavily coal using area of the country, and I think that if we
all work together facing the reality that the planet is getting
warmer, that we do have an increase in the greenhouse gases in
our atmosphere, and we can all work together to do something
about it.
Thank you, Mr. Chairman. I yield back the balance of my
time.
The Chairman. I thank the gentlemen very much.
The chair recognizes the gentlelady from West Virginia, Ms.
Capito, and again we extend the sympathies of the entire
committee to your State.
Mrs. Capito. Thank you, Mr. Chairman. I thank the
witnesses. And as a native born West Virginian I want to thank
everybody here and really throughout the Nation who have
extended their deep sympathies to us for this latest tragedy.
It is gut wrenching and it is really difficult. In a small
State we have a great sense of community, and so we all feel
it. I appreciate everybody extending their prayers and good
wishes to the families.
Last week's mine disaster at Montcoal, at the Upper Big
Branch Mine, which killed 29 miners, was the worst mine
disaster in 40 years. But just 4 years ago, 12 miners were
killed in the Sago Mine in my own district. With this
investigation going on and further details that are coming
forward, we must continue our commitment to keep miners safe
and safety first. We cannot permit this, and we have to prevent
this from happening again.
The Upper Big Branch Mine disaster only furthers people's
questions of coal mining and has led many to discuss the future
of coal. As we have heard today, coal is a primary source of
energy throughout the world. Our fast growing countries, and I
would be interested to hear the gentleman's testimony on how
much they are exporting to China and India, rely on coal to
fuel their energy demands. But here in the United States coal
is our most abundant domestic resource with recoverable
resources sufficient to last 250 years. Coal currently fuels 50
percent of our electricity in this country.
In my State of West Virginia coal power is 98 percent of
our electricity. Nationwide it provides 125,000 direct well
paid jobs for the U.S. coal miners and supports hundreds of
thousands of additional jobs throughout the supply chain.
While considering the future of the coal and the global
warming debate, the thing we need to consider and we need to
remember is that climate change and energy policies are
inextricably linked with economic, environmental, and social
issues. Last year the House passed the American Clean Energy
and Security Act; I did not support this legislation because I
believe it stood to push energy prices upward and threaten an
economy that is already in trouble. I also was displeased with
the way I felt it set up winners and losers across this
country. A tax increase on carbon dioxide emissions will
directly come out of consumers' pockets in the form of higher
electricity rates. Manufacturing output would also fall
considerably. Manufacturing firms, who have traditionally
relied on low and stable electric rates in our States, would be
subject to massive cost increases, likely forcing them out of
business or at least to relocate their operation overseas. We
are seeing that now in any case.
Instead, we need to do much more to accelerate the
development of advanced clean coal technologies and, most
importantly, CCS.
Carbon capture is important to West Virginians in ensuring
our Nation's energy independence. Without it we deprive
ourselves of the important effective tool for addressing
CO2 emissions from coal. We need to provide
sufficient funding and incentives to accelerate the
development, demonstration, and broad commercial deployment of
CCS technologies.
As my colleague from Missouri mentioned, the AEP plant in
New Haven, West Virginia represents a milestone in our efforts
to bring CCS on line. That is actually in my district. The
facility began operations last fall, captures and stores
approximately 100,000 metric tons of CO2 per year.
It is a first demonstration at an existing coal-fired plant.
The implementation of this technology will not only benefit a
State like mine with jobs in technology and revenue, it will
also benefit our Nation by making clean coal a reality.
In addition to climate change, coal has been the subject of
continued Federal scrutiny for its impact on water quality.
Recent action by the President's administration and the EPA to
further scrutinize mining permits only confirms an anti-coal
agenda. The minority staff on the Senate Committee on
Environmental and Public Works initiated an investigation into
EPA's handling of Clean Water Act Section 404 permits for coal
mining in Appalachia and found that in 2009 EPA froze 235 coal
mining 404 permits, claiming that additional time was needed to
assess the environmental impacts of mining operations. Since
the initiation of this investigation, EPA issued 45 of the 235
permits. And today there are 190 permits that EPA continues to
hold for operations, including surface, underground and refuse
operations.
Furthermore, decisions being made by Federal environmental
regulators are not focused enough on the importance of coal to
the economy. In my conversations with Lisa Jackson, the head of
the EPA, she said that she explicitly omits economic
considerations from her decision-making process. I find this
particularly troubling. The EPA's delays in handling these
permits is already jeopardizing jobs in Appalachia and is
weakening our energy security.
Even more disturbing, on March 26, EPA announced their
intent to veto the existing Spruce Mine permit. The decision by
the EPA to veto the Spruce permit brings into question the
reliability of the entire permitting process and shows their
complete disregard for the impacts it will have on our Nation's
economy and on my State in particular. And I think it reeks of
a lack of a sense of fairness.
I look forward to hearing the testimonies from the panel.
Thank you.
The Chairman. The gentlelady's time has expired. The chair
recognizes the gentleman from Colorado, Mr. Salazar.
Mr. Salazar. Thank you, Mr. Chairman. I do appreciate your
having this hearing today. I am pleased to have three of
Colorado's largest employers sitting in front of us here today.
Arch Coal, Peabody, and Rio Tinto all provide much needed jobs
in the Third Congressional District. Thank you very much for
what you do for Colorado.
The State of Colorado is home to 407 mining operations, and
provides employment for nearly 45,000 Coloradans. Mining jobs
in Colorado are high paying jobs, 43 percent higher than the
average wage in the State. The average annual wage in the
mining industry in Colorado was 65,000 in 2007. Total direct
earnings from the State of Colorado's mining payroll were $810
million. Clearly this is a sizable contribution to our State,
particularly now at a time when jobs and income are at a
premium.
I think we all know that coal is not the only and final
answer to energy independence, but we should realize that it
must and it will play a valuable role in providing energy to
our country, as it is one of America's most abundant natural
resources. We must continue to invest financial resources in
research and development for all potential clean energy
sectors, such as biofuels, solar, wind, algae, and carbon
capture and sequestration.
Mr. Chairman, I want to thank you for holding this hearing
once again and I think it is vitally important that coal remain
a source of energy, but we must do everything that we can to
minimize the carbon footprints that many mines and plants may
leave behind. I refer to one of your comments in your opening
statement where you mentioned that there was over $60 billion
provided for the coal industry for clean coal burning
technology, I believe. It is my understanding that the bill
only secured $4\1/2\ billion, but maybe I am mistaken.
Thank you.
The Chairman. No, I thank the gentleman. The gentleman's
time has expired. Inside the Waxman-Markey bill there is $60
billion actually.
Mr. Salazar. Sixty billion?
The Chairman. Yes, at least $60 billion, to be honest with
you.
The Chair recognizes the gentleman from Arizona, Mr.
Shadegg.
Mr. Shadegg. Thank you, Mr. Chairman. I request unanimous
consent to insert my opening statement into the record and not
read it here in full in the interest of time for our hearing.
The Chairman. Without objection, so ordered.
[The statement of Mr. Shadegg follows:]
[GRAPHIC] [TIFF OMITTED] T2589A.003
Mr. Shadegg. I do want to thank all of the witnesses for
being here and for their testimony today to help us answer what
I think is a critically important question. I particularly want
to recognize Peabody Energy, which operates in Arizona and
produces coal there and provides thousands of jobs in Arizona,
as well as Rio Tinto, which does not mine coal in Arizona but
does mine copper in Arizona, also contributing to our economy.
With respect to coal, coal is as I think we all know an
important natural resource whose production creates many jobs
for American workers. The United States has the largest natural
coal reserves in the world, representing 28 percent, I believe,
of the global reserves. It is America's most abundant energy
resource. We have approximately 270 billion tons of coal
reserves, enough to last well over 250 years.
How we handle this resource is vitally important. If we
mishandle it and impose restrictions on it which drive its
costs through the roof or make it unaffordable, then we will
all as a nation pay a price. Any tax that we impose on carbon
will be passed on to the consumers of the energy that carbon
producing fuel produces and will be absorbed by those consumers
and do damage to the economic viability of the companies who
rely upon it.
Obviously we have a duty to be careful in our conduct and
to carefully examine the issue. The questions about global
warming need to be examined carefully and thought through
thoroughly. David Sokel of Midamerican Energy Holdings
testified before the Energy Committee earlier this year that he
could meet every single carbon goal in the Waxman-Markey
legislation but that by doing it through that legislation we
were doubling the cost. It seems to me we cannot do that to our
Nation at this particularly difficult and challenging economic
time. We need those jobs and we need that energy.
With that, Mr. Chairman, I yield back.
They don't work, they just don't work.
The Chairman. No, they don't. The Budget Committee----
Mr. Shadegg. Can't afford mikes.
The Chairman. Whose hearing room has not properly funded
their communications system. We thank the gentleman.
So that completes opening statements from the members.
[The prepared statement of Mr. Sullivan follows:]
[GRAPHIC] [TIFF OMITTED] T2589A.004
[GRAPHIC] [TIFF OMITTED] T2589A.005
The Chairman. And to just take a brief moment here, today
is the last hearing for our Chief Clerk, Ali Brodsky. She has
overseen every single hearing of the Select Committee since its
inception, from the top of Cannon Mountain in New Hampshire to
today in the Cannon Building. Ali has been our constant. We
wish her all the best as she leaves to join Teach for America
in Chicago. And as proof of her dedication to the Select
Committee, she is flying there tonight and still came here
today to oversee and run this last hearing. So, Ali, the
committee owes you our thanks for your exemplary public
service. Thank you so, so much for everything that you have
done.
So now we will turn to our witnesses and we thank them for
being here. Our first witness is Mr. Gregory Boyce. Mr. Boyce
is the Chairman and Chief Executive Officer of Peabody Energy.
Peabody is the world's biggest private sector coal company with
customers in 23 countries and six continents. Mr. Boyce joined
Peabody in 2003 as President and Chief Operating Officer and
has extensive United States and international management
operating and engineering experience. We look forward to your
testimony, Mr. Boyce. Whenever you feel comfortable, please
begin.
