Global Climate Change and Coal's Future

Global Climate Change and Coal's Future

Remarks by Eileen Claussen
President, Pew Center on Global Climate Change

Spring Coal Forum 2004 - American Coal Council

May 18, 2004

It is a pleasure to be here in Dallas.  And I want to thank the American Coal Council for inviting me to address this forum. 

I thought I would open my remarks today with some commentary on the upcoming FOX movie about climate change—it is entitled “The Day After Tomorrow.”  It is not often, after all, that I get to talk about the movies in my speeches.  And I suppose that’s because there are not a lot of movies on the topic of climate change—of course, I am not counting “Some Like It Hot.”

In case you haven’t already heard, “The Day After Tomorrow” comes out Memorial Day weekend.  It is a movie that tries to show the consequences of climate change by letting loose tornadoes in Los Angeles, dropping grapefruit-sized hail on Tokyo, and subjecting New York City to a one-day shift from sweltering-to-freezing temperatures.

The only thing I can say is it’s a dream scenario for the people at The Weather Channel. 

Actually, the reason I bring this up is because we are bound to be hearing a great deal about the issue of climate change over the next several weeks.  This is a major motion picture with a major marketing push behind it. 

And, while I know of no one in the scientific community who believes climate change will unfold in the way it is portrayed in the film, I also know this: If this movie sounds far-fetched, it is frankly less of a distortion—much less—than the argument that climate change is a bunch of nonsense.  It is not.  Climate change is a very real problem with very real consequences for our way of life, our economy and our ability to ensure that future generations inherit a world not appreciably different from our own. 

I strongly believe it is time for some straight talk about the problem of climate change and what it means for you  - the coal industry.   So while my remarks here today are also relevant to the oil and gas industry, I believe coal to be in a more precarious position, and I believe that for 2 reasons:  1) I think coal is an easier target politically and 2) oil and gas are already involved in the policy process.    So despite the current outlook for coal in the United States, I am here to say that a robust future for coal is not a sure thing, particularly if we do not find environmentally acceptable and cost-effective ways to use it. 

So let’s look at some facts. 

Here in this country, as all of you know very well, coal provides 52 percent of all electricity, more than double the amount of any other fuel source and five times more than gas, oil or hydro-electric power.  Coal is the most abundant energy source today, it is dispersed throughout the world, and it is available at a relatively low cost.  Worldwide coal consumption, according to the U.S. Energy Information Administration, is expected to grow by more than 40 percent between 2001 and 2025, with China and India accounting for three-fourths of that increase. 

Given these facts, a scenario in which we meet the world’s various energy challenges without coal seems to me highly unlikely. 

At the same time, however, I cannot imagine—or, rather, I fear to imagine—what will happen if over the next 50 years we do not get serious about reducing worldwide emissions of carbon dioxide and other greenhouse gases that we know contribute to climate change. 

Coal alone is responsible for 37 percent of CO2 emissions in the United States.  Thirty-seven percent.  Worldwide, the EIA projects that coal will continue as the second largest source of carbon dioxide emissions after petroleum, accounting for 34 percent of the total in 2025. 

Coal’s dominant role in the global energy mix, together with its responsibility for a large share of CO2 emissions, suggests it is high time to figure out how to continue using coal in a way that results in the least amount of harm to the global climate. 

I am not going to tell you that we can address this problem with no costs.  Our goal must be to ensure that the costs themselves do not become a barrier to action.  I believe we can manage those costs in a way that enables continued economic growth and, equally important, in a way that causes the least amount of harm to the environment.

And finally, we must acknowledge the very real costs of not acting to address the problem of climate change.  I will talk more about that later. 

And so today I want to lay out for you how important it is for this industry—your industry—to become a part of the solution to climate change.  I also want to talk about your role in helping to shape the policies and in developing the technologies that will allow us to reduce greenhouse gas emissions from coal generation and other sources. 

But before that, I need to address the question of why I am here and why we are having this discussion in the first place.  And the answer is because the threat of climate change, as I have already noted, is very real.  If you still have any doubts about this, then I refer you to the findings of a special, well-balanced panel put together by the National Academy of Sciences at the request of President George W. Bush. The panel’s conclusion: the planet is warming and human activities are largely to blame.  And, of course, the human activity that is most responsible is the burning of fossil fuels.

