America’s energy future. U.S. House hearing 2011

[  It’s always good to look back in time to when our representatives were worried about our dependency on oil.  Apparently they were desperate, since the proposed H.R. 909 bill included Coal-To-Liquids (CTL), much of it for the military.  I predict that when the shale oil and gas boom goes bust, CTL will be back again as a “solution”.  And that anyone who thinks we have less than 250 years of coal left won’t be invited to speak at hearings, and that the military will grab most of it to try to keep the oil flowing.

DEVIN NUNES, CALIFORNIA.  “H.R. 909 would enhance our national security by removing barriers to expand our Nation’s secure coal supplies to fill the tanks of the American military vehicles and jets. In fact, the bill’s near-term goal is to produce at least 300,000 barrels of CTL, coal to liquid. Such supply would equal the amount of fuel consumed daily by the U.S. military for domestic operations.  The American people are looking to us for leadership. They know intuitively that we are running out of time, and they are worried about the future of our country and for their-and our country’s future for their children”.

David Sandalow. “We are supporting reducing our dependence on oil by developing the next generation of biofuels”. [ I guess he hasn’t read my post “Peak soil: Why biofuels destroy ecosystems and civilizations”.

Thomas Hicks is the only one who understands that a “drop-in replacement fuel is critical”.

Alice Friedemann  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts:  KunstlerCast 253, KunstlerCast278, Peak Prosperity]

House Serial No. 112–57. June 3, 2011.  The American energy initiative part 9:  H.R. 909, A roadmap for America’s energy future. House of Representatives.

HENRY A. WAXMAN, CALIFORNIA;   Today we are holding a hearing on a bill that is titled, ‘‘Roadmap for America’s Energy Future.’’ Our Nation faces major energy challenges and we need to have a serious conversation about the American energy future

But I am sad to say the legislation we are examining today proposes no innovative solutions to our Nation’s energy needs. It doubles down on oil, and it doubles down on old, ineffective policies. We have seen this roadmap before. This is a recycled version of a plan developed by the secretive Bush-Cheney Energy Task Force and pushed through Congress by Republicans while they were in office. The Bush administration and Congressional Republicans spent 8 years following this roadmap. They pushed oil and gas drilling, onshore and offshore. They expedited permits and weakened environmental protections. They opposed efforts to increase fuel economy. They called for nuclear fuel reprocessing. They tried to greenwash proposals for drilling in the Arctic National Wildlife Refuge by implying congressional appropriators could use royalty revenues to support renewable energy. They pushed the dirtiest alternative and unconventional fuels, coal-to-liquids, oil shale, and tar sands. And where did this roadmap lead us? Energy prices soared, and carbon pollution increased. And we have become even more dependent on foreign oil. In the last year of the Bush administration the Energy Information Administration projected that our dependence on oil and oil imports would continue to rise year after year. Today, we are sending nearly $1 billion per day overseas for foreign oil. We use 25% of the world’s oil, but we only have 2% of the world’s oil reserves. We’ve worked to increase our domestic crude oil production by nearly 300,000 barrels per day. And yet gas prices remain high. Increasing oil production is not going to solve our energy needs.

Even if we doubled our oil production, oil prices would still be set by world markets and leave us vulnerable to price shocks. H.R. 909’s roadmap doesn’t lead to the future. It leads to the past. The technology to turn coal into liquid fuel has been around since World War II. Its problem is as it has always been: huge amounts of carbon pollution that will drive uncontrolled climate change.

American entrepreneurs and inventors are using technology to unlock real energy solutions: energy sources that are clean, safe, and affordable, and grow our economy. In testimony provided to the committee for today’s hearing, we will hear that the wind and solar industries will create over 200,000 new jobs. But H.R. 909 would abandon our clean energy future to China. For many reasons it is unlikely to help renewable energy, because of flaws in its reverse auction mechanism.

