United States
Environmental Protection
Agency
Research and Development
Washington DC 20460
EPA-600/9-78-023
July 1978
Office of Energy, Minerals and Industry
<>EPA Public Hearing Transcript
Federal
non-nuclear
energy
R&D Program
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foreword
Section 11 of P.L. 93-577, the Non-nuclear Energy R&D Act of 1974, directs the
responsible agency to carry out a continuing review of the Federal Non-nuclear Energy
Research and Development Program to evaluate its adequacy of attention to:
(a) energy conservation method, and
(b)
environmental protection and the environmental
consequences of energy technologies.
The President's reorganization transferred responsibility for this review from the Council on
Environmental Quality to the Environmental Protection Agency. The Office of Energy,
Minerals and Industry (OEMI) within EPA's Office of Research and Development has been
assigned the responsibility for conducting the review.
"Section 11" requires EPA to hold yearly public hearings as part of its R&D review
responsibilities. This report presents the edited transcripts of a Public Hearing on the
Federal Non-nuclear Energy Research and Development Program held March 29-31,
1978 in Washington DC. Information acquired at the hearings will be of particular value
as a mechanism for surfacing problems and issues in Federal Non-nuclear Energy R&D.
EPA plans to improve the understanding of these problems and issues, to confirm their
significance and to further explore their dimensions.
The 1978 hearings were organized by David Graham, senior staff engineer with
OEMI.
Readers of this report may wish to comment on the issues presented here or on
other issues concerning the non-nuclear R&D program's adequacy of attention to energy
conservation and environmental protection. We would greatly appreciate receiving such
comments; please send them to:
Section 11 Coordinator
Office of Energy, Minerals and Industry (RD-681)
U.S. Environmental Protection Agency
Washington DC 20460
yCT
Steven R. Reznek
Acting Deputy Assistant Administrator
for Energy, Minerals and Industry
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vxEPA Public Hearing Transcript
Federal
non-nuclear
energy
R&D Program
March 29, 30, & 31, 1978
GSA Auditorium
Washington DC
SPONSORED BY
The Office of Energy, Minerals and Industry
within the Environmental Protection Agency's
Office of Research and Development
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topics
29 MARCH 1978
i future energy patterns and coal use
Morning Session
5 Introductory Remarks, Dr Stephen Gage
7 Further remarks, Dr Steven Reznek
7 Statement of Dr Irvin White
17 Statement of Congressman Andrew Maguire
delivered by Mr Todd Caliguire
30 Statement of Dr Meyer Katzper
35 Statement of Dr Jay Lehr and Mr Tyler Gass
43 Statement of Mr Ronald Wishart
55 Statement of Mr Richard Demmy
65 Statement of Mr Earle Miller
Afternoon Session
70 Statement of Mr William Chandler
76 Statement of Mr Sheldon Kinsall
87 Statement of Dr Roger Caldwell
97 Statement of Dr Boyd Riley
107 Statement of Mr Richard Merritt, representing
the State of Nebraska
116 Statement of Dr Don Kash
145 Statement of Dr Otto Raabe
152 Open Discussion on Audience Questions
Adjournment
30 MARCH 1978
155 energy conservation and solar programs
Morning Session
159 Opening Remarks by Dr Steven Reznek
160 Statement of Mr Cecil Phillips
169 Statement of Dr William Jones
176 Statement of Mrs Ellen Winchester
184 Statement of Dr Charles Berg
192 Statement of Dr George Laf
197 Statement of Mr William Partmgton
203 Statement of Dr Marshal Mernam
Afternoon Session
246 Statement of Dr Vic Russo
254 Statement of Dr Theodore Taylor
260 Statement of Dr Thomas Sladek
271 Statement of Mr John Abbotts
288 Statement of Mr Garry DeLoss
297 Statement of Dr Donald Anderson
305 Statement of Mr Norman Clapp
311 Statement of Mr Jonathan Lash
319 Statement of Mr David O'Connor
Evening Session
325 Statement of Dr William Lang
340 Statement of Dr Ronald Doctor
Adjournment
31 MARCH 1978
351 synthetic fuels and oil shale
Morning Session
355 Opening Remarks by Dr Steven Reznek
355 Statement of Mr Richard Jortberg
363 Statement of Dr Benjamin Schlesinger
377 Statement of Mr William Rogers
383 Statement of Mr Robert Humphries
394 Statement of Dr Chester Richmond
406 Statement of Mr Kevin Markey
Afternoon Session
420 Statement of Mr John McCormick
430 Statement of Mr George Bolton
437 Statement of Mr John Rigg
444 Statement of Dr Eliahu Salmon
454 Statement of Dr Thomas Sladek
461 Statement of Dr David Stricos
475 Statement of Mr Jackson Browning
Adjournment
iii
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future energy patterns and coal use
WEDNESDAY 29 MARCH 1978
PANEL:
DR STEPHEN GAGE, Assistant Administrator
for Research and Development, Environmental Protection Agency
DR STEVEN REZNEK, Acting Deputy Assistant Administrator
for Energy, Minerals and Industry, Environmental Protection Agency
MRS ADLENE HARRISON, Regional Administrator, Environmental Protection Agency
MS VIRGINIA VAN SICKLE, Office of State Planning,
State of Louisiana
DR JAMES MACKENZIE, Council on Environmental Quality
Federal
non-nuclear
energy
R&D Program
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contents
MORNING SESSION
PAGE
PAGE
5 Introductory remarks. DR STEPHEN GAGE
7 Further remarks, DR STEVEN REZNEK
7 Statement of DR IRVIN WHITE
Science and Public Policy Program
University of Oklahoma
Questions and remarks
16 DR REZNEK
15 DR MACKENZIE
14 MRS HARRISON
17 Statement of the HONORABLE ANDREW MAGUIRE
Member of Congress from New Jersey
Delivered by MR TODD CALIGUIRE
Questions and remarks
22 MRS HARRISON
22 DR MACKENZIE
23 MRS HARRISON
23 DR REZNEK
24 MR ELWOOD HOLSTEIN
25 DRGAGE
27 MRS HARRISON
29 MS VAN SICKLE
30 Statement of DR MEYER KATZPER
Systems and Information Analysis
Questions and remarks
33 DR REZNEK
DR MACKENZIE
MS VAN SICKLE
33
34
34
34
MRS HARRISON
DR REZNEK
35 Statement of the National Water Well Association
by DR JAY LEHR and MR TYLER GASS
Questions and remarks
40 DR MACKENZIE
41 MRS HARRISON
43 Statement of MR RONALD WISHART
Director of Energy and Transportation Policy
Energy Supply Service Group
Union Carbide Corporation
Questions and remarks
49 DR MACKENZIE
51 DR REZNEK
52 MRS HARRISON
54 DR REZNEK
55 MRS HARRISON
55 Statement of MR RICHARD DEMMY
Executive Vice-President
Roy F Weston. Inc
Questions and remarks
62 MRS HARRISON
63 DR MACKENZIE
64 DR REZNEK
65 Statement of MR EARLE MILLER
Vice-President
Chas T Main, Inc
Questions and remarks
67 MS VAN SICKLE
67 DR MACKENZIE
69 DR REZNEK
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AFTERNOON SESSION
PAGE
PAGE
70 Statement of MR WILLIAM CHANDLER
Nature Conservancy
Questions and remarks
74 MS VAN SICKLE
74 DRREZNEK
75 MS VAN SICKLE
76 Statement of MR SHELDON KINSALL
Assistant Conservation Director
National Wildlife Federation
Questions and remarks
81 MRS HARRISON
82 DRREZNEK
84 DR MACKENZIE
87 MRS HARRISON
87 Statement of DR ROGER CALDWELL
Council for Environmental Studies
College of Agriculture
University of Arizona
Questions and remarks
96 DRREZNEK
107 Statement of MR RICHARD MERRITT
Consultant
Representing the State of Nebraska
Questions and remarks
112 MRS HARRISON
113 DR MACKENZIE
116 Statement of DR DON KASH
Science and Public Policy Program
University of Oklahoma
Questions and remarks
141 DR MACKENZIE
142 DRREZNEK
144 MS VAN SICKLE
145 Statement of DR OTTO RAABE
Radio Biology Laboratory
University of California
Questions and remarks
150 DRREZNEK
151 DR MACKENZIE
151 MS VAN SICKLE
97 Statement of DR BOYD RILEY
Consultant
Questions and remarks
103 DR MACKENZIE
105 MS VAN SICKLE
105 MRS HARRISON
105 DRREZNEK
151 Open discussion on audience questions
152 DRREZNEK
153 DR MACKENZIE
ADJOURNMENT
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future energy patterns and coal use
29 MARCH 1978
The hearing convened, pursuant to Notice at 9 am
Or Stephen Gage and Dr Steven Reznek presiding:
introductory remarks
DR. GAGE: Good morning. I'm Stephen Gage, the Assistant Administrator for Re-
search and Development in the Environmental Protection Agency.
This morning's session opens three days of public hearings on a subject
which is crucial to our nation's future — the relationship between energy
development and environmental protection. Energy and environmental problems
are now so widely recognized and debated that we're becoming accustomed to
them, and perhaps overlooking their fundamental importance to our society.
An era of the world's history is rapidly coming to a close. The in-
herent limitations of the traditional wisdom, that investment of money and
labor to develop natural resources will be rewarded by a growing economy,
have now been demonstrated. We know that in the short term the cost of
energy — that is the capital and labor required to produce usable energy --
will increase.
Furthermore, the potential environmental problems of coal and nuclear
energy are much greater than those of petroleum and natural gas, and will
require increased expenditures if they are to be solved.
Although we have all witnessed some of the near term economic, politi-
cal, and environmental implications of the closing of the petroleum age, none
of us can forecast accurately what the future has in store. The energy
crisis may mean a protracted and gradually worsening economic recession, lack
of opportunity for our young people, and decreasing social mobility. It may
mean rapidly degrading environmental quality and exhausting our supplies of
clean air, clean water, and productive land.
On the other hand, the energy will rise to the point where widely
available and environmentally benign sources will be used to meet society's
economic and social needs.
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future energy patterns and coal use
The exact course of our future cannot be predicted. However, the
Federal government is investing immense resources on research, development,
and demonstration projects which may shape that future.
This hearing will examine two aspects of Federal programs expending
approximately two billion dollars per year for non-nuclear energy technolo-
gies. The purpose of this hearing is to gather information on the proper
degree of emphasis given by those programs to environmental protection and
energy conservation.
The Federal Non-Nuclear Energy Research and Development Act of 1974
requires this hearing as a review forum. The President's Council on Envi-
ronmental Quality held four previous hearings. The last was in Austin,
Texas, a little over fifteen months ago. Originally with CEQ, the Presi-
dent's reorganization plan transferred responsibility for these hearings to
EPA. This is the first of the hearings that we have held.
Each of the three days will emphasize slightly different questions re-
lative to the appropriate emphasis of environmental protection and energy
conservation in the Federal program.
Today we will examine the question of future energy patterns and the
levels of coal use.
Tomorrow we will examine the topics of solar energy, the so-called
"soft" technologies, and energy conservation.
On our last day, Friday, we'll devote the hearing to testimony on ad-
vanced energy systems, particularly synthetic liquid and gaseous fuels de-
rived from coal and oil shale.
The available handouts summarize some of the issues for each of these
three days. I would now like to introduce the members of today's hearing
panel.
At my far left is Adlene Harrison, the Regional Administrator for EPA's
Region VI. She's located in Dallas Texas.
Next to me is Steven Reznek, the Acting Deputy Assistant Administrator
for Energy, Minerals, and Industry, in the Environmental Protection Agency.
At my immediate right is Virginia Van Sickle of the Office of State
Planning for Louisiana.
And next to her is Jim MacKenzie, the Senior Staff Member for Energy of
the President's Council on Environmental Quality and a veteran of such
hearings.
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Statement of Dr Irvin White
I believe Dr. Reznek has a few words about the conduct of this hearing,
and then we'll take our first witness.
Steve?
DR. REZNEK: Yes, according to the schedule, each witness is allotted approximately
twenty minutes. As an experiment, we would like to use half of each
speaker's time for questions. We are .going to delay questions from the
audience until the end of each session. We will provide three-by-five cards
for written questions. Please address your questions to specific panel
members or to the witness and turn them in to the receptionist in the back of
the room.
The record for this hearing will be held open for three weeks beginning
next Monday. We'll accept written testimony and written comments during that
three-week period.
If any of the witnesses have brought along extra copies of their tes-
timony today, or if we can have copies made, they will be available for the
press from the receptionist at the back of the room.
Those are my comments. If there are any questions about the proceed-
ings today, please ask either the receptionist or me. We're going to publish
both a summary and a direct transcript of all the proceedings. These docu-
ments can be obtained by writing to either Dave Graham or to me at EPA. Ask
the receptionist for our mailing address.
Our first witness today is from the University of Oklahoma. The name
in the program is Irvin L. White, but I always call him Jack. Jack White.
STATEMENT OF DR. IRVIN L. WHITE
SCIENCE AND PUBLIC POLICY PROGRAM
UNIVERSITY OF OKLAHOMA
DR. WHITE: As you know too well, Steve, I've always had an identity crisis.
Mr. Chairman, members of the hearing panel, I wish to thank you for
this invitation to participate in this hearing on the environmental protec-
tion and energy conservation aspects of the Federal non-nuclear research and
development program.
Since I'm confident that you will hear from numerous witnesses during
this hearing who will identify research needs in specific scientific fields
and for particular environmental and energy conservation programs, I would
like to take the few minutes available to me this morning to discuss several
needs which are likely to receive much less attention.
7
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future energy patterns and coal use
In identifying these needs I will be assuming a broad definition of
research and development and a policy sciences orientation. That is, I will
focus on research and development which I believe is needed: first, to im-
prove the current capability, to use existing knowledge and data efficiently
and effectively, to inform non-nuclear environmental protection and energy
conservation policies and programs; and second, to improve the current capa-
bility to plan and implement research and development programs which will
effectively meet both the present and the future, near and long-term needs
of policy makers when they attempt to deal with environmental protection and
energy conservation problems.
The three closely related categories of research and development needs
which I wish to discuss briefly are: one, research needs in the policy and
decision sciences; two, public-private sector relationships; and three,
broadened participation in public policy making.
I will speak most extensively on the first of these three.
We all recognize the need to attempt to anticipate the consequences of
policy choices before they are made and implemented, and of developing and
deploying technologies before they are developed and deployed.
While this means that knowledge and data are needed, it also emphasizes
the need for a valid, reliable, and creditable capability to integrate and
synthesize knowledge and data, to reconcile conflicting research results, to
reduce uncertainty, and to facilitate making choices.
In short, it emphasizes a need for a capability to link the scientists
and technologists and the policymaker more effectively.
When research and development programs are formulated and research and
development dollars are allocated, the tendency is to emphasize needs that
are easiest to identify and define, that is, knowledge and data needs, and
these tend to get defined in terms of specific, "hard science" disciplines,
particular technologies, or specific on-going programs.
As the current non-nuclear research and development budget shows, the
search is aimed at improving the existing capability to use current knowledge
and data more efficiently and effectively, and to improve the existing capa-
bility to plan and implement research and development programs receives much
less attention than does the acquisition of knowledge and data.
8
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Statement of Dr In/in White
Much more attention needs to be given to the policy and decision
sciences. Specifically, more attention needs to be focused on improving
existing capabilities in the following areas:
First, to develop and use multiple measures of cost risk and benefit.
Second, to establish the credibility of the knowledge and data base
used in making public policy choices.
And third, to plan strategically, including the capability to forecast
technological developments, assess technologies, analyze trends, evaluate and
compare contingencies, and use a broad range of analytical tools to attempt
to better inform present choices and to guard more successfully against
future surprises by reducing our vulnerability.
Multiple measures of cost, risk and benefits are needed because all
policy choices distribute cost risks and benefits differently, and no exist-
ing single measure adequately indicates what interest and values are being
distributed and how they're being distributed, despite the tantalizing appeal
of the bottom line for policymakers. In most cases there isn't one, no
matter what analysts are willing to tell you.
In my opinion we rely far too much and far too often exclusively on
economic measures at the present time. Such measures are important, but they
need to be supplemented, for example, with energy, environmental quality, and
health effects measures.
Considerable research is required if this capability is to be developed
and made understandable.
My colleague in the Science and Public Policy Program at the University
of Oklahoma, Don Kash, who is scheduled to testify this afternoon, will
emphasize the need for adequate, reliable, and creditable knowledge in his
testimony.
Let me simply note that while policymakers almost always have to make
choices under conditions of uncertainty, the level of their uncertainty can
be quite different depending upon the relative adequacy, reliability, valid-
ity, and creditability of the knowledge base available to them. The lack of
an adequate, reliable, valid, and creditable knowledge base concerning energy
resources, energy technologies, and their impacts, largely determines the
level of confidence that policymakers, other interested parties, and the
general public can have in non-nuclear energy policies and programs.
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future energy patterns and coal use
The lack of adequate, reliable, creditable knowledge about energy tech-
nologies and their impact is illustrated by the absence of data on most syn-
thetic fuel technologies at a commercial scale. With the exception of Lurgi
high-Btu gasification, data exist for only bench or pilot scale facilities.
The lack of data and experience are handicaps that make impossible the
anticipation and analysis of the impacts or effects that can be expected to
occur when these energy technologies are deployed.
If the existing knowledge base is inadequate because of the lack of
theoretical understanding, no amount of data will eliminate the high level of
uncertainty policymakers will confront. For example, at the present time the
understanding of how trace elements were chemically bonded in different types
of coal, and how different chemical bonds will affect what happens when coal
is burned in various types of boilers, is quite limited. Considerable ana-
lytical chemical and bench or pilot scale testing in different kinds of
boilers will be required to acquire the empirical knowledge base that may
eliminate this knowledge gap and make it possible to predict what will happen
when a coal with known characteristics is burned in various kinds of boilers.
For example, results of such a search would make it possible to predict what
portion of the trace elements would be admitted as air and water pollutants.
Policymakers are constantly confronted with a dilemma when dealing with
the uncertainties associated with making policy choices in the absence of an
adequate, reliable, credible knowledge base. As noted earlier, policymakers
always — almost always — have to make choices under conditions of uncer-
tainty, and at times the level of uncertainty is so high that they have to
decide whether it would be socially more responsible to choose not to do
something or to delay doing something until a test has been conducted, more
and/or better data collected, and more analysis completed.
This is the case in several areas of non-nuclear energy policymaking,
as, for example, in the case of government funding and guarantees for support
of the development of synthetic fuel technologies.
More policy sciences, decision sciences research is needed to help pol-
icymakers know how to deal more confidently with this kind of policymaking
problem.
The final policy analysis research need which I identified is a greater
emphasis on developing a more creditable, diversified, strategic, long-range
10
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Statement of Dr Irvin White
planning capability. While such a capability should be intended to identify
potential future problems, in order to help avoid them, or to help respon-
sible agencies to be ready to deal with them more effectively when they do
occur, it should also provide help for those who are dealing with current
problems.
What is needed is the capability to scan the horizon while constantly
upgrading the quality and extent of knowledge about current technologies, the
consequences of deploying these technologies, how they can be configured or
regulated to achieve policy and program objectives, and so forth.
To be effective, developing and utilizing such a strategic planning
system has to be an iterative, integrated process, and it must contribute to
the further development of the capability to integrate and synthesize knowl-
edge and data, reconcile conflicting research results, reduce uncertainty,
and facilitate policymaking choices, which I mentioned earlier.
Among the relevant research tools whose development warrant more atten-
tion are technology forecasting, technology assessment, and trend and con-
tingency analysis. In particular, what is needed is a much more developed
capability to pick up signals of technological change and to monitor this
change as it actually develops.
This is, of course, closely related to my next topic, public-private
relationships. They are related because both require a more profound under-
standing of the process of innovation and the diffusion of innovation, in-
cluding the commercialization of non-nuclear technologies developed by Feder-
ally funded research and development programs.
Technology assessment has become an overworked label which can apply to
anything from characterizing technology in a descriptive sense to a full-
blown assessment of the consequences of the decision to develop and deploy
technologies such as those upon which the non-nuclear energy research and
development program is focused.
I wish to emphasize the need for more research of the latter type.
These kinds of technology assessments are conducted to achieve two kinds of
objectives: first, to inform public and private policymakers and interested
citizens about the likely consequences of a decision to develop and employ a
technology, and second, to identify, evaluate, and compare alternative poli-
cies and implementation strategies for dealing with the problems and issues
11
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future energy patterns and coal use
that either are perceived or are actually likely to arise when a technology
is deployed.
Three questions must be answered to achieve the first objective. Are
the consequences that have been anticipated actually likely to occur? Are
there also likely to be consequences that have not been anticipated? And if
either or both kinds of consequences occur, how serious will they be?