STATEMENTS OF GREGORY BOYCE, PRESIDENT AND CEO, PEABODY ENERGY
CORPORATION; STEVEN F. LEER, CHAIRMAN AND CEO, ARCH COAL, INC.;
PRESTON CHIARO, CHIEF EXECUTIVE FOR ENERGY AND MINERALS, RIO
TINTO; AND MICHAEL CAREY, PRESIDENT, OHIO COAL ASSOCIATION
STATEMENT OF GREGORY BOYCE
Mr. Boyce. Well, good morning, Chairman Markey and
distinguished members of the committee. On behalf of all of
Peabody employees, we also extend our thought and prayers to
the fallen miners in West Virginia.
You have asked me to discuss the role of coal in a new
energy age, and it is my privilege to speak to a topic of vital
importance to the American people, the U.S. economy, and the
world.
I am Chairman and CEO of Peabody Energy, the world largest
private sector coal company, a global leader in clean coal
solutions and, Mr. Chairman, I also agree that we can provide a
safer and cleaner path for coal in the future. My testimony
will focus on what I believe are the three top issues we face
as a society, energy, the economy, and the environment. We call
them the three Es. Coal plays an enormous role in solving each.
I will take these one at a time.
Energy security coal is a future fuel to provide clean
made-in-America energy and we have the world's largest supply
running at our feet.
Economic stimulus, greater deployment of clean coal
technology will reindustrialize the U.S. economy to create jobs
and infrastructure.
And environmental solutions, coal with carbon capture and
storage or green coal is a low cost, low carbon energy
solution.
As we contemplate decisions that will affect every American
and every global citizen, let me start with the macro view. Mr.
Chairman, everyone here today is a member of the so-called
``golden billion.'' We enjoy a standard of living most only can
dream about, thanks in large part to affordable energy. The
global population will grow 25 percent to more than 8 billion
people by 2030 and the world will need the equivalent power of
five more Americas to fuel these needs. This growth occurs at a
time when more than half the world's population still lacks
adequate access to electricity. So we have the dual challenge
of providing electricity to 3.6 billion people who are not
properly connected and expanding our infrastructure to another
2 billion who will be people added to the grid.
[Disruption of hearing.]
The Chairman. We would please ask for--we would please ask
for the security officials to restore order in the committee
hearing room.
We apologize to you for the interruption and we will
recognize you again, Mr. Boyce, and without any time obviously
deducted from your oral presentation.
Mr. Boyce. Thank you, Mr. Chairman. As I was saying, we
have an issue of 2 billion people added to our energy grid in
the future. How we satisfy this growth with coal is the primary
global generation fuel and is expected to grow faster than any
other fuels combined in coming decades. Some while others call
coal a bridge to the future, I say coal is the future. It
powers nearly half of America's electricity at a fraction of
the cost of other fuels and Americans enjoy the best quality of
life in the world.
Let's move to the economy. We all recognize the jobs is the
number 1 priority for the American people. Creative deployment
of advanced technologies, including CCS, over the next several
decades would create tremendous economic stimulus,
reindustrializing our economic base and putting people to work.
A 2009 study with the National Coal Council concluded that the
deployment of coal with CCS would increase U.S. GDP by $2.7
trillion, create 20 million job years from new construction,
and support 800,000 permanent jobs over 40 years. Enhanced oil
recovery from CCS would produce additional 2 million barrels of
oil per day. So our three E goals are complementary and advance
through clean coal technologies which have a strong record of
success.
U.S. coal use for electricity generation has more than
tripled since 1970, yet criteria emissions have been reduced by
84 percent. Technology can lead us to a lower CO2
world. Here is the path.
First, build super critical combustion plants with improved
efficiencies.
Second, demonstrate carbon capture and storage. We know the
technology works. Statoil's Sleipner project in the North Sea
has been storing a million tons of CO2 annually for
15 years.
Third, complete large scale CCS demonstrations.
Fourth, advance coal-to-gas with CCS so the ultimate cost
of capturing and storing CO2 is reduced.
Next, deploy commercial scale IGCC technology with CCS.
And finally, retrofit the world's existing fleet of coal
plants with CCS technologies.
A growing number of studies conclude the coal with CCS is
the low cost, low carbon solution, 15 to 50 percent less
expensive than others. And around the world nations have
committed significant finding for CCS demonstrations, but more
funding is needed to bring this technology to commercial scale.
That is a brief view of the essential role of coal and the
need for continuous improvement in emissions toward shared goal
of near zero emissions. But I would like to close with a look
at carbon legislation.
There is a growing recognition in Washington for the vital
role that coal plays in providing energy security and
affordable electricity for Americans, and we saw this in
elements of the Waxman-Markey bill. Achieving our three E goals
will require smart, science-based policy to protect the
American consumer, worker and family. I say deployable
technology should be available before regulation. And we have
to take the time to get this right and we have to have the
national commitment to get it right.
Now let me emphasize Peabody will support the right kind of
legislation which builds on the positives of the Waxman-Markey
House bill. It is essential for us to provide a legal and
regulatory structure to enable robust development of CCS that
assumes Federal responsibility for long-term CO2
storage, offers timelines for emissions reductions that allow
for technology development, eliminates conflicting frameworks
at the State and Federal level.
We believe the strong energy bill that advances CCS is best
way to achieve both our energy and our environmental goals. The
goals are not accomplished by cap-and-trade programs that will
result in punishing costs to economies and family budgets. For
those who say that a cap-and-trade systems can be cost
effective, I don't agree. The only reasonable possibility on
this front would be a ceiling of say $12 a ton that Senators
Bingaman and Specter advanced several years ago. But here again
the only path to meet CO2 goals is true technology.
I say this after just returning from China, where the
Presidents of both our nations have committed to a clean energy
path that includes low carbon coal. Peabody is the only non-
Chinese equity partner in GreenGen, a near zero emissions power
plant that will begin generating power next year. If China can
build these type of plants, why can we not here in the U.S.?
The U.S. could also be a provider of technology for the rest of
the world.
So in conclusion, the real question isn't will we use coal.
The U.S. uses more coal than any nation on Earth. We have
hundreds of billions of tons of coal in the U.S., trillions of
tons in the world, we will use it all. The real question is
what is the proper path to move to what the Presidents of both
China and the U.S. last year called, ``21st century coal.''
That path is technology first, deployment requirements second
as we work together to accelerate the movement to clean coal.
Thank you, Mr. Chairman.
[The statement of Mr. Boyce follows:]
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The Chairman. Thank you, Mr. Boyce.
Our next witness is Mr. Steven Leer. He has served as the
President and Chief Executive Officer of Arch Coal since 1992.
Arch Coal is the Nation's second largest coal company.
We welcome you, Mr. Leer.
STATEMENT OF STEVEN F. LEER
Mr. Leer. Thank you, Chairman Markey, committee members. I
appreciate the invitation to offer my views on the role of coal
and coal technology in meeting the Nation's clean energy needs
and for reducing CO2 emissions. But first let me
echo our prayers and sympathy for the miners and their families
that were lost last week in West Virginia.
This committee has an extremely difficult task addressing
an extremely complex subject. With this in mind, I am going to
focus on four points.
My first point is that coal is being used and will continue
to be used around the globe. Coal supplies roughly 23 percent
of the U.S. energy needs and roughly 27 percent of the global
energy requirements. Global coal use since 2000 has increased
more than any other fuel, and that trend is expected to
continue. Coal use is growing because it is abundant, widely
distributed, and relatively inexpensive. Coal helps billions of
people around the world enjoy a higher standard of living than
would otherwise be possible. That is the good news.
My second point is the bad new; coal emits more carbon
dioxide than other major fuel sources per unit of energy, which
bring me to my third point.
We believe technology is the answer. Clean coal technology
has solved earlier environmental problems associated with coal
use and continues to improve the burning of coal's emissions.
Emissions of particulate matter, SO2 and
NOX, have gone down as previously referenced in
several comments. We can be successful in capturing and
isolating CO2 with carbon capture and storage
technologies, or CCS. Most elements of CCS have been shown to
work in individual elements, but not necessarily at scale or
all together, and it is not inexpensive at the moment. DOE and
others have developed technology road maps for solving the
technological problems associated with CCS and driving down
costs. We know where we need to go with CCS and we have
identified a path to get there, but I am not saying we are
there yet because we are not. But I am convinced that we can
get there, first because we have already gotten off to a fairly
good start, and second because we really have no other choice
if we are serious about and are going to be successful in
stabilizing global CO2 concentrations in the
atmosphere.
That is not just my view. In former Prime Minister Tony
Blair's assessment of CCS he said, ``The vast majority of new
power stations in India and China will be coal fired--not may
be coal fired, will be--so developing carbon capture and
storage technology is not optional, it is literally of the
essence.''
Remember, China uses three times as much coal as the U.S.
and the Chinese use of coal is growing at about 200 million
tons every year.
The International Energy Agency found that a scenario which
lacked a CCS option was 97 percent more costly than one which
included CCS technology. The IAEA has concluded that
``CO2 capture and storage for power generation and
industry is the most important single new technology.'' CCS
technology is also a job creator. A report last December by the
National Coal Council, a Federal advisory committee to the
Secretary of Energy, concluded that CCS deployment through 2050
could produce 28 million job years of construction employment
and create 800,000 permanent jobs.
The promise of CCS still has many barriers to overcome.
American Electric Power is at the forefront of CCS technology
and currently is in the process of scaling up a test facility
in West Virginia that will store about 1.5 million tons of
CO2 per year in deep saline formations. Their pilot
demonstration plant is built, but we can't say that we have
solved all the problems yet, and in reality we have over 2
billion tons of power plant CO2 to deal with in the
U.S., let alone the rest of the world.
My fourth and final point covers the action that we need to
take in order for CCS to be commercially available and
affordable in a timely manner. One, we need to sharply expand
the number of commercial CCS demonstration projects to the 15
to 20 recommended by the NRC.