The bill does nothing on efficiency, which is the cheapest and most reliable new source of supply. It promotes the form of nuclear energy that risks putting nuclear bomb grade material into the hands of terrorists. It does nothing to develop carbon capture and storage, the technology that coal needs to remain a competitor in a carbon-constrained world. In 2001, Vice President Cheney said, ‘‘Conservation may be a side of personal virtue, but it is not a sufficient basis for a sound, comprehensive energy policy.’’ Ten years later the Republican budget defunds the federal investment in energy conservation and innovation. The rest of the world has been racing ahead over the last decade. It is too bad the Republicans’ energy policies have not.

DEVIN NUNES, CALIFORNIA.  Our Nation has been blessed with great abundance of natural resources. Consider these astounding facts. ANWR potentially contains 10 billion barrels of oil, the Outer Continental Shelf is estimated to hold 85 billion barrels of oil and 420 trillion cubic feet of natural gas, and over two trillion barrels of oil are held in oil shale deposits, more than are contained in all of the countries in the Middle East combined. Additionally, our Nation has nearly 250 billion tons of recoverable coal reserves, which is the estimated equivalent of 800 billion barrels of oil and constitutes more than three times Saudi Arabia’s proven oil reserves. Unbelievably, our government has chosen not to utilize these resources fully, despite the repeated promises to achieve energy independence by both Democrats and Republican administrations and Congresses alike. But continued inaction is unacceptable with stubbornly high unemployment, lackluster economic growth, widespread unrest in the Middle East, and the prospect of escalating gas prices punishing American families. Nothing done by our government in the past 4 decades has actually helped to achieve the goal of energy independence, or for that matter, kept energy prices affordable for American families and businesses. The reverse is true. We are more dependent on foreign oil today than ever before and far more economically vulnerable than at any point in our Nation’s history.

The energy roadmap is not a radical alternative to current energy policy. That is, while we can all agree that we need a comprehensive approach, this approach must be market-based and gradual if we are to achieve true energy independence. The energy roadmap would lift restrictions on development and extraction of resources in ANWR and OCS. The roadmap recognizes that dependence on any one fuel source is dangerous and short-sighted.

Another component of the roadmap would establish or would mandate that 200 reactors permits be granted by 2040. This bill would provide new, streamlined regulations and a system to manage the waste that will drive private sector investments in these facilities, which today are stalled as a result of red tape, lawsuits, and parochial concerns. Nuclear power in my estimation is essential to achieving an abundant and affordable supply of electricity to fuel our Nation’s economy

H.R. 909 would enhance our national security by removing barriers to expand our Nation’s secure coal supplies to fill the tanks of the American military vehicles and jets. In fact, the bill’s near- team goal is to produce at least 300,000 barrels of CTL, coal to liquid. Such supply would equal the amount of fuel consumed daily by the U.S. military for domestic operations.

The American people are looking to us for leadership. They know intuitively that we are running out of time, and they are worried about the future of our country and for their—and our country’s future for their children.

Mr. WHITFIELD. In your proposal you talk about licensing 200 new nuclear plants in a relatively short time, by 2040. But we have a significant issue of how do we dispose of this waste because the administration has basically stopped Yucca Mountain after the expenditure of $15 billion and after judgments against the Federal Government of $15 billion and after taxpayers and energy users have paid the fee for this, how do you propose that we would get rid of this waste?

Mr. NUNES. What I tried to achieve in drafting this legislation was to create a scenario where the Congress forces an administration to act one way or the other on Yucca Mountain and reprocessing and a whole host of issues, because as you know, it seems like every President, no matter if it is Republican or Democrat is—they are all for nuclear power yet nothing ever happens

Mr. David Sandalow, Assistant Secretary for Policy and International Affairs at the U.S. Department of Energy

The administration agrees with many of the goals of this bill. For example, the administration believes that facilitating the efficient responsible development of our oil and gas resources is a necessary component of energy security. We are working to expand cleaner sources of energy, including renewables like wind, solar, and geothermal, nuclear power, as well as clean coal and natural gas on public lands. However, the administration has serious concerns with many provisions in this legislation. For example, a number of the changes in Title I would make amendments to Interior’s Offshore Energy Program, undercutting safety and environmental reforms adopted in the wake of the Deepwater Horizon oil spill, and it would open the coastal plain of the Arctic National Wildlife Refuge to oil and gas drilling. Department of the Interior and other involved agencies may have additional views on this legislation.

