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National Coal Council Meeting

June 7, 2007 - 1:40pm

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Remarks As Prepared By Deputy Energy Secretary Clay Sell

Thank you, Georgia [Nelson, Chair of the NCC].

I am grateful for the opportunity to be here this morning.

Before I begin my remarks, I'd like to take a moment to honor the late Senator Craig Thomas.  As everyone in this room knows, Senator Thomas was an important voice in the shaping of this nation's energy policy for more than a decade.  He was a dedicated and distinguished statesman and a champion for the enduring importance of coal in our nation's energy future.  He was a friend to us all and I, personally, will sorely miss him.

The Department of Energy values the input and insights we get from the National Coal Council.  And you all have been an important part of our efforts to address our nation's short- and long-term energy needs.

Coal has a vital role in the President's vision for greater energy security and I'll speak to it at length in a moment, but before I do that, I believe it is important to provide the context of the new energy reality we face internationally and domestically, and to explain what steps the Bush Administration is taking to address them.

To begin, I believe this new energy reality is driven by three principle causes:

  1. Extraordinary surge in demand
  2. Geopolitical instability
  3. Carbon constrained energy future

Those are the root causes for the new energy reality.  The five policy areas we in the Administration are undertaking to address these challenges are:

  1. More traditional energy sources from a diversity of suppliers
  2. More alternatives (biofuels, nuclear, coal with CCS)
  3. More efficiency (2007 State of the Union fuel economy announcement)
  4. Strong bias toward lower carbon technologies
  5. Infrastructure - to build and secure (generation, transmission, refineries)

But let me return specifically to the issue of coal, where I think it is important to discuss the term, "clean coal."  It is a term that is used often in the lexicon of the industry and the lexicon of government, but I believe it understates the significance of the underlying issues involved.

Because when we talk about "clean coal," it inevitably leaves the focus on coal - when the focus should really be on the technology that enables us to use coal more efficiently, and in a cleaner and more environmentally secure manner.

I believe the terms that we use matter as we talk about the new energy reality, because we must remind people that there are great challenges to confront if we want to continue to rely on coal as our major energy source, while at the same time reduce the amount of greenhouse gases in our atmosphere.  And so the President has made the research, development, and implementation of advanced coal technology a priority for this government and this nation.

But while this technology holds great promise, we must be realistic about the difficulties and scale of its implementation.  As you all know, advanced coal technologies have major cost, integration and reliability hurdles that must be overcome before they can be widely deployed.

We in the Federal government seek to address those challenges by establishing partnerships with the private sector, creating innovative new programs such as CCPI, and through the use of loan guarantees and tax credits.

Today, we see one such result of these partnerships with the private sector, as the National Coal Council presents the Department of Energy with its report on technologies that will help reduce -- or capture and store -- carbon dioxide emissions.  Secretary Bodman requested this report, and I know its conclusions will receive careful study.  The report is the culmination of one year of hard work by many of you in this room - and on behalf of Secretary Bodman and the entire Department, I thank you.

Another example of partnership is through our work with the seven Regional Carbon Sequestration Partnerships, which are conducting field tests of deep geologic storage.

This week, we received applications from each of these Partnerships that will put large volume CO2 injection projects in place throughout the United States.  These projects will demonstrate the ability to permanently and safely store CO2 from power plants and other industrial sources.  These large scale tests are needed to prove that sequestration technologies can be commercialized - and in the future, can be used to effectively mitigate greenhouse gas emissions.

Our engagement on the FutureGen project is another example of our partnership efforts on coal.  As most of you know, the field of candidate sites has been narrowed to a final four and we anticipate a final site selection this fall.

FutureGen is an exciting project, but as with any project of this complexity and magnitude, cost is increasingly becoming an issue of concern and it's a matter we are taking very seriously at the Department of Energy.

I expect that many of you are aware of the recent escalation of costs in the heavy industry sector, so we are working closely with our partners, the FutureGen Alliance, to identify ways to limit the project costs and ensure that the project is not only technically feasible - but financially and politically sustainable as well.

Finally, I am pleased to make an announcement regarding our work with the IRS to complete the awarding of the $1.65 billion in tax credits for advanced coal technology projects authorized by the Energy Policy Act.

The IRS and DOE share responsibility for these tax credits - with DOE in charge of certifying the projects and the IRS responsible for awarding the credits.  These tax credits are an important way to foster the early deployment of advanced coal and gasification projects in commercial use.

You may recall that last November, the IRS awarded $1 billion in credits to support nine advanced technology plants in the categories specified by the Act - two for IGCC generation using bituminous coal; one IGCC project using lignite; two using advanced coal generation technology other than gasification; and four using gasification not limited to coal.  The application period for the second round of tax credits began immediately after these awards were announced.

This morning, I am pleased to announce some important new details about round two and the $650 million dollars in tax credits remaining.

First, in addition to certifying projects, DOE will now also rank the projects according to certain criteria, with the highest priority given to projects that introduce the practice of capture and sequestration into commercial use.  To be given priority, a project must capture and store at least 50 percent of CO2 produced - and the higher a project's ratio of capture, the higher priority it will be given.

Next, the deadline to apply with the Department of Energy for certification has been extended -- from June 30th to October 31st, allowing companies more time to adjust to these new guidelines.  The IRS will then award the second round of tax credits next March.

In addition, we have listened to some of the concerns that were raised during the first round and sought to address them in this second round.

A technical oversight in the first round precluded sub-bituminous coal from being considered for the tax credits, and so we have added a provision to accommodate IGCC projects using sub-bituminous coal.  Also, the definition of coal - for the sake of these projects - has been expanded to include waste coals.

So through the partnerships I've discussed, the new programs, and the tax credits, we are promoting the development of advanced coal technology projects that harness greater efficiency, which in turn delivers more energy while either eliminating - or slowing the growth of -- greenhouse gas emissions.

We cannot ignore the great challenges we face when it comes to meeting the challenges of this new energy reality - but we are on the right path.  President Bush provided the vision six years ago.  Since then, we have worked together on developing the plans and technologies to best realize that vision -- and today, through public/private partnerships we are finally beginning to see those plans become reality.

This success is in no small way thanks to many of you, who have invested your time and effort into addressing America's greatest energy challenges.

With your continued support, we can keep building on these successes and ensure that coal will be an environmentally-safe and plentiful source of energy for the United States and the world well into the future.  Thank you.

Location: Washington, DC

Media contact(s): Megan Barnett, (202) 586-4940

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