To achieve the second objective, the answer to these three questions
must be related to the social and political context within which the tech-
nology will be developed and deployed. The questions to be answered in this
case are:
First, what alternative policies and implementation strategies can rea-
sonably be used to maximize benefits and minimize cost and risk when the
technology is developed and deployed, and second:
How will these alternatives distribute cost, risk, and benefit through-
out society?
This kind of research deserves much more emphasis that it presently
receives, and it deserves to be approached from a variety of intellectual
perspectives, not simply the complex formal modeling approaches which seem to
dominate most current programs.
Let me hasten to say that none of my recommendations for a greater
emphasis on policy and decision science research is intended to call for
large expenditures for abstract methodological studies. Instead, I strongly
believe that methodological development should be a standard required com-
ponent of substantive studies, and I certainly am not advocating an exclusive
focus on any particular kind of approach.
My sense is that proportionally too many of the dollars being spent in
this area are being spent to develop complex computer models which often hide
or tend to hide things from policymakers that they need to know.
Given the state of the policy and decision sciences art, what is needed
is multiple perspectives and lots of hands-on, thoughtful analysis.
Let me turn now to a somewhat related topic, public-private sector
relationships in non-nuclear energy research and development.
I happen to believe that existing problems in public-private sector
relationships have to be overcome if we are to be successful in achieving
stated national energy, economic, and environmental policy objectives.
12
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Statement of Dr Irvin White
While this is most obvious at the national level, it is also true at
local levels as well, as for example in resolving problems which arise for
small western communities that can potentially be overwhelmed by the con-
sequences of nearby large-scale energy development projects.
I currently chair a subcommittee of the American Association for the
Advancement of Science's Committee on Science and Public Policy, on this
topic. This subcommittee is just now beginning to develop a research agenda
for this problem area, focusing initially on public-private sector relation-
ships and commercialization of new energy technologies, particularly non-
nuclear technologies such as synfuels and solar.
I will append to my prepared statement a copy of a paper by Dr. Mary-
Hamilton, which we are using to initiate the subcommittee's identification
and definition of commercialization problems and research needs, and I trust
that this paper will be helpful to you as well.
Because of time constraints I'll leave my discussion of this topic at
this point. However, I'll be glad to expand on this topic when you question
me later.
I wish to turn briefly now to my final topic, broadened participation
in public policymaking.
Broadened participation in public policy making, particularly in the
environmental and energy areas, is now the norm, but we actually know very
little about how to provide effectively for the meaningful participation
which accomplishes the required accommodations among competing interests up
front, while a policy is being made, rather than when it is being imple-
mented .
There is very definitely a need for some focused research in this area,
including some experiments or quasi-experiments with a variety of methods and
techniques, for example, the kind of approach used by the recently completed
National Coal Policy Study.
I focused on soft policy, policy oriented research needs in my testi-
mony this morning. I elected to take this focus because the results of all
the other kinds of research needs that you'll hear about during these hear-
ings will be less useful than they might otherwise be if we don't improve our
capability to use research results more efficiently and effectively. If
there are any iron laws around, one of them has to be that public policy
choices will always have to be made under conditions of some uncertainty.
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future energy patterns and coal use
That this is the case doesn't mean that we shouldn't continue to try to
gain more knowledge and collect more data in our attempts to reduce that un-
certainty. However, it does emphasize the need to focus more attention on
research aimed at enhancing our capability to deal with uncertainty.
This is certainly an obvious need in the non-nuclear energy research
and development research program.
Because of time limitations, and the nature of my recommendations, my
remarks have tended to be quite general. When I submit my prepared statement
I will append a summary of some specific recommendations for non-nuclear
energy research and development based on our technology assessment of western
energy resource development, and our final complete research needs report
will be available to you within the next few weeks.
Thank you, and I stand ready to answer your questions.
DR. REZNEK: Thank you sir. Does anyone have questions for Dr. White?
QUESTIONS AND REMARKS
DR. REZNEK: I'm intrigued by your remark that one of the missing pieces in the
Federal program is research on how to set policy. I believe that this sort
of policy research is being done, but not very visibly, i.e. , not as a sepa-
rate program with its own resources. Thus it is impossible to make judge-
ments on whether or not the program's resources are adequate or its substance
properly focused. I'd be very interested in your specific proposals.
I believe I misunderstood another one of your remarks. It was a remark
on synthetic fuels from gasification. It seemed that you were saying that we
ought to stop the gasification experiments that are now on-going until we
understand how to do it better. Could you elaborate on this point?
DR. WHITE: It really wasn't that point that I identified as a missing link. I
think that there is a lack of adequate emphasis in the non-nuclear program on
the acquisition of data on technologies that haven't been deployed at a
commercial scale.
Don Kash will talk in more detail about a specific recommendation this
afternoon, but basically, what the proposal in Our Energy Future calls for is
going to a full scale plant at a demonstration stage in order to acquire the
data while you still have an opportunity to turn it on or off, and to then
make the decision about what portion of our future energy supply we want to
come from that particular kind of technology.
14
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Statement of Dr Irvin White
It's an intermediate step. It's not to cut it off, but to add a step
in the development process.
DR. MACKENZIE: I get the impression that you're saying, for example, near the
beginning of your presentation, that there's a lot of basic research that has
to be done. Isn't that the thrust of the -- all the gaps and holes that you
see in trying to formulate policy?
DR. WHITE: That's right, and what I was saying generally was that I think that
very frequently -- the research questions, as they are formulated, in a hard
science disciplinary sense, are not the questions that need to be answered
from the policy oriented perspective, and I was saying that we need a much
better set of linkages between the policy-maker and those who are doing the
research, so that the questions are formulated in ways which meet policy
needs, and not necessarily disciplinary needs.
If you allow scientists in each academic discipline to set the research
agenda they set it in terms of expanding knowledge in their respective disci-
plines. They don't do it in terms of what will be the incremental benefit to
improve policy making by the acquisition of that kind of knowledge.
DR. GAGE: What types of mechanisms, then, do you think are needed in order to
bring about this marriage of policy and research resource allocation at the
Federal level, if not at other levels?
DR. WHITE: Well, as I said very generally in my prepared statement, I think what's
needed is an iterative on-going program which is attempting to look out into
the future, but at the same time upgrade the data base, improve the knowledge
that people running current programs need to have on a day-to-day basis.
There seems to be a gap now between people who are dealing with current
enforcement problems and people who are trying to look out into the future
and anticipate problems and do research which would provide a basis for deal-
ing with these problems.
And I think that it has to be in one continuous process, and that the
way in which you enlist the people who are dealing with today's problems into
thinking about future problems is to give them products on a continuing basis
which they can use.
DR. GAGE: That still sounds fairly general. Do you have some specific recommenda-
tions for improving these interactions? I gather you are trying to speak to
15
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future energy patterns and coal use
preparation of reports which feed the long-range perspective into the view-
points of the research planners, but can you go beyond that at this time?
DR. WHITE: Well, part of what I was saying in my statement was that I don't think
we know at the specific level yet, and I think we need to devote a great deal
more attention to learning how to do that much more effectively than we can
do it at the present time.
I identified it as a major gap in the decision or policy sciences at
the present time, as they are used in policymaking in this area.
So I don't have an agenda set that I can lay out for you in a specific
manner.
MRS. HARRISON: Your presentation, as you said, was very general because of limited
time, so it makes it difficult then to ask you questions on general informa-
tion, but one of the things you threw out was the public need to enter into
the policymaking, and for them to enter up front on policies being made. On
a general basis, I totally agree.
But I wonder, in the specific information that you will be giving us,
if in fact you're going to tell us how to include the public up front in
policymaking, and also, who will provide some technical data to them and
technical assistance so that they can participate in some kind of meaningful
way.
DR. WHITE: Well, let me just use an example that I have some detailed personal
knowledge about. One of the kinds of research that I said we need more of is
technology assessment, and one of the things that's characteristic of tech-
nology assessment, at least the approach that we use in our work, is to
attempt to involve this broad range of interested parties in the research it-
self beginning with research definition and research design stage.
And to carry those people with you, then, through the process of
acquiring the knowledge and identifying what the problems are that the re-
search is intended to address, and the alternative ways of trying to deal
with those problems.
In fact, this is something of a political process, because what it does
is give the various interests an opportunity to participate in the learning
process, and it leads them then to having a much better understanding about
what the policy choices really are and what the implications of these policy
choices are.
16
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Statement of Congressman Andrew Maguire delivered by Mr Todd Caliguire
Now, in some of the early work that we did in off-shore oil and gas,
for example, one of the things that we've gotten lots of feedback on is that
the level of the debate significantly changed as a consequence of people
having been involved in that study using the information which was a product
of our study. That is, -- they now understood in a much better kind of way.
I think we need to do a lot more experimentation of that sort, to see
if we can't get the up-front agreement, the accommodations, rather than pay
the price after we make the decision and implement it.
DR. REZNEK: Thank you, Jack
DR. WHITE: Thank you.
DR. REZNEK: I think we have two witnesses next, Mr. Todd Caliguire and Elwood
Holstein, both representing Congressman Andrew Maguire, who unfortunately
couldn't be here today.
STATEMENT OF THE HONORABLE ANDREW MAGUIRE
MEMBER OF CONGRESS FROM NEW JERSEY
AS DELIVERED BY MR. TODD CALIGUIRE
MR. CALIGUIRE: My name is Todd Caliguire. I'm here on behalf of Representative
Andrew Maguire from New Jersey.
I'd like to read a statement from the Congressman first, and then I'll
be pleased to answer any questions you have afterwards.
I am very concerned about the problem of fine particulate pollution as
it relates to the nation's commitment to double coal consumption by 1985. As
you know, coal-burning power plants are a major source of these pollutants.
Although the National Energy Plan envisages a gradual reduction in
total emissions of particulate matter, air quality may still decline because
the concentration of particles in the submicron range may well increase.
Existing particle collection devices, although highly efficient for the
removal of large particles and thus for the reduction of bulk emissions,
preferentially allow the emission of the smallest, most toxic particles.
It is widely recognized that this equipment is least efficient in re-
moving particles in the critical 0.1 to 1 micron size range.
A report prepared by the National Institute of Environmental Health
Sciences, chaired by Dr. David P. Rail, on the effects of increased coal
17
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future energy patterns and coal use
utilization states that, "Control measures which remove only the larger,
non-respirable particulates may cosmetically lower the level of TSP," total
suspended particulates, "without having any impact on health effects. In
fact, it is conceivable that reliance on such control measures, e.g., elec-
trostatic precipitation, could lead to an unrecognized increase in respirable
particulates, and hence more of an adverse effect."
The threat to human health that is posed by fine particulate pollution
has been well documented. Fine particulates, especially those which are less
than one micron in equivalent aerodynamic diameter, are small enough to avoid
the body's defense mechanisms in the upper respiratory system, and to pene-
trate deeply into the alveolar regions of the lung where natural fluids
facilitate the dilution of the toxic elements they contain, and transport
these chemicals into the blood stream.
In addition, researchers at the University of Illinois have determined
that it is these very small particles which carry the greatest concentration
of toxic chemicals.
Those fine particulates which result from the combustion of coal are
especially hazardous. A group of researchers at the radiobiology laboratory
at the University of California, Davis, have recently confirmed that the fly
ash emitted by coal-fired power plants contain substances capable of causing
mutations in bacteria.
There is a ninety percent correlation between the mutagenic activity in
a bacterial test system and carcinogenicity of substances in animals and man.
The carcinogens contained in the fly ash apparently include inorganic
compounds such as cadmium, cobalt, and nickel, as well as organics such as
benzpyrene and other polycyclic aromatic hydrocarbons.
Such evidence suggests that the prospect of a large increase in the
amount of coal burned for energy production presents a severe threat to human
health in the absence of specific regulations limiting the amount of fine
particulate emissions resulting from this increase.
The Rail Committee has concluded that, "The elevation of gases and
aerosols, as a result of increased coal utilization, near or above current
ambient levels may be associated with increased respiratory disease, acute
and chronic, including lung cancer."
18
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Statement of Congressman Andrew Maguire delivered by Mr Todd Caliguire
There are two other compelling reasons for acting swiftly to promulgate
standards for small particulate emissions. The first is to allow utilities
and industry to take into early consideration the need for control devices
for this form of pollution. It would simply be more economical and fair to
incorporate these technologies into plants for the conversion of existing
facilities to coal use, and for the construction of new coal-burning plants,
than to retrofit them in order to meet new fine particulate standards issued
after these programs are under way.
Action must be taken very soon if this advantage is to be gained, since
the switch to coal has already started and is expected to accelerate rapidly
following passage of the National Energy Act.
The second reason concerns the implementation plans which were required
of the states pursuant to the Clean Air Act Amendments of 1977.
The states are currently preparing plan revisions to meet the new re-
quirements of the 1977 legislation, due January 1, 1979. If new fine partic-
ulate standards are promulgated after these revisions are submitted, they may
render the states' work obsolete or incomplete, in that the new standards may
be inconsistent with some of the control targets and strategies which the
states will have established.
Concern over the effects of fine particulate pollution did not origi-
nate with the National Energy Plan. By 1973 it had become widely recognized
that these smaller particles pose a far more serious threat to human health
than the larger particles which national standards were designed to control.
In testimony before the Interstate and Foreign Commerce Committee EPA
witnesses stated that, "Our Agency is moving toward controlling fine partic-
ulates, that we do have the authority to control fine particulates, and that
the schedule calls for controlling fine particulates in the next year or so."
In its 1979 Guidelines Policy Statement for the development of 1973 to
1978 program plans, Administrator Ruckelshaus gave tacit recognition to the
magnitude of the fine particulate problem by identifying the establishment of
national energy and air quality standards for fine particulate matter as a
national priority objective.
As a result, the Office of Research and Development committed $47 mil-
lion to the study of fine particulate pollution over a six-year period be-
ginning in 1974. This program was to include the study of health and welfare
19
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future energy patterns and coal use
effects, particle formation and transport, monitoring and measuring, and
control technology.
In 1975 Administrator Train reiterated this concern when he testified
before the Interstate and Foreign Commerce Committee that, "The general con-
clusion at this time certainly is that fine particulates are in an order of
magnitude more significant from a health standpoint than gross particulates."
In addition, in 1975 the National Academy of Sciences began its own
review of total suspended particulate standards with an emphasis on the pos-
sible need to control fine particulate pollution. The status of these pro-
jects and the summary of the results obtained have never been made available
to Congress.
In a 1975 letter submitted to the Commerce Committee the EPA gave a
preliminary analysis of the fine particulate problem by emphasizing that the
proper solution would be to combine the existing total suspended particulate
standards with standards for certain classes of toxic fine particulate com-
pounds, such as lead, sulfates, and nitrates.
In testimony to the Committee in 1973 Dr. Greenfield of EPA stated that
sulfate and nitrate small particulate standards would be enacted within three
years. To this date the Agency has failed to establish such standards, and
none appear to be forthcoming.
The EPA has often blamed its inability or unwillingness to enact fine
particulate standards on the non-existence or impracticability of control
equipment. This excuse is entirely unsatisfactory. The state of New Mexico
has already demonstrated the efficacy of current technology in inhibiting
fine particulate emissions.
In 1974 New Mexico adopted a regulation for coal burning equipment
which prohibits fine particulate emissions of less than two microns in
equivalent aerodynamic diameter and unit density to the atmosphere in excess
of .02 pounds per million British thermal units of heat input.
This regulation is being enforced at both electrical generation plants
in the state, and several of the units of both plants are expected to be in
compliance within a few months, using currently available control technology,
yet no EPA representatives have even consulted with officials from the New
Mexico Division of Air Quality concerning the methods they have utilized and
the results obtained in this effort.
20
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Statement of Congressman Andrew Maguire delivered by Mr Todd Caliguire
The history of EPA's effort to remedy the apparent inadequacy of exist-
ing particulate standards is one of broken commitments and circumlocutory
»
scientific study. After spending large sums of money and undertaking numer-
ous investigations there is every reason to expect that EPA is rapidly
approaching the level of preparedness necessary to promulgate its national
standard for fine particulate pollution. This is especially reasonable in
light of the Agency's 1973 claim that it was prepared to promulgate such
standards, and the subsequent five years that it has spent working on the
problem.
The Clean Air Act Amendment of 1977 required that the EPA conduct an
eighteen-months study of the fine particulate question. This work should now
be well under way.
I'm interested in knowing the specific termination dates of these pro-
jects, the contracts which have been awarded for this work, and the amount of
study which will be conducted within the Agency itself.
An interim report describing the exact nature of the work and the
results obtained to date should be made available to Congress as soon as
possible.
I believe 'that it is vital to the interests of public health that the
EPA be prepared to promulgate an interim standard for fine particulate emis-
sions immediately upon the completion of this eighteen-months study. It
would be unnecessary and inappropriate to delay the beginning of the rule-
making process until the completion in late 1980 of the Administrator's re-
view of the National Air Quality Standard pursuant to Section 110 of the 1977
amendments.
These same amendments authorize the Administrator to revise existing
ambient standards whenever available information justifies such action.
In view of the growing body of evidence relating to the harmful effects
of fine particulate pollution, and the emerging national commitment to coal
as an energy source, there is a clear need for the Administrator to establish
the schedule for the rule-making for fine particulates which will assure that
standards are in place by early 1980, or sooner.
The emphasis of the Agency's strategies in this regard should be on the
prevention of adverse effects, not undertaking an endless series of studies
which delay effective action at the expense of human health.
21
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future energy patterns and coal use
That concludes the Congressman's statements. I'd like to note that the
same points will be reiterated in a letter to Administrator Costle, which
will be sent in a few days.
I'd be happy to answer any questions.
QUESTIONS AND REMARKS
MRS. HARRISON: I'd really like to make a statement, rather than ask you a ques-
tion. I wish I had more Congressmen's representatives telling us to go ahead
and do something before all the data is in, because in my region I hear the
opposite, "Don't do anything until all the health effects are tied down and
you can prove it."
So I'd like to take you back to my region.
MR. CALIGUIRE: I'd be happy to go.
DR. MACKENZIE: Is it your judgment or the Congressman's judgment that there is
available control and technology to control fine particles at a level that
will protect the public health? Is that the statement that he's made?
MR. CALIGUIRE: I've spoken to some people in New Mexico personally, at the Divi-
sion of Air Quality, and they've had this program in effect since 1974 using
venturi scrubbers and horizontal scrubbers and they claim that they've had a
fair degree of success.
As I said, a few of their units at the two plants will be in compliance
in one month.
DR. MACKENZIE: In compliance with New Mexico's regulations?
MR. CALIGUIRE: With New Mexico's parameters.
DR. MACKENZIE: And in the Congressman's judgment, that's sufficient, so the tech-
nology's available. Is that what he's saying?
MR. CALIGUIRE: I believe that there is technology to control the fine particu-
lates --
DR. MACKENZIE: Sufficiently?
MR. CALIGUIRE: -- pollution. Whether it's efficient or not certainly bears fur-
ther investigation.
22
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Statement of Congressman Andrew Maguire delivered by Mr Todd Caliguire
DR. MACKENZIE: Okay, the other question I had was: Does this opt for or favor a
synthetic fuels policy, one that would, say, convert coal to gas, where par-
ticles might be more thoroughly removed, rather than direct combustion?
Would that --
MR. CALIGUIRE: If that is the case, I think you're right. I think it would favor
such a program.
MRS. HARRISON: Have you been speaking to Ken Hargis in New Mexico?
MR. CALIGUIRE: Yes, I have.
DR. REZNEK: As you know, New Source Performance Standards are based on best demon-
strated technology. The question I would like to ask is: What constitutes a
demonstration? This is a difficult question for a technology such as high
Btu gasification, which is not commercially available. Experiments have been
completed either abroad or at home on a small scale by the Department of
Energy. Timely full-scale demonstrations of technologies with some environ-
mental advantage, such as control of fine particulates, are needed both to
encourage industry-wide conversion to them and to assure that regulatory
requirements for them can be developed in a rational and timely fashion. Do
you or the Congressman have any thoughts on how this nation might assure such
timely full-scale demonstrations?
MR. CALIGUIRE: I think that there definitely is an advantage to be gained by in-
corporating that type of technology on a large scale. We're concerned that
the switch to coal will occur before appropriate technology is put into
place.
In other words, as I said, it certainly makes more sense to allow
utilities to incorporate the technology as they switch to coal than to force
them to retrofit after they've already begun utilizing coal as an energy
source. Just in terms of economics it makes a heck of a lot more sense.
DR. REZNEK: Some highly stringent versions of the proposed standards for conven-
tional coal combustion, when you look at the water pollution requirements and
the air pollution requirements, could put the cost — either annualized cost
or capital cost — at thirty percent of the cost of a new plant.
Do you feel that thirty percent of the cost of electricity generation
is a reasonable figure for environmental protection?