Many countries are moving aggressively to develop and deploy the clean energy technologies that the world will demand in the coming years and decades. As the President said, this is our generation’s Sputnik moment. We must rev up the great American innovation machine to win the clean energy race and secure our future prosperity. To that end, President Obama has called for increased investments in clean energy research, development, and deployment. In addition, he has proposed generating 80 percent of America’s electricity from clean energy sources by 2035.

A clean energy standard will provide a clear, long-term signal to industry to bring capital off the sidelines and into the clean energy sector. It will grow the domestic market for clean sources of energy, creating jobs, driving innovation, and enhancing national security. And by drawing on a wide range of energy sources, including renewables, nuclear, clean coal, and natural gas, it will give utilities the flexibility they need to meet our clean energy goals while protecting consumers in every region of the country. The Department of Energy’s goal is to strengthen the Nation’s economy, enhance our security, and protect the environment by investing in key priority, including supporting groundbreaking basic research, leading in the development and deployment of clean and efficient energy technologies to reduce our dependence on oil, and strengthening national security by reducing nuclear dangers, maintaining a safe and secure and effective nuclear deterrent and cleaning up our cold war legacy. As the President said in his State of the Union address, investing in clean energy will strengthen our security, protect our planet, and create thousands of new jobs here at home. We are doing this through programs to make, for example, homes and buildings more energy efficient with a new Better Buildings Initiative. We are also developing new sources of wind, solar, and geothermal supporting the modernization of the electric grid and carbon capture and sequestration technologies. We are supporting reducing our dependence on oil by developing the next generation of biofuels and promoting electric vehicle research and deployment supporting the President’s goal of putting one million electric vehicles on the road by 2015.

THOMAS HICKS.  Department of the Navy. As the Deputy Assistant Secretary I have been actively involved in assessing the policy, economic, technological, and environmental costs and benefits associated with the use of fossil fuels and alternative fuels. I and many members of my staff and colleagues have personally met with dozens of industry representatives of U.S.-based organizations from a wide range of interests including alternative fuel companies, large oil companies, venture capital, private equity, and industry associations. We have also met with government experts from DOE, the Department of Defense, Department—U.S. Department of Agriculture, NASA, EPA, and others. So the perspective provided here today is drawn on these discussions and on contemporary studies and analysis on the topic of alternative fuels.

Changing the way the United States uses, produces, and acquires energy is one of the central policy challenges that confront the Nation.

As a military and as a country, we rely far too much on fossil fuels, far too much on foreign sources of oil. This dependency degrades our national security and negatively impacts our economy. Our dependency on fossil fuels makes us more susceptible to price shocks, supply shocks, natural and man-made disasters, and, as we have recently seen, political unrest in countries halfway around the world.

The challenges we face today are not just about what types of fuels we use or where and how those fuels are produced. Clearly we must be more efficient in the fuels that we use. The best barrel of oil is the barrel of oil we do not use. The challenge we face in the Navy today is the 280 ships we have today, the 3,700 aircraft are largely the ones we are going to have tomorrow and into the future, so focusing on new sources of fuel, drop-in replacement fuel is critical.

The Department of the Navy’s interest in this topic of alternative fuels is fundamentally about improving our national security and our long-term energy security. The more we replace for in sources of oil with more diverse, domestically-produced alternative fuels the better we are as a military and the better we are as a Nation. How one successfully accomplishes that objective is where the debate lies, and it is a topic that the Department of the Navy has a perspective.

It has recently suggested before this committee that the best near-term approach to meet the Department of Defense fuel needs is essentially a coal-derived or a mixture of coal-derived and biomass Fischer-Tropsch fuels. Fischer-Tropsch is a thermo-chemical conversion process invented and developed in pre-World War II Germany to convert resources such as coal, natural gas, and biomass to fuel oil.

In this country given the enormous quantities of biomass required and its relative limited availability at the scales required to run a Fischer-Tropsch or an FT plant, biomass as a long-term feedstock is typically not considered. More often than not, coal is viewed as the primary, if not exclusive, feedstock, and as a result, in addition to requiring large, new sources of coal, it requires enormous quantities of water, $5 to $10 billion in capital per plant to provide a fuel result that is more than twice as carbon intensive as petroleum.