Two, we need to follow up with continuing financial support
for the next 60 gigawatts of generating capacity.
Three, we need to address the legal framework that poses
barriers to CCS technology, like the long-term viability of the
stored CO2.
Four, we need to ensure that the policies do no harm or
provide disincentives to CCS.
For example, some are proposing that we provide a financial
incentive for the deployment of natural gas to displace coal in
power plants. I believe this would be a mistake on several
fronts. While natural gas emits 50 percent of the
CO2 of coal, it will require CCS to achieve the
long-term climate goal. A dash to gas will put CCS development
on hold and the technology will not be available when it is
needed domestically or globally. Of course the availability of
sufficient quantities of natural gas to replace coal
particularly at a reasonable price is another question mark.
An alternative approach would be to expand current
proposals for Federal renewable electricity standards to
include fossil fuel generation with CCS, advanced nuclear power
generation, and improved efficiencies at existing power plants.
In closing, let me reiterate my four points. Coal is and
will remain an important part of the U.S. and global energy
mix, providing benefits to billions of people. Coal's issue is
CO2; the solution is carbon capture and storage
technologies. Commercializing CCS in the desired time frame
will require industry-government collaboration, significant
resources, and an appropriate legal framework. But it can be
done. In fact, it must be done if we are going to stabilize
global CO2 concentrations by 2050.
Thank you for your time.
[The statement of Mr. Leer follows:]
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The Chairman. Thank you, Mr. Leer. Our next witness is Mr.
Mike Carey. Mr. Carey is the President of the Ohio Coal
Association. He has a diverse background that includes military
service and legislative relations in both the energy and
natural resource industries.
We welcome you, sir.
STATEMENT OF MICHAEL CAREY
Mr. Carey. Thank you, Chairman Markey, members of the
committee. My name is Mike Carey, President of the Ohio Coal
Association, border State to West Virginia, and our prayers are
with the families there as well.
I would like to take a moment to thank my fellow witnesses
both from Arch Coal and Peabody Energy for their continued
commitment to the American coal industry. However, I must point
out at this time that Rio Tinto has been divesting themselves
of domestic coal reserves for many years. I do not believe they
represent the future of coal in America.
Given the high levels of recoverable coal reserves and
increasing demand for energy, especially in developing nations
where low cost electricity is essential, coal's future global
success is assured. However, coal mining and use in the United
States is severely jeopardized by the war on coal waged through
the legislative process and the unprecedented regulatory
actions. But in the rest of the world our competitors are
investing in coal to make them more competitive and to steal
our jobs. China alone continues to build a new power plant
about every week.
I would like to leave you with three main points. First,
the Obama administration's regulatory assault on energy
production and the war on coal in particular is creating a de
facto Obama energy tax on all American families.
Second, the CCS provisions in the Waxman-Markey bill and
other climate proposals encourage massive fuel switching to
more expensive natural gas before the CCS technology can be
deployed. But even then the lack of regulatory legal frameworks
will prevent commercial deployment of the technology.
And despite the recent tragedy in West Virginia, the U.S.
coal mining industry has the best safety record in the world.
The role of coal in the new energy age is greatly hampered
by the regulatory assault waged by the Obama administration and
in particular the Environmental Protection Agency. While
President Obama may not directly raise taxes, his
administration is implementing the Obama energy tax on all
American families by administrative fiat. We are in the process
of calculating how much this will cost the American families in
higher energy bills.
The chart that you see behind me lists a number of the
proposals, final, planned regulatory assaults on the coal
industry, and I will briefly highlight a couple of them. The
Ohio Coal Association is challenging the endangerment finding
in court. We believe that the science that is underpinning the
endangerment finding is questionable and that the EPA did not
include required parts of economic analysis. According to the
EPA, they relied substantially on the IPCC and the data which
is at the heart of the Climategate scandal. Only 52 scientists
signed the U.N. IPCC fourth assessment report, and it is cited
in the endangerment finding an astounding 49 times and 395 in
the technical supporting documents.
Next, we have seen the Clean Water Act used inappropriately
in many ways to hamper the production and use of coal, such as
the use of the clean water guidelines on surface mining permits
issued just last month which would basically put a moratorium
on mining in Appalachia. The Clean Water Act veto of an
existing Army Corps of Engineers permit is unprecedented. The
Waxman-Markey CCS provisions are an attempt to persuade the
coal industry to support the cap and tax.
The bill, according to my numbers, allocates $10 billion
towards CCS but misses the mark in two regards. The first is
timing. The legislation requires emission reductions starting
in 2012. The restrictive performance standards on coal-fired
power plants in 2020, ignoring what the developers of the CCS
technology have been saying for years, which will take 15 to 20
years before commercial development. The United States Congress
simply cannot dictate a timeline of technological developments.
Secondly, the bill calls merely for a study to report back
to Congress with recommendations on issues such as CCS
liability, permitting and other environmental considerations.
CRS and GAO have already provided information on liability and
permitting problems and the need to address for CCS to work.
The way the CCS program and the Waxman-Markey bill is
structured actually encourage massive fuel switching to more
expensive natural gas before the CCS technology can actually be
deployed. But even then, the lack of regulatory legal liability
frameworks will prevent commercial deployment of the
technology.
In conclusion, domestic coal production needs the support
of Congress in this administration. Despite the recent events
in West Virginia, the U.S. coal mining industry has the best
safety record in the world. Mine Safety and Health
Administration data showed there were 18 coal mining fatalities
last year amongst 133,000 coal miners, an improvement of up to
63 percent over the numbers 3 years before. By contrast, the
BBC estimates that 13 Chinese coal miners die every day in
their coal mines. Our safety record is largely due to our
combined national and State efforts to encourage innovative and
safety practices. The Ohio Coal Association recently
collaborated with the Ohio legislative process legislature and
worked to pass a new mine safety bill in our State even though
we had not had a mine fatality in 5 years.
I want to thank you for the opportunity to testify, and I
look forward to answering any of the questions you may have.
[The statement of Mr. Carey follows:]
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The Chairman. Thank you, Mr. Carey. And our final witness
is Mr. Preston Chiaro. He is the Chief Executive for Technology
and Innovation for Rio Tinto. Rio Tinto is the largest
diversified mining company in the United States and the third
largest mining and exploration company in the world. Rio Tinto
also holds a 48 percent interest in Cloud Peak Energy, which is
the third largest coal company in the United States.
We welcome you, Mr. Chiaro. Whenever you feel comfortable,
please begin.
STATEMENT OF PRESTON CHIARO
Mr. Chiaro. Chairman Markey, distinguished members, first,
thank you for inviting me to testify today on the role of coal
in a new energy age. And like my fellow miners on behalf of the
employees of Rio Tinto I wish to extend our thoughts and
sympathy to the families of the miners who lost their lives in
West Virginia last week.
As you said, my name is Preston Chiaro. I am the group
executive for technology and innovation for Rio Tinto. Rio is
the largest diversified mining company in the U.S. and one of
the largest diversified mining companies in the world. Our U.S.
assets include coal holdings in Colorado, copper in Utah,
nickel and copper projects in Michigan and Arizona, borates in
California, talc in Montana and Vermont, as well as an aluminum
smelter in Kentucky. We have nearly 5,000 U.S. employees all
told.
As you also mentioned we hold a 48-percent interest in
Cloud Peak Energy, formally known as Rio Tinto Energy America,
the third largest coal company here in the U.S. We are also one
of the largest coal producers and exporters in Australia, and
we also happen to be a major uranium producer.
Rio Tinto established its climate change position in 1998.
We recognize that manmade emissions of greenhouse gases are
contributing to global climate change and that action is
necessary to reduce those emissions and to adapt to a changing
climate.
As a coal producer, a large energy consumer, and a
technology developer, Rio Tinto continues to devote resources
and funds to the development of low emission coal technology,
in particular carbon capture and storage, or CCS, technology.
This technology affords coal and eventually natural gas a
tremendous opportunity to position itself as a low carbon
energy source both in the U.S. and globally.
In 2007, we launched the hydrogen energy joint venture with
BPO Alternative Energy. Through the hydrogen energy California
project in Kern County, California we are developing the first
full scale, fossil fueled electricity plant to capture and
store up to 90 percent of its emissions upon deployment. Once
fully operational in 2015 the plant will provide low carbon
electricity to 150,000 southern California homes while
permanently storing 2 million tons of CO2 per year
in a nearby oil field, creating 1,500 construction jobs and 100
permanent operational positions.
Rio Tinto believes that it is critical for the world to
transition away from high emitting conventional fossil fuel
electricity generation by the middle of this century. We
continue to support and advocate the recommendations included
in the blueprint for legislative action, developed last year by
the U.S. Climate Action Partnership, of which we are a member.
We have gone on record in support of their inclusion in H.R.
2454 to address the existing technical, financial, legal and
regulatory bottlenecks to the commercialization of carbon
capture and storage technology.
Economic modeling of U.S. Climate Action Partnership's
recommendations indicates that the long run transition costs
are small when climate policies are market-based and economy-
wide, when forest and land-based offsets are available to
contain costs, and when we allocate funding to the development
of technology such as carbon capture and storage that keep coal
in the energy mix. In fact, USCAP studied a wide range of
economic models and they all show that U.S. economic output
levels of consumption and jobs, things we all care deeply
about, are virtually identical to business as usual, even years
after a climate policy such as H.R. 2454 is put in place. For
example, compared to business as usual the sum total impact to
the general economy, household consumption, and number of jobs
can be viewed as a growth delay of 8 to 9 months over 20 years
and most scenarios show a delay of only a couple of months.
Mr. Chiaro [continuing]. Well-constructed policy provides
the best means to address the multiple challenges facing our
industry. We will either participate in the shaping of policy,
or we will have the policy thrust upon us. Our experience has
been that constructive participation in the policy process can
yield positive outcomes on the issues most important to us. I
thank you for your time.