23
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future energy patterns and coal use
MR. CALIGUIRE: Well, I'd be interested in knowing what the figure is now in terms
of gross particulates. Frankly, I don't know. I would imagine that it's
going to be more expensive to control fine particulates. The control tech-
nology has to be more complex and more sophisticated, but I think if we're
talking about endangering a population, subjecting a population to a form of
pollution which could possibly increase various forms of cancer, I don't
think that thirty percent is an excessive amount to be spent.
MR. HOLSTEIN: I'm Elwood Holstein, and I've enjoyed your presentation, Todd, but I
wanted to add a couple of things on these points that you're asking questions
about.
Todd is our staff expert on the particulate question, but I think some
of the questions that you're raising do pertain more directly to some of the
general questions that Congress has been trying to address, not just this
year, but in the last several years in terms of synthetic fuel development
and some of the other energy technologies -- and the cost factor.
I think one of the things that Congress is attempting to deal with
nowadays is the actual cost of discovering, developing, producing, and
making available to the public the various types of energy sources, so that
when we talk about the environmental cost versus the cost of implementing the
best available control technology, we're really talking about taking some of
those costs which were previously externalized and figuring them in to our
total audit, if you will, of the true cost of providing energy.
So that on the one hand we may talk about the added cost to the rate
payers of providing the best available control technology for various types
of pollutants, but that must be measured against the cost to the general
public of the health effects if those control technologies are not
implemented.
Another cost that I think is raised in this discussion, another set of
costs, are those associated with synthetic fuels. There is much speculation
now about potential for coal gasification and coal liquefaction for example,
in terms of the potential for reducing pollution of various kinds, yet
there's an on-going debate in Congress that we've seen in the last three
years over just how that's to be funded, and there's much disagreement as to
whether or not those technologies will be economical within the next five or
even ten years.
24
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Statement of Congressman Andrew Maguire delivered by Mr Todd Caliguire
The costs of these alternative synthetic fuels have persistently man-
aged to float just above the higher cost of world oil, regardless of whether
that cost was $3.40 a barrel, $7.00 a barrel, $10.00 a barrel, or $12.40 a
barrel, so that I think we're going to see an increasing trend — it's not a
definite answer to your question, but I think it must be viewed in terms of a
growing trend to try to assess energy costs in terms of their total budget,
if you will, in terms of externalized costs, costs of government subsidies,
and so forth.
DR. GAGE: Could I ask a series of questions? Are you familiar with the fact that
most of the new increment of coal will be burned in new power plants? And
further, are you familiar with the fact that the Clean Air Act really pro-
vides for two different types of standards, National Ambient Air Quality
Standards (I believe that you referred to these in your testimony), on the
one hand, and New Source Performance Standards, which would set the degree of
pollution abatement in new plants, on the other hand.
I gather you are concerned because you believe that new coal-burning
plants are probably not that reachable under the National Ambient Air Quality
Standard. Yet they are not only reachable, but they are very controllable
under the New Source Performance Standards.
A new Source Performance Standard is now being prepared for new coal
power plants for both sulfur dioxide and particulates. The stringency of the
New Source Performance Standard for particulate control, which is in its
early draft stages at this point, appears to be quite ample to provide as
high a degree of control as possible under the present circumstances.
The Ambient Air Quality Standards and New Source Performance Standards
are, of course, connected, but we have found that in protecting public
health, we're able to go much, much farther by means of New Source Perform-
ance Standards.
MR. CALIGUIRE: I think another reason for concern, though, is the fact that many
smaller scale plants will be using coal increasingly as a fuel. I think that
it's obviously much more -- it's a much easier problem to solve when you're
talking about large-scale utilities, because they are easily recognizable,
and easily observable, but smaller scale plants, number one, tend to be in
areas of densest population, and, secondly, are — because they are so small
and numerous -- difficult to observe and control.
25
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future energy patterns and coal use
I think that's where a major problem lies, and for that reason I think
the National Standard is necessary.
MR. HOLSTEIN: Dr. Gage, if I can just redirect your own question back to you and
ask -- I'd like some clarification on your point. Is it the basis of your
judgment that the bulk of future coal use will come in new plants, based upon
the predictions of expanded power plant construction in coming years?
And the reason I ask the question is simply that one of the difficul-
ties that we've had with that, of course, is that the radical changes that
have taken place in future energy demands have caused utilities, not only in
New Jersey but throughout the nation, to totally revamp their estimates of
future power plant need; have caused the local -- the state commissions,
rather, to take a much closer look at the utility data with respect to future
power plant needs; and have caused some drastic downward revision in the
expectations, not only of the power plants, but of the coal that they may be
expected to use.
DR. GAGE: I believe that your capsulization of the reaction of the utility sector
within the last few years is a pretty accurate one. I think the fact still
remains that the largest bulk of new coal capacity will probably be coming in
the so-called Sun Belt, in our Region IV, and Region VI as represented by
Mrs. Harrison here, and that the uncertainty associated with the increased
use of coal in the industrial sector is probably the largest uncertainty that
is still available in the National Energy Plan.
I think that we are all, of course, very concerned about conversions in
urbanized, industrialized areas, but each one of those conversions have to be
subjected to a health review, and we may in fact end up requiring essentially
best available control technology on a number of those conversions in order
to protect public health.
I might point out, the conversions cannot occur in areas which do
exceed the National Ambient Standard now. I think that that in itself speaks
to the necessity for moving ahead in a very accelerated way to revising, if
the data shows that it's necessary, the National Ambient Standards for par-
ticulates, as well as for the other pollutants.
Adlene, did you want to comment at all about the situation in the
southwest?
26
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Statement of Congressman Andrew Maguire delivered by Mr Todd Caliguire
MRS. HARRISON: Well, I think we're expecting probably about eleven precent in-
crease in the use of utilities using coal, and it's going to escalate very
rapidly. And so, therefore, we're equally concerned that we have the proper
regulations in place.
But you're not going to stop these conversions, because a lot of things
are in place, and therefore we're going to monitor those conversions very
closely.
As Steve said, if they can't meet the Ambient Air Quality Standards,
they're not going to be able to do that at all.
Secondly, in my area we have a problem in that it's low sulfur content
coal, therefore thay have to burn more of it. So in a way it really starts a
whole other ball game.
We used to pride ourselves on the fact that we had low sulfur burning
coal. Instead that's going to impact in some other way.
But the thing about -- one thing that interests me about what you said
about retrofitting, and that really nothing should be built before all the
facts are in, haunts me in a way that we talk about nuclear energy plants
too. I don't think we know all the answers there either, and yet we've gone
on and constructed some nuclear energy plants.
The country's not going to be able to stand still with energy develop-
ment while all the facts come in. Philosophically, I would totally agree
with you. I wish we could just stay in place until we know all the answers.
But we're going to find that we're going to have some problems, because we
don't know all the answers, as we retrofit -- or even the new sources.
I mean our standards for new sources might be strict, but we may find
later that they're not the whole answer either. So we're going to be moving
forward, and we're going to do it with as much expertise as we have avail-
able.
MR. CALIGUIRE: I'd like to answer a couple of your points.
First of all, it's not our intention to stop the conversions, merely to
afford the maximum degree of protection to the population.
Secondly, I think that it's not a question of waiting for the facts to
come in. I think we've done enough investigation. We've been carrying it on
for upwards of five years and at a cost of nearly $40 million. I think it's
time to consolidate the facts and move ahead in order to afford that protec-
tion to the population.
27
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future energy patterns and coal use
And as I said, let me reiterate, it's not our intention to stop the
conversions at all.
MRS. HARRISON: Well, as you know that -- because you talk about studies, there are
all kinds of studies going on, for instance, about health effects, and we can
study it every day and we should continue to do it. So I'm not speaking
against the studying of it.
But maybe ten years from now, when we put all of those studies to-
gether, we will still not know all of the effects, as the studies come in,
and you are totally right, Mr. Holstein, when you say -- when we talk about
the impact, the economic impact of development of techniques, and so forth,
that we should not lose sight of the fact of all the economic impact from a
public that is not healthy.
So you have to put all of those figures together, but I think that this
panel and the Department of Energy and EPA and everyone certainly wants to
hear any facts that they haven't uncovered to move us forward in a manner
that we're not going to waste, and yet protect the public health.
I'm hoping after sitting here for eight hours today that I'm going to
hear a lot of new things.
MR. HOLSTEIN: I think that one thing you'll probably conclude by the end of
today's session, if you haven't already, is that there is such a wide range
of opinion on these matters, that we all end up dealing in gray areas. I
think our message here today is that -- at least one of our messages here
today is that -- Congress has imposed upon you folks the job of sorting out
those gray areas, and our difficulty in this instance is that we're dealing
here with a program that, beginning with the Energy Supply and Environmental
Health Coordination Act's Coal Conversion Authority, which unfortunately or
fortunately has not seen much fruition in terms of actual orders for con-
version, and continuing on through the National Energy Act that the conferees
have now reached agreement on, at least in terms of the coal conversion
section, we're dealing now with the very immediate, or at least in the near
future, need on your part to come up with the best standards possible,
balancing these various gray areas.
And if in fact there is a — what you would feel is a substantial and
compelling body of evidence to suggest that small fine particulate pollution
is going to be quite possibly a real hazard, then I think perhaps the forth-
coming procedures that you devise ought to take that into account.
28
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Statement of Congressman Andrew Maguire delivered by Mr Todd Caliguire
I don't know whether it's applicable, but I was noting with some in-
terest the other day that the National Highway Traffic Safety Administration
published — and I don't know whether it's for the first time, or not -- but
they published in a recent Federal Register the product of their thinking for
the next ten-year period of time in terms of the things that they are taking
a look at.
I believe that it's an opportunity to give policy makers, automobile
manufacturers, and so forth, an opportunity to begin to think far in advance
about what types of safety modifications may become necessary in the future
on the basis of on-going research in that department.
Perhaps a similar effort would be called for in this circumstance where
an education effort launched by the Environmental Protection Agency to pre-
pare the public, industry, utilities, and the Congress, for what may come on
the basis of some on-going research, even if you were not prepared at this
date to promulgate standards on the basis of your judgment of this balancing
of interests.
MS. VAN SICKLE: Have you reviewed the proposed New Source Performance Standards?
And do you feel that they will more adequately control the emission of fine
particulates and toxics in the environment?
MR. CALIGUIRE: Frankly, I haven't reviewed them, but I've been led to believe that
they're moving in the right direction. The question is: Are they going to be
sufficient? And that's a question which frankly I can't answer at this time,
but my feeling is that a national standard is going to be necessary, despite
the New Source Performance Standards.
Basically, what we're trying to do here today is to encourage the EPA
to move ahead in these areas. Mrs. Harrison said before that she was pleased
to see someone coming forward urging the prevention of adverse effects.
I think that we've suffered too much in the past from shortsightedness
to not move forward in these areas, and I think that prevention is the key.
We've made too many mistakes in the past, and it's time now to have a little
bit more perspicacity and farsightedness.
DR. REZNEK: Any further questions?
Thank you all very much for your remarks.
MR. CALIGUIRE: Thank you.
29
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future energy patterns and coal use
MR. HOLSTEIN: Thank you.
DR. REZNEK: We have a substitution next. Dr. Meyer Katzper of Systems Information
Analysis is going to substitute for Mr. Clarke Watson.
STATEMENT OF DR. MEYER KATZPER
SYSTEMS AND INFORMATION ANALYSIS
DR. KATZPER: I will expound on one of the issues mentioned by the previous
speakers, namely, the fact the Federal government has some difficulty in
dealing with small-scale dispersed systems. If we are concerned about con-
trol technologies and have a lot of small installations all over, the ques-
tion arises as to how to monitor them and how to keep them in line.
There are also the questions of the capital costs involved in instal-
ling effective pollution controls in many small plants.
In terms of our national needs for energy supplies certainly one of the
options that has a lot of potential involves small-scale and intermediate
energy technologies, and this is an area which — again, partly due to the
Federal government's problems with it -- has not been explored sufficiently.
For instance, the Department of Energy has been critiqued for a lack of
emphasis on small scale dispersed energy systems. A synthesis of these
critiques may be found in the book, Soft Energy Paths: Toward a Durable Peace
by Amory B. Lovins (Ballinger Pub. Co. 1977).
The two main points that I will focus on in my talk, therefore, are,
A) what should be done with respect to small and dispersed energy tech-
nologies, and B) what does the government have available, so to speak, and
what technologies can it help to advance? Energy technologies must not be
considered in isolation but in terms of the infrastructure they fit into.
The synthetic fuels program, for instance, fits into a preformed net-
work. Similarly, the many electrically oriented developments which involve
high technology fit into a pre-formed network where the distribution is
already available and the entire supply system is in place.
If we want to put into operaton some sort of a small scale energy
utilization process, we have to worry about its discharges. But we also
have to worry about the entire infrastructure, which means that we have to
30
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Statement of Dr Meyer Katzper
worry about starting from resources and going through the many steps of man-
ufacturing, transporting and distributing all the way to the end where you
get your discharges.
This is done in very large cases. If you're worried about a mine mouth
power plant you're going to wonder how you're going to get everything from
here and there, whereas if you're wondering about a local town's heating and
cooling facility, no one worries much about the distributor and about the
supply or about the manpower.
One of the examples given by Lovins of a technology that has achieved
widespread use on its own is up in Vermont with the cold winters and lots of
wood around. Apparently the increase in the number of Franklin stoves burn-
ing wood has been something like thirty or forty percent.
You can say, "Oh, isn't that great?" But there is a catch and the
catch is, there already was in place a manufacturing industry, suppliers,
distributors, and even repair services to fix the stove, if anything should
happen to it.
This is the sort of analysis which has not been carried out in terms of
the entire chain, even though every step of that chain also has environmental
impact on energy implications. You not only have to worry about the end user
creating soot from his stove, but you also have to consider the manufactur-
ing. The stove may be manufactured in an antiquated plant.
We now will focus on an example of a technology which the government
can help develop which can provide energy and solve problems of waste dis-
posal.
One of EPA's major mandates has been to assist in clean disposal of
solid waste. EPA has undertaken some interesting and innovative attempts at
waste disposal which also will use the waste to generate energy in a rela-
tively pollution-free approach.
Unfortunately, the experiment that was carried out and that's best
known -- namely, the Baltimore pyrolysis plant -- collapsed, in a sense, in
that enormous financial losses were incurred. Monsanto, the company that was
involved, backed out at a great loss to themselves.
But if we look at the history of what happened, it's interesting to
note that the bench scale prototype was developed and operational in 1968.
It was rather small, 0.6 tons per day. By spring of 1969 they had a small-
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future energy patterns and coal use
scale prototype in St. Louis, Missouri of 35 tons per day, and also in the
spring of 1974 in Kobe City, Japan, there was a 35 tons per day pyrolysis
plant. Late in 1974 Monsanto put into operation their full-scale prototype
of 1,000 tons per day, and disaster after disaster occurred.
I suggest that while it is necessary to consider all of the integrating
infrastructure factors previously mentioned, such as the support required to
establish a small-scale plant, nevertheless if these small-scale plants had
been fostered, had been spread, had been supported by EPA instead of scaling
up, there could have been at least a half-a-dozen small-scale plants operat-
ing around the country by now. Those plants would have given us an enormous
amount of knowledge that we need.
However, what has happened instead is there is one big plant and it's
ten years since the bench pilot project was carried out.
I therefore suggest very strongly that EPA use some of its resources,
at least, in looking at the smaller scale technologies and supporting their
development. One of the approaches suggested is the use of coal for fluid-
ized bed technology for cogeneration combining electric production with proc-
ess team generation or district heating. These technologies are admittedly
largely untested. They have not been implemented at full scale. Experi-
mental prototypes will of necessity be expensive.
There are going to be overruns, but if we develop smaller scale tech-
nologies we can put them into action faster than large scale projects and we
can find out whether they are operationally effective.
In the case of pyrolysis and fluidized bed technology, we have pro-
cesses which possess similarities, and we can learn from one with respect to
the other. We can possibly -- hopefully -- develop environmentally superior
processes so that we don't have to put our major focus on best available
technology for pollution control.
Scaled down and environmentally superior energy technologies are the
two things which I feel have not been focussed on.
There is an interesting problem in the choice of focus. Administra-
tors, given a choice between a multimillion dollar project or devoting some
of their time for a smaller scale project, are going to pick the ultrabig
project. After all, the large prestigious project can supply a large percent
of our country's needs, and can be bolstered with many arguments and sup-
porters. But it's not true, if the thing's going to flop.
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Statement of Dr Meyer Katzper
Specifically, in the case of pyrolysis, I really think that it's some-
thing which should be revived on a smaller scale in spite of the large scale
failure.
QUESTIONS AND REMARKS
DR. REZNEK: I enjoyed your comments. As you know, within the Federal government
the basic responsibility for creating energy technologies, at whatever scale
of operation, lies with DOE. EPA's responsibility is for environmental
overview and assessment of these new energy technologies.
Your comments about the difficulties of bringing about a small tech-
nology, a technology for systems consuming a relatively small number of Btu's
per day, and your comments about how the Federal government has difficulty in
managing a program designed to create such a small-scale technology, are
intriguing. I would like to hear a response to these comments from the
panel, or perhaps you would care to discuss this matter further. I'd espe-
cially like to hear any suggestion for how to deal with this situation.
DR. MACKENZIE: Well, I think you're quite right. At the moment the Department of
Energy does not have, for example, any office of small-scale technology.
Senator Percy has submitted legislation to create it, and it looks like it's
going to happen, but partly it's, I think, from my experience, a problem of
staffing.
And this goes true with your argument about one big thing rather than a
lot of small things. It takes a lot of people to manage a lot of different
contracts, and one person can manage a big contract rather easily, and that's
another institutional problem.
It strikes me, though, that it's not always true that small-scale
things are necessarily cleaner than bigger ones.
DR. KATZPER: No. I don't make that claim. I understand.
DR. MACKENZIE: But I mean there is an environmental trade off. There's a total
energy system that Harvard University is trying to build in the middle of
downtown Brookline, Boston, in the middle of the Harvard Medical Center
complex, and it's being fought bitterly because it's going to produce about
one percent of all the NOx in Massachusetts in the middle of this hospital
complex.
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future energy patterns and coal use
And yet it's the sort of thing, you know, with high energy efficiency,
supplying chilled water and electricity and the whole business, and so I
think I agree with you. Things have to be approached, though, sort of sepa-
rately and separably, and scrutinized carefully.
MS. VAN SICKLE: Perhaps a lot of this is happening more at the state level. In
Louisiana we have about a million tons of bagasse produced each year, a sugar
cane by-product, and a lot of the mills are already burning this to provide
heat to refine the sugar.
So I don't know -- I'm sure as long as we stay within the water and air
quality standards, that we'll be all right with that.
MRS. HARRISON: Well, having served on the Energy Task Force for the National
League of Cities before I came to EPA, we studied some of the pyrolysis
plants, and so forth, and I will admit that the big ones were flops, and
therefore everyone ran away from going back to that kind of technology.
But in the meantime, there are some communities that are fairly viable
that are trying some things on their own, and also some states, as you sug-
gested.
It's not going to always be the Federal government to do some of these
small-scale things. It's going to be certain regions, certain cities, cer-
tain counties that are going to go ahead on their own with some assistance
from Federal government.
So I think if you will look around, there are, in fact, some small
technology things going.
DR. KATZPER: May I interrupt for a second? I know they're going on, and what
happens is not only the Federal government not helping in their development,
as it should, but once they're going they are well hidden.
If we say that we have a need, at least one simple test that can be
made is instead of doing academic type and policy studies, which decision
makers like, one could say, "Here is what actually is there. Shouldn't we
try convincing one or two other guys to try it?"
It's as simple as that.
DR. REZNEK: I am intrigued with the idea that rather than the Federal government
establishing a Franklin stove repair industry, its proper role is to document
that one, in fact, exists. I think that is an important role, a role
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Statement of Dr Jay Lehr and Mr Tyler Gass
which can't be done at any of the lower levels of government. Furthermore, I
should say that the Federal government could probably accomplish this docu-
mentation a lot cheaper than other organizations.
Are there any further guestions?
DR. REZNEK: Thank you.
DR. KATZPER: Thank you.
DR. REZNEK: The next witness, actually the next two witnesses, are from the
National Water Well Association: Jay Lehr, its Executive Director, and Tyler Gass.
STATEMENT OF THE NATIONAL WATER WELL ASSOCIATION
BY DR. JAY LEHR, EXECUTIVE DIRECTOR
AND TYLER GASS, DIRECTOR OF TECHNICAL SERVICES
DR. LEHR: Thank you, Dr. Reznek, and panel. The National Water Well Association
greatly appreciates the opportunity to address this very important hearing.