From the Navy’s perspective, there simply are too many questions to suggest that this is the best near-term solution. In our ongoing dialogue with industry, venture capital, and the equity communities, one thing is clear. America’s advanced biofuel industry knows no geopolitical boundaries, and unlike the proposed near- term solution, the feedstocks and refineries needed to produce advanced biofuels to power the fleet or our aircraft can literally be produced in every State, all 50 States. The U.S.-based companies comprising this industry that are currently producing or will soon be producing fuels across the spectrum from the tens of thousands of gallons to the tens of millions of gallons. These are companies new and old, some are small businesses, and some are now publicly traded. These companies represent the type of innovation and spirit needed to meet the energy demands of the future. In conclusion, a robust advanced drop-in biofuels market is an essential element of our national energy security. Energy security for the Nation requires unrestricted, uninterrupted access to affordable energy sources to power our economy and our military. Traditional fossil-fuel based petroleum derived from crude oil has an increasingly challenging market and supply constraints. Chief among these is limited, unevenly distributed, and concentrated global sources of supply. Advanced biofuels that use domestic, renewable feedstock provide a secure alternative that reduces the risks associated with petroleum dependence.

WHITFIELD.   Mr. Sandalow, you are Assistant Secretary for Policy and International Affairs at DOE, and you know as well as any of us that we are utilizing about 20 million barrels of oil a day here in the U.S. for all of our needs, most of it transportation. And since 1976, when Jimmy Carter was President, and the big push was made, we have got to be less dependent on foreign oil. Now, this administration in my personal view is overselling the electric cars and some of these renewable energy mechanisms, not that we don’t need them but I don’t realistically think that they are going to be able to meet all of our increased energy demands any time soon. But you have probably studied this even more than I have since you are head of policy. What is your realistic appraisal on our ability to significantly reduce the amount of oil that we are buying from the Middle East and other countries, and what kind of timeframe from your analysis do you think is realisti

Mr. SANDALOW. I think the ability of this country to meet any great challenge is extraordinary and I believe that if we set our minds to it that we can reduce our dependence on oil, reduce our dependence on imported oil, and we can do it by following a number of different pathways. I do believe that electric vehicles have tremendous potential, and by the way, not just to reduce our dependence on oil but also to create jobs in this country.

Mr. GONZALEZ. You said a couple of things that were rather interesting. Regarding DOD and the role that it can play as we go in search for alternatives, on page 3 of your testimony, ‘‘the camelina grown in Florida and Montana, the algae grown in New Mexico, Hawaii, or in Pennsylvania, for example, can be turned into fuels blended in existing infrastructure in the Gulf or on the East or West Coast to power the Fleet.’’ So you are saying that that may be a realistic alternative in your opinion?

Mr. HICKS. It certainly is a realistic and growing alternative for us, literally and figuratively. I mean, it is one that we are seeing— today we are aware of a facility in the—in Texas, for example, that is capable of alternative fuels, bio-based alternative fuels, 90 million gallons per year, and claiming at competitive prices with petroleum. So we are seeing that. You know, what we are looking at is fuels that don’t need new infrastructure, and that is both for the commercial sector but also for us. We need ready, dropped-in fuels, fuels that don’t require changes to our platforms and our engines, that don’t require changes to our infrastructure to store and use the fuel, and that is exactly what we are getting by looking at these advanced biofuels. And to be clear, we are looking at these in 50/50 blends, so these are blended with petroleum, and that is a common point for the commercial industry as well, going to a 50/50 blend.

TERRY. In your opening you made statements and suggestions about making the Navy vehicles more energy efficient, and of course, you also then mentioned that the major users of fuel are ships and planes. How do you make them more fuel efficient? How do you get better air miles per gallon for your planes and ocean miles for your ships? And following up, if you can make them more efficient, why haven’t you?

Mr. HICKS. We are making them more efficient, and the way you do that in surface vessels as well as aircraft, we are putting propeller coatings on ships to be silkier in the water, better able to float through the water. We are also putting coatings on the stern flaps of many of our ships, where it is economically justified in the lifespan of those platforms, as they go through their dry docking procedures. We are putting coatings on our aircraft as well.

