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INTERNATIONAL ZERO EMISSION COAL WORKSHOP 2009

TOYKO, JAPAN

February 23, 2009

US Perspectives on Near Zero Emissions Coal

Dr. Victor Der

Acting Assistant Secretary for Fossil Energy

U.S. Department of Energy

Greeting

I want to thank our friends and hosts at RITE and METI for inviting me to

speak here today at this International Zero Emission Coal (IZEC) Workshop.

I also wish to thank Director General Kaya for his opening remarks, and

thank everyone who worked so very hard to bring this workshop together.

Finally, I would just like to note that we at the U.S. Department of Energy

(DOE) appreciate the cooperation between RITE and our National Energy

Technology Laboratory on capture technology. We welcome continued

collaboration in this area.

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I have been asked to talk today about the United States’ perspective on Near

Zero Emission Coal and the status of our programs. Our perspective is

shaped by the necessity and global importance of coal as an energy source,

as well as the environmental challenges facing coal today and in the future.

The Importance of Coal as an energy source

In the United States, as in many parts of the world, coal is a strategic and

secure energy resource. It is the most abundant and least expensive fossil

fuel in the United States. Current recoverable reserves of coal are projected

to last about 240 years at today's usage rates and prices.

In 2007, the United States used 1.1 billion tons of coal. This usage is

expected to increase by 37 per cent -- to an estimated 1.5 billion tons -- by

2030 according to the Department of Energy’s Energy Information

Administration (EIA). Coal accounts for almost one third of America's total

energy production and approximately half of all U.S. electricity generation --

and it will remain a major source of energy in the United States well into this

century.

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But coal is not vital only to the U.S. Globally, it has been the fastest

growing fuel for the past 5 years. China alone is adding coal-based

electrical capacity equivalent to the entire U.S. coal-fired fleet every 4 years.

According to British Petroleum, coal consumption in China grew 7.9% in

2007, which was the lowest growth rate since 2002.

With the growth in fossil energy use, including coal, there will be an

increase in the carbon emissions unless we take some substantive mitigation

actions. In 2004, CO2 emissions by developed nations and developing

countries were about equal. The DOE and the International Energy Agency

(IEA) project that by 2030, emissions by developed countries will increase

by 30 percent, while that of developing countries will double. In response to

this anticipated growth, the IEA has called for a global “Energy Revolution”

to respond to the climate change issue. Meeting this challenge will require a

collective effort -- one that includes reducing carbon emissions through

carbon capture and storage (CCS).

The heart of the issue is that climate change mitigation is complex.

The climate change challenge goes beyond just the reduction of atmospheric

greenhouse gas – or GHG -- emissions. It is intricately tied to the economic,

energy, environmental and national security of every country. And climate

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change mitigation strategies must consider these security aspects. There is

no single “silver bullet” or single approach to resolving this issue.

International organizations (like the IEA) recognize the need for a

combination of approaches to reduce greenhouse gases. As the world’s

population continues to grow, so does the desire and drive for a better

standard of living. In order to meet the climate challenge, we collectively

must adopt approaches to meet the world’s energy needs while reducing the

greenhouse gas “footprint”.

When we speak of near-zero emissions coal or other fossil fuels in the U.S.,

we are most definitely including carbon emissions. Given the world’s

current and projected reliance on fossil fuels, carbon capture and storage is

essential to achieving global greenhouse gas stabilization. In fact, analysis

by the International Energy Agency indicates that CCS represents nearly 20

percent of the reductions needed to achieve GHG stabilization -- and without

it, stabilization is not likely to be achieved by the end of the century. So,

the continued environmentally responsible use of fossil fuels will require

CCS. But for CCS to be realistically feasible it also must be made affordable,

safe and effective over the long term.

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There are many challenges to realizing CCS as a part of the global

solution to climate change.

In order for CCS to be a viable solution to climate change, a number of

barriers must be overcome. The first is to realize the magnitude of the issue.

Global emissions of carbon dioxide are projected to rise dramatically from

about 28 giga tonnes of CO2 per year to over 42 giga tonnes by 2030.