Just a moment to introduce ourselves. The National Water Well Associa-
tion started out as a professional society and trade association representing
the ground water supply industry and geologists and hydrologists involved in
ground water development.
We have evolved in recent years primarily to a research, education, and
development group with a professional staff of fifty residing in Worthington,
Ohio. Our primary responsibility is research and publishing and dissemina-
tion of information on ground water development, and, perhaps more impor-
tantly, ground water protection.
Our interest in non-nuclear energy development has a very long track
record. During the past decade, as interest has focused on the development
of oil shales, more extensive in recent years, on further development of
coal, and as well, the continuing development of oil and gas, all of these
energy activities have a significant impact on ground water utilization.
Now, we begin from a position where we recognize that our nation's
ground water resources are between twenty and thirty times greater than our
surface water resources. They have been underutilized, primarily due to lack
of education, but as our surface waters become utilized to a greater degree,
and also more and more polluted, in recent years the emphasis of ground water
use has increased manyfold.
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future energy patterns and coal use
And while we have vast ground water resources, we cannot afford to pol-
lute them. And we wish to charge this Agency with a very careful cost ac-
counting in terms of oil shale development, coal development as well as
marginal oil and gas, to recognize that the requirement for large quantities
of ground water in the development of these non-nuclear fuels should be taken
into account and recognized as a cost, that this water should not be thrown
away unnecessarily, as the nation faces a significant water crisis.
So our first message here today is to ask that you guard carefully
against the pollution of our underground waters in the development of non-
nuclear fuels.
The second is to awaken you to the fact that we can in fact use ground
water not just indirectly in the development of non-nuclear fuels, but we can
use ground water as an energy source itself.
The aspects of ground water that make it cooler than air in the summer
and warmer than air in the winter offer it as a great potential for energy
utilization in extraction through heat pumps, and we'd like to direct a few
minutes of our comments here on that subject, and for this purpose I would
like to introduce to you Mr. Tyler Gass, who is the Director of Technical
Services for the National Water Well Association, to speak more specifically
on that part of our testimony.
MR. GASS: Perhaps the best way of working towards protecting our ground water
resources, due to the development of fossil fuels, is by reduction of our
need for fossil fuels. And this could be done by utilizing ground water as
an energy source.
Ground water, regardless of its temperature, should be considered a
form of geothermal energy. Temperatures as low as forty degrees Fahrenheit
can be used with conjunction with a heat pump to heat or cool interior build-
ing space.
Perhaps I'd best begin with describing what a heat pump is.
A heat pump is a year-round air conditioning and cooling system that
utilizes a medium such as air or water as a heat source or heat sink.
For heating, heat is extracted from the medium -- air or water --and
it's transferred to a refrigerant. The refrigerant — the heat energy in the
refrigerant is pumped from that heat exchanger to another heat exchanger,
which would be an air refrigerant heat exchanger, interior air space, passing
36
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Statement of Or Jay Lehr and Mr Tyler Gass
through that heat exchanger, would absorb the heat and carry that through the
building.
During the summer when cooling is needed the reverse would occur. Heat
from inside the building would pass over the air-to-refrigerant heat ex-
changer transferring the heat from the air to the refrigerant. The refrig-
erant would then be pumped to the outside source, which would act as a heat
sink, this time, whether it be air or water, and the heat is extracted and
the refrigerant continues through the cycle.
If we have an abundance of air you may ask why use ground water? Well,
there are a number of reasons for this.
First of all, let's look at some of the physical characteristics of
water. Water has one of the highest specific heats of any compound commonly
occuring substance on the face of the earth. It has a specific heat of one.
Air has the specific heat of 0.18, or eighteen thousandths.
The specific heat is kind of a measure of a substance's capability to
store heat energy or transfer heat energy. If we take a pound of water, and
starting let's say at fifty degrees, and we lower it one degree Fahrenheit,
we get one Btu out of the water.
If we take a pound of air and lower it one degree Fahrenheit we get
eighteen thousandths of a Btu.
In other words, we're getting fifty times the amount of heat energy for
a given temperature drop, for a given unit weight, of water than we would
with air. Therefore, the ground water heat pump operates at a much greater
efficiency than the air source heat pump.
But as many of you may know already, the air source heat pump has
gained great popularity in the United States over the last few years.
In addition to being -- and literally the ground water heat pump is
twice as efficient, producing twice as much heat or twice as much cooling
capability as an air source heat pump.
In addition to this, it overcomes a number of other problems associated
with the air source heat pump. Air source heat pumps rely on outside air
temperature. It's a non-steady state situation. As the air temperature
drops, let's say, during the winter when you need heating, the system becomes
less and less efficient. During the summers when you want cooling, the air
temperature outside is hot, and it acts as a less efficient heat sink.
37
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future energy patterns and coal use
Ground water has a constant temperature throughout the year. The tem-
perature range of ground water in the United States is ideal for ground water
heat pump operations.
In addition to this, utilization of ground water, with the heat pump,
is a non-polluting source of energy. It's also a non-consumptive type of
energy. We're returning the water back to the ground.
Now, in a wide band of the United States, where the heating and cooling
loads are almost balanced, there is no chance of environmental damage what-
soever.
There are a few areas where either the heating load dominates the situ-
ation throughout the year, or the cooling load dominates the situation
throughout the year, where there may be -- and I emphasize may, because
preliminary investigation shows that it seems like it would be insignifi-
cant -- but there may be an environmental impact.
The factors which affect the impact have to do with heat pump -- the
density of heat pump use, the rate of ground water movement, the heating
and cooling load of the area, and the net change of the water temperature
entering the system and leaving the system.
There are 13 million homes in the United States today being supplied by
individual well water systems utilizing ground water. There is no reason in
the world why these 13 million homes cannot be reducing their energy consump-
tion for heating and cooling by one-half to two-thirds by utilizing ground
water heat pumps.
There are over a million factories in the United States today that
utilize ground water for a sanitary or a drinking water supply or for indus-
trial use. There's no reason in the world why these one million factories
shouldn't be using ground water for heating and cooling.
In addition to this -- and probably more important than the two groups
I just mentioned -- there are half a million new homes going up each year
that will be supplied by ground water. They will have individual water sup-
ply systems, well water, and they'll be using ground water, and in the plan-
ning stages they should be planning to develop or work with a ground water
heat pump.
After all, in most areas they cannot get natural gas any more. There's
a problem getting oil. Electrical costs have skyrocketed, so they should and
they could be using ground water heat pumps today.
38
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Statement of Dr Jay Lehr and Mr Tyler Gass
The National Water Well Association and the Water Well Contractors of
the United States have gone a long way in promoting ground water heat pumps
by explaining the availability and the occurrence of ground water in the
United States.
Heat pump manufacturers are beginning to explain the utilization of
ground water heat pumps. So slowly the country is recognizing that these
systems exist.
However, there's a great need to educate the public on ground water
heat pumps. The Federal government has gone a long way in promoting the
utilization of solar energy, and in doing so the public has gained acceptance
in the utilization of these systems.
The Federal government has a hand and should be actively educating the
public to the availability of ground water heat pumps and the availability of
ground water in the country. For in eighty-five percent of the United States
there is enough underground water at shallow depths that these systems can be
utilized.
I'll turn back to Dr. Lehr for some concluding comments.
DR. LEHR: Thank you, Mr. Gass.
Again, I'd just like to emphasize that we have a two-fold purpose here.
One is to focus a great deal of attention or ask that attention be focused on
the cost of utilizing underground water in the development of non-nuclear
energy, the vast quantities of water utilized in the development of oil
shale, the vast quantities of water that are polluted in coal development,
acid mine drainage problems, and the like, the potential pollution problem of
developing marginal oil and gas that deal with the fact that salt water is
developed with the oil and gas and has to be disposed of, and the disposal
problem is one that is very hazardous to the well-being of the potable ground
water that exists in those areas, and simply that we -- we put a cost on
these water supplies and do not develop them thinking that some water is lost
but it doesn't have a cost to society. It does.
And then, focus attention on the turnaround and look at the water as
being a direct energy source, something that's been totally overlooked. It
seems today, in the non-nuclear area, if you get away from the shale and the
gas, the oil, the coal, fossil fuels, solar is the magic word.
39
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future energy patterns and coal use
I suppose we could use solar — we could say that it's solar energy
that heats the earth and it's the heat in the earth that heats the water in
the ground, and thus ground water heat pumps are a solar energy source. I
suppose that's true, but that's hiding behind, today, a political catchword
to make something very popular.
We have a sleeping giant in energy available tens of feet below the
earth that can be utilized directly as a non-nuclear fuel that has not begun
to be done so in this country, but I think the future of looking at that for
the Environmental Protection Agency and looking at then the environmental
impact of doing this, which is going to have to be done hand in hand, is the
message that we wish to leave you with.
Thank you.
DR. REZNEK: Thank you. Panel?
QUESTIONS AND REMARKS
DR. MACKENZIE: First, I'd like to say I enjoyed your presentation.
You're probably aware that the Department of Energy has a division on
energy storage, and in fact they are planning I think for next year to air
condition JFK airport using underground water as seasonal storage.
What they'll do is all winter long they will bring up water from below,
run it through their cooling towers, cool it further and further, put it down
into the aquifer, and then during the summer draw it out for air conditioning
purposes.
They expect to reduce their cooling demand for electricity by ninety
percent using this.
And so there is a program.
But there are a couple of questions that arise in my mind. First of
all, whether there's more information available. You said eighty percent of
the country, I think it was, there exists enough water. I'd be interested in
any documentation, for the record, if you have, or personally, or whatever.
DR. LEHR: Yes, we could supply that.
DR. MACKENZIE: Secondly, are there legal problems? Who owns the water? Is that
going to become an issue, if people start using this either for seasonal
storage or for a heat pump?
40
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Statement of Dr Jay Lehr and Mr Tyler Gass
DR. LEHR: There are indeed legal problems. They vary from state to state. By and
large, though, for non-consumptive use of ground water, and the small quan-
tities that are consumed through this use, landowners for the most part can
do as they please as long as they're not polluting.
Now, the states are going to have to look at this problem individually
and decide under what regulatory scheme they can allow people to take water
out of the ground and put it back in the ground, essentially chemically un-
changed. They are going to have to also look at the ramifications of altera-
tion in the thermal balance of the ground water.
And these are areas in which research is desperately needed. These are
problems that will have to be solved, but they're not problems by any means
that should turn us aside from utilizing it.
The JFK situation is an outstanding example of some research that is
being done. As a mater of fact, the low temperature energy group at Oak
Ridge, Tennessee is holding a symposium on it, Lawrence Berkeley lab, the
second week in May, of which I am one of seven speakers that will form
basically a state of the arts report on low temperature energy storage.
MRS. HARRISON: I think a couple of my questions have already been placed, but you
mentioned the environmental impact, you know, and studies are needed for
that. I agree.
I wonder, though, if the National Water Well Association has done any
studies on environmental impact of constant movement of underground water,
and if so, what do you suspect in that area?
DR. LEHR: I think I can answer that, Mrs. Harrison,
We have been working in this area tor about three years. We started
off with a very small seed grant from EPA to look at it. In the past year we
have built our own test facility in a domestic home in Columbus. We've only
scratched the surface.
We suspect, as Mr. Gass inferred, that the environmental impact will be
very slight. That is to say in most areas the heating days and cooling days
balance each other and the ground water moving so slowly that within a given
aquifer, a small area, the net input of heat approximately equals the net
extraction of heat, so that over a large area of the aquifer there is no net
change in temperature.
41
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future energy patterns and coal use
There have been some studies done at the University of Wisconsin
actually charting a plume, a thermal plume moving away from a storage area,
looking at the dissipation of heat and the long-range alteration of the
temperature of the ground water. It appeared to be virtually negligible.
But this is only the beginning, so we suspect that the end result of research
that is needed will be very positive, but there is no way that the government
can really begin promoting the utilization of this type of energy without
having much harder facts that we have today.
MRS. HARRISON: Also, although I know your facts are still scanty, what would you
project as the use of underground water as far as giving us energy in this
country? Would it be five percent of the energy needs, or ten percent? Or
what? At one time I heard a ten percent figure that was thrown around for a
long time, but I think that was probably taken out of somebody's imagination.
DR. LEHR: I think that's true, and the more I look at the various energy alterna-
tives, that look very exciting, you always come down to what I say, single-
digit numbers, and the more we recognize that there is not one answer to our
energy problem, but we damn' well better have twenty, twenty times five,
making a hundred, and I think we're in that range.
I think we're talking between four and eight percent of what we look
at, and probably the most important figure to recognize, which is a very
accurate one, and the one Mr. Gass gave, is that there are 13 million homes
drawing their water supply from wells, and these very same wells, without
even drilling an additional well, other than the disposal well, which is a
much less costly factor, can be utilized in eighty percent of the cases.
They could retrofit a ground water heat pump system that would probably --
again, by our preliminary estimates -- decrease the amount of fossil fuel
that would be needed for heating and cooling these 13 million homes by about
sixty percent.
That's a lot of millions of barrels of oil a day that could be saved.
This again is something we need much harder numbers.
MS. VAN SICKLE: What are the current and projected costs for the installation of
ground water heat pumps in individual homes?
DR. LEHR: Presently -- to give you an idea -- the sole national manufacturer of
heat pumps, which are supplied in Florida area, the Frederich Group of Wylain
42
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Statement of Mr Ronald Wishart
Corporation, which is a New York Stock Exchange company, makes a unit in the
state of Florida working on a higher temperature water. It will work on
fifty-five degrees, but they really only promote it for sixty degree water.
It sells for $1200.
They have told us that within six to eight months they will have a unit
that will work on forty degree water, which is the lower level of ground
water within the United States, and they estimate that the cost will
not exceed $1800.
Now this is not a lot more than the standard furnace, and of course it
does both the air conditioning and the heating. Generally it can be retro-
fitted to your air duct work in a house with only minor alterations to what
presently exists.
But it will be more expensive, but we're talking about reducing elec-
trical energy costs or oil and gas quite dramatically. We're talking easily
in terms of fifty percent.
DR. REZNEK: Any further questions? Thank you very much.
DR. LEHR: Thank you.
MRS. HARRISON: If you get a button for underground water, instead of Sun Day, I'll
wear that too.
DR. LEHR: Thank you.
MR. GASS: Thank you.
DR. REZNEK. The next witness is Dr. Ronald Wishart. He is director of the Energy
and Transportation Policy of the Energy Supply Service Group for Union
Carbide.
STATEMENT OF RONALD WISHART
DIRECTOR OF ENERGY AND TRANSPORTATION POLICY
ENERGY SUPPLY SERVICE GROUP, UNION CARBIDE CORPORATION
MR. WISHART: Thank you. I appreciate the opportunity to be here with you.
I am Ronald Wishart, and I am Director of Energy Policy for Union
Carbide. I strongly support your review of environmental and other impacts
on non-nuclear energy research and development and of the role of the govern-
ment in achieving necessary environmental and energy goals. I welcome the
opportunity to participate in it.
43
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future energy patterns and coal use
I've chosen — you have in front of you, I guess, a draft of ray
remarks. I've chosen, you'll find, to drop out a couple of things in ray oral
discourse here in the interests of time.
We in the chemical industry have a special interest in the development
of all new energy technologies -- non-nuclear included -- that can supplement
or replace the finite supplies of petroleum and natural gas that presently
power our manufacturing processes and provide our basic raw materials, for
hydrocarbons are to our industry what iron ore is to steel and electricity is
as essential to us as it is to the manufacturers of aluminum.
For the chemical industry as a whole, fifteen cents of every sales
dollar is spent for energy and feedstocks. That figure rises to thirty cents
of each sales dollar for the pertrocheraical companies. We are here, there-
fore, as a large energy consumer with great reason to care about how much we
pay for energy, how efficiently we use it, and whether there will be an ade-
quate supply available when we need it. Government, I'm afraid, will play a
major role in determining the answers to all of these questions, and of
course we hope they will be positive ones.
If anyone questions the need for development of new energy technolo-
gies, he should look at the fact that oil and gas — with proven reserves of
only a few decades -- supply 76 percent of the U.S. energy needs today.
Coal, shale, and uranium -- with reserves large enough to meet our needs for
hundreds of years -- provide only twenty percent. All other resources,
including renewable ones, take care of about four percent.
There's an obvious need to encourage fuel switching in the stationary
applications that utilize over sixty percent of our oil and gas to produce
heat and power. And there is an immediate need to reduce the thirty percent
of these scarce fuels now used for transportation, while we develop effec-
tive, economical ways to synthesize transportation fields from plentiful U.S.
coal and shale resources.
And there is a special need to do these things so that we can preserve
these finite supplies for their highest value added use as chemical feed-
stocks, because these hydrocarbons have unique properties as chemical build-
ing blocks that make them hard to replace in the near future.
In recognition of these needs we have for some time been switching our
natural gas boilers to oil, and to coal. We have done so for three reasons:
44
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Statement of Mr Ronald Wishart
the anticipated scarcity of natural gas, the rising cost of oil and gas and
their greatly enhanced value as feedstocks. But neither we, nor the nation,
can stop there.
We must develop alternative feedstocks with longer term potential than
oil and gas. Therefore, we at Union Carbide -- and I'm sure others -- are
exploring alternatives that range from the familiar -- making synthetic gas
from coal -- to the exotic -- using biological synthesis to turn biomass and
solid waste into chemicals.
The Department of Energy is proposing to have built, or to encourage
the building of, a small number of commercial scale coal conversion plants
which should be suitable to demonstrate the feasibility of various technolo-
gies at full scale.
Such plants will be few in number over the next decade, since their
products will not be currently profitable substitutes for petroleum. None-
theless, it is essential that they be put up and be in operation as soon as
possible if we are to learn enough from them to support expansion of these
technologies in the 1990's.
Hence, it seems to us that the role of the EPA should be to prevent
delay of these plants by the environmental regulatory process. In the per-
spective of the national air loading, for example, these few plants can
hardly be consequential, and time exists to develop and add an' adequate
environmental protection technology if a coal conversion process demon-
strated, proves to be economic.
Coal-based technology leads our list of alternatives because of the
abundance of coal and because of our long industrial experience in synthetic
gas processes. Crude oil from shale, tar sands, and coal will eventually
become more attractive as the price of crude oil from conventional sources
goes up.
And finally, increasing oil and gas prices and improving biomass and
solid waste utilization technologies will make these resources attractive,
probably by the 1990*s. It is possible that the alternatives we are now
studying can provide ten to fifteen percent, but not more than 25 percent, of
needed feedstocks by the year 2000.
Based on our current technological innovation and our own experience in
commercializing new technologies, we see four .phases of change in the chemi-
cal industry between now and the year 2000:
45
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future energy patterns and coal use
In Phase One, which is where the industry stands today and is likely to
remain for the next six or seven years, research, development, and demon-
stration projects on alternative feedstocks are being conducted on a priority
basis.
Perhaps the most important development in this phase is the commer-
cialization of technologies to increase the efficiency of the use of crude
oil as a feedstock. An important evidence of this is the demonstration of an
Advanced Cracking Reactor which will be operating at Union Carbide's Sea-
drift, Texas plant in 1979. It will make ethylene, a key chemical building
block, directly from atomized crude oil, and will provide a higher yield of
ethylene from each barrel of crude.
Phase Two will be characterized by increasing production and use of
synthetic gas from coal as a feedstock for such chemical products as ethylene
glycol -- which I think you know as anti-freeze, and it's also important in
polyester fibers -- and methanol, a widely-used solvent and intermediate.
We expect these technologies to emerge in the late 1980's.
Depending on economic and technological factors, they could eventually
displace natural gas and some petroleum feedstocks for as much as 25 to 30
percent of the U.S. petrochemical production. Syn-gas technology can utilize
a wide range of feedstocks such as residual petroleum fractions, coal, muni-
cipal refuse, and biomass.
Phase Three will be characterized by the introduction of supplemental
crude oil derived from shale oil and coal, both as fuels and possibly as
feedstocks. But supplemental crude will not play an increasing role before
the 1990's.
Phase Four will involve the production of chemicals from biomass or
solid waste, both of which are renewable resources with great potential.
Commercialization, however, is not expected until well in the century, for
several reasons.
Biomass harvesting is expensive and not an efficient art today. It
would, for example, take 100,000 acres of corn to produce enough starch to
supply a commercial petrochemical plant. Biomass also has a lower specific
carbon content than coal and a higher moisture content, and this means more
expensive and less efficient conversion processes. Solid waste, on the other
hand, is readily available, but the cost of collection, transporting, sort-
ing, and converting it is high.
46
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Statement of Mr Ronald Wishart
We see the chemical industry using bioraass and solid waste in two ways:
synthetic gas for the production of oxygenated chemicals and ammonia, or in
the direct production of chemicals, such as alcohol, through fermentation and
other biological means. Union Carbide's biomass research effort is going
forward in anticipation that in 1990 this technology may be a viable alter-
native.