[The statement of Mr. Chiaro follows:]
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The Chairman. Thank you, Mr. Chiaro, very much. The chair
will now recognize himself for a round of questions. And this
is for you, Mr. Chiaro, Mr. Leer, and Mr. Boyce.
You agree with the statement made by Mr. Don Blankenship of
Massey Energy that ``global warming is a hoax and a Ponzi
scheme,'' as he indicated on his Twitter page on February 19 of
2010. Mr. Chiaro?
Mr. Chiaro. As I mentioned, Rio Tinto recognized in 1998
that climate change was a serious issue, that human emissions
were a primary cause of it, and we think action needs to be
taken soon to address it.
The Chairman. Mr. Leer.
Mr. Leer. I don't agree with Mr. Blankenship. We look at
climate change as an evolving issue that's serious and needs to
be addressed. We think how we address it and that technology is
the most critical piece of that path forward.
The Chairman. Mr. Boyce.
Mr. Boyce. Do not agree with Mr. Blankenship. Our view is
the globe's climate has been changing since the globe was
formed. Levels of CO2 have risen in the atmosphere,
and we have been a strong advocate for technology advances to
reduce CO2 in the atmosphere, particularly from the
use of coal.
The Chairman. So the next question comes to you, Mr. Carey.
I am a little bit confused, because we are being told by the
natural gas industry that we did too much for coal in the
Waxman-Markey bill and not enough for natural gas. And that is
what natural gas executives are saying to us.
Do natural gas executives not understand how much more we
helped them than you, since they are of the opinion that this
$60 billion which we put in for carbon capture and
sequestration and the other tools that we put in place in order
to minimize the impact on coal consumers across our country are
clearly being viewed by the natural gas industry as being much
more friendly to the coal industry than to the natural gas
industry? What don't they understand? You seem to think that
there is a bias towards natural gas.
Mr. Carey. Mr. Chairman, I was referring to the time tables
but unfortunately I don't work for the natural gas industry.
But I can tell you this. According to the studies that I have
read with regards to what coal production would look like by
2030 under the proposals that have been initiated, we would
look at a 77 percent decrease in the amount of coal. Now, for
the 3,000 and some coal miners in Ohio, the folks in West
Virginia, Kentucky, Western Pennsylvania, when you are
eliminating 77 percent of those jobs, that is a concern. And
when you look at the Appalachian communities and you look at
what an average coal miner makes, in Ohio, it is roughly
$65,000; I believe Congressman Salazar talked about Colorado
being $65,000. Mr. Chairman, it is going to be devastating.
The Chairman. To the question on natural gas, sir, you are
just dead wrong. Okay? We absolutely insured that we would deal
with the coal industry in a transition and in such a way that
actually drew criticism from the natural gas industry. So you
are just wrong. And I just want to put that out there plain and
simple. We did not approach this issue as anything other than
one in which we wanted to create a bridge for the coal industry
to the future. Okay? And any other interpretation is just plain
wrong. And the natural gas industry will testify to that, and
over in the Senate, in fact, they are now lobbying in order to
receive equivalent benefits to what the coal industry received.
Mr. Boyce--and I think this is important for us to clarify
this issue. In your petition to the Environmental Protection
Agency to overturn the scientific finding that greenhouse gases
endanger public health and welfare, you state: ``Peabody's
petition is based primarily on the release of e-mail and other
information from the University of East Anglia climate research
unit in November of last year.''
The British House of Commons has now reported that the
hacked e-mails from the University of East Anglia climate
research unit do not in any way cast doubt on the overwhelming
scientific evidence of anthropogenic climate change. Do you now
accept the broad understanding by scientists and governments
that greenhouse gases threaten to destabilize global climate?
Mr. Boyce. Our view and what we said in the petition was we
think that EPA should take a step back and do more work
internal to the U.S. To rely so heavily on an international
body which did not have the ability for people here in the U.S.
and scientists here in the U.S. to have the level of peer
review, and with the number of issues that have come out
relative to some of their basic data assumptions as well as
interpretations. All we have asked is that the EPA step back
and reconsider their endangerment finding.
The Chairman. So you continue to question then the
scientific finding that greenhouse gases endanger public health
and welfare?
Mr. Boyce. As we look at the IPCC report and all of the
issues that came out relative to its data and interpretations,
we think there needs to be another independent review of that
data. Whether those findings are sound or not, we think there
needs to be another review to put to rest all of those issues.
The Chairman. Mr. Leer, do you question the scientific
findings that greenhouse gases endanger public health and
welfare?
Mr. Leer. I think that the EPA is a very, very--and using
the Clean Air Act in their approach, the Clean Air Act is a
very blunt instrument to try to address a very complex problem.
The Chairman. I am just going to the question. You earlier
seemed to indicate, you and Mr. Boyce, along with Mr. Chiaro,
all seemed to indicate that you acknowledged that climate
change is occurring and that it is caused by CO2 or
other greenhouse gases. And now it seems as though you are
backing away from it. So I am just trying to determine which is
it. I am only going to the scientific question here of whether
or not greenhouse gases do in fact cause global warming.
Mr. Leer. I think they are contributing to global warming,
and that--again, I was trained as an engineer. I look at it,
how do we address the problem? And I will let others, because I
am certainly not a climate scientist and only know what I have
read as well as others' comments, that whether the east Angola
e-mails are an issue or not. They certainly, I think, raise
questions in people's minds. But, more importantly, if we are
going to address this problem, which I think we should, it is
going to be driven by technologies of carbon capture.
Otherwise, I don't think we can achieve the 2050 goals that are
outlined in your bill or outlined in many other bills. And that
is--I am the engineer approach.
The Chairman. We do agree with you on that. And that's why
we put those tens of billions of dollars in the bill, so there
would be a technological solution that we could partner on
creating. Mr. Chiaro, do you agree that the scientific--with
the scientific finding that greenhouse gases endanger public
health and welfare?
Mr. Chiaro. We do think the science is strong. Yes.
The Chairman. Again, we thank you for that. We need to
have--if we are going to create a public policy, we at least
have to agree on this basic fundamental fact that the planet is
warming and that greenhouse gases are contributing to that
problem. And we still seem to have some disagreement here. And
you, Mr. Boyce, are not, in fact, dealing with the issues
scientifically in a way that divides the question from the
means by which we would then deal with the issue. So we just
need a clear statement here on that subject from you. And let
me come back to you just this one final time on the science of
global warming and on the relationship between greenhouse gases
and the warming of the planet.
Mr. Boyce. Well, as I said, Mr. Chairman, and the one known
fact that we deal is that CO2 has risen in the
atmosphere over the last 100 years. And what we have always
said is we want to use coal cleaner every day that we use it.
We have almost a dozen clean energy projects that we are
involved with in Australia and China and the U.S. You know, I
think the scientific discussion, we leave to the scientists.
What we say is we understand the public policy and the desire
to have cleaner coal. We agree with that, and we are putting a
lot of money and a lot of effort into trying to make that
happen on a global basis.
Again, whether it is in Australia, tens of millions of
dollars, whether it is our partnership in China in GreenGen or
FutureGen here in the U.S., we have made investments in Calera,
which is a new startup company to produce cement from
CO2 capture. We have money invested in GreatPoint
Energy, which is trying to develop cleaner ways of gasifying
coal.
So at the end of the day, it is our actions to try and
promote and be a catalyst for clean coal technologies.
The Chairman. And we agree with you, Mr. Boyce; that is,
that your investments in Calera, your investments in other
companies show that you are working to solve the problem, but
what we need you to say, because that will end this first stage
of debate, is that there is a problem and that the science has
identified a problem that has to be solved, and that your
investments are related to that conclusion that there is a
problem and that you accept it. Because then we can move on to
working together to put together the solutions to solve the
problem. So can we come back again to that scientific question?
Mr. Boyce. Mr. Chairman, I think I have said, we agree
CO2 is rising in the atmosphere. That's an issue
that needs to be addressed, and we are doing everything we can
to try and promote technologies to address that issue.
The Chairman. Thank you, Mr. Boyce. I thank all of you. Let
me now turn and recognize the gentlelady from West Virginia,
Mrs. Capito.
Mrs. Capito. Thank you, Mr. Chairman.
I wanted to ask a question to Mr. Boyce and Mr. Leer that I
alluded to in my opening statement. And I am curious to know in
both of your companies what percent of your coal do you
currently export? What are your largest exporting countries?
Mr. Boyce. This is domestic coal that's mined here.
Mr. Boyce. Today we are exporting very, very small
quantities of coal in the export business. As you know, we no
longer have any operations in the eastern part of the U.S.
where most of the U.S. exports come from. We have a small
amount of coal from Colorado and a very small amount of coal
from the Midwest which we export to Europe. Other than that,
all of our exports are from Australia to the Far East.
Mrs. Capito. So you are exporting your Australian product
to China?
Mr. Boyce. We export from Australia all over the world,
China, India, Japan, Europe, Brazil.
Mrs. Capito. Mr. Leer.
Mr. Leer. Last year, even in the economic downturn, we did
export a few boats out of Wyoming into the Pacific Rim. They
ended up being in China, and I think India was a trader at the
second boat. On the East Coast out of specifically mostly West
Virginia, but also Kentucky and Virginia, we are exporting
somewhere between 3 and 4 million tons of year in a normal
year. Last year was down due to the economic recession. This
year, just given the nature of particularly the metallurgical
markets, we are seeing a significant rise in export
opportunities; and I would guess that when the year is done, we
will end up somewhere between the 4 to 6 million tons of
exports.
Mrs. Capito. Thank you. The reason I am bringing that out
and am curious about whether it is on the rise is because if we
are going to put forth policies here in our own country to meet
certain emission goals, would the industry then begin to look
at other areas of the world who maybe aren't buying into
emission goals to then push the product out across the rest of
the world? And I have a hunch, I mean, you are in business to
make money, that is probably what could happen. But I am going
to shift to another topic. Technology. All of you talked about
the need for technology. But there is an undercurrent here of,
is it technology before emission targets, or emission targets
before technology?