Another challenge is to garner broad acceptance of CCS. Widespread

support for this technology requires confidence in its safety and

effectiveness. This confidence must be based on feasible technology and

evidence backed by solid science -- which help create a sound regulatory

framework for storage. Quite simply, the public must be given the facts

about CCS before they accept it as a solution.

A third challenge is the current high cost of capture. For example,

implementing a large-scale capture system using currently available

technology would diminish the capability of a conventional pulverized coal

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plant by approximately 30 percent or more. Affordable CCS solutions must

be developed in order for broad deployment to be realized. Considerable

research is underway to bring the cost down – but additional significant

investments in research, development, and demonstration of advanced low-

cost technologies are needed.

And this leads to the fourth challenge -- raising the investment to develop

infrastructure for CCS. Capture devices must be added to point sources.

Regional (and perhaps national) pipeline networks must be developed in

order to transport the CO2. Injection and storage systems must be installed

with equipment to measure, monitor, and verify the safety of the stored CO2.

All of this infrastructure will require extensive investment. And that

investment is difficult to make unless two other challenges are addressed:

the regulatory framework for storage and carbon valuation.

There is currently no regulatory or legal framework for carbon storage in the

United States. The absence of such a framework creates uncertainties

associated with long term storage liability. Regulatory, legal, and liability

issues must be addressed as a necessary condition for widespread CCS

deployment.

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A final challenge is the pricing -- or valuation -- of carbon. Whether this

takes the form of credits from a cap and trade scheme, an auction or tax,

the valuation will affect the decisions and actions taken, including the

extent and speed of CCS deployment. Nevertheless, continued research

and development to make CCS an affordable option even without

valuation is necessary for global deployment -- especially in developing

economies.

This brings me to the U.S. Program on Near Zero Emissions Coal. This

program is focused on getting us ever closer to near zero emissions through

affordable and effective technology. And we seek to have this technology

available for full commercial deployment by the 2025 to 2030 timeframe.

This time frame puts CCS on a path -- along with other efforts -- toward

achieving GHG stabilization. Full commercial deployment means that every

coal plant will be equipped with advanced CCS and will be competitive with

other low greenhouse gas energy systems.

To this end, the U.S. has been engaged in CCS research for the past decade,

and much has been learned. Primarily, that early work has taught us what

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needs to de done to make CCS an acceptable reality. From the technology

perspective, that includes doing the necessary research and development,

demonstrating the technology; deploying CCS early; and providing the

information and experience to all to use with confidence. From the

infrastructure perspective, it means putting into place the necessary legal,

regulatory, and policy framework for carbon storage. This includes the

ownership rights, transport, storage, and liability. But more importantly – as

I mentioned earlier -- CCS must be broadly accepted. Again, the public will

want to have confidence that CCS is safe and that resources will be deployed

to mitigate or resolve any issues that may arise.

I would now like to go over several aspects of our CCS program. I will also

show how our CCS program is integral to the Near Zero Emissions goal,

primarily with the focus on coal. But the main point is that if CCS can be

made to work reliably, affordably, and safely on coal, then it should work on

other sources of carbon emissions as well.

Now for the U.S. research and development effort.

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One of the key focuses of our research and development is the reduction of

the cost and energy penalty of CO2 capture and transport. This includes

optimizing systems with advanced component technologies to offset part of

the lost efficiency and output capacity from the inclusion of CCS. It also

includes developing low-cost CO2 separation and compression technologies

that exact a low energy penalty. These include such components and

subsystems as oxygen membrane separation, hydrogen separation for

gasification, advanced supersonic compression, hydrogen fueled turbines

including advanced low-nitrogen oxide combustors, and high temperature

steam turbine blades. Additionally, we are working on high temperature

boiler tube and structural materials with corrosion resistance, as well as

reliable fuel feed systems. We have extensive modeling and simulation

capabilities to help us in this effort, focusing on the integration of CCS with

plant systems -- including the dynamics of plant operations. For combustion

systems, our near-term target is to achieve a cost of electricity or energy

premium that is lower than 35 percent when CCS is added. Our long-term

goal is a premium of less than 20 percent when CCS is added. We seek to

meet these goals by retrofitting or repowering existing coal plants and

industrial facilities with advanced back end CO2 stack capture. This is a

high priority in our CCS program since we must address both the existing

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fleet and the continued construction of conventional pulverized coal plants.