Development and commercialization of alternative feedstocks will take
place slowly over a period of decades as we shift first to coal, next to
shale, and then to biomass and other resources. But this timetable may be
shortened -- or it may be lengthened -- according to the incentives for pro-
gress or impediments to it put in our way by government legislation and regu-
lation.
Synthetic liquid fuels made from coal appear now to be unsuitable as
feedstocks. Therefore, our principal interest in them is in their displace-
ment of crude oil fractions from the fuel market. This displacement will
make petroleum feedstocks more available. We believe, really, that if we
take care of the fuel problem, the feedstock problem will be resolved.
We see opportunities for dramatic reductions in process fuel require-
ments in the chemical industry. For example, the 1980 olefins plants will
use forty percent less process energy than the 1965 olefins plants. And in
our chemical plants we have, in 1977, this is Carbide's plant, experienced an
eighteen percent reduction in the Btu's required per unit of output, compared
with 1972.
Feedstock energy improvements have been achieved, but the opportunities
here are less likely, since feedstocks are converted into products, not con-
sumed, as in the process fuel uses.
I've reviewed our scenario for development of alternative feedstocks
for two reasons. First, it suggests my company's active commitment to de-
velop alternatives to current oil and gas, but more importantly, it indicates
that development, demonstration, and commercialization of new energy tech-
nologies does not take place overnight, and that the realistic time frame is
measured in decades, not years.
For that reason, we obviously can't wait until the supply of tradi-
tional energy and feedstock resources is depleted to start development. We
also can't wait until utilization of a specifc technology is economically
feasible before the research and demonstration processes begin.
47
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future energy patterns and coal use
We need to have the new technologies waiting in the wings when the time
comes that it makes economic sense to use them, when it is more economical to
switch to renewable resources than to drill for finite ones.
Realistically, the decision to make commercial use of new technologies
will be made on a solid economic determination that it is better to invest
money in chemical processes adaptable to coal processing than in the drilling
of deep, dry holes in well-perforated real estate.
Not surprisingly, positive government incentives can move forward the
time when these new technologies do make sense economically.
As an example, current oil and gas pricing data demonstrates that it is
not economically advantageous to invest in coal utilization and that addi-
tional incentives are required to reach parity. If, as proposed in current
National Energy Plan negotiations, drilling incentives are allowed to in-
crease four and one-half percent above inflation, it would take approximately
fifteen years to double the gas-oil incentive. More than doubling seems to
be needed to make investment in coal utilization attractive.
The economic decision is an important one, because energy development
and environmental control, as well as chemical manufacturing, require major
capital investments. Since money, like oil, gas, and clean air, is a finite
resource, the size of these investments is a prime indicator of when it
becomes logical to shift to other fuel and feedstock alternatives. Given the
risk and uncertainty that seems to abound in current environmental laws and
regulations, it's a natural reaction to minimize investment to conserve
finite money resources.
In this current period of energy and environmental challenges we
believe four things will determine how successful the nation -- and the
chemical industry — will be in developing, demonstrating, and utilizing new
non-nuclear alternatives to the present fuels and feedstocks.
First, the kind of realistic economic signals and incentives from
government that enable and encourage us to develop and use current energy
resources as efficiently as possible, and that foster development of alter-
native resources. Most productive would be a change in the current carrot-
and-stick approach to emphasize the carrot -- not the stick.
Two, a rational approach to environmental goals that won't stand in the
way of needed development of new resource technologies. Let's not hold up
48
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Statement of Mr Ronald Wishart
development of badly-needed energy technologies until we have developed envi-
ronmental protection technologies. After all, the best environmental pro-
tection equipment in the world is no good if there isn't an adequate energy
supply to operate it.
We also need to ask ourselves if zero-impact-on-the-environment is a
viable environmental goal, or an unrealistic roadblock to the development of
new technologies.
Three, legislation and regulation that provide the kind of certainty
needed to make required capital investments and economic decisions. This is
essential if private decision makers -- like my company — are to respond
rationally to the nation's energy and environmental needs.
And fourthly, a commitment from government and industry to innovation
and technology, and a realization that there are demonstration technologies
that industry can afford, and some that only government can afford.
Innovation may be too ambiguous for some planners to use in their
models, but recent history teaches us that resources provided through new
technologies are the variable that confounds the arithmetic of depletion. At
Union Carbide we're convinced that scientific and technological innovation is
the driving force behind conservation, development of new energy resources,
and environmental protection, for it involves using both our resources, and
our resourcefulness.
We firmly believe that if either the chemical industry, or the nation
it serves, fails to stay economically and socially healthy in this era of
energy and environmental challenges, it will be from lack of faith that we
can come closer to creating the kind of society we want -- not from lack of
resources.
We don't have that lack of faith at Union Carbide.
Thank you.
DR. REZNEK: Thank you. Panel?
QUESTIONS AND REMARKS
DR. MACKENZIE: Yes. Do you have any idea what the chemical feedstock needs will
be in say 1990 or 2000, any kind of an overall — primary fuels in quads --
guess?
49
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future energy patterns and coal use
MR. WISHART: Well, there must be a study some place. Present feedstock and energy
needs of the chemical industry are about eight percent of the oil and gas
supplied in the United States.
DR. MACKENZIE: So it's about six quads, or something like that.
MR. WISHART: Yes, five, three, something like -- maybe six, right.
DR. MACKENZIE: You think maybe it will double by the end of the century? I mean
do you have any sort of sense of that?
MR. WISHART: It's a good question. We have, for example, seen studies that pro-
ject the GNP growth at its reduced rate and project the chemical industry.
growth at its reduced rates, and one is still double the other.
So the arithmetic suggests you would be looking at double, or more,
maybe, in that time.
DR. MACKENZIE: Have you -- has the chemical industry, or Union Carbide, looked at
the relative economics of say biofuels versus synthetics and coal? It seems
to me that they are, you know, very close to being in the same technological
state. People produced methane for a long time, and from there methanol is
pretty straight forward.
MR. WISHART: Well, of course. In parts of the world biological processes are
fundamental. In India, for many years we operated an ethylene plant on
ethanol made by fermentation. That has not been economic for a number of
years, but I don't know the present state. I think that it is considered
sometimes.
Today — I think it is being reconsidered today. That, of course, is a
local decision.
The biomass problem -- I commented in my paper here, in the part I
skipped over, a detail that it takes really an enormous amount of land and
material to produce — support a significant size plant.
I had a group some years ago. We studied all kinds of things, in-
cluding making ethylene out of the waste from feed lots. You could do it,
but it would take an awful lot of cows.
DR. MACKENZIE: It's being done commercially now in Chicago at about a dollar-and-a
half for a million Btu's, producing gas from manure from feed lots, so
it's --
50
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Statement of Mr Ronald Wishart
MR. WISHART: Zero cost for the manure, huh?
DR. MACKENZIE: Well, that's a waste product. We're solving a problem there as
well.
MR. WISHART: Yes. Yes. Yes, and there's that enormous spruce forest up in the
middle of Maine that has been affected by the bugs, a very large acreage.
It's -- I guess I equate this, you know, a little bit to the analyses we've
done ad infinitum since the early sixties about making petrochemicals in Arab
lands. If they gave us the raw material for free, we can't do it.
I think that will change as their economies advance, and they -- it
doesn't -- it isn't so extraordinarily costly to build a plant and maintain a
work force, the transportation, and so on. It's -- something like that
happens with the pine forests. The manure was concentrated, but I think the
feed lot -- the Chicago stockyards are shut down, aren't they?
It's a -- you know, it's the gathering business, developing the experi-
ence in the infrastructure.
DR. REZNEK: I'd like to explore the question of not having environmental goals
which serve as a detriment to development of alternative feedstocks.
If the chemical company is going to grow at a rate which will double
its size by the end of the century, and if our resources of clean air and
clean water are finite, and if we're going to be using fuels which have a
great potential to be dirty, as for example when you start using coal rather
than natural gas to produce methanol, how do you strike a balance?
There's a need for economic growth and a need for environmental pro-
tection. You are considering using resources which produce a larger amount
of pollution to be abated? How do you draw the bounds? Under what circum-
stances do you set a course which will degrade the environment? Or when do
you try to hold the emissions inventory of your industry where it is now?
How do you strike a balance?
MR. WISHART: Well, I left you with the wrong impression, I think, based on your
first comment.
My point with respect to the alternative fuel sources was that in the
next decade the construction of those plants is going to be very few, because
they don't make economic sense, today. It's a de minimis problem.
51
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future energy patterns and coal use
I would not suggest that you should not have what are deemed to be
adequate environmental protections associated with such plants when they pro-
liferate. My point is, though, first build the plants, and see if the thing
is going to work before you -- the alternative might be, you see, to delay
the building until you were perfectly satisfied that you had adequate
environmental protection, and you would be then stressing a technology which
is unproven, losing time, and time is a valuable asset.
But I also said that it's appropriate in that decade to be concerned
about the environmental things, but that comes second.
Is it worthwhile to develop a fancy apparatus to clean up the air when
you don't know that you're going to use the thing at all? That was the point
I was making.
Now, with respect to the other point, about the chemical industry, it
indeed -- it's position has been, I think -- oh, ever since the generation of
management changed in 1965 because of the environmental stress -- has been
that it has to be a good citizen, and can't pollute the air.
The point of zero degradation, though, represents an absolute that is
more a function of how good is the analytical technique than how much we pol-
lute, and the analytical technique keeps advancing.
We found, for example, in the Coal Policy Project, in our discussions
there with the environmentalists about clean air and other problems asso-
ciated with coal -- and Jackson Browning will talk about that in a couple of
days, before you -- we found that when we sat down together that everybody
agreed that every time you build a plant you would have some effect on the
environment. You would have some effect.
There is a balance between necessary economic development and impact on
the environment, and you cannot say that one is so important you will not
have the other, and we agreed on that.
So I think that really the point I'm making here is that we have to
keep things in balance.
MRS. HARRISON: Mr Wishart, I think maybe all of us misunderstood, but it's pretty
clear in writing on page five, page seven, in your closing remarks, that
government regulations are very bad things to have, when you don't know
exactly all the effects that you're going to get from pollution control
equipment, and all.
52
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Statement of Mr Ronald Wishart
The one thing -- I spoke to someone at the break and I said I liken it
to what a doctor said to me, that when everyone starts talking about the
problems of cholesterol, and said that he was going to put his patients on
low cholesterol diets because if in ten years it was proven that they didn't
need to be on those diets, they still would be fairly healthy anyway. It
wouldn't hurt them. But if he found out that he waited for all the results,
and in fact they should have been on low cholesterol diets, he couldn't
retrieve the damage that was done.
I'm not saying that you need unreasonable controls, but who is going to
decide what's unreasonable? It depends on whose ox is gored, sometimes, I
think, and in my region I have to really look at the petrochemcial industry,
because I have so much of it in my area.
And what I find missing in this text — and I would like to ask you if
it's part of your consideration — is the fact that you're talking about the
economics of environmental control being so tough that maybe it will cause
people not to build plants anymore, or whatever, because of the economics of
it, but do you explore the fact of what kind of productivity you get out of
employees, for example, if there's more illness in the area of all the chem-
ical plants, if there were no controls, by people not coming to work or being
half as productive because they don't feel well?
What are the medical costs to Union Carbide, for example, because they
have policies on all these people -- I'm certain that they do.
MR. WISHART: Yes.
MRS. HARRISON: So that really also has to be figured in on costs, I think.
MR. WISHART: Well, I recognize your point, and the problem isn't arising from a
general debate on that subject. It's not a question of whether we agree with
you or not, but the question is quantification and what degree makes sense.
But that was not the object of my statement. The object of my state-
ment was to try to bring a sense of perspective to what has seemed to me to
be an incredibly difficult thing, and that is to develop the alternate fuel
technologies.
I have on a number of occasions in public, predicted we'd never see, in
my lifetime, anyhow, coal conversion plants, for a lot of reasons.
53
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future energy patterns and coal use
There's an abundance of oil in the world right now, right? We have a
national defense security dollar problem. That's what that's all about, that
question of the importation of oil, and indeed there is a lively concern in
the government, and I think some concern in the countryside, about that.
The proposals with respect to alternate fuel development from coal it
seems to me are coming into some sensible perspective. We're not talking
about crash programs now. We're talking about proving out a few of them.
Mr. O'Leary has a B-17 analogy, which is a pretty good one. He says
that in 1942 -- and I remember that -- there were twelve B-17's in the world.
Not a very big bomber force for the United States, but they've been around
for ten years. We knew how to fly them, we knew how to make them, we knew
what their good points were and bad points, so that we could very promptly go
ahead and replicate them in the thousands, and that was a significant factor
in the outcome of the Great Conflict.
What he's saying here is -- my analogy -- it's wise to get these things
up, even though we won't -- pretty sure we won't need them till the 1990's,
and I agree with that. That makes sense. Let's find out if they work.
That's the only point I want to make.
MRS. HARRISON: I don't think anyone debates the fact we need to try certain tech-
nologies.
MR. WISHART: And that ought to be done quickly.
MRS. HARRISON: But at the same time, I think we also have to have some measure of
control as we do it.
DR. REZNEK: It would be a shame if we understood the performance characteristics
of coal conversion plants, for instance, to the same extent that we under-
stood the performance characteristics of the B-17's before they were produced
in large quantities, but did not simultaneously understand their environ-
mental performance.
MR. WISHART: Well, I don't disagree with that at all, but I think the environ-
mental technology we have today for power plants is not as good as that we'll
have in several years, and it's not sufficient to achieve the environmental
requirements.
And what are you going to do? Force it? If it doesn't work, it
doesn't work. Spending a lot of money on it doesn't make any sense to me.
54
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Statement of Mr Richard Demmy
MRS. HARRISON: How would you ever get the technology if you never tried?
MR. WISHART: Well, we're getting the technology. It's coming ahead in terms of
burning coal, for example. It'll get there. It's like all of this fuss here
in Washington -- which I've been involved in for the last three years —
about a big national energy policy.
Without any laws at all the objectives of the national policy are being
realized by the free market, somewhat held up by the government, but we're
getting there.
[Audience Laughter]
MRS. HARRISON: I think you should put in the testimony that we should do away with
all government.
DR. REZNEK: Any further questions?
Thank you.
MR. WISHART: Thank you.
DR. REZNEK: Our next witness will be Mr. Demmy. Mr. Demmy is Executive Vice-
president of Roy F. Weston.
STATEMENT OF MR. RICHARD H. DEMMY
EXECUTIVE VICE-PRESIDENT
ROY F. WESTON, INC.
MR. DEMMY: My name is Richard H. Demmy; I am Vice President of Roy F. Weston,
Inc., Environmental Consultants and Designers. The operation is a consulting
engineering firm specializing in environmental consulting services for indus-
try, municipalities and government. Our studies are directed toward problems
of air, water, land, wastewater, solid waste, marine pollution control,
energy conservation and management, environmental and occupational healths,
resources development and recovery. Our professional staff of over 270
include 125 registered Professional Engineers, Planners, Architects, and
Geologists, and 35 Diplomates of the American Academy of Environmental Engi-
neers. Augmenting and supporting the professional staff are approximately
300 technical and administrative personnel.
I am pleased to discuss the subject of future energy patterns and coal
use with you this morning. First, because Roy F. Weston, Inc. has been
55
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future energy patterns and coal use
deeply involved in the subject of environmental protection and energy con-
servation as a corporation. Secondly, because I have personally chaired the
Coal Utilization Subcommittee of the Commerce Technical Advisory Board Panel
on Project Independence Blueprint and have recently been Chairman of the Coal
Gasification and Liquefaction Subcommittee for the National Coal Policy
Project.
In the past, energy use has been determined by the economics and avail-
ability of the fuels. Coal replaced wood in the latter part of the 19th
century; and in the early part of this century, oil and gas have displaced
coal. The future energy problems of the United States, and as a matter of
fact of the world, will not be totally determined by economics and availa-
bility as has been the case in the past but will be determined by political
decisions reached in the capitals of the world. Witness the National Energy
Plan developed to deal with the "eventual and inevitable shift from oil and
natural gas to a new mix of fuels". The political decision has been made:
"a national goal of an annual coal production (and consumption) of one bil-
lion tons by 1985".
Even before the Arab Oil Embargo it was obvious the domestic oil and
natural gas resources could not satisfy the burgeoning national demand for
fuel much longer. Petroleum -- or more specifically, cheap petroleum — had
become a dominant force in the economy but supplies were limited. The
implied energy policy of the United States was to rely on cheap oil imports.
However, the days of cheap oil imports are gone, and whereas in the near
term, world oil supplies are plentiful, we cannot assume lower oil prices.
Indeed we must prepare for the ever present potential of another oil embargo
with its impact on national security and on the economy of our country.
The National Energy Plan demands greater use of coal and rightfully so.
Coal is, after all, our most abundant domestic energy source. The National
Energy Program has assumed that the only way to use coal is for industrial
steam raising or for converting it into electrical energy.
Inadequate attention has been given to the emerging technologies of
coal gasification. Coal gasification -- compared to conversion to elec-
tricity -- will cause significantly less air pollution, generate less solid
waste and use far less water to produce the same amount of energy. The
environmental impact of two equivalent energy projects is shown in Table 1.
56
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Statement of Mr Richard Demmy
TABLE 1. ENVIRONMENTAL IMPACT OF TWO EQUIVALENT ENERGY PROJECTS(1)
Unit Plant
Discharge to Atmosphere
Particulates
Sulfur Dioxide
Nitrogen Oxides
Water Requirements
(Acre Ft/yr)
Solid Wastes (Tons/day)
COAL GAS(2)
250 million cu ft/day
(Ib/hr)
180
450
1,780
6,300
1,400
COAL ELECTRICITY1-3 '^
3000 Mwe
870
2,300
20,830
41,400
5,100
^ 'Table 1 is from "The Gas Option" by Henry R. Linden and J. Glenn Seay,
Institute of Gas Technology, for the New England Gas Association Annual
Business Conference, 16 March 1978, Boston, Massachusetts.
(2}
Radian Corporation, A Western Regional Energy Development Study: Pri-
mary Environmental Impacts, Vol. II, Council on Environmental Quality
and Federal Energy Administration, Contract No. EQ4AC037, August 1975.
(3-)
Final Environmental Impact Statement on the Proposed Kaiparowits Project,
U.S. Department of the Interior, March, 1976.
(4)
Atmospheric discharges based on use of average quality coal.
The technology to build low, medium, and high Btu coal gasification
plants now exists. Many improvements are under way and "second generation"
technology is being developed.
If the future energy patterns of the United States are to guarantee the
best environment, we simply must make sure that our nation's vast resources
of coal are channelled into a system that will contribute the most energy for
our nation at the lowest cost economically and environmentally. That system
is coal gasification.
Gasification projects can utilize high sulfur bituminous coal from coal
reserves adjacent to the industrialized east. These projects would be in a
competitive position with alternate low sulfur coal projects located farther
west. Also, it is technically possible to utilize some of the anthracite and
57
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future energy patterns and coal use
bituminous refuse banks that scar the landscape as a result of earlier coal
preparation.
An example of the utilization of high sulfur coal would be the Pennsyl-
vania Coal Reserves where 43 billion tons out of 58 billion tons contain
sulfur in excess of present environmental standards. If a utility chooses to
use this fuel, and particularly in light of the new air pollution laws de-
manding best available control technology, it will mean costly expenditures
for stack gas cleanup. The economic incentives for using eastern coal gasi-
fied for eastern industry are substantial.
Although interest in new coal gasification technology virtually disap-
peared in the United States with the shift to natural gas, interest continued
high in petroleum-short Europe where coal remained the chief energy source.
Mixtures of carbon monoxide and hydrogen -- synthesis gas -- also became
increasingly important as the basic raw material for ammonia and a whole
range of organic chemicals needed for plastics. As a result the United
States is looking to Europe for the initial technology in coal gasification.
At the present time, research and development support is being given to at
least three basically different coal gasification approaches: synthetic,
natural gas and coal liquefaction.
I stated earlier that coal gasification will contribute energy to our
nation at the lowest economic cost. Let me quantify that statement:
Let's assume that we are going to use coal to add 1.5 quads, about 2
percent of our energy, per year to the nation's energy supply. One quad is
equal to ten to the 15th power of Btu's.
To convert that coal to electricity it will take 50 - 2,000 megawatt
plants for the capacity of 100,000 megawatts. At the going rate of $800 per
kilowatt, these plants will require a capital outlay of $80 billion.
If we convert the coal to substitute natural gas (SNG) we are going to
need 20 plants capable of producing 250 million cubic feet of gas per day.
These plants, based on latest figures, will cost approximately $1.2 billion
each or a total cost of $24 billion.