When do you reasonably think something that can be used
full scale and go broad based in this country in terms of when
CCS can actually be implemented in this country with success
and achieving substantial targets? I know that is a ballpark.
Mr. Leer. It is a ballpark. And no one can really project
the technology curb, other than history would tell you that
once we get started it comes sooner and often we get
significant advances.
In talking with our utility customers, who really are at
the forefront of this, I think most of them talk somewhere in
the mid 20s if we get started now. The key really is having the
legal framework established and the funding, and certainly the
Markey-Waxman bill was a great start on that one issue. We had
other concerns. But, again, I am an engineer. I look at, how do
you solve the problem? You solve the problem by technology.
Otherwise, we can't stabilize CO2.
Mrs. Capito. There is a body of thought out there that
believes this technology never will be able to achieve. I hear
it certainly around a lot of skeptics that we are never going
to be able to meet these targets. Do you have a response to
that?
Mr. Leer. I do. And when you look at global CO2
emissions, we had better hope that we can establish this
technology, because that is what you want. No one has offered a
path that allows energy growth and meets energy growth demands
on a global scale other than the technology to capture carbon
and store it. And it is a pretty simple answer. People may
disagree that they don't like it, but that is the path to
stabilize CO2 in the atmosphere and no one else has
offered a path to do it.
Mrs. Capito. Thank you.
The Chairman. Thank you. The chair recognizes the gentleman
from Washington State, Mr. Inslee.
Mr. Inslee. Thank you. Mr. Carey, I found your comments
that somehow Congress is waging a war on your industry pretty
astounding. And the reason I say that, as I was thinking about
your comments I ran into my grandchild, he is 15 months old,
yesterday, on the sidewalk, got to mess around with him for a
while. And I started thinking about what your industry is doing
to his future. Because of the emissions from your industry, it
is probable that there will be no healthy coral reefs in the
world during my grandson's lifetime. It is probable that there
will be no glaciers in Glacier National Park, which is a
national treasure, in his lifetime.
It is probable that the acidification of the ocean will
continue to an extent that, in some ways that we can't entirely
predict will affect the food chain upon which the salmon
depend, which my granddad and my dad and I and my wife fish
for, that he won't be able to fish for. It is probable that
there will be significant changes in the climate in the
southwest so maybe he won't go and get to enjoy the southwest
like I have in his lifetime.
If there is a war being waged here, it is a war on our
grandkids, because the emissions from your industry are
destroying significant parts of this one and only little planet
we have got. Now, that is just a scientific fact.
Now, I don't think of it as a war, because the people in
your industry are great people. They are hard-working folks,
they are trying to make a living, they want to have a future in
this industry. And I recognize that. So I don't use that term
of war because I don't think they are waging war on our
grandchildren. But I think your position is so irresponsible
for your own industry that I have got to call it out.
We have put in a pool of $60 billion to your industry to be
able to save it, save it in the sense that you will have a way
to sequester carbon dioxide. And the smart folks on this panel
recognize that the day will come that coal will not be a viable
alternative if we do not find that technology. And we have
given you $60 billion. We don't give $60 billion to al Qaeda.
You want to see a war? We are in a war. We don't give them $60
billion. We don't give $60 billion to industries we are at war
with. We give $60 billion to people that we hope maybe there is
a chance of saving, and that is what we are doing.
So let me just ask you. Will you personally, or your
organization that you represent, tell us that you will replace
that $60 billion that we have offered you in this bill?
Mr. Carey. Chairman Markey, Congressman Inslee, it was a
long question. There are many parts of it.
Mr. Inslee. Listen, I don't want you to answer my comments.
I want you to answer my question. Will you personally--and I
think the answer is probably no--or your company or your
organization tell the American public and the people you
represent today that you will put up $60 billion to help save
this industry by finding CCS technology to replace the money
you are trying to take away by killing this legislation? Will
you do that? And that is a pretty simple yes or no.
Mr. Carey. I think the question, Mr. Chairman, Congressman
Inslee, I think we have to examine parts of the question if we
are talking about CCS technology. Now look, I am the chairman
of the Ohio Coal Technical Advisory Committee. This is a body
that actually works with clean coal projects, and we have been
looking at for the last 10 years carbon sequestration and
discussions on carbon sequestration. Nobody is arguing that is
important.
Mr. Inslee. I would really appreciate an answer. Are you
personally, or your organization willing to commit today to
spending $60 billion to try to perfect CCS technology to
replace the money you lose if this legislation doesn't pass?
Just give me a yes, sir, or no. I have got one more question I
have got to ask Mr. Boyce.
Mr. Carey. Mr. Chairman, Congressman Inslee, I would say
that CCS is important. But if you are asking me to make a
personal commitment that I will personally put $60 billion into
carbon sequestration, that is not a very serious question.
Mr. Inslee. How about your company?
Mr. Carey. My association? My association represents small,
medium-ranged companies that actually work on behalf of Ohio.
Mr. Inslee. I will take your answer as no. If you want to
amend it, go ahead.
Mr. Boyce, as I understand your position listening to your
testimony, you seem to recognize the necessity, if not urgency,
of developing CCS technology. But I seem to--if I can
characterize your corporate philosophy, you have resisted in
any way every way that I can ascertain any legal mechanism that
would put a restriction on carbon dioxide emissions, which
would--many of us would believe would drive investments into
CCS technology. And what I hear you saying is that if we just
trust the industry to make these investments, everything will
be okay.
Folks at this table will put in billions of dollars. I
don't know where you are going to get it, because you won't get
it from us if we don't pass this bill. But you will put in
billions of dollars. You will solve this problem. And then,
after you solve this problem, then we can put a regulation on
the industry of CO2. Now, to me, that is a little
bit like saying when they stop robbing banks, then we can put a
law in effect saying you can't rob banks. And, frankly, I have
not seen a major environmental problem solved without some
message to the industry to make these investments.
Now, is that a fair characterization, you are thinking on
this? And I would ask you to comment on that thinking.
Mr. Boyce. Thank you. No, I would have to say I don't
believe it is a fair characterization. And the reason I say
that is at the time of Waxman-Markey we indicated that there
were some tremendous aspects to Waxman-Markey, great
recognition of the role of coal, and, as you have both pointed
out, strong funding for clean coal technologies and a mechanism
to help provide some of that funding. But we had concerns that
enabling the technology of CCS to go forward without having
solved the legal and regulatory framework around the property
rights, injection of CO2, the long-term storage, as
well as the aspect of hard caps until the technology and the
time frame for that technology to be determined left us to
where we didn't believe that we could support the bill in its
current form. And I think that is all that we ever said. We
have always--as I said earlier, we have been working with
Senator Bingaman for a number of years in terms of the original
proposals that he had laid out for improving our reductions in
carbon and for a carbon management program.
It is just a matter of how all the components come
together. We have concerns about the cost impacts. That is only
natural. And we had concerns that capturing all the
CO2 without the ability to actually store it in the
ground was a Catch-22 that we could not see our way around.
But I don't want anyone to believe that we don't feel that
there needs to be carbon management programs going forward.
Mr. Inslee. Thank you.
The Chairman. The gentleman's time has expired. And to the
gentleman from Arizona, the gentleman from Washington State
went over and we will note that as the gentleman is engaging in
his questions.
Mr. Shadegg. I will do my best to give back the time he
took in going over.
I want to thank all the witnesses for your thoughtful
testimony. I think these are complex issues that require
thought and reflection.
I want to start, Mr. Boyce, with you. In questions
propounded by the chairman, you indicated that with regard to
the endangerment finding you believe that, given some of the
doubt now cast on the science developed and relied upon by the
IPCC and the University of Anglia, that you thought it was
appropriate and your company felt it was appropriate for the
EPA to take a step back and reassess that science. Is that a
correct statement of your position?
Mr. Boyce. I will tell you that, given that, whatever
burden we put on society based on this issue, we have to have,
or at least I think we should have public support for our
position. I couldn't agree more that we should, in fact, step
back and take a close look at that.
Mr. Shadegg. The chairman cited the fact that the
Parliament in England had found that there was nothing wrong
with the science in its basic findings. I guess I am a little
curious about that. Do you know how many years the IPCC spent
looking at science to reach its original conclusions?
Mr. Boyce. The IPCC has been empanelled since 1992 or the
early 1990s with the original Rio Treaty. So they have been
looking at this data for a long period of time.
Mr. Shadegg. So they have been looking at that data from
1992 to 2010, we will say roughly 18 years, and we now discover
major flaws in it, some of which they admit including flaws
about the Himalayan glaciers disappearing by 2035. They
acknowledged those flaws. They spent 18 years reaching the
conclusions; we now discover the flaws. How long have we known
about the flaws in the science? It hasn't been 18 years. Has
it?
Mr. Boyce. No, sir. It has not.
Mr. Shadegg. How long do you suppose it has been? Closer to
18 months?
Mr. Boyce. Not even that. The fourth quarter of last year.
Mr. Shadegg. Well, then I think your view that we should
take some time and look at that science again, given it took 18
years to develop it and has now been cast in doubt, I don't
think we can whitewash it in less than 18 months. So I think
that is a considered position.
I also want to clarify a point you made earlier. I believe
you said that you, in fact, support CCS and CCS technology and
all clean coal technology. You simply want a regulatory
atmosphere in which that can be carried out and everybody can
understand and follow the rules. Is that correct?
Mr. Boyce. That is correct. As I said earlier, we are
involved in a number of clean coal technology projects across
the globe, China, Australia, here in the United States. And we
just firmly believe that we have to understand the time frame
for deployment of the technology and the cost impacts to the
economy of that technology deployment before we put the hard
caps in place.
Mr. Shadegg. Again, as I mentioned in my opening statement,
I believe those costs will necessarily pass on to the consuming
public and to businesses in America which must compete around
the globe, and I think looking at those cost factors and
looking at issues like, okay, so we can capture it. We have got
that figured out. Where can we store it, and can we store it
legally? And I haven't seen anybody jump forward and say, gosh,
I want it stored under my land. And we seem to have had a
parallel issue in Nevada where we tried to store nuclear waste,
and some people in Nevada seemed to get upset. I think there is
a United States Senator who is a little concerned about the
storage of nuclear waste in that State. It seems to me storing
carbon might be almost as complex as storing nuclear waste.
