Hearing of the Energy and Environment Subcommittee of the House Science and Technology Committee

Statement

HEARING OF THE ENERGY AND ENVIRONMENT SUBCOMMITTEE OF THE HOUSE SCIENCE AND TECHNOLOGY COMMITTEE
SUBJECT: THE BENEFITS AND CHALLENGES OF PRODUCING LIQUID FUEL FROM COAL: THE ROLE FOR FEDERAL RESEARCH
CHAIRED BY: REP. NICK LAMPSON (D-TX)
WITNESSES: DR. ROBERT FREERKS, DIRECTOR OF PRODUCT DEVELOPMENT, RENTECH CORP.; JOHN WARD, VICE PRESIDENT MARKETING AND GOVERNMENTAL AFFAIRS, HEADWATERS, INC.; DR. JAMES BERTIS, SENIOR POLICY RESEARCHER, RAND CORPORATION; DAVID HAWKINS, DIRECTOR CLIMATE CENTER, NATIONAL RESOURCES DEFENSE COUNCIL; DR. RICHARD BOARDMAN, HEAD OF THE SECURE ENERGY INITIATIVE, IDAHO NATIONAL LABORATORY; DR. JOSEPH ROMM, DIRECTOR AND FOUNDER, CENTER FOR ENERGY AND CLIMATE SOLUTIONS

BREAK IN TRANSCRIPT

REP. BOB INGLIS (R-SC): Thank you, Mr. Chairman. I appreciate the opportunity to participate in this hearing, and this afternoon Coca Cola and United Resource Recovery Corporation will be announcing their intent to build in Spartanburg, South Carolina the largest bottle-to-bottle recycling plant in the world. The plant will recycle 100 million pounds of plastic for reuse each year -- enough plastic to make 2 billion 20-ounce Coca Cola bottles. That's a lot of Coke. The plant will bring jobs to the South Carolina's Fourth District, require less energy than producing bottles from unused materials, reduce waste and lessen carbon dioxide emissions by 1 million metric tons over the next ten years.

It wasn't long ago when the best way we knew to deal with waste from bottles was to dig a hole and bury it. When we found out that strategy wasn't the best use of resources nor environmentally sound, we innovated and started recycling. I suppose that when you start -- first started realizing the negative effects of burying our plastic someone could have and may have suggested we just bury the waste in a different place, maybe at the bottom of the ocean. In retrospect it's easy to see that approach, while newer looking, was equally problematic. So plastics are everywhere and we learned how to innovate.

In the same way, coal is a fact of life in our current energy situation and we have an opportunity to innovate -- to make it the most efficient -- to make the most efficient use of that resource. And coal is a lot like those plastics. At one point we thought burning it in kettle stoves -- excuse me -- was a good way to heat a home.

Now the challenges of carbon emissions and greenhouse gases caused us to rethink that strategy. I'm concerned that we may be headed down the wrong track here in gasifying coal for transportation use. Makes a lot of sense to use that coal, for example, in integrated gasification-combined cycle technology that's stationary and that makes it so we can produce electricity and then use that electricity in things like plug-in hybrids, and that we can also generate hydrogen power out of a similar use of that technology by capturing the hydrogen.

But I have significant concerns about whether this is the right path -- to make it into a liquid and make it a portable transportation fuel. Seems to me that the -- there are other portable transportation fuels. We can't put a reactor in our trunk and we can't clamp a windmill on the back bumper, so we got to find some portable energy source for our cars. And perhaps I could be convinced that coal-to- liquid is a good idea for transportation purposes but I come with great skepticism about whether it would work or whether it's desirable. So I look forward to hearing the testimony and Mr. Chairman, I yield back.

BREAK IN TRANSCRIPT

REP. INGLIS (R-SC): I said to the chairman bingo! It seems to me that is quite the question, is why invest in something that really is sort of like -- well, I think when we're comparing coal-to-liquids to petroleum, we're really comparing Pintos and Vegas. Anybody remember a Pinto and a Vega? Some of the staff back here is too young to remember.

REP. LAMPSON: It shows your age when you --

REP. INGLIS: The Vega -- well, my family had three of them. They had aluminum blocks or something. They fell apart after a while.

They were maybe --

(Off mike.)

The Vega may have been better than the Pinto or the Pinto better than the Vega. But really, when you're comparing coal-to-liquid and running it in a car compared to petroleum, aren't we really talking about that kind of comparison rather than a really elegant solution that the chairman was just talking to. You figure a way to get that hydrogen into that car, the only emission is water out of the back of the car, right? You don't have this -- you know, Dr. Bartis mentioned we can deal with the national security issue, and I think that's correct. It seems to me that if we used our own coal, we're clearly dealing with national security. We're not getting all the way, which is also fixing the environmental challenge.

So the thing that I found interesting about testimony from -- let's see, Dr. Romm said -- and I'd be interested in Mr. Ward's response to this -- that a carbon-trading system would wipe out coal- to-liquids, destroy the economics of it. Is that correct?

MR. WARD (?): Not in our view. Because again, I think you had it right with the Pinto and the Vega. You know, we're not talking about coal-to-liquids being something that competes with hydrogen that is some number of decades in the future. We're talking about reducing our dependence on imported oil with a like thing. So I would look at it from the perspective of the Pinto I have to build and protect a system for protecting my imported oil resources, versus the Vega is something that I can do here at home while we're working on whatever vehicle we want for the future.

As far as your direct question on the carbon trading goes, the products are commodities. We're not talking about a new kind of fuel. These products will compete against the oil-derived products in an open market. And our analysis shows that as long as oil prices remain above a certain level -- $50 a ton or whatever -- the impact of that carbon will -- the carbon tax or whatever carbon regulation scheme will come into place -- will wash out in that process. So I don't see it as a death nail at all.

REP. INGLIS: And Dr. Freerks had a comment about reducing the risk of those price fluctuations. What would you recommend by way of strategies to reduce that price fluctuation?

MR. FREERKS: My concern is that if crude oil drops precipitously, it will wipe out the economic benefits of building CTL plants. And I think the economic value for CTL plants is in the 45 (dollar) to $50-per-barrel range, so we can make those plants pay back their loans and give the investors a good return at a reasonable price for crude. But we need price stability and a (collar ?) on the lower end of that price in order to get the investors to be willing to put money into those plants.

REP. INGLIS: Are you talking about a floor on prices, a floor on crude oil prices? Is that what you're talking about?

MR. FREERKS: Yeah. Just a guarantee that the prices will not drop below a certain level, which will just ensure the economic viability of these plant (future ?), and we are not then dependent upon foreign sources of crude to fuel our economy and protect our --

REP. INGLIS: Dr. Hawkins, you had some different numbers in the MIT study that is mentioned in the charter for this hearing. You said that -- MIT apparently says that to replace 10 percent of the fuel consumption, they say it would -- I think it was your number, too -- 10 percent -- they say that it would take 250 million tons of coal per year. You said I think 470 million tons. They said it would require a 25 percent increase in our current coal production. You said a 43 percent. Am I -- you're disagreeing with the MIT study I guess?

MR. HAWKINS: My numbers are taken from the National Coal Council report. And they are aimed at a target of 10 percent reduction in the year 2025 forecasted oil consumption, which is larger than today's oil consumption. So you have two numbers -- one, the larger amount of oil consumption in 2025, which is about the earliest that you'd expect this industry to get spun up to a size where it could conceivably make that kind of a dent, and using the technology efficiency numbers that the National Coal Council used. I don't know what efficiency numbers MIT used.

REP. INGLIS: Thank you.

Thanks, Mr. Chairman.

BREAK IN TRANSCRIPT

Source