Another approach would be the conversion of coal to a low Btu gas.
This gas would be made available for industrial usage in a limited area.
While there is no particular virtue in making a fuel with low heat value, the
cost of producing such gas is lower because upgrading steps are eliminated
and the overall process is more efficient.
58
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Statement of Mr Richard Demmy
Let's compare low Btu gas production with an electric plant producing
an equivalent amount of electricity. A plant with a 1,000 megawatt capacity,
again at the $800 per kilowatt cost, will require an investment of $800
million to produce a like amount of gas -- 10 billion Btu per day -- will
require five gasification plants at $28 million each or a total cost of $140
million. Again, this is low Btu gas for industrial use. The plants would
have to be located near their customers to make them economically worthwhile.
Table 2 (High Btu Gas Versus Electric) and Table 3 (Low Btu Gas Versus Elec-
tric) reveal that the effective fuel costs to the consumer are significantly
less by converting coal to gas: 65 percent of the cost of electricity for
high Btu gas and 35 percent for low Btu gas.
An additional area which is not being sufficiently addressed at the
present time is the fluidized bed combustion of coal. If the coal industry
is to participate in the industrial and electric utility energy market , a
modification in the method of burning fuel is indicated. Witness the intense
opposition to fluid gas desulfurization scrubber systems. It is my belief
that the atmospheric fluidized bed is the only method of fuel combustion
available today in sizes which can be utilized by industry and upgraded to
large steam production requirements of the electric utility industry in the
United States. This method is available in commercial sizes today. Two
atmospheric fluidized bed boilers are supplying steam to a 60,000 kilowatt
generating station in Casablanca, Morocco. I fear that the delays inherent
in developing commercial pressurized fluidized beds will prohibit the com-
mercial development in the United States. However, if the atmospheric
fluidized bed process is introduced into the United States, we will have fuel
technologists knowledgeable in fluidized combustion capable of guiding the
development of the next step forward in this technology; namely, pressurized
fluidized beds. The atmospheric fluidized bed needs research and development
funds to further the art of limestone sorbents in the active bed.
(l)"Ignifluid Boilers for an Electric Utility" by Richard H. Demmy, P.E. ,
presented at the 69th National Meeting of the American Institute of Chemi-
cal Engineers, Cincinnati, Ohio, 16-19 May 1971.
59
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future energy patterns and coal use
TABLE 2. HIGH BTU GAS VS. ELECTRIC
USE OF COAL TO ADD 1.5 x 1015 BTU/YEAR
COAL TO ELECTRICITY
0.5
100,000 MW
$800/KW
$80 Billion
$10.66
$ 3.20
$13.86
3.20
$17.06
100%
$17.06
(2)
Capacity Factor
Plant Capacity
Cost
Capital
UNIT COSTS IN $/MMBTU
Annual Capital Unit Cost
(20% Capital/yr)
Effective Fuel Cost
(36%eff.) (56% eff.)
Total Production Cost
Transmission & Distribution
Total Cost
End Use Efficiency
Effective Fuel Cost
COAL TO SNG
0.8
20 plants @ 250 MMCFD
$1.2 Billion each
$24 Billion
$3.20
$1.78
$4.98
$1.75
$6.73
60%
$11.22
(1)
(2)
Table 2 is from "A Utility View of Coal Gasification" by Richard H.
Demmy, Roy F. Weston, Inc., Symposium on Pennsylvania Coal sponsored by
Air Products and Chemicals, Inc., College of Engineering and Physical
Sciences, Lehigh University, Pennsylvania Power and Light Company,
Bethlehem, Pennsylvania, 25 March 1977.
Capacity factor is based on plant usage and is modified by plant avail-
ability. For example, gas can be stored underground while electricity
must be generated to meet daily loads.
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Statement of Mr Richard Demmy
TABLE 3. LOW BTU GAS VS. ELECTRIC
USE OF COAL TO ADD 1.5 x 1013 BTU/YR
COAL TO ELECTRICITY
0.5
1,000 MW
$800/KW
$800 million
(2)
Capacity Factor
Plant Capacity
Cost
Capital
UNIT COSTS IN $/MMBTU
COAL TO 300 BTU GAS
0.8
5 plants @ 10 Btu/day
$28 million each
$140 million
$10.66
$ 3.20
$13.86
3.20
$17.06
100%
$17.06
Annual Capital Unit Cost
(20% Capital/yr)
Effective Fuel Cost
(36% eff.) (75% eff.)
Total Production Cost
Transmission & Distribution
End Use Efficiency
Effective Fuel Cost
$1.86
$2.38
$4.24
0
$4.24
70%
$6.06
(1)
(2)
Table 3 is from "A Utility View of Coal Gasification" by Richard H.
Demmy, Roy F. Weston, Inc., Symposium on Pennsylvania Coal sponsored by
Air Products and Chemicals, Inc., College of Engineering and Physical
Sciences, Lehigh University, Pennsylvania Power and Light Company,
Bethlehem, Pennsylvania, 25 March 1977.
Capacity factor is based on plant usage and is modified by plant avail-
ability. For example, gas can be stored underground while electricity
must be generated to meet daily loads.
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future energy patterns and coal use
An environmental concern of the energy projects I have discussed today
is to properly identify and control the hydrocarbon releases in gaseous
emissions wastewater and solids discharges. Although the basic technology is
available to treat and control such releases, the specific application of
available technology is not proven. This is particularly so relative to the
monitoring and control of leachate from the land disposal of process solids.
Adequate R&D funding should be supplied to answer these concerns immediately.
In summary, coal must be used in the near and medium term to satisfy
the energy requirements of the United States economy. Fluidized bed combus-
tion and coal gasification (low, medium and high Btu) are the most economical
and environmentally acceptable solutions.
Thank you.
DR. REZNEK: Any questions?
QUESTIONS AND ANSWERS
MRS. HARRISON: Can I ask — on page three, at the top of the page, where you say
that coal gasification will cause significantly less air pollution.
MR. DEMMY: Yes.
MRS. HARRISON: And then I think in the summary you say that coal gasification is
more environmentally sound than other methods.
As of about a year ago I was involved in some studies of a coal gasi-
fication plant in the Midwest. A municipality was thinking of putting a coal
gasification plant in, and they did not seem to have any of the facts on the
environmental impact.
MR. DEMMY: Well, the facts are available. As a matter of fact, the MOPPS study
had a very good report on just that, and if you'll turn to Table 1 of my
paper I can give you a comparison of the reduction of the particulate emis-
sions defined for a high Btu coal gasification project, which were 180 pounds
per hour of particulates, 450 of sulfur dioxide, and 1780 of nitrogen oxide.
That sounds high until you compare it with a coal electric plant of the
same energy capacity, delivered to the consumer.
The water consumption is much less, as well as the solid wastes, as you
can see by that table.
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Statement of Mr Richard Demmy
This table is developed from the work that was done on the MOPPS study
recently. So we do have it.
Yes?
DR. MACKENZIE: You've got particulates and oxides and nitric oxides, but my under-
standing is there are -- there's much less known about things like poly-
cyclica, you know, hydrocarbons in gasification plants, both in terms of
occupational exposures and in terms of contaminants in the actual gas as it
leaves, so that when you get to the consumer you're not quite sure what's
coming out of that pipe in terms of trace metals, or what have you.
MR. DEMMY: You'll notice at page 6, I mention at the bottom of that, in the last
paragraph, our concern to identify and control the hydrocarbon releases in
the gaseous emissions wastewater and solid discharges.
DR. MACKENZIE: Yes, so —
MR. DEMMY: So we recognize -- I recognize that, and it must be identified, but it
has not been addressed sufficiently at this point. That's why I brought it
out in my testimony. I agree with you.
DR. MACKENZIE: Yes. There's one other comment I had, and that is on your com-
parison between using coal for electricity, or gas, it strikes me, you know,
in a gross sense you're right, but you really have to see what the energy's
being used for.
You could, for example, take coal, gasify it, and then burn it in a
combined cycle power plant and then run a heat pump, and that might be far
more efficient and less polluting than making natural gas and just burning it
in a home.
MR. DEMMY: I would take issue with you on that. No. I don't agree with you.
DR. MACKENZIE: Well —
MR. DEMMY: One -- the reason behind it is this: that the — I have shown you the
environmental impact, and the cost impact on Table 2, of high Btu gas where
the delivery system is available in the United States for the gas system to
be delivered into the home.
If you use that system you will use less total material of coal in the
beginning including using the heat pump. Actually, if you utilize the heat
pump, and that will only be for the energy to heat the air, you'll end up
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future energy patterns and coal use
with about 28 units of energy for every 100 units of energy you start with in
coal, whether you go the gas route or whether you go the coal route, and
that's including the heat pump.
But the units of heat, for heating water, and for cooking, the units of
coal will then rise on the electric side, compared to the gas side.
I can supply studies for you, should you desire to have them. I have
them available.
DR. REZNEK: I think that the economics of pollution should be expressed in terms
of a market-basket of mixed end products, although I realize it's very hard
to do this and that it wouldn't be universally appropriate to use those
terms.
One of the things that I've always been interested in but never see
mentioned is this: You can power a heat pump with gas, can't you?
MR. DEMMY: Very definitely, and the only reason they have not developed it is
because economics -- which the former speaker talked about — have not driven
the heat pump. The cost of gas has been too low to justify the capital
costs.
The capital costs will be higher for a gas heat pump. As a matter of
fact, if you go back five to six years ago, the gas refrigerator went out of
business, and that is a gas heat pump.
So the technology is there, but costs are higher, but the capital cost
denied the savings of the low cost of gas, which has been inordinately held
down by price regulations in the national market for the domestic consumer.
Therefore, there's been no push for it. If you look at the cost of
electric energy, where I live in the Philadelphia area today it's about
$15.00 a million Btu. Gas is still selling for $3.50 a million Btu.
If you can get a coefficient of performance of two on those two units,
your dollars saved in electricity justify the heat pump. They do not justify
it at this point in the gas, but they will as our costs of gas rise.
Coal gasification will be $5.00 per million Btu, whereas gas out of the
ground today in the Texas area is approximately $2.00 and even a little bit
less, because the competitive market has come back into play there.
In Pennsylvania the price -- minimum price for typical gas is about
$1.85, much lower than coal gasification at this point.
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Statement of Mr Earle Miller
But the point is, that if we're going to protect our environment we
should be pushing toward gasification because it has less impact upon the
environment and actually does use our resources up at a slower rate, since
there is a better efficiency.
DR. REZNEK: Any further questions?
Thank you very much.
MR. DEMMY: Thank you.
DR. REZNEK: The next witness is Earle C. Miller, Vice-President of Charles T.
Main, Incorporated.
STATEMENT OF MR. EARLE C. MILLER
VICE-PRESIDENT
CHAS. T. MAIN, INC.
MR. MILLER: Dr. Reznek, panel, my name is Earle Miller and I'm Vice-President of
Chas. T. Main engineers of Boston, Massachusetts.
I'm President of the Engineering Society's Commission on Energy, Chair-
man of the Technical Committee on Energy of the Pan-American Association of
Engineering Societies, and past President of the American Society of
Mechanical Engineers.
I'm presenting my own personal views.
It's a privilege to participate in this hearing. I am interested and
have been for many years in expanding the use of coal to help to assure
continuing reliable supply of electrical energy, at least until such addi-
tional sources, new sources of electrical energy, become available.
Now, we hear of many proposals for saving of energy, saving of gas,
saving of oil, conservation, improving efficiency, but many of these will
require additional electric capability. And this is what I'm most interested
in.
The need for utilization of vast quantities of coal will certainly
extend well into the next century. We must now look to the near term, and
also the long term in R and D.
Research and development must be considered for both the near term and
the long term. The near term must rely on improvement of developed or
nearly-developed technologies if the results are to be a substantial help in
the next few decades.
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future energy patterns and coal use
This phase of the work should stress demonstration plants capable of
proving and improving performance, reliability, economics of the most prom-
ising of the processes.
Concurrently with this phase the work on advanced research should
proceed to provide improved options for the next century.
The current mix of projects in the Department of Energy program is, in
the main, commendable. Unfortunately, the success of the project is not
likely to impact coal utilization as quickly as the nation would wish.
There are a number of reasons why successful research takes time to
become commercial, and not the least of these is the inertia of people
resisting change until that change has been fully proven. This takes time,
and rightly so, and in electric energy supply, reliability has to be a con-
suming goal. There is an economic need to get on quickly with the expanded
use of coal, to keep our industrial machine and our national fiscal position
healthy enough to carry the heavy R and D loads for the future.
I believe the present Department of Energy program for coal is well-
balanced to achieve such a goal.
I do perceive two unattended areas that need early attention, that is
sulfur emission control processes and a more accurate determination of
acceptable levels of sulfur emission.
Our present regulations on sulfur emission are based more on the lack
of information than on knowledge. For this reason, very straight, stringent
regulations were promulgated. These regulations are far more restrictive
than those of the highly industrialized nations of Germany and Japan.
The U.S. regulations preclude satisfactory operating parameters for
present sulfur removal equipment.
Mandating performance and accomplishing that performance are not syn-
onymous. Less stringent regulations would result in a marked gain in equip-
ment usage. Increased usage is a fast way to get the improvement needed.
There is highly developed equipment for the utilization of coal for
power genera ton, equipment that has been proven and is available. This
technology is handicapped only by the lack of reliable sulfur removal equip-
ment. Attention to this handicap would be productive.
I suggest that the Department of Energy additonally be charged to
develop reliable data on acceptable performance, or achievable performance,
66
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Statement of Mr Earle Miller
of sulfur removal equipment. Concurrent with the determination of achievable
performance an aggressive research and development of the most promising
processes of sulfur removal should be pursued, and this includes waste dis-
posal .
There is within the Department of Energy the capability of assessing
the potential of various systems of sulfur removal, and the most serious
problems in those systems. In addition, knowledgeable advisory committees
could be assembled to assist in the evaluation of a productive program.
In conclusion, I believe that we have penalized our progress by making
our goals unachievable. Whenever a mandate is handed down that simply can't
be executed, we lose time, and accomplish very little.
I would hope that we would change from an adversary position to one of
cooperation. I believe that EPA, the Department of Energy, and industry
should study the problems, come up with reasonable solutions, and proceed.
Thank you.
DR. REZNEK: Thank you. Does the panel have any questions?
QUESTIONS AND REMARKS
MS. VAN SICKLE: You said that you think the sulfur standards should be re-eval-
uated based on available technology. What magnitude of down-grading do you
think is necessary, if that's what you're getting at?
MR. MILLER: Well, the way I would approach it -- I wouldn't give you a number,
because I don't think we have a number. We don't have a number because we
set a goal so high that we couldn't attain it.
It's like the fellow trying to pole vault. If you set it at eighteen
feet, you may never know how high the fellow can vault. You start out at a
level that he can attain and you build up to a maximum. You simply don't set
a goal that's unattainable and stay back and say, "Let's keep on trying to
get across that pole." You'll never get across the pole.
So I don't think we should try to establish a number at this point. I
think we should determine what we can do and move from there.
DR. MACKENZIE: I'd like to ask you on sulfur, I reviewed the standards and the
criteria and so forth, you know, when they were set in the early seventies,
and I think there's been some recognition that SCL as a pollutant is perhaps
less of a problem than what it gets turned into -- the sulfates, for example.
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future energy patterns and coal use
And indeed, the more evidence -- as research goes on we see that sul-
fates and the acid rain that results from it, is indeed a much more seriously
problem.
For example, in New England there are streams in New Hampshire which
have no life left in them because of acid rain. There's a lot of damage
there that's being done due to acid -- masonry and copper and so forth --
things that are eroded, and it seems to me that it's likely that even in the
face of SCL reductions the consequent damage is still significant and that 1
see a further reduction, based on not SCL emissions, but basically the damage
that seems to be more and more, as we look at it, from the sulfates that
result from it.
I'd like to hear your comments on that.
MR. MILLER: Well, you've pointed out specific areas. I think I know the areas
you're talking about. I think one of our problems, one of our problems
nationally, is that we pick a Los Angeles basin and we say the oxides of
nitrogen are so high they are creating smog in the Los Angeles basin.
We then set the same regulation for the plains of Texas.
In response to yours, I think that we do have to treat all of these
problems on a regional basis, and not try to impose the same regulation
across the country, because the conditions are different. We're a large
country. Maybe in a small country you have the same uniform condition.
That's not so here.
So in answer to yours, yes, I agree on several courses. One, I think
that we have put a tremendous effort into elimination of oxide of sulfur, and
that is what I'm saying. We worked with too little information and became
too rigid in our conclusions.
I'd back off from that and take a look at some other items.
Now, as I suspect -- this I don't know either -- I suspect that better
control of solids emissions, in combination with reduced sulfur emission, not
at the present level, but an attainable level, would gain us more than set-
ting the sulfur level so extremely stringent as to be unattainable.
Our regulations are becoming self defeating because the plants that
can't meet the code have the new equipment shut down, and they revert back to
plants that have no solution for either solids or the sulfur.
So you've got to take a broader view.
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Statement of Mr Earle Miller
DR. REZNEK: I'd like to explore one point. Your suggestion that there be an
advisory panel for a Federal program in developing sulfur control technology
is an interesting one and it has received a lot of consideration. For in-
stance, such a program was in the first version of the National Energy Plan.
Could you comment briefly on the composition of such a review panel,
how it might work, what groups might be represented on it?
MR. MILLER: That answer is going to depend on what chair you're sitting in.
I realize that there is in the government tremendous talent, tremendous
talent, in different areas. And starting from that position, a few years ago
I got involved at the request of a department of the government to try to
encourage cooperation and that was to get the other party to understand that
they were really trying to be reasonable and accomplish a standard goal.
Well, in that particular case what I suggested was that since two
different agencies of the government were in conflict, and both of those were
taking adversary positions with respect to industry, the agencies should
jointly sit with industry to develop an acceptable program.
I think, then, that possibly a part of that type of conflict could be
resolved simply by advisory committees within government itself.
I was one of the group that offered to various government agencies to
put together from the various engineering societies consulting groups, and to
put them together in the same manner in which we put our own code committees
together.
As a member of ASME I worked on code committees, and although that was
financed by ASME, we put on those code committees people from the government,
from industry, and from the public in order to get a balance in our codes and
standards.
And if I were setting up the programs that is the way I'd go about it.
I'd put government, industry, and the public into it.
DR. REZNEK: Any further questions?
Thank you.
MR. MILLER: Thank you.
DR. REZNEK: We'll adjourn now for one hour and five minutes, by my watch, and
reconvene at 1:15.
Thank you.
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future energy patterns and coal use
AFTERNOON SESSION
DR. REZNEK: Let's start the afternoon session.
Once again, if there are questions from the audience you can turn in a
three-by-five card and they'll come up — either questions for panel members
or for witnesses, if they're still available.
Our first witness is Bill Chandler from the Nature Conservancy. Bill?
STATEMENT OF MR. WILLIAM CHANDLER
NATURE CONSERVANCY
MR. CHANDLER: One aspect of coal use which I would like to address today is its
impact on the nation's overall natural ecological diversity, a subject area
with which the Nature Conservancy has been long involved in trying to pro-
tect.
Coal development, of course, is only one part of a larger problem, and
that is landscape alteration in general, which has gone on this country in an
unplanned fashion for about 200 years.
As a result, we have literally been throwing away our diversity of
ecological resources in haphazard fashion, and eventually we may pay the
price for that.
A lot of people ask the question, out of ignorance, as to the value of
maintaining natural diversity, and you often see the argument raised, "What
does it really matter if you lose half of the species on this earth as long
as Man continues to dominate natural systems and maintains his own species?"
I think it should be pointed out that every time we throw away one of
these unique genetic resources we are in fact eliminating a resource option
on which our society can depend in the future, perhaps for a source of medi-
cine, agriculture -- an agricultural product, a forest product, or what-
have-you, and it's just sheer fool-hardiness in terms of resource management
to be throwing these things away in an unplanned fashion.
The Conservancy has long thought and tried to do something, or figure
out what needed to be done, to protect natural ecological diversity in the
United States, and in order to maintain that full range of diversity you
basically have to decide what it is you're trying to maintain, where it is,
what its status is, and then you have to take intelligent actions to go out
and specifically protect examples of each one of these resources.
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Statement of Mr William Chandler
The key to doing that is classifying the landscape into the individual
elements which compose that diversity, doing an inventory on a continuing
basis to find out where these things are, what their status is, et cetera,
setting up a data management system that allows people who need this informa-
tion in facility siting decisions, and so forth, to utilize it and to access
it very quickly; and going out and actually taking protective action to make
sure that as many examples as possible or as practicable of these resources
are preserved.
This is a job that's never been done before in this country, and it's a
little strange, or it's interesting to me, that we've had a Geological Survey
in the United States for a hundred years, but we've never had a biological
survey to do the same thing on the biological front; and there's just simply
been no holistic, systematic, comprehensive effort to do this on a national
scale.