Can you elaborate for the committee--and this will be my
last question--the specific elements of legislation we could
pass that would allow for the utilization of coal that was, in
fact, clean and in which the carbon had been removed? And we
would resolve some of those issues so that we could in fact
stop any of the uncertainty that I think is now impinging upon
the development of coal and coal energy in the United States.
Mr. Boyce. I think, as I indicate in my written comments
and briefly alluded to in my verbal comments, we have laid out
a path for technology. I firmly believe that supercritical and
ultra-supercritical power stations that are carbon capture
ready as well as IGCC plants are carbon capture ready should be
enabled to be built today. We know what the work, for instance,
at AEA is doing, that we will have retrofit technology
available for those plans. But, in the meantime, we have a
serious need for additional energy, as does the rest of the
world. And so that is the first step. And then these carbon
demonstrations. FutureGen.
We have been a founding member of FutureGen and, like the
committee, have been very frustrated that we have not been able
to get that project up and running yet, although we continue to
work extremely hard at trying to find the rest of the funding
for that project. It is a full-scale plant. Inject
CO2 in the ground and store it.
Those are the types of things that need to be done. And
then once that happens, then we can put in place the time
frames and the regulatory framework to say this is the path and
this is the ability of the U.S. economy and the global economy
to absorb the cost of transforming our energy infrastructure.
Mr. Shadegg. And you are willing to work with us on
legislation to achieve those goals?
Mr. Boyce. Absolutely.
Mr. Shadegg. I yield back.
The Chairman. The gentleman's time has expired. The Chair
recognizes the gentleman from Colorado, Mr. Salazar.
Mr. Salazar. Thank you, Mr. Chairman.
Mr. Boyce, Senators Rockefeller and Voinovich have proposed
a phase-in technology plan for CCS that takes into account
electricity production and industrial activities that produce
CO2, and proposes incentives for CO2
development and deployment. Do you support that approach?
Mr. Boyce. We support the premises in that bill. We are
still looking at the specific language. But, basically, the
concepts of enabling that technology, providing the framework
for it, and then getting that technology right first, we
absolutely support.
Mr. Salazar. Mr. Leer.
Mr. Leer. I would concur. I certainly have spoken with
Senator Rockefeller on it, and again, we would like to review
the details a bit more. But when you look at the premise, it,
to us, is going in the right direction.
Mr. Salazar. Mr. Carey.
Mr. Carey. Congressman, Senator Voinovich being from Ohio,
we have worked very closely with him. And we are still
continuing to review it, but we like the premise.
Mr. Salazar. Mr. Chiaro.
Mr. Chiaro. Yes. We certainly support the rapid deployment
of CCS technology. That is why we are investing tens of
millions of dollars in it ourselves to built a plant in
California.
Mr. Salazar. Okay. Well, I appreciate your comments. We
will start again with Mr. Boyce. How is uncertainty over carbon
and climate change legislation in the U.S. Congress affecting
the buildout of coal fueled generation systems?
Mr. Boyce. Well, I think there is no question that we have
got basically a stand-still in terms of new investments in the
advanced technology or current technologies for coal-fired
power stations. We all know there has been a number of plants
that have been put on the shelf or cancelled over the last year
to 2 years because of the uncertainty around where are we going
with carbon management in the future.
As I said in my statement, I think we ought to enable
ultra-supercritical and supercritical power stations to move
forward. They have got a footprint of anywhere from 15 to 40
percent lower carbon intensity of the existing fleet of plants
that we have today. It is a fabulous first step. And then we
add the carbon capture and storage technologies when they
become available to those plants, which would be the preferred
path.
Mr. Salazar. Mr. Leer.
Mr. Leer. I would concur with Mr. Boyce. And when you look
at the uncertainty, I think--I try to put myself and maybe some
of our utility customers' positions, and think, what would I be
doing then? And there were very few good things that came out
of the recession, but one of them probably was we had moved
back our capacity needs 3 or 4 years. And given all of the
uncertainties that surround this question and other questions,
and even if you look at, say, natural gas renewables and where
they might end up, my conclusion would be that I would stop
building anything for a period of time and just sit there and
wait for clarity to occur.
My concern with that is that we will let that--that will
happen, and then 5, 6, 7 years from now, suddenly we will
realize that the economy has started moving again, and
hopefully in a dramatic fashion, and we will see reserve
margins starting to diminish, and then we will be forced into
taking panic positions and really on economic, I will call
them, decisions because you just have to. And at the end of the
day, American people do demand electricity, and they have every
right to do that.
Mr. Salazar. Mr. Chiaro.
Mr. Chiaro. I think there is no question that the lack of a
long-term carbon framework has a chilling effect on investment
in coal-fired power generation. That is why we have been
arguing for getting such a framework in place as soon as
possible.
Mr. Salazar. Thank you. Mr. Carey, you mentioned that this
legislation had provided only $10 billion for carbon
sequestration, I think, in your testimony. The chairman and Mr.
Inslee say that the legislation provides $60 billion. I just--I
want clarification. Where do you get your numbers?
Mr. Carey. Mr. Chairman, Congressman Salazar, I would be
more happy to provide that.
The Chairman. If the gentleman would yield. There is $10
billion that is included as part of a wires charged that is
included to support research and development and carbon capture
and sequestration. In addition, the Waxman-Markey bill provides
$50 billion additional for bonus allowances for carbon capture
and sequestration installed in coal-fired plants before 2025.
So it is a grand total of approximately $60 billion for the
coal industry for the research development and deployment of
carbon capture and sequestration technology before 2025.
Mr. Salazar. So, Mr. Chairman, would that go specifically
to research and development of CCS?
The Chairman. That is correct. And deployment. The $50
billion is for deployment of carbon capture and sequestration
technologies in coal plants in our country before 2025.
Mr. Salazar. Thank you, sir, for that clarification. I
yield back.
The Chairman. The chair recognizes the gentleman from
Oklahoma, Mr. Sullivan.
Mr. Sullivan. Thank you, Mr. Chairman. First off, I got
here late. I would like to extend to offer my condolences to
the victims' families to the mining disaster last week in West
Virginia, and I look forward to an investigation and learning
what we can do to improve mining safety.
I have some questions for everyone. If the United States
were to cap greenhouse gas emissions without similar
commitments from the developing nations, how much would that
lower total worldwide greenhouse gas emissions from burning
coal. If no one else does it, is that significant?
Mr. Boyce. Well, the reality is we know that China has
become the largest emitter of CO2, and that doesn't
even include the rest of the world outside the U.S. So even
with a cap here in the U.S., if nothing else was done
particularly in the developing countries, the impacts would be
negligible in terms of any impact and in terms of addressing
rising levels of CO2 in the atmosphere.
Mr. Leer. Again, we would concur with that conclusion. If
you look at the developing world and the developed world,
CO2 admissions in Europe and the U.S. essentially
have flattened. I mean, they are still growing slightly, but
they have essentially flattened. The developing world is now
emitting more CO2 than the developed world.
So, again, we come back to really my fundamental
engineering premise: If we are going to address this problem,
it is carbon capture and sequestration, and we share it with
the rest of the world through trade agreements,
commercialization, whatever, however we get it there. But it is
going to have to be cost effective from their perspective.
Mr. Carey. Mr. Chairman, Congressman, there would not be a
lessening, there would actually just be a displacing of the
carbon dioxide emissions. And we simply look at what China and
India, what they will do over the course of the next 20 years,
the fact that their demand for coal, their demand for energy,
the fact that they are bringing power plants on line. The only
people that would be affected by this type of legislation would
be the American people, the people that are paying the electric
bills every day.
And point in fact, Administrator Lisa Jackson actually
admitted this, I believe, in testimony before the EPW committee
as did Secretary Chu. So both are very aware that this
legislation would do little to curb overall worldwide
CO2 numbers.
Mr. Chiaro. I would agree, that if the U.S. is the only
Nation that moves forward, the effect on total emissions to the
atmosphere would be small, single digit percentages.
I guess the bigger concern for me, having attended the
U.S.-China energy summit last October in Beijing is looking at
what the Chinese are doing in all these alternative energy
technologies. They are now leading the world in nuclear power
plant construction, wind construction, solar construction,
electric cars. They are moving ahead very quickly on these
clean energy technologies, much more rapidly than the U.S. And
I fear that the jobs that will be lost will be in the new
energy technologies.
Mr. Sullivan. So it would be extremely unwise for us to
unilaterally enter into any kind of agreement without other
developing nations being involved as well. And I agree with
that.
Another question. What foreseeable impact will the EPA's
endangerment finding and pending regulation have on the
domestic coal industry? And how are you preparing for something
like that?
Mr. Boyce. Well, I think, as was mentioned earlier on the
panel, you know, the Clean Air Act is a blunt instrument and it
is our view that it was never really designed to handle
something like CO2. And if we are forced to go down
an EPA regulatory path, the disruptions, not just to the coal
industry but to every facet of American industry and our daily
lives, is going to be significant as if EPA tries to regulate
every emissions of CO2 in the country, which
eventually they will have to under the Clean Air Act. So that
is a significant issue.
I would like to also add one point on CCS and why it is so
critical. Post-2020, to meet the targets in Waxman-Markey,
natural gas generating facilities will have to put
CO2 capture and sequestration technologies on them.
And so this technology is critical not only for the coal
industry, but for the gas, for fuel in general, and that is why
we are so strongly in favor of it.
Mr. Leer. Again, I concur with Mr. Boyce. The EPA's
approach on this I think will create unintended consequences
that are unimaginable as it works through this economy. And we
are focused very much on working with Congress to make sure
that doesn't happen. I think Senator Rockefeller's proposal and
Congressman Rahall's proposal to delay--step back and delay
implementation 2 years is very sound as we really work through
the system and work with Congress and all of industry to try to
find a much better instrument to deal with the issue, as
opposed to EPA handling it in a very blunt manner.