Let's get one other thing out of the way  -- the Kyoto Protocol.  I am not here to argue the merits of the Protocol.  And I'm certainly not here to argue for ratification of Kyoto.  Because I think it's pretty clear that, at least as far as the United States is concerned, the Kyoto Protocol is a dead issue.  So, let's agree on that, and let's move beyond Kyoto, and talk about what really needs to happen.

This is what we know. The 1990s were the hottest decade of the last millennium.  The last five years were among the seven hottest on record. Yes, the earth's temperature has always fluctuated, but ordinarily these shifts occur over the course of centuries or millennia, not decades.

Now I know there are skeptics on this issue - there might even be a few here today, so let me take a minute to talk about some of the more common misconceptions I hear.

A common one is to point to the satellites circling our planet overhead and to note that these precision instruments show no warming of our atmosphere.  Global warming, some skeptics say, is therefore just an artifact of urbanization or some other miscalculation here on the ground. 

All I can say about these claims is that they are dead wrong.  As early as 2000, the National Academy of Sciences concluded that the warming observed on the ground was real, despite what the satellites might tell us.  What’s more, since that time estimates of warming from satellites have progressively increased.  Just this month, in fact, a new study in the journal Nature took a fresh look at the satellite data and found that the so-called “missing warming” had been found, bringing the satellite estimates more in line with temperatures observed on the ground.        

Warming by itself, of course, is not proof of global warming.  Climate conditions vary naturally, as we all know, and I am sure you have heard arguments that such natural variability, whether caused by volcanoes or the sun, can account for the climate change we’ve seen in recent decades.  But, when scientists actually take a look at the relative importance of natural vs. human influences on the climate, they consistently come to the same conclusion.  And that is this: observed climate change, particularly that of the past 30 years, is outside the bounds of natural variability.  Atmospheric concentrations of carbon dioxide are more than 30 percent higher now than they were just a century ago.  Despite what you may hear, this increase in carbon dioxide is undeniably human in origin, and it is the only way to explain the recent trends in the global climate. 

Scientists project that over the next century, the average global temperature will rise between two and ten degrees Fahrenheit. A ten-degree increase would be the largest swing in global temperature since the end of the last ice age 12,000 years ago.  And the potential consequences of even gradual warming are cause enough for great concern.

What will those consequences be?  We can expect increased flooding and increased drought.  Extended heat waves, more powerful storms, and other extreme weather events will become more common.  Rising sea level will inundate portions of Florida and Louisiana, while increased storm surges will threaten communities all along our nation’s coastline, including the Texas coast.

Looking beyond our borders, we can see even broader, more catastrophic effects.  Imagine, for example, what will happen in a nation such as Bangladesh, where a one-meter rise in sea level would inundate 17 percent of the country.  

In addition to the obvious threat to human life and natural systems, climate change poses an enormous threat to the U.S. and world economies.  Extreme weather, rising sea level and the other consequences of climate change will result in substantial economic losses. 

We cannot allow the argument that it will cost too much to act against climate change to prevail in the face of the potentially devastating costs of allowing climate change to proceed unchecked.

Furthermore, the longer we wait to address this problem, the worse off we will be.  The Pew Center in 2001 held a workshop with leading scientists, economists and other analysts to discuss the optimal timing of efforts to address climate change.  They each came at it from a different perspective, but the overwhelming consensus was that to be most effective, action against climate change has to start right now. 

Among the reasons these experts offered for acting sooner rather than later was that current atmospheric concentrations of greenhouse gases are the highest in more than 400,000 years.  This is an unprecedented situation in human history, and there is a real potential that the resulting damages will not be incremental or linear, but sudden and potentially catastrophic.  Acting now is the only rational choice. 

But what can we do?  The Pew Center on Global Climate Change was established in 1998 in an effort to help answer this very question.  We are non-profit, non-partisan and independent.  Our mission is to provide credible information, straight answers and innovative solutions in the effort to address global climate change.  We consider ourselves a center of level-headed research, analysis and collaboration.   We are also a center in another sense–a much-needed centrist presence on an issue where the discussion too often devolves into battling extremes where the first casualty is the truth.

The Pew Center also is the convenor of the Business Environmental Leadership Council.   The group’s 38 members collectively employ 2.5 million employees and have combined revenues of $855 billion.  These companies include mostly Fortune 500 firms that are committed to economically viable climate solutions.  And I am pleased to say that they include firms that mine coal and firms that burn it—some of whom are represented here today.  As members of the Business Environmental Leadership Council, all of these companies are working to reduce their emissions and to educate policy makers, other corporate leaders and the public about how to address climate change while sustaining economic growth. 