We have a program in shipping called INCON, which is a way for the skipper of the ship to plot out their course in a more efficient w

I think we are very comfortable with the program that we are on, and we feel that that is the best near-term solution for the Department of Navy is one that is focused on alternative biofuels. The challenges with coal to liquids, as has been mentioned before, it is a technology that has been around since pre- World War II Germany. The challenges there are the capital expenditures required, $5 to $10 billion, the amount of water and the sources of water that you need for that, the amount of waste that is generated from those plants, and then certainly there is the carbon picture there that—which is typically those plants without carbon capture and storage—— and that’s why it hasn’t been done in this country.

Mr. WAXMAN.  Mr. Sandalow, the bill before us purports to be a roadmap to our energy future, but it omits key policies that many recognize are critically important. For example, it does not even mention energy efficiency. It also fails to mention technologies that show so much promise and are just now beginning to be commercialized like electric vehicles. Instead it seems to be a proposal to return to the energy policies of the Bush administration with a focus on drilling in the Arctic Refuge and the Outer Continental Shelf.

JAMES T. BARTIS. I will be focusing my remarks today on the policy implications of sections of H.R. 909 that deal with oil shale and coal liquefaction, as is RAND’s policy.

The United States has enormous oil shale [my comment: not true, it is not even close to being commercial, there’s not enough water, and so on — see Shale Oil], has an enormous oil shale resource base, enough to support the production of millions of barrels per day for centuries. But getting a useful fuel from this resource is technically complex, requiring temperatures that are much higher than those used in processing Canadian oil sands. Moreover, nearly all of the high-value oil shale resources are geographically concentrated on federally managed lands in a very small area, roughly 30 by 35 miles in Colorado’s Piceance Basin and within a small portion of the Uinta Basin within Utah. That oil shale belongs to all of us. The public value is potentially tens of trillions of dollars. But reaping that public benefit, not to mention the energy security benefits of domestic alternative fuels production, requires the development of a commercial oil shale industry capable of producing a few million barrels per day. That level of production should be the long-term strategic goal for oil shale. At this stage I don’t know if that goal can be achieved. We are talking about a tremendous amount of industrial activity, especially when we consider supporting infrastructure within a very small area. Extensive measures will be required to prevent serious adverse ecological and social economic impacts and to protect the quality of the Colorado River. My analysis of the oil shale provisions of H.R. 909 is that they do not move our Nation towards that long-term strategic goal of large and sustainable commercial production.

There are a few areas where Congress may need to provide direction so that the Nation can realize the full opportunity that oil shale offers. The critical step is obtaining early production experience. Until we understand the performance of the process options, it is not productive to engage in establishing a detailed, regulatory structure for a large, multi-million barrel-per-day commercial industry.  You should require that the Departments of Energy and the Interior and the Environmental Protection Agency cooperatively develop and publish a federal plan for promoting the construction and operation of a limited number of pioneer commercial plants. That plan should be designed to attract America’s top high-technology firms. You should also require the Department of the Interior develop, publish, and implement a 15-year schedule for multiple offerings of small R&D leases. Finally, require the preparation of plans for conducting critical environmental and ecological research and an assessment of the carbon management options in the vicinity of the federally managed oil shale lands

I am concerned with the slow progress towards gaining commercial experience in coal-derived liquids production in the United States. However, I do not believe that government ownership of alternative fuels production facilities is a credible solution. If the Congress is interested in using the purchasing power of the Defense Department to promote early commercial experience, I suggest providing the Department with the authority to make long- term agreements to guarantee a minimum sale price to the benefit of the alternative fuel producer in the event that oil prices are low. In return for this benefit the Department would negotiate a maximum purchase price that would be lower than world oil prices in the event that world oil prices pass a specified threshold.

Mr. AUERBACH. The United States has plenty of resources. I agree with what the Congressman is saying. If we are going to develop more clean energy and use technologies that are now commercially available and coming down rapidly in cost like electric cars, we need to have a resource strategy, and it has to be domesticated more than it is today.



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