Mr. Carey. Mr. Chairman, Congressman, we are actually in
litigation right now on the endangerment finding. We have a lot
of concerns with regards to the way the EPA came up with their
data. Again, I mentioned it. They talk about the IPCC study 48
times, and actually in the supporting documents, company
documents they reference it 395 times. So we have a lot of
concern with that. But I also have to look at the fact that the
idea that you only--you didn't have to find endangerment. You
may. And you may make a ruling. It was completely up to the
administration on this.
If you look at what Administrator Jackson actually said
when she was in the EPW committee testifying on behalf of: If
legislation such as the Kerry-Boxer bill were to have passed,
would she still need to find this regulation. And she answered
yes.
So we are very concerned with this. And we are concerned
about what that would do to the jobs. Again, we are talking
about the elimination of thousands of hard-working coal mining
jobs in areas of this country that don't need to be hurt
economically any more than they are. This is about families,
this is about small grandchildren. This is about people that
are trying to provide for their families, and we are very
concerned.
Mr. Chiaro. We don't think the Clean Air Act and the
endangerment finding is the best approach to address the
climate change issue, which is why we are a member of the U.S.
Climate Action Partnership and support the principles that are
largely embodied in H.R. 2454.
The Chairman. The gentleman's time has expired. And, by the
way, the chair will recognize himself for another round of
questions. By the way, that is the point, the point that Mr.
Chiaro is making. We are trying to create a legislative
framework that is able to deal with the consequences of putting
a cap on carbon. That is our goal in the legislation.
And, again, it continues to be a little bit of a mystery to
me. In 2009, there were no new coal-fired plants ordered. There
are 10,000 new megawatts of wind installed in the United
States, 500 new megawatts of solar, 200 new megawatts of
geothermal, 200 new megawatts of biomass electrical generation
installed in America, 10,000 new megawatts of natural gas. Coal
saw its percentage of total electrical generated capacity
decline from 49 percent down to 44 percent in 2009. We have
seen the rise in the price of coal anyway. It has gone up 60
percent over the last 5 years. Coal costs have gone up. That is
without any price on carbon.
This legislation that we passed through the House of
Representatives is intended on helping the coal industry. The
legislation which Senator Rockefeller has introduced has $850
million a year for the next 10 years, our bill has $1 billion
per year for the next 10 years to do research, to do
development. But we add an additional $50 billion for the coal
industry, which the Rockefeller legislation does not have. So
we have a grand total of $60 billion; the Rockefeller
legislation has a grand total of $10 billion.
So this disparity goes right to the heart of the question
of whether or not we are, in fact, engaging here legislatively
in an attempt to harm rather than help the industry.
We do believe there is an inexorable decline. We see it
year after year in terms of the rise in the percentage of
renewable electricity coming from natural gas, coming from
wind, coming from solar, coming from actual installation of new
energy efficiency technologies.
So I just think, Mr. Carey, that a lot of what you are
engaged in here is really just crocodile tears that you are
shedding for an industry that we are trying to help; because,
otherwise, you are basically mirroring the whole path that the
auto industry took in denial in terms of the technology
revolution that was taking place around it, the desire to help
the industry to make the transition, and then blaming those who
were trying to help. Okay? And it is just a repetition of that
over and over again.
And all I ask is that there not continue to be a
misrepresentation, Mr. Carey, of what is, in fact, inside of
the Waxman-Markey bill. And additional modifications that could
be made as part of negotiations with the coal industry, with
the utility industry, with natural gas and other industries as
well. That goes right to the heart of this whole issue what we
are doing. And my bottom line here is that we do believe that
the coal miners of our country deserve a bridge to the future,
and we are trying to provide that in the legislation. Trying to
hold on to something that is not tenable is ultimately going to
come to harm those families.
That is our own belief, economically. And the reason--and
we will go back to Mr. Chiaro's point. The reason that we do
believe that we have to fund carbon capture and sequestration
is that we have to solve it for the rest of the world. We have
to develop a technology that can be used in China and in India.
That is our responsibility as a Nation. We are a technological
giant. We have the capacity to do this. The companies who are
at this table are investing in carbon capture and sequestration
technology. They are global companies, so they know that this
is moving towards some--not only here but in other countries as
well.
We are trying to provide the leadership and help the United
States be first in its deployment. So that is really what this
debate is all about. Okay? It is not whether or not we want to
harm the coal industry. We don't. It is, can we make compatible
the CO2 that is emitted from the coal industry with
new technologies in a way that creates a bridge to the future.
If we don't, I think the pathway is inexorable, and that is
down in terms of the amount of coal which is used in
electricity generation in our country.
As State after State passes renewable electricity
standards, there will be a higher and higher percentage of
electricity generated from those alternative sources. We have
all read the headlines in just the last couple of months with
ExxonMobil purchasing a basically unheard of small natural gas
company, which, along with six other natural gas companies,
have discovered enough natural gas in our own country to
increase natural gas reserves by 30 percent. And all of this
has occurred just in the last 2 years. So this pathway is one
where we want to partner with the coal industry to create this
new technology in partnership you.
And, again, I keep coming back to this because we do not
believe that this should be adversarial. We should try to
partner in order to try to find a way to accomplish this goal
to the mutual benefit of our country and the coal industry.
Otherwise, I am very much afraid that there will be negative
consequences for the coal industry because of the development
of alternative technologies and other electricity generating
sectors in our country.
And so I come back to use my 5 minutes to make that point
and, again, to invite the industry to partner with us to solve
the problem rather than continuing to engage in these kind of
historical remain demand debates about whether or not the
science is accurate or not. It is. But, rather, to really work
as to how we can construct a technological pathway for the coal
industry. If we do that, then it will be win-win.
The chair's time has expired again. Let me turn and
recognize the gentlelady from West Virginia, Mrs. Capito.
Mrs. Capito. Thank you, Mr. Chairman. I am going to respond
to some of your comments. I wasn't really going to say
anything, but I want to do want to say we have the top two
largest coal producing companies in our country. I did not
hear----
The Chairman. Actually, the three top.
Mrs. Capito. Three. Excuse me. I did not hear a pushback or
denial that CCS and increased technology and research is going
to be a bridge to the future. I think they are fully engaged in
this. They realize this is the bridge to the future, and that
this will continue to use our most abundant resource and keep
people working. You mentioned that we have used less coal--so I
think we have unanimous consent that this is the direction that
we need to go.
You mentioned that less coal was used in 2009. We had a
national recession. Many in my own district, we lost Century
Aluminum out of our district, which was the largest energy
consumer in our entire State, moved to, of all places, Iceland.
But that is an enormous hit across this Nation in terms of why
have we used less coal.
The other thing, you mentioned that no new coal plants or
coal-fired plants have been developed. This begs a whole other
issue, this whole permitting issue that we have been talking
about. This is an area that is pervasive in this administration
with the EPA and other regulatory agencies basically conducting
an anti-coal agenda. And I think that is part of what we are
seeing with the lack of permitting.
So I do think that we agree that CCS--I am really proud
that the first experimental AEP plant is in the second largest
coal-producing State in this country, in West Virginia.
The other thing that I think Mr. Chiaro has brought up sort
of peripherally but is not the subject of this debate or this
testimony is that the natural gas industry is going to have to
also be at the forefront of this technology to be able to exist
in the existing plants that we have right now.
And so I think, you know, that we realize in a State like
West Virginia, whose State economy is heavily reliant on coal,
that we need to begin to transition and transition into more
advanced and more refined technologies to be able to use this.
But at the same time, I have heard in the testimony, if we are
going to ask for renewable standards--and that is great. But
you are not calculating in we are going to have a larger demand
for all kinds of energy. Why wouldn't we consider putting CCS
or carbon sequestration as part of a renewable standard like
they have in Pennsylvania? And I am not sure if it is in our
West Virginia standard or it was put forth as a West Virginia
standard. But these are the kind of questions that have come
forth with me. And I think that acknowledging in your bill,
while I didn't vote for it, that $60 billion--also, somebody
says over here, well, you are saying you don't want $60
billion. Excuse me. The bill is over in the Senate. We haven't
even passed this. It is not like anybody is turning their head
down to $60 billion to try to invest in a technology that is
going to keep people working, make sense economically.
So we are just looking for commonsense solutions. Let's
look for a way to move forward. Maybe if we extend the
deadlines out to where the technology can catch up to where we
can meet admissions standards. These are the kinds of things
that I keep hearing. I don't hear a denial that this is not a
direction that we need to move as a Nation. Maybe where we are
in disagreement is how quickly and in what kind of blunt
instruments do we use to punish the middle part of our country
or a State like West Virginia or the State in the middle where
we are heavily reliant on fossil fuels to generate our energy.
We want a commonsense energy plan that has an all-of-the-above
solution that is going to meet these standards and move us
toward cleaner air.
So that is my comment. Thank you.
The Chairman. I thank the gentlelady. The gentleman from
Washington State, Mr. Inslee.
Mr. Inslee. Thank you. We haven't talked about what we did
in the stimulus bill, either, which was put $3.4 billion in to
pursue carbon sequestration technology, including $20 million
for a company called Ramgen, which is pursuing a compression
technology which can make CCS more energy efficient by reducing
compression costs. I just want to note that.
I wanted to ask, I will just ask Mr. Boyce, I guess. Let me
ask Mr. Leer. I have already run out my quota with you, Mr.
Boyce. I want to ask you about the economics of carbon
emissions. Paul Krugman wrote a really interesting piece about
the economics of carbon emissions, and I recommend it to anyone
who is interested in the economics of this issue. Basically,
what he was arguing is that coal competes with other sources of
energy. It competes with wind energy, it competes with
hydroelectric energy, it competes with solar energy.
Those three technologies don't put meaningful amounts of
carbon dioxide. They do, in part, because you have to
manufacture the stuff to make it. But certainly less than coal.