And, if their work with the Pew Center proves anything, it is this:  Objecting to the overwhelming scientific consensus about climate change is no longer an acceptable strategy for industry to pursue. 

We need to think about what we can realistically achieve in this country and around the world and begin down a path to protecting the climate.  And that means making a real commitment to the full basket of technologies that can help to reduce the adverse environmental effects of coal generation.  The most promising of these technologies, of course, are: carbon capture and storage; and coal gasification, or IGCC.

Carbon capture and storage, or CCS, holds out the exciting prospect for all of us that we can continue using proven reserves of coal even in a carbon-constrained world.  In only the last three decades, CCS has emerged as one of the most promising options we have for significantly reducing atmospheric emissions of greenhouse gases.  Today, 1 million tons of CO2 are stored annually in the Sleipner Project in the North Sea, and several more commercial projects are in various stages of advanced planning around the world.  Between off-shore, saltwater-filled sandstone formations, depleted oil and gas reservoirs, and other potential storage locations, scientists say we have the capacity to store decades worth of CO2 at today’s emission rates.  

Of course, it will still take a great deal more effort before CCS is ready for prime time.  In a paper prepared for a recent Pew Center workshop held in conjunction with the National Commission on Energy Policy, Sally Benson of the Lawrence Berkeley National Laboratory identified several barriers to the implementation of carbon capture and storage, or CCS.  They include:

  • The high costs and quote-unquote “energy penalties” of post-combustion CCS.
  • The high capital costs of gasification, as well as a lack of experience with the technology in the utility sector.
  • Limited experience with large-scale geologic storage.
  • Uncertainty about public acceptance of CO2 storage in geologic formations.
  • A lack of legal and regulatory frameworks to support widespread application of CCS.
  • And, last but not least, a lack of financial resources to support projects of a sufficient scale to evaluate the viability of CCS. 

Yet another technology that could potentially help to reduce the climate impact of coal generation is IGCC.   Of course, IGCC’s principal benefit from a short-term environmental perspective is a significant reduction in criteria air pollutant emissions  and in solid waste.  But, over the long haul, IGCC has great potential to reduce CO2 emissions as well, both because, compared to pulverized coal combustion, it could result in significant improvements in efficiency, because it can be much more easily combined with CCS, and because it enables hydrogen production from coal. 

But, as with CCS, IGCC still has a ways to go before it can deliver on its enormous promise.  As of today, there are only two real IGCC plants in operation in the United States, but neither is operating fully on coal.  Yes, the Bush administration has made a big splash with its announcement of the $1 billion FutureGEN project—which, as you know, would build the world’s first integrated sequestration and hydrogen production research power plant.  But no specific plans have yet been announced.

The bottom line: these technologies—both CCS and IGCC—are nowhere near prime time.  Right now, to stretch the analogy further, they are far enough from prime time to be on the air around 3 a.m. with a bunch of annoying infomercials.  And they won’t get any closer to prime time without substantial investment in research and development, as well as a major policy commitment to these technologies. 

The potential rewards are great.  If we make the necessary commitment to CCS and IGCC, these technologies could make an important contribution to the United States’ efforts to control greenhouse gas emissions in the decades ahead.  And the potential for coal to become a source of hydrogen for transportation could revolutionize the industry and our energy future.

But we need to make a commitment. 

Investing in the development of these technologies, in fact, may be the only way for coal to have a long-term future in the U.S. energy mix.  There will be a time in the not-too-distant future when the United States and the world begin to understand the very real threat posed to our economy and our way of life by climate change. 

When that happens, those industries that are perceived as part of the problem and not part of the solution are going to have a difficult time.  Allow me to put it another way: if current trends continue, there is a strong possibility that, at some point, policymakers and the public are going to see the need for drastic reductions in our emissions of carbon dioxide and other greenhouse gases.  The coal industry—because of its responsibility for such a large share of those emissions—may find itself the focus of intense scrutiny and finger-pointing.  And it will need to demonstrate that it is making steady and significant progress in reducing its emissions—or else face draconian policy measures.

The coal industry, of course, cannot tackle this challenge alone. Government, too, must become a part of the solution, and this is not just a matter of technology policy; there is a need for a broader climate policy.  I mean a policy that sets a national goal for greenhouse gas emissions from ALL important sectors - including transportation, utilities and manufacturing - and then provides companies and industries with the flexibility to meet that goal as cost-effectively as possible.  This is the approach taken in the Lieberman-McCain Climate Stewardship Act.