To this end, in 2008 we awarded 36 million U.S. dollars for 15 novel capture

technology innovations that will be applied to existing plants. Our plans are

to expand research and development in CO2 stack capture. We are also

investigating oxyfuel systems with supercritical steam integrated with CCS.

The advantage of an oxyfuel plant is that it produces a relatively

concentrated stream of CO2. This technology, while promising, has its

challenges. Specifically, it requires considerable oxygen generation for

combustion, and the captured CO2 must be compressed from atmospheric

pressures. In the gasification area our target is a 10 per cent COE premium

when adding CCS, since Integrated Gasification Combined Cycle -- or

IGCC -- currently has a higher capital cost than conventional pulverized coal

plants. We are developing IGCC with pre-combustion carbon capture. We

are also examining the prospective benefits of coal with biomass to liquids

with CCS.

The other major research area focuses on geologic carbon storage,

specifically on issues regarding safe and effective long-term geologic

storage. Our Regional Carbon Sequestration Partnerships (RCSP) support

activities and research in these areas (I will speak more about these

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partnerships later). We are also developing monitoring, measuring, and

verification – or MMV -- technology for site characterization, CO2 injection

and storage behavior. To this end, we are pursuing risks assessment and

modeling research activities using real field data inputs. And we are

integrating sequestration science with technology to ensure CO2 storage

stability and permanence. A key part of the storage effort has been the

estimation of geologic storage capacity. The DOE has compiled an updated

atlas of its CO2 storage capacity in the United States and parts of Canada.

This atlas matches major point sources of CO2 such as power plants with

potential storage sinks. The results have shown that saline reservoirs have by

far the largest potential. Additionally, depleted oil and gas fields -- as well as

deep coal seams -- also have significant storage capacity. Altogether, the

potential storage capacity for CO2 in the U.S. and North America is several

hundred years.

The other major element of our CCS program is Large-scale

Demonstrations of CCS technologies

In order for CCS to be deployed, the integration of these technologies must

be demonstrated at sufficient scale. A number of efforts are underway. Our

Regional Carbon Sequestration Partnerships are currently in the large scale

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field test demonstration phase. During this phase, the projects will gather

monitoring and measurement data on injection and storage behavior of CO2

in various formations. We are also pursuing operational integration and

reliability of CCS with other commercial scale energy and industrial plants

through the FutureGen and Clean Coal Power Initiative programs. We are in

the process of evaluating proposals for these programs and will make

decisions on selections later this year. These demonstrations will provide

essential project experience with integrated CCS systems and with the

process of siting and permitting CCS. An important outcome of our

demonstration programs is the invaluable and necessary experiences to

develop best practices and methodologies. These documented practices

form the basis for acceptable standards for industry and third party

verification of safe and effective geologic storage.

To encourage early deployment of large-scale demonstrations, a number of

incentives have been enacted. These include: cost-shared public-

partnerships on CCS demonstration; investment tax credits; and loan

guarantees. We have encouraged early opportunities for CCS such as

linking it to enhanced oil recovery -- or EOR. The CO2 from integrated

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CCS plants can be transported to EOR projects. EOR can be an early market

pull for adopting CCS as a source of CO2.

As the end-user of the technology, industry is beginning to address CCS

liability and insurability issues. For example, the Zurich Financial Group

recently announced that it is offering insurance products for geologic carbon

storage. As more CCS data, experience and best practices are developed and

assessed, the cost of coverage can better reflect the risks. Early activities in

CCS deployment using market mechanisms -- such as CO2-based EOR --

also allow time to develop affordable CCS technologies for future direct

geologic storage without the need for a cost offset.

I now would like to highlight our efforts in three specific large-scale

demonstration programs that will advance the deployment of near zero

emission systems.

First, the DOE’s Regional Carbon Sequestration Partnerships (or

RCSP) Program.

