DOE readies $8bn worth of funding help for fossil fuels

U.S. Department of Energy Secretary Ernest Moniz went to Capitol Hill on Sept. 18 to say that despite planned CO2 rules for new and existing power plants, there is still a role for fossil fuels like coal and natural gas on the U.S. energy stage.

He was testifying to the House Committee on Energy and Commerce’s Subcommittee on Energy and Power, which was holding a hearing on the broad reach across many federal agencies of White House climate change initiatives. The head of the sub-panel, Rep. Ed Whitfield, R-Ky., recently complained that DOE and the U.S. Environmental Protection Agency were the only federal agencies to respond to his requests to send witnesses to the hearing.

DOE plays a central role in developing the technologies that will be part of a low-carbon future, Moniz noted in his prepared testimony. “We invest in advanced fossil energy, nuclear energy, renewable energy, advanced fuels, electric vehicles and other low-carbon technologies. This is part of the President’s all-of-the-above approach to energy policy. Coal and natural gas generate almost 70% of the electricity in the United States, and they are projected to remain significant sources of domestic energy in the years to come. The public and private sectors must work together to ensure that all energy sources will be part of a low-carbon future.”

That is why, as part of President Obama’s Climate Action Plan, DOE is working on a draft solicitation for $8bn in loan guarantees for advanced fossil energy technologies. “When issued, the solicitation will seek applications for projects and facilities that cover a range of technologies,” Moniz noted. “These technologies could include any fossil technology that is new or significantly improved, as compared to commercial technologies in service in the U.S. Applicants must show that their proposed project avoids, reduces, or sequesters air pollutants or greenhouse gas emissions. We are currently engaging with the public and with industry, and we expect to issue a final solicitation this fall.”

Since the beginning of the Obama Administration, DOE has invested around $6bn to advance clean coal technologies – particularly in carbon capture, utilization, and storage (CCS) – that substantially reduce carbon emissions, Moniz noted. “Coal plays a key role in our energy mix, and the Administration is committed to making investments to advance clean coal technologies to position the U.S. as a global leader in this technology and to help enable continued use of this important domestic energy resource in the low-carbon economy of the future.”

This funding supports projects across the country that will inject millions of tons of CO2 annually into geologic reservoirs over extended periods. Captured CO2 is also being put to work in ways that can help offset the cost of capture – like enhanced oil recovery. Combined, the existing and planned new programs represent $14bn in loan guarantees and research investments, all with the goal of enabling the use of coal and other fossil fuels in a carbon-constrained world, Moniz said. “These programs are part of a real all-of-the-above clean energy strategy for a low carbon future where efficiency, coal, natural gas, nuclear and renewable sources all have an important role to play, and can successfully compete in a low carbon marketplace. The mix of solutions will vary by region. And since the President took office, we have seen domestic energy production surge. Oil imports are at a twenty year low and domestic oil and gas production are at the highest level in nearly two decades. And yet carbon dioxide emissions have gone down. We can grow our economy and reduce carbon pollution at the same time.”

Moniz didn’t mention that a major reason for recent carbon emissions reductions is an ongoing series of coal-fired plant shutdowns in large part caused by new U.S. Environmental Protection Agency emissions rules governing pollutants like mercury.

EPA head Gina McCarthy was also a witness at the Sept. 18 hearing and said in her prepared testimony: “EPA will soon issue new proposed carbon pollution standards for future power plants, reflecting new information and the extensive public comments on our 2012 proposal. For existing plants, we are engaged in outreach to a broad group of stakeholders with expertise who can inform the development of proposed standards, regulations, or guidelines, which we expect to issue in June of 2014. These guidelines will provide guidance to States, which have the primary role in developing and implementing plans to address carbon pollution from existing plants. This framework will allow us to capitalize on state leadership and innovation while also accounting for regional diversityand providing the necessary flexibility.”

The plan also calls for the development of a comprehensive, inter-agency strategy to address emissions of methane – a powerful greenhouse gas that also contributes to ozone pollution, but which has substantial economic value, McCarthy noted. EPA will work with other agencies to assess emissions data, address data gaps, and identify opportunities to reduce methane emissions through incentive-based programs and existing authorities.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.