The need for a broader climate policy was the key conclusion of a recent Pew Center study that looked at three future energy scenarios for the United States.  Even in the most optimistic scenario where we develop a range of climate-friendly technologies such as CCS and IGCC, the study projected that we will achieve no net reduction in U.S. carbon emissions without a broader policy aimed at capping and reducing those emissions.

So the challenge before us is clear: we need to craft a wide-ranging set of policies and strategies to reduce humanity’s impact on the global climate.  And coal needs to be proactively and positively engaged—much more so than has been the case thus far.

I am pleased to report that there are elected leaders at the state level and in Congress who understand the importance of government action.  In Congress, of course, last year we saw the Climate Stewardship Act introduced by Senators Joseph Lieberman and John McCain.  This measure, which would establish modest but binding targets for reducing U.S. greenhouse gas emissions, attracted the support of 43 senators—a respectable number and an indication of growing support for U.S. action on this issue.  A companion measure to the Senate bill was introduced in the House of Representatives earlier this year.

Policymakers, particularly at the state level are moving beyond debate to real action on this issue.  Among the examples:

  • Thirteen states, including Texas, now require utilities to generate a specified share of their power from renewable sources.  
  • New York and nine other mid-Atlantic and northeastern states are discussing a regional “cap-and-trade” initiative aimed at reducing carbon dioxide emissions from power plants.  
  • And, last September, the governors of three Pacific states—California, Oregon, and Washington—announced that they will be working together to develop policies to reduce emissions from all sources. 

So the fact is, we have a lot of people in government at the state and federal levels who are beginning to look seriously at this issue and who are trying to figure out how best to respond.  So the coal industry needs to be at the table now, because the policy discussion has begun.  

But understand - getting to the table is not just a matter of showing up and saying, “Let’s talk.”  To earn a seat at the table, coal is going to have to demonstrate that it is committed to real and serious action on this issue. And as you are probably aware, some of your competitors from a climate change perspective - the gas, oil and renewable industries are already there.

The benefits of active involvement by industry in environmental policy became clear to me during negotiations on the Montreal Protocol. 

An important reason for the success of that agreement, I believe, is that the companies that produced and used ozone-depleting chemicals—and that were developing substitutes for them—were very much engaged in the process of finding solutions.  As a result, there was a factual basis and an honesty about what we could achieve, how we could achieve it, and when. And there was an acceptance on the part of industry, particularly U.S. companies, that the depletion of the ozone layer was an important problem and that multilateral action was needed. 

In the same way, industry involvement was an important part of the process that developed the Acid Rain Program created under the Clean Air Act Amendments of 1990.  And, once again, those with a seat at the table, by and large, came out with a policy they could live with.  Those who were not at the table were not as happy with the outcome. 

It is a basic principle of democratic governance: the more you get involved in the process and in shaping solutions, the more likely it will be that those solutions are agreeable to you.  Or, as the Chinese proverb puts it, “Tell me, I forget.  Show me, I remember.  Involve me, I understand.”  For those of you who think there is no possible configuration that would allow the coal industry, government and environmental advocates to sit around one table—I am here to tell you that I for one am willing to make the seating arrangements work.  Because we need them to work.
Whether the issue is public-private partnerships, incentives for technology development, or the level and timing of reductions in emissions, coal has a chance to shape the right solutions. 

What are the right solutions?  A lot of it has to do with technology—and, more specifically, with the policies needed to push and pull solutions such as CCS and IGCC to market.  (Let me say here that I don’t want to leave the impression that these are the only technologies we need to look at because there are others, such as coalbed methane, that show enormous promise as well.) 

I will say it one more time: coal’s place in the U.S. and global energy mix in the decades to come will depend largely on the industry’s ability, in concert with government, to develop the technologies that will allow us to achieve dramatic reductions in carbon emissions from coal generation.  Without those technologies, coal loses out when the United States and the world finally appreciate the need for serious action to address this very serious problem. 

In closing, I want to note that the promotional materials for the film, “The Day After Tomorrow,” ask the question: “Where will you be?”  It is my sincere hope that, whether you go and see the movie or not, this industry will be on the side of solutions to this very urgent problem. 

I honestly believe you don’t have much of a choice.  After all, a mine is a terrible thing to waste. 

Thank you very much.