I would like to point out that this job is now being done in ten states
and in the TVA power service region. Seven of those states, by the way, have
substantial coal deposits.
The states that have a natural diversity inventory and maintenance
program going on right now are West Virginia, Ohio, Washington, Oklahoma, New
Mexico, Mississippi, and Tennessee. They need more resources to do a better
job, but at least they've started.
I would like to briefly state how these programs work and then try to
tie this in with coal use and development.
First of all, the program staff sits down with the scientific community
in the state and they draw up a classification system of the state's elements
of diversity, which include all of the plant community types known to exist
and be native to that state, the aquatic community types, all plant and
animal species which are liable to disappear from the state without deliber-
ate efforts to protect them, the different types of geological features found
within the state, and then they have a category called miscellaneous — sort
of a flexibility category where they can throw in other types of ecological
resources which the state feels are important to maintain.
Then what they do next is to actually go out and search the landscape
for examples of where all of these different elements can be found, and they
actually plot these locations on quad maps. Each one of these states has a
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future energy patterns and coal use
comprehensive set of USGS quad maps on which they locate every example of
each element of diversity that they can find and verify.
They set up a state data bank to manage this information and to analyze
it, and then they actually set up a protection program to go out and make
sure that insofar as possible the best examples of all of these elements that
they can find are protected, whether they're on private lands, Federal lands,
or state lands.
In addition to identifying important elements of natural diversity
which need to be saved before they're irretrievably lost, this data bank that
these states have now established has tremendous utility in the EIS process.
For example, in West Virginia, they have evaluated 245 surface mining
permit applications, since August of '77, for the State Department of Natural
Resources. They're also providing information to consultants who work for
EPA trying to do an EIS on coal development in West Virginia.
In Mississippi, the state has passed the strip mining law down there
which basically requires areas unsuitable to strip mining to be identified,
and an area unsuitable to strip mining happens to mean a unique natural area,
among other things, so that the state natural diversity program in Missis-
sippi is actually helping implement that state law by providing information,
specific concrete information, on where all of these elements are found and
how these overlap potential coal mining sites.
To cite another type of energy development, the New Mexico program is
doing work on evaluating the impact of geothermal leasing sites for BLM; and
to give you an idea of how much data one of these state systems can manage as
they're now set up, the state of Tennessee last year with one-half person for
the entire year screened 1800 Federal projects for their impact on the ele-
ments of natural diversity in Tennessee.
In other words, the NEPA process is being made to work for the first
time in these states that have these data management systems with respect to
the specific genetic resources with which the Nature Conservancy is con-
cerned.
And of course this all ties in to siting decisions, trade-offs, where
do you put development, where do you not allow development to occur, and so
forth, and this is how it relates then to the coal problem.
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Statement of Mr William Chandler
Theoretically we could go out and dig up every acre of coal in the
United States and be done with it. On the other hand, we know that to do
that there will be certain environmental consequences that need not nor
should not occur.
We would suggest that one of the consequences that should not occur is
that this process of energy development should not be allowed to wipe out
unique ecological resources on which our society is going to depend in the
future. We just do not have that right to throw those things away on a
short-term basis, so the alternative is to get out and actually find these
things, so they aren't eliminated in ignorance, and to take specific actions
to protect them.
And the only way that you're going to do that is to get one of these
state inventory programs going and to keep it running, and it's going to take
us a long time. We're way behind. The energy forces are moving rapidly, and
we have to start moving equally rapidly on the ecological data collection and
management process so that we can identify these sites, and provide this
information to people making these decisions.
We very strongly feel that the basic role of the Federal government in
this whole process is to get the financial and the technical assistance down
to the state level where we think the job can best be done. It can't be done
from Washington, it should be given to the states because they're closest to
the problem. They have the authorities and most of the tools necessary to do
the job in terms of protecting lands that have natural diversity value. They
also have a sufficient breadth of scope in terms of geography that they can
compare the trade-offs of siting a coal mine here versus there, in terms of
the state's overall natural diversity resources.
In closing I would like to point out that although there are seven
state — or excuse me, ten state programs that are trying to do this in-
ventory now, as I pointed out earlier, they do not have sufficient resources.
They could use more help. There is a piece of legislation pending in the
Congress which we hope will provide that Federal financial and technical
assistance, and if it passes we will be very happy.
We have our fingers crossed, and hopefully the Congress will recognize
the importance of these state data banks and get the money out to the states
to do the job.
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future energy patterns and coal use
Thank you.
DR. REZNEK: Thank you, Mr. Chandler. Are there questions?
QUESTIONS AND REMARKS
MS. VAN SICKLE: Are you familiar with the basic monitoring network that each state
has implemented?
MR. CHANDLER: The basic monitoring network?
MS. VAN SICKLE: Right. It was required by EPA, and we have -- each state was
required to set up a network of sections across the state to inventory the
different types of communities, and benthos, nekton, plankton, and also run
sediment and all these types of --
MR. CHANDLER: You're talking about water quality data.
MS. VAN SICKLE: Yes sir. This is just in water quality area. This is one of the
first things that we've done, like this.
MR. CHANDLER: Right.
MS. VAN SICKLE: And each state has implemented this program and it was funded
through EPA. I guess we started ours last month.
MR. CHANDLER: Those kinds of programs, to the extent that they would provide
information relevant to, you know, the actual location of aquatic types, or
aquatic species of plants or animals, would be helpful to us. To the extent
that they don't, they would not be helpful, because we're actually trying to
pinpoint habitats and locations on the map where, you either find a species,
or you find an ecosystem type that you can identify as being native to that
state.
These programs, by the way, these state programs build on a lot of
different inventory efforts that are on-going. In fact, that's one of their
great benefits. They can take information gathered by the Fish and Wildlife
Service; they can take information gathered by the Parks Service, or by state
agencies, and then they transform that, if they can use that data, into a
comprehensive picture of the entire state landscape, which nobody else has
ever done before.
DR. REZNEK: Presumably, Federal action is not needed to allow mining of coal
resources on privately owned land. At any rate, how does this ecosystem
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Statement of Mr William Chandler
inventory affect the situation where a unique biological resource is on land
which is privately owned and mineable?
MR. CHANDLER: Well, first of all, the first thing we have to know is that there is
a unique resource on private land, and again, that ties back into the inven-
tory system. We may find, for example, that there are forty different loca-
tions of an oak-hickory forest in the state of Tennessee, some of which may
be on private land, some on Federal land, some on state land. To the extent
that that type of ecosystem is not protected, the job then would be to go out
and get several examples of each -- of that ecosystem that we could defi-
nitely insure were protected for the future.
We realize that we don't have the resources to do everything. You
know, we can't protect every example of every element.
In the case of the private landowner who has a resource that we would
like to protect, we've got to go out and argue with the guy, try to get him
to understand what the value of that resource is, and we basically go about
that now by trying to buy the land from him -- give him an option as to what
he's going to do with that land, or try to get some sort of a conservation
easement, or what have you.
But we basically work with positive techniques to try to get him to
dedicate that resource to long-term conservation. There's no condemnation
applied to that particular site.
It's basically an argumentative process.
Let me cite a good example of something that happened, although it
didn't pertain to coal lands, just to make this more clear. There is a heron
rookery down on the Potomac River, about sixty miles south of here. The
owner basically had an option to sell for second home development and sub-
division. Somebody came out and told him what was on his land. He said,
"Hey, that's really neat, you know, give me another option," so we're in the
process now of trying to raise the money to buy that site.
So you know, when you can come in and tell people that they have some-
thing unique on their land, we've found that in ninety percent of the cases
they're more than willing to listen to a conservation option, if you can help
them achieve that and protect them financially.
MS. VAN SICKLE: The ten states that are involved now, what type of funding are
they working on? Is it Federal funding, OF just from the states?
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future energy patterns and coal use
MR. CHANDLER: The ten state programs that are running were started with a mix of
private and Federal resources, in most cases. The Federal government usually
bows out after a couple of years. They are being funded through the old
Bureau of Outdoor Recreation as part of their state recreation planning
process.
And then eventually, within two years, the states take these programs
over and run them totally on state funds.
DR. REZNEK: Any further questions?
Thank you. Our next witness is Mr. Sheldon Kinsall of the National
Wildlife Federation.
STATEMENT OF MR. SHELDON KINSALL
ASSISTANT CONSERVATION DIRECTOR
NATIONAL WILDLIFE FEDERATION
MR. KINSALL: My name is Sheldon Kinsall. I'm Assistant Conservation Director of
the National Wildlife Federation, which is the nation's largest conservation
organization, with three and a half million members.
We appreciate the opportunity to present our views on the nation's R D
and D energy policy. We'll focus on the policy process by which the --we
believe the nation's future energy pattern should be drawn.
We'll take a somewhat broad brush approach in this short statement.
We'd also like to make some general comments on several problems we see in
the actual process.
The Federation, like most environmental and conservation groups, has had
a long interest in energy. A very significant portion of the environmental
issues which are of concern to us are in some way related to the impact of
energy extraction, transportation, conversion, or use.
As the demand for energy increases, living space shrinks, reserves of
conventional fuels dwindle, and environmental concern grows, these areas of
conflict will just get worse, at least for awhile.
It is not surprising that energy is such a major source of environ-
mental problems when one considers the central role of energy in our society.
We realize, as I believe all environmental and conservation groups do, that
enough energy to fuel our society is essential, but environmentalists and,
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Statement of Mr Sheldon Kinsall
clearly, a growing number of people here and abroad recognize that a decent
environment is also essential to our economic as well as individual health
and well-being.
While many believe or at least proclaim, because it suits their per-
sonal ends -- that achieving the twin goals of a decent environment and
sufficient energy for society are mutually exclusive, we do not accept that.
The Federation realizes that some trade-offs between energy production
and environmental quality are inevitable. We can control, however, the
significance of the trade-offs, especially the further we get into the
future.
The future energy supply pattern of the country can be drawn in a
number of ways with differing impact on the environment. Just as there are a
number of alternative energy futures, there are a number of alternative and
environmental futures, some more survivable than others.
While energy can be supplied by a number of sources, we obviously have
only one environment. The only prudent course is to protect it, because when
we degrade it we pay the price, inevitably.
We cannot avoid payment by adjusting interest rates, providing sub-
sidies, or legislating that less than the full amount will be collected. We
can, however, manipulate these human institutions to adjust to our energy
supply problem.
Such manipulation, of course, is the stuff of the policy process, and
as far as the environmental impacts of policy are concerned, we would like to
suggest some areas for policy makers to consider in trying to provide energy
and still maintain environmental quality.
The most obvious and important consideration is that environmental
questions be given full consideration at every stage of the policy process.
This means thoroughly reviewing existing environmental data and, if that is
insufficient, aggressively generating as much new data as possible before
deciding on how to proceed with energy-related or other projects.
It means fully incorporating the environmental factors as givens which
must be dealt with to at least the same extent as making a profit, or the
role of the project in maintaining the national security.
In the Federal government, the review process envisioned in the
National Environmental Policy Act is the kind which should be incorporated in
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future energy patterns and coal use
all policy processes involving the environment. Unfortunately, even in
government, the spirit -- if not the letter -- of NEPA is subverted.
A second policy consideration dictated by our increasing understanding
of environmental dynamics is the need to give the environment the benefit of
the doubt.
Often the understanding is lacking to prove conclusively that adopting
a policy option will result in what most people consider unacceptable en-
vironmental costs.
At the same time, what evidence and understanding is available suggests
that significant damage will occur. In such a case that option should not be
chosen unless there is some overriding national interest involved and there
is no other way to attain it.
The known short-term benefit must always be carefully weighed against
long-term environmental costs.
As the growing concern with environmental quality has encouraged in-
creased environmental research, we have found that pollution standards --such
as in the Clean Air Act -- which we once thought were comfortably safe, do
not give us such a comfortable margin after all.
This research is also uncovering problems about which we were ignorant
even a few years ago -- PCB pollution is a good example.
A third policy consideration is one which should be easily embraced by
policy makers interested in serving the public interest. It is one which
provides a fair mechanism, the marketplace, to help determine what the
nation's energy mix will be.
Simply put, the costs of protecting the environment should be inter-
nalized by the energy producer. Presently the costs of not protecting the
environment too often are borne by society at large.
Simple justice dictates that the segment of society which utilizes an
energy source should pay the total cost of its production. Since the costs
of environmental protection will be passed on to the consumer by the energy
producer, the consumer cost of that energy will reflect the total cost of its
production if adequate environmental standards are set and enforced.
The market mechanism, then, will encourage some energy sources and
discourage others. Similarly, competition within an energy production sector
will encourage the most efficient producers.
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Statement of Mr Sheldon Kinsall
Coal strip mining is a good example of an energy source in which the
total costs of production are -- hopefully -- only just beginning to be
internalized. It is probably not possible to figure the true costs of strip
mining in Appalachia, for example, with complete accuracy, but included would
have to be such things as the loss of tourism revenue, loss of recreational
opportunities because of stream pollution, elimination of timberlands, health
effects from ground water contamination, cost of increased water treatment,
damage to downstream reservoirs from flooding due to increased siltation, the
social, economic, and human costs of forcing people into already overburdened
urban areas and onto welfare rolls, and so on.
This does not take into account such things as the aesthetic impacts,
loss of wildlife habitat, dangers from landslides, and so on.
Compare these costs with the 50 to 75 cents a ton that it is currently
estimated is the maximum incremental cost in most cases of doing the mining
properly in the first place. This incremental cost per ton is a one-time
cost. The much higher costs of irreversible stripping, however, must be paid
year after year after year.
Clearly, society as a whole has not benefitted in the long run from the
apparently lower costs of stripped coal.
A similar case could be made for cleaning up air and water pollution,
protecting coastal marshes, and a number of others.
To restate the point, we do not avoid paying for environmental damage.
It may not be noticeable; it may not seem to affect us personally; but nature
will balance the books, nonetheless.
The fourth major policy consideration involves the overall goal of
energy policy. By knowing what the desired objective is, the day to day
decisions and trade-offs can be placed in proper perspective.
Losing sight of the goal can result in narrow, unwise decisions which
may satisfy short-term needs, but at an unacceptable cost of long-range
values, such as the quality of the environment we will hand down to our
grandchildren and to their grandchildren.
Unfortunately, the government too frequently loses sight of the long-
range goal, or does not seem to have one clearly fixed. The question, which
is important, is too often, "How much energy will it produce by 1985?" and
not often enough, "What are the consequences of starting down this path, or
what other options do we have?"
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future energy patterns and coal use
The fifth consideration is where on the "worst case-best case" con-
tinuum should future policy planning be anchored. No responsible policy
maker can base policy decisions on the premise that the best case will apply,
but no realistic policy maker should base decisions -- especially in the
energy area -- on the assumption that the worst case will apply.
This is particularly true when the environmental implications of ac-
cepting a worst-case scenario are considered. The hope for the future is
clearly with energy research and development.
We have, fortunately, some sources for providing energy, primarily
those in the solar area, which have either minimal environmental impacts
or -- when compared to conventional sources -- much less adverse impacts.
I will not go into the advantages of solar energy. Most of us, I
think, are familiar with that. In fact, over the past few years Americans
have grown increasingly aware of the potential and progress in harnessing the
sun's energy.
It seems that the only people who remain largely ignorant are those who
propose and approve the Federal budget.
Again this year, as always before, the budget is unrealistically low
and the public must again turn to Congress to provide a realistic level of
funding.
As you know, this process has already begun, and I am confident that
the Congress, at least, will adopt a realistic level of funding for solar
research, development, and demonstration.
This year's budget is another result of the clear bias against solar
energy, which has existed within the various Federal agencies which have had
or now have solar R and D responsibilities.
The country simply cannot afford this kind of narrow minded approach to
such an important issue of providing environmentally acceptable energy re-
sources for the nation.
In addition to -- or perhaps because of -- the bias towards sources of
energy with currently greater economic and political impact, there is -- from
the outside at least -- a lack of coordination in public policy designed to
deal with solving the overall energy problem.
Too much emphasis is being placed on a few energy supply efforts, and
too little on developing new ways of using energy more efficiently.
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Statement of Mr Sheldon Kinsall
In areas from agriculture to architecture there are many things which could
be accelerated to reduce demand and still maintain our standard of living.
We are told, often condescendingly, that conservation of energy is all well
and good, but that we still need to produce energy. We agree, but we hasten
to add that the problem facing the United States, at least, is not one of
insufficient energy. Rather, it is one of tapping enough energy sources soon
enough at acceptable economic, social, and environmental costs.
Conservation buys the time to permit this, if we will, to develop the
options that we have available now, or which we can see just over the
horizon.
The Federation firmly believes that we can provide sufficient energy
for the nation and still maintain the quality of the environment. We do not
feel, however, that as a nation we are making a particularly good start
towards that goal.
We see a serious lack of sensitivity to environmental issues in the
Department of Energy, a bias against some of what appear to us to be the best
options, and too narrow a perspective on the scope of the problem and the
range of solutions.
Unless some fairly significant changes are made our environmental
future is far bleaker than we believe it should be.
I'll be happy to answer any questions or discuss any of these points
further.
QUESTIONS AND REMARKS
MRS. HARRISON: Mr. Kinsall, since I think you said you have three and a half
million members, so obviously you all are pretty active in public awareness
programs. When you're out there in the field do you find that more people
are becoming knowledgeable on these problems, or do you find there's less
interest? You might be able to give us some handle on how the people out
there perceive what's going on -- with government or with you, whatever --
with energy policy, development of energy, and the impact on the environment.
MR. KINSALL: We've — there's obviously a number of aspects to that question. Let
me just mention a couple.
We've just recently taken a poll of our -- a portion, a large portion
of our membership, and among other things asked them which energy sources
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future energy patterns and coal use
they felt should be given primary emphasis, and the energy sources that are
usually grouped under the rubric "appropriate technologies or alternative
technologies" were far and away the most popular.
Some of the more conventional sources came in quite a ways down in the
list of those that the public -- at least that segment of the public which is
included in our membership -- sees as desirable, and solar energy was clearly
far and away the most popular.
Again, there seems to be a feeling which is part hope, but part an
understanding, I think, on the part of a number of opinion leaders across the
country, as to just what this potential is, and it seems to us that in part
it reflects the lack of concern, to a certain extent, on the part of the
public with where the energy comes from to turn on the light when they flip
the switch, just so it's there and just so it's not provided in unacceptably
high economic or environmental costs.
That does not, obviously, hold for some of the people who have careers
invested in a particular technology, or who stand to benefit financially from
one or another technology being accelerated.
In a somewhat broader answer to your question, opinion polls -- as
you're probably aware -- have shown consistently that public concern with
cleaning up pollution is one of the top three or four or five problems that
people have identified for a long time, for -- certainly ever since Earth
Day — and while there was some small dip during the energy crunch, it's
now — and recent polls back up -- it hovers between 55 and 60 percent of the
American people who feel that this is a very serious problem, one which needs
to be corrected.
So obviously there are other aspects, but to take a couple of specific
examples, we feel that as the population becomes more aware and as the edu-
cation level goes up, the sensitivity, as more people grow up with interest
and concern in the environment, that we will have increased desire on the
part of the public to make sure that environmental quality is maintained and,
if possible, enhanced.
MRS. HARRISON: Thank you.
DR. REZNEK: Certain people feel that some energy alternatives or options, par-
ticularly the softer technologies, are being overlooked, and that not enough
consideration of what is practically achievable in that area is occurring.
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Statement of Mr Sheldon Kinsall
They feel that once the full potential of soft technologies is realized, the
enormous expenditures to develop the hard technologies will be unnecessary.
Others feel that we'd better begin developing hard technology quickly,
that we know what is achievable with them, and that equivocating for a pro-
tracted period now will cost us an enormous amount later, both environ-
mentally and economically. These people feel that we must commit ourselves
now to a course of action which will at least open up options as time goes
on.
Would you like to comment on this issue? Should we keep on talking, or
should we shut off the debate and devote all of our energies to action? Or
specifically, should we examine soft technologies further to see to what
extent they preclude the need for hard technologies, or should we get on with
the business of developing hard technologies so that they will be ready when
needed, since their lead time is so protracted?
MR. KINSALL: If I understand your question, part of our answer would have to be
that our best immediate source of energy -- if we can look at it in some kind
of broad perspective -- is conservation or greater efficiency of use, and
another part of it would have to be that we have not really thoroughly ex-
plored all that we can get in the same time frame as some of the so-called
hard technologies, some of the technologies which are currently most of the
emphasis by the Department of Energy -- that is synthetic fuel production,
for example, oil, shale, that kind of thing.