And yet, so they are competing--you are competing with these
other if I can just call them cleaner from a CO2
aspect technologies. And yet, in the current state of the law,
we allow one industry, the coal industry, to put gigatons of a
pollutant, carbon dioxide, into our atmosphere which we all own
jointly in unlimited amounts at zero cost, and that is using up
the limited carrying capacity of our atmosphere. And I think
any economist would look at that and say that is an
externality. You are using up, you are costing society
something, because you are using up our atmosphere's ability to
absorb pollutants, but you are not paying anything for it and
there is absolutely no limitation today whatsoever. You can put
as many gigatons as you want without compensating the public
for that loss at all, nor is it regulated.
Now, there is two ways to deal with that. One is to
regulate the amount going in; or, two, to impose some costs
associated with that. And I guess I would just ask you, from an
economic fairness standpoint, and realizing there is all kinds
of issues about how to do this. Mr. Boyce expressed some of the
concerns about the existing bill. I guess, Mr. Leer, do you
think it is fair for the coal industry to be able to impose
this cost on the rest of the world and be able to put unlimited
amounts of carbon dioxide in the atmosphere at zero cost from
an economic standpoint? Do you think that is a good economic
system?
Mr. Leer. Congressman, I appreciate what your question is,
and there is always a large debate on externalities and what
price they should be and the real cost. But I think it is
reflective also in your not addressing in your question at
least the other side of the equation, is that coal is the most
competitive fuel source typically in most applications around
the world other than hydro. And then you can get down into
externalities there and the other questions. And that low cost
gets passed on to consumers.
So can there be a price on carbon? Yes, there can be a
price on carbon. And will that ultimately end up in consumers'
cost of electricity, cost of products? Yes. That is the system
ultimately that will be translated, or the business will go out
of business. That can happen as well.
Today, when you look at all of our renewables, the way we
are established in promoting renewables is to subsidize them
heavily to try to make them more competitive with fossil fuels.
And that is okay. That is what we are going to have to do with
carbon capture and sequestration as well.
So in the premise, could there be a cost for carbon?
Certainly. Will that cost ultimately end up in the price of
electricity, in the price of all goods and services in the U.S.
or elsewhere in the world? Yes.
Mr. Inslee. So let me ask you, the experience we have had
on trying to drive new technologies. When we needed a new
technology to deal with sulfur dioxide, which scenario
occurred? Scenario A, the industry on its own devices went out
and made an investment to develop the technologies to deal with
acid rain and develop the technologies to reduce sulfur dioxide
emissions? Or, did scenario B take place, that the U.S.
Congress imposed some cap, if you will, on the amount of sulfur
dioxide going out, create a price associated with that
pollution, and the industry then in response to that developed
the technologies to solve that problem? Which occurred?
Mr. Leer. Well, as you are well aware, the Congress did
within the Clean Air Act, both phase one and phase two, tighten
SO2 regulations. And ultimately the technologies
advanced and were put into place.
The issue with SO2 compared to carbon is
SO2 frankly was more regional in the U.S.
CO2 is global. And the point here, and also at the
time, I think, if we go back--and we are going back to the very
beginning of my career. There were alternatives. You know,
utilities could do in an economic evaluation of moving to low
sulfur coal. Scrubber technologies did exist. They got advanced
further as a result of I think the legislation, but they were
in existence. And we just find ourselves earlier in the
technology curve at the moment.
Mr. Inslee. If the chair would indulge me just one more
question, if I may. Do you really think the industry would have
solved the acid rain problem by itself in the absence of a
regulatory requirement that they do so? Do you think they
voluntarily would have made those investments, looking at it in
retrospect.
Mr. Leer. One, I am in the coal industry, you are really
asking a utility question. But I think the utilities would have
started to address it. I think legislation advanced it further.
Mr. Inslee. Thank you.
Mr. Leer. Or faster.
Mr. Inslee. Thank you. I would point out we don't have a
lot of time on this one, either.
Mr. Leer. That is why carbon capture and sequestration is
so critical.
Mr. Inslee. As is this bill. Thank you.
The Chairman. And while we have you here and you are the
experts in the field, perhaps we can get brief comments from
you on this: The U.S. Mine Safety and Health Administration
cited the Upper Big Branch Mine with 1,324 safety violations
from 2005 to 2010; in March of this year alone the mine cited
53 safety violations, including improper failure to ventilate
the combustible gas methane. Is that a typical rate of
violations for mines and can you give us your sense of what is
needed in this mine safety area in order to make sure that we
reduce the likelihood that other families won't suffer what is
now being borne by those families in West Virginia?
Mr. Chiaro.
Mr. Chiaro. Well, I am a board member of Cloud Peak Energy,
the former Rio Tinto division, and I am happy to say that we
have the best safety record of the mining industry at Cloud
Peak. And Rio Tinto generally has a very good safety record. We
don't see the kind of level of violations that you are talking
about at any of our mines.
To be fair, our mines are in the Powder River Basin, they
are open cut mines, tend to have a different set of hazards
associated with them than the underground mines in the East,
and so I would expect there to be some difference. But I would
have to say if I saw that level of violations at one of my
mines I would be quite concerned.
The Chairman. Thank you. Mr. Carey.
Mr. Carey. As I mentioned in my written testimony, Mr.
Chairman, and also I believe in my oral, the importance of mine
safety is very critical to Ohio. Anybody--I do want to give an
anecdotal example just real quickly. I was driving in and there
is a barn on my way to the airport from my house in Ohio, and
on that barn it says, every day is Earth Day to a farmer. And I
can assure you that every day is Mine Safety Awareness Day to
every coal operator and every coal miner that goes into the
ground every day.
The issues revolving around this tragedy, we do not know
all of the answers yet, I don't know the level to what the
seriousness, the size of the fines or the amount of fines or
the size of the mine or any of that. It is not in Ohio, but I
can assure you it will be addressed and we just have to keep
those miners and their families in our prayers.
The Chairman. Mr. Leer.
Mr. Leer. You know safety and environmental compliance are
core assets and values with us. When we look at violations we
report them. Every week I get a report. If it is serious I get
it instantaneously. If you look at operations like ours that
operate large deep mines, large surface mines across the entire
United States, we would argue with our peers, and it is a bit
different than the profile that Preston talked about, was we
really think we do lead the industry in overall safety
performance, incident rates, lost time rates, and we set a
standard that really our board doesn't even allow us to compare
ourselves to the industry. We can only compare ourselves to
ourselves. And last year was a record, the year before, beating
the year before record. This year we are off to a record start.
We will see how the year finishes. We take it very seriously,
the number of violations that have been reported, and I
certainly haven't verified those myself, and I think you have
to look at the severity of the violations because within the
framework of the coal industry it is true that the big mines
virtually every day are being inspected by a State or Federal
inspector. And some violations are very, very serious and some
are really almost a traffic ticket approach. And the key that I
always preach to all of our employees is we take them all very
seriously, but if there is a violation out there that has
endangerment and really a major concern on safety, you better
be on it before the inspector gets there, let alone when the
inspector is there. And we will fix them immediately.
The Chairman. Thank you. Mr. Boyce.
Mr. Boyce. You know we again feel like we are partners with
both Steve and Preston in terms of trying to drive much better
safety performance throughout our industry. 2009 was the safest
year in our 126-year history, and over the last 3 years we have
improved our safety performance over 40 percent. And we start
every meeting within the company with a safety contact or a
safety discussion, including our board meetings. So it is an
issue that we deal with on a daily basis. Our safety vision is
to be incident free at all of our operations, and we run 29
operations within the U.S. and Australia.
The issue of violations is one we treat every violation to
look at and understand the underlying cause as to what occurred
and why that violation was there and what we can do to rectify
the situation.
We had, as an example of how seriously we take this, we had
an operation in Illinois several years ago where we had a high
level of violations. As we looked, brought in the safety
professionals in the company to look at that, we determined we
could not continue to mine that operation safely and we
actually went through with the decision to shut that operation
down. We were fortunate to be able to move all of our employees
to another operation in the area, but we had to then take the
financial impact with the customers to make that decision. It
is just something that you have to do. We have an obligation
and we have a view. I joined the industry in 1977, the passage
of the initial Safety Act. And when I joined the industry
accidents were statistics; what we have tried to drive in the
industry is every employee deserves the right to go home safe
every day and we are not going to be happy until that happens.
And we look at those citations and at our safety statistics
very, very carefully, every day.
The Chairman. Thank you, Mr. Boyce, very much. We thank our
panelists for their participation here today. This issue of
coal is right at the heart of the question of whether or not we
are going to control dangerous greenhouse gases while at the
same time enhancing our national security and creating jobs
here in the United States. That is our goal. And what I would
basically recommend to the industry is that they do engage in
the Senate in their efforts right now to find a bridge to the
future for the coal industry. We believe that Waxman-Markey is
that bridge, but we also do not believe that it is in any way
not capable of being improved. And so we would urge you to work
towards that goal. There is an inevitability to there being a
price placed on carbon, it is going to happen. And so I think
the better course, one not adopted by the auto industry, would
be to try to start out where you are going to be forced to wind
up anyway because ultimately there are partnerships here,
constructive partnerships, that be want to basically put
together with the industry in order to achieve those goals.
Mr. Boyce said earlier we should leave the science to the
scientists, and we have a letter from 18 scientific groups,
scientific organizations saying observations throughout the
world make it clear that climate change is occurring and
rigorous scientific research demonstrates that the greenhouse
gases emitted by human activities are the primary driver.
So that is the world and we should not be in denial, but
rather we should be engaging this. We do believe that we can do
so in a way that preserves coal mining jobs in our country. I
am working with you in partnership to make coal mining a safer
industry. We can do so for one that for the rest of the century
continues to have coal as a central part of our industrial
sector.
We thank you for your participation. We want to work with
you closely in these months ahead. And with that, this hearing
is adjourned.
[Whereupon, at 11:48 a.m., the committee was adjourned.]
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