Under this program, DOE is funding a network of seven regional

partnerships to help develop the technology, infrastructure, and best

practices for implementing sequestration in diverse geological formations in

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the United States and Canada. This approach includes engaging local

organizations and citizens to contribute expertise, experience, and

perspectives that represent their concerns and goals.

The seven Regional Partnerships that form this network currently include

more than 350 expert organizations, including laboratories, universities, non-

governmental organizations, and private companies spanning 42 U.S. states,

and four Canadian provinces. Collectively, the seven Regional Partnerships

represent regions encompassing almost all of the geologic sequestration sites

in the United States that are potentially available for carbon sequestration.

Through the Regional Partnerships, DOE is evaluating numerous

sequestration options to assess which are best suited for different geologies

of the country. The Partnerships are also developing a test framework to

validate and potentially deploy the most promising technologies.

DOE’s sequestration field test program is structured on a multi-phase

approach. The first is the Characterization Phase, which was initiated in

2003. It focused on characterizing opportunities for CCS, and identifying

CO2 sources and storage locations. The Characterization Phase was

completed in 2005 and led into the second phase -- the Validation Phase.

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The Validation Phase focuses on field tests to validate the efficacy of carbon

sequestration technologies in a variety of geologic storage sites throughout

the US. The extensive data and information gathered during the

Characterization Phase, allowed DOE to identify the most promising

opportunities for carbon sequestration, which led to the carbon storage atlas

that I had mentioned previously. We are now performing widespread,

multiple geologic field tests on these locations -- more than 30 field tests in

total. The tests include projects in deep saline formations, unmineable coal

seams, depleted oil and gas fields, and basalt formations. This Regional

Partnership program is also addressing key infrastructure issues related to:

regulatory permitting, the transportation of CO2, pore space ownership, site

access, liability, and public outreach and education.

With the Validation Phase well underway, the third phase --Deployment --

was initiated in 2008. This phase is focused on conducting large-scale

injection tests. These tests are aimed at confirming the representative scale

of CO2 transport, injection, and storage -- as well as being candidates for

future commercial CCS deployment in these geologic formations. The

geologic formations being tested during this phase represent vast geographic

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coverage, large storage capacities, and natural impermeable seals that are

expected to ensure the safe long-term storage of CO2.

As we pursue these field projects, DOE will develop best practice manuals

for properly conducting geologic storage activities. These will include

guidelines for site characterization, site construction, operations, monitoring,

mitigation, closure, and long-term stewardship. These guidelines will allow

us transfer the lessons learned from DOE’s funded sequestration research to

all stakeholders and future CCS projects.

FutureGen

You have no doubt heard or read about the change in direction of FutureGen

last year. As you may recall, the original focus of the government-industry

FutureGen partnership was on providing a large scale research test facility.

This facility was to serve as an integrated platform to test advanced

components that would, if successful, be incorporated in follow on

commercial demonstrations. Its goal was to test the technical feasibility and

economic viability of integrating CCS with advanced IGCC coal power

plant technology. With the change in direction from this original focus, the

FutureGen program was restructured last year. It was redirected towards

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integrating existing CCS with commercial plants to gain experience in siting,

permitting and real commercial operations. Each approach has merit as each

focus on a portion of the aspects necessary for successful commercialization.

The original approach focused on large scale, integrated advanced

technologies. The restructured approach focuses on gaining early

experience with CCS in commercial settings. Both approaches can provide

valuable experience and data on integrating CCS with power plants. The U.S.

is currently examining the options on the path forward in the context of

designing an optimum overall CCS program and the associated funding

priorities.

A solicitation of proposals for possible FutureGen plants was issued on June

24, 2008. Several proposals were received by the October 8, 2008 deadline

and are currently being reviewed. Additional information has been

requested from some of the proposers.

CCPI

The DOE issued a third round solicitation for proposals on the Clean Coal

Power Initiative (CCPI-3). CCPI-3 is focused on advanced coal based power

projects integrated with carbon capture that would allow the captured CO2

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to be used for beneficial uses such in CO2 based enhanced oil recovery

operations. In CCPI-3, the DOE will provide up to 50 percent cost sharing

on the CCS related portion of a project

The goal is to help potential low-cost and efficient technologies to test in

clean coal demonstrations integrated with CCS. CCPI requires:

· 90 per cent carbon capture efficiency of the CO2 in the gas stream;

· The capture of a minimum of 300,000 tons CO2/year with the

option of beneficial reuse or storage of the CO2; and

· A minimum of 50 per cent cost share from participant in the

demonstration;

A solicitation was issued on August 11, 2008 seeking project proposals.

Proposals were received in January, 2009, and the review and evaluation

process has begun.

Let me turn now to the topic of international collaboration and

cooperation:

International organizations provide forums and platforms to share

experiences and information on projects, lessons learned, feasibility, and

strategies for garnering broad acceptance of CCS. The Carbon Sequestration

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Leadership Forum (CSLF) has been effective in this regard. CSLF’s

success in advancing CCS globally is the result of efforts by its Policy and

Technical Group as supported by the Secretariat. These activities included

the formulation of a strategic plan, a technology roadmap that is currently

being updated, and various task force activities -- including CCS capacity

building for developing countries. The CSLF recognizes bonafide CCS

projects, and makes available updated project progress and data. CSLF task

force activities have also included assistance in estimation of storage

capacities for countries and matching sources and sinks. Another important

international effort is the International Energy Agency’s Greenhouse Gas

Research Programme. This program has focused on coordinated stakeholder

efforts in greenhouse gas analysis and has pointed up the importance of its

CCS research and development projects. We eagerly await the newly

formed Global Carbon Capture and Storage Institute contribution in assisting

and supporting CCS project demonstrations. The GCCSI will be discussed

in greater detail in the next lecture.

Another example of our international cooperation on CCS is the Weyburn-

Midale project in Canada. This project is probably one of the first large

scale demonstrations of a gasification plant with CCS linked to EOR. Here,

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the CO2 is captured from the Great Plains Dakota Gasification Plant in

North Dakota and sent by pipeline to the Weyburn-Midale EOR operations

in Canada. One could consider this to be the first of the 20 CCS

demonstrations the G-8 has called for by 2020. The Weyburn project is a

prime example of market demand for CO2 from CCS.

Ultimately, bilateral and multilateral cooperative activities on CCS are

important for two reasons. First, they allow countries collectively to

accelerate their CCS technology and knowledge base more broadly, while

leveraging costs. Second, they allow the necessary transfer of technology

tools and experience in CCS (via projects) around the world for developed

and developing countries.

Concluding Remarks

To summarize, the long-term global dependence on fossil fuels demands that

solutions to GHG reductions be available sooner rather than later.

Population growth and economic development requires clean energy and

electricity for prosperity and security. This demand will stretch the needs

for all forms of clean energy. However, energy production must reflect

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concerted efforts to address climate change mitigation, particularly the

carbon emissions from human activity. Meeting this goal will require all

pathways to GHG reductions through low or no carbon solutions. These

pathways include efficiency and conservation measures, renewable sources,

nuclear, and fossil fuels with CCS. We need advanced, affordable and

effective technologies to get us there.

As I said earlier, no single “silver bullet” can meet the climate change

challenge. We can, however, draw our bows and aim an array of strategic

technology and policy arrows to target the slow-down, arrest and reversal of

the greenhouse gas emissions trend. And CCS is an essential arrow in our

quiver. In fact, it is hard to see how we can achieve global CO2 stabilization

without CCS. However, I believe that if we act collectively,

conscientiously and cooperatively, we can reach our target in time.

In conclusion, the U.S. is poised to engage in meaningful, substantive

cooperation in CCS and zero emissions technology R&D and

demonstrations. This cooperation can enable all of us to learn by doing, and

help expand the technology better, faster and cheaper. And cooperation will

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allow us all to work toward broad global acceptance of zero- emissions and

CCS in developed and transitional economies.

Because we share the same planet, we must work toward common solutions

for a sustainable future – a future that involves all forms of clean energy,

including near zero emissions fossil fuels. And we must do so even in the

face of current economic challenges. The challenges are great – but so are

the opportunities. Together, I am convinced that we can address the

challenges and take advantage of the opportunities.

I thank you for your attention and the opportunity to address you today.