A number of interesting studies have been done, but one in partic-
ular -- if we're talking about the period from now to the year 2000, which is
the mid-term period, one interesting study done in California recently sug-
gested that if California now began to make a conscious effort to become
relatively independent as a state for its enery production, based on its own
resources and those that were already do-able -- not those that required
considerable extensive research and development yet -- that it could sustain
doubling the population growth by I think it was 2030, and the economy could
increase four times, and by using things which under conservative estimates
were going to be available in that time period, could become independent of
nuclear power and of imported oil.
Now obviously we are talking there a somewhat longer time frame, but
the point is that we have options available. These are things which don't
require ten years of reserach and development.
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future energy patterns and coal use
The people who did this study — Energy Laboratories in California,
Lawrence Livermore and Berkeley, a couple of other universities I believe are
involved — took fairly conservative assumptions and they did not allow for
breakthroughs.
We have certainly — the one thing we can be sure of is that there are
things which we're going to find out next year and the next year and five
years down the road which are going to change the picture. And what we would
like to see is a somewhat more flexible approach, something that would allow
us to buy the time, and we could go into a number of examples of -- there's a
report recently of a new tertiary recovery technique which might release some
70 percent of oil which is left in the average well after — for all intents
and purposes — the well is dry.
Now there are things which if we focused on the problem and looked at
the potential for conservation and increased efficiency we think we can buy
the time to put off for a short while -- five to ten years, perhaps — having
to make the kinds of decisions which would pretty much lock us in.
And if we look at the amount of capital which we're talking about in a
government program to subsidize or sponsor even demonstration of synthetic
fuel, and we look at the payoff which is the late 1980's before these plants
will even be in production for a long enough period of time to get an idea of
the economics and the environmental impacts and so on. We feel that there
are much more economic and efficient ways of spending that money in the short
term, at much less environmental cost, which will give us the flexibility to
make these choices.
So we would agree that something has to be done, certainly, but we
would not agree that we're confronted right now with having to make major
choices on which path to take.
DR. MACKENZIE: Just one quick question. Certainly conservation is affected by the
price of energy. Has the National Wildlife Federation taken a position on
either the deregulation of gas or the deregulation of oil prices?
MR. KINSALI: No, not specifically, but we have generally taken the position that
energy should reflect the total environmental costs of clean-up, which --
DR. MACKENZIE: But not —
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Statement of Mr Sheldon Kinsall
MR. KINSALL: -- in most cases would raise the price, and we unofficially believe
that it ought to reflect the cost of replacement, but we have no official
policy or national resolution on that question.
DR. REZNEK: I have one question from the audience. You mentioned insensitivity on
the part of DOE to the environmental concerns, and yet quoted Lawrence
Livermore and Lawrence Berkeley, which I believe are funded by DOE. Would
you care to elaborate on the manifestations of —
MR. KINSALL: Yes, I would. There are two interesting aspects to that observation.
One is that this particular study -- the exact title slips me right now, it's
Distributive Energy Systems for California, or something like that — was
done about a year ago, and was somewhat surprising to many of the people,
from very prominent Californians, technically competent people who were
involved in that study, who were not particularly strong alternative energy
advocates, but they were surprised as they worked through the pay-offs from
various energy sources as to exactly the amount of energy that could be
provided.
That study is currently back in the Department of Energy, and there has
been some criticism -- there was criticism earlier on that the Department was
trying to suppress that study.
That appears not to be the case, but what they clearly are doing is not
making any effort to publicize that study and there are a number of things --
the NET-2 plan, which is underway right now within the Department, which
could have benefitted from the kinds of data that these people came up with,
and which was available to the Department at the beginning of this process,
and yet there is not indication -- until it was raised through some leaked
documents -- that energy conservation was even considered in this supply
strategy, which is now the current ninety-day wonder going on within the
Department.
So that's one interesting aspect of it, that while it hasn't been
suppressed, it hasn't been publicized either.
But as a more specific kind of example of the insensitivity of the
Department, we just within the last 48 hours finally have gotten an indi-
vidual selected to be the Assistant Secretary of Energy for Environment. It
is the last major -- I'd be happy to tell you afterwards, but this was re-
lated related to us on good authority, and we've checked with the person, but
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future energy patterns and coal use
we were asked not to publicize it, but it's somewhat ironic, when you look at
this from several perspectives. It almost is the six-month anniversary of
the creation, the formal creation of the Department, and it's almost the
one-year anniversary of the first letter sent by the heads of the National
Wildlife Federation, and all of the major environmental groups in the
country, to the President urging him, one, to -- suggesting the kinds of
characteristics that the ideal Assistant Secretary for the Environment should
have, but two, urging the President and, indirectly, Schlesinger and others,
to make this one of the very early appointments so that in the creation of
this Department this particular individual could be on the ground floor, so
that his operating procedures were established and while the situation was in
a state of flux everyone would -- hopefully — get used to having someone
responsible raise the environmental questions and ask the kinds of things
which we think needed to be asked.
It is indicative, I think, of the dedication of some of the people in
the Department that we are just now getting that person, and we are getting a
good person --it's a person we're enthusiastic about and the Department's
enthusiastic about -- but I can tell you that it is only the result of very
protracted struggle on the part of the environmental community to head off
some of the people the Department wanted which we found unacceptable.
And we are not encouraged by our experience in helping find candidates
for this position that there is that kind of sensitivity.
To expand on the question just a little further, we still do not have
confirmation hearings scheduled for another key Assistant Secretary, who
fortunately has been named, but is not in place and not functioning, the
Assistant Secretary for Solar and Conservation.
That is held up somewhere within the Administration, and I think that
it's probably very indicative -- I could mention the budget total for this
particular sector, I could mention some of the transfers of programs within
the Department that are going on, but I think it's indicative, a number of
these things, of the kinds of priorities put on environmental concerns by the
new Department.
DR. REZNEK: Are you aware of the environmental development plan process, and does
your organization review the development plans?
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Statement of Dr Roger Caldwell
MR. KINSALL: Some of them. We don't have the personnel to do as much as we would
like to.
MRS. HARRISON: Could I go one step further? When you mention there will be an
Assistant Secretary that you're pleased with, in fact, do you know whether
that person will have staff?
MR. KINSALL: That's another -- we understand that there is a personal secretary
allocated there.
MRS. HARRISON: His secretary?
MR. KINSALL: We understand that there were assurances that there would be the
maximum amount of flexibility available to this person in staffing that
Assistant Secretariat and in choosing people to head up the various— in
fact, even in terms of suggesting reorganizations of the organization, which
is only a few months old, they felt that was desirable or necessary.
We will have to see, though, whether that is carried out.
DR. REZNEK: Any further questions? Thank you very much.
MR. KINSALL: Thank you.
DR. REZNEK: Our next witness is Dr. Roger Caldwell
STATEMENT OF DR. ROGER CALDWELL
COUNCIL FOR ENVIRONMENTAL STUDIES
COLLEGE OF AGRICULTURE, UNIVERSITY OF ARIZONA
DR. CALDWELL: My name is Roger Caldwell. I'm the Director of the Council for
Environmental Studies, the College of Agriculture at the University of
Arizona.
I'm going to speak in terms of energy, environment, and toxic materials
and their role in the R, D, and D activities of the Federal government. I'm
going to try to highlight areas I think are important to the process of
Federal R, D, and D, as well as providing some specific recommendations.
Initially, I will discuss the relevant problems as I see them, and then
review some of the Federal R, D, and D programs and finally list some areas
of needed action. My oral comments will be about half that of my written
comments so I can stay within the ten-minute limit.
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future energy patterns and coal use
The first problem area is the changing times. Due to these changing
times, we've had some new interactions develop among previously isolated
economic sectors, and the complexity of the world has become more obvious.
These factors have raised questions relating to 1) new types of long-range
planning where previous experiences cannot be simply extrapolated, 2) eco-
nomic systems where externalities are internalized and the cost/benefit
analysis is broadened to include long-term impacts, and 3) solutions of
problems which involve more than social/institutional questions, rather than
the technological components.
Therefore, any analysis of a program such as energy/environment must be
conceptually understood to be a futures responsive question and open to new
and untried solutions, rather than a simple continuation of past trends.
This is particularly important when evaluating the type of R, D, and D to be
pursued.
Another problem is the energy supply and demand. Historically, energy
supplies have increased to satisfy the demand, and there was essentially no
questioning of the cause and effect relationship. As a result of the chang-
ing energy situation it is no longer a simple matter to plan for future
energy needs or to estimate the relative mix of the various energy sources.
It is becoming increasingly clear to those with broad understanding,
however, that the growth rate of energy use will be less than that of the
past, and probably significantly so, and that energy sources may signifi-
cantly consist of "new technologies" that will most likely be different than
the "new technologies" as viewed a few years ago. The concept of a substan-
tially reduced energy growth rate and the idea of "new technologies" bears
directly on the type of R, D, and D which should be addressed.
Another area is technology assessment. In recent years technology
assessment has become a common topic of conversation, and it is a powerful
tool if used appropriately. Reports have been developed to evaluate new
technologies, their positive and negative impacts, the areas of uncertainty,
and the limitations of the technique. The knowledge base and innovations
relating to the specific technologies are enormous, though still limited,
compared to the knowledge base of public understanding, behavioral char-
acteristics, institutional constraints, and interactions among the specific
technologies.
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Statement of Dr Roger Caldwell
New technologies seem to be implemented more easily if they are well
developed and understood prior to commercialization, if user groups are
involved in the development, and jt the risk of new technologies is distri-
buted over several groups; otherwise, the effect is to reduce innovation.
In addition, to place new technology in proper perspective, scientific
and technical personnel need to be committed to the public good, rather than
simple allegiance to a specific technical idea. In some cases, scientists do
not adequately understand the need for research directed at decision making
operations, including those of a regulatory nature.
Since technology assessment must be evaluated with a future orienta-
tion, the outlook of Federal agencies regarding long-range analysis is re-
lated to their concept of the R, D, and D effort. In a 1976 study of seven
Federal agencies by the General Accounting Office it was found that the
Energy Research and Development Administration had a good long-range planning
program, and the Federal Energy Administration did not, and the Environmental
Protection Agency was intermediate in its approach.
New and innovative thinking, risk taking in terms of research, and
long-range understanding are all necessary in part of a good R, D, and D
program.
Public involvement is another problem area. Public involvement is just
as important in the R, D, and D decision-making process as in any other
agency activity, but is frequently ignored by agencies -- although not by
Congress. In recent years the public has become more educated and sophisti-
cated, as well as more interested in the activities which impact on their
lives. As a result of earlier improvements in the communication process, the
public is faced with too much information in some cases, insufficient data in
others, and an increasing amount of conflicting opinion on technical
questions.
These conflicting opinions to a large degree are due to the R, D and D
process as we are now using it, and to the popular news media. Frequently,
R, D and D efforts are contracted on a specific technical question, some
questions which really cannot be fully answered until other studies are done.
However, when the contract -- whether it's internal to the agency or
external -- is complete, it appears to stand alone, thus giving the impres-
sion that the study is complete and the answer is known.
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future energy patterns and coal use
When this process is combined with a number of variables involved even
within the same research topic, legitimate and non-legitimate conclusions can
be drawn from the selected use of available data. This piecemeal approach to
R, D, and D is a major problem. As the news media publicizes such piecemeal
reports, additional confusion results; this confusion is intensified by the
apparent need for some of the news media to stress controversy and extreme
viewpoints, as opposed to careful and full analysis.
The role of toxins is another problem area. Our level of knowledge on
toxins is primarily on the analysis side, rather than on the effect side.
New toxins are discovered or manufactured, analyzed, and publicized more
rapidly than we can understand their effects.
Toxicity data are limited, but they are often referred to as "The
Truth." This leads to reports such as, "carcinogen of the week," to revers-
ing earlier decisions which were based on incomplete data, and to the setting
of regulations based on limited data which may not be representative of the
real situation.
We frequently give great credibility to a statistical analysis of some
apparent cause and effect relationship, and use this analysis to make a
regulatory or an R, D, and D decision. However, a proper statistical study
can only be done when all the pieces of the relationship are known
Rather than attempting first to understand the system and then evaluate
the interactions, we guess at the interactions and forget to further evaluate
the system. A great deal of R, D, and D resources can be expended in
efforts, and sometimes are counterproductive.
Another major problem is risk analysis. Generally speaking, society
and some regulatory decisions are oriented to a no-risk situation. But there
are no no-risk situations, whether it's automobile travel, medical opera-
tions, or environmental impacts of energy development.
Until more effort is expended on probability or risk analysis, includ-
ing public awareness efforts, many existing research efforts may add to the
confusion, rather than to the solution, or worse yet, may result in incorrect
assessments of an original good R, D, and D question.
In the area of research and development, current R, D, and D efforts
can be placed into two broad categories: 1) those which significantly ad-
dress key needs and may result in major new concepts or programs being ad-
i
vanced, and 2) those which are duplicative, irrelevant, and unnecessary.
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Statement of Dr Roger Caldwell
In the first case, the research may be difficult to do or difficult to
convince the agency it is necessary, it may be risky if the potential payoff
is unknown, and it may not be compatible with prevailing political attitudes.
Perhaps an example of this phenomenon is the omission of nuclear energy from
environmental assessment under PL 93-577.
In the second case, the research may be easy to do, easy to fund, and
provide only limited risk of not having a "product" at the end of the con-
tract period. It is hard to say how much research effort would fall in each
category, but I would guess the second one would be significant.
Research funded by mission-oriented agencies can be both long-term as
well as short-term, and basic as well as applied -- and there needs to be an
appropriate mix of all types. All that is necessary is that it be the ap-
propriate subject of the agency or combinations of relevant agencies.
Regulatory agencies, understandably, need to direct research efforts to
the regulatory process; whereas Cabinet agencies can be much broader.
It seems that much of the R, D, and D effort still tends to be oriented
to a pre-embargo thinking, although changes have been made to a greater
degree each year to reflect new needs. There is an apparent reluctance to
write off "bad investments" in areas which no longer are technically/ eco-
nomically a high priority but may be politically popular.
As more is known of the role of toxic materials in specific technol-
ogies, there does not seem to be a corresponding assessment of that technol-
ogy and its role in the overall energy program. Included in the increase in
knowledge of energy/toxic materials is the realization that we may increas-
ingly know less about an entire system, thus putting that particular tech-
nology in a relatively greater risk area.
One of the major reporting problems of R, D, and D activities is the
piecemeal approach referred to earlier. Years ago a scientist would perform
many experiments, develop hypotheses, do more experiments, and develop con-
clusions based on a variety of events. Now, there is a tendency to publish
each component as it is completed, and this allows for misleading conclusions
to get into the information system. This problem may become more severe as
Federal R, D, and D becomes more contract-oriented with a major incentive
being making the contract deadline, rather than answering the question.
The need for more "risk taking" in research topics is important, and
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future energy patterns and coal use
there is a need to focus research efforts to fill in gaps, as opposed to
refining or duplicating already known facts.
There's also a great need to increase research in the behavioral
sciences, in information use -- or studies of people's perceptions versus
reliance on facts -- and how trade-offs are made when cost/benefit analyses
and risk assessments are diffucult or impossible. While all these aspects do
not fall completely to mission or Cabinet agencies, a considerable portion
does.
Some of the current activities -- within the last three to five years
there appears to be significant increase in real coordination among federal
agencies dealing with environment and energy. While the day-to-day opera-
tions have been complex because of the state of flux of the involved organi-
zations --particularly DOE, recently -- positive results are evident.
In addition, the environment/energy interactions appear to be signifi-
cantly internalized within the appropriate divisions of agencies, rather than
being treated as independent subjects. The major problem appears to be
related more to developing a smooth working relationship, rather than the
need for problem recognition.
One of the more important examples of coordinated energy/environment R,
D, and D is the Federal Interagency Energy/Environment Research and Develop-
ment Program. The seventeen-agency group -- coordinated through EPA -- was
begun in 1975 and has published a number of relevent documents in the R and D
Decision Series.
Important examples include "Environmental Considerations of Selected
Energy Conserving Manufacturing Process Options" -- 1976 -- and "Accidents
and Unscheduled Events Associated with Non-nuclear Energy Resources and
Technology" --1977. In addition, the series provides important information
relative to project abstracts, bibliographies, and budget analysis.
The National Science Foundation is currently analyzing for the Toxic
Substances Strategy Committee the first agency-wide survey of toxic sub-
stances research in the Federal government -- "Research Activity of Federal
Agencies on Toxic Chemicals."
Since the concern over toxic substances is growing rapidly, this should
provide additional insight to their role in the energy/environment R, D, and
D process.
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Statement of Dr Roger Caldwell
There have been a number of significant NSF studies in recent years
dealing with environment/energy and how to deal with future needs and co-
ordination. Some of the broader -- multiagency -- research needs are being
addressed, such as the inadvertent weather modification, environmental risk
management, environmental effects of energy, and chemical threats to man and
environment.
The National Academy of Sciences since 1973 has played an increasingly
important role in this area. They have reviewed -- at the request of Con-
gress --the entire R, D, and D program procedures at EPA. They've performed
energy futures studies, and have published several books on procedures for
evaluating chemicals in the environment.
The Department of Energy Environmental Development Plans and the Office
of Technology Impacts appear to increase the integration of environment into
specific technology programs at DOE.
The Council on Environmental Quality is presently developing regula-
tions for the EIS process, and the agencies involved with EIS have largely
accepted the idea now of EIS, and this should result in better use of exist-
ing R, D, and D information in evaluating future energy/environment programs.
Reports through the Congressional Office of Technology Assessment, the
Congressional Clearinghouse on the Future, the NTIS, Smithsonian Science
Information Exchange, and specific journals and documents of agencies all
indicate the results of energy/environment R, D, and D activities being
published.
Some problems still remain, however, even though major improvements
have been made in recent years. Most research is directed at technical
issues, whereas many problems are behavioral/institutional. Most research
information is published in technical form and is not properly evaluated --
and I underscore "not properly evaluated" -- after contractors submit their
final reports.
The results are generally not packaged for the appropriate audiences
and there is a reluctance to research the most relevant topics, even though
results of workshops and studies have been published on future agendas of
research.
With such an increasing number of unanswered questions in areas which
have not been researched, and the observation of significant data gaps in
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previously researched topics, the limited R, D, and D resources must be well
directed and not duplicated.
There are a number of specific areas that one could specify for new R,
D, and D directions, but I'm going to make only general remarks which I think
are the most critical, and I've listed twelve points.
Number one, R, D, and D cannot provide all the answers and should not
propose to do so; the major solutions in many cases are economic and insti-
tutional and may not be solved by further study.
Number two, there is a need for projects which analyze and tie together
previous specific projects; this would provide a more comprehensive analysis
and identify data gaps.
Number three, R, D, and D should be more innovative and should risk
some resources to evaluate new options. Now there is too great a reliance on
"accepted ideas" of what new technology should be.
Number four, there needs to be a greater broad public involvement in
the initial process of R, D, and D decision making and a greater communica-
tion to the various publics after the projects are completed, and I should
indicate, in a form which they can understand.
There need to be specific research projects directed at assessing the
techniques of existing research activities. This should also include proce-
dures to validate the data and to standardize the techniques where appro-
priate.
Number six, multiple R, D, and D contracts from the same project area
should be given to a variety of researchers to provide diversity of viewpoint
and to keep each group honest, but specific duplication of effort should be
avoided.
Number seven, there should be a greater use of "expert agencies" when
appropriate. For example, the National Institutes of Health should play a
key role in evaluating toxic materials and human health.
Eight, there should be a greater use of groups such as the National
Academy of Sciences as a "third party check" on R, D, and D assumptions,
directions, results, and procedures.
Number nine, it should be recognized that the perception of people may
override the facts, even if the perception is counter to the facts. The role
of information science in R, D, and D efforts is probably seriously under-
estimated.
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Statement of Dr Roger Caldwell
Number ten, there needs to be a greater technology assessment of R, D,
and D needs by groups of varied viewpoint and experience; included would be
the assistance in agency R, D, and D priority setting by outside groups.
Number eleven, there is a need for joint awarding of projects to groups
of varied interest -- for example, environmentalists and industry -- such
that the advocacy positions and differences in data validity are resolved
within the project, rather than highlighted in the popular press.
Finally, number twelve, R, D, and D efforts should be directed at a
fundamental understanding of the problem, and not simply an itemization of
apparent cause and effect relationships or statistical summaries of processes
which are not understood.
In summary, within the last ten years we have entered a new era and we
can no longer depend on extrapolations of past experience. We have much new
knowledge, but the complex interactions have created a greater lack of under-
standing even with this new knowledge. For example, acceptable estimates of
energy use in the year 2020 range from several times that of today to less
than that currently used.
R, D, and D efforts are moving in new directions as a result of these
changing conditions. There is increased coordination among agencies working
on related activities, and there is a greater understanding of the need for
energy/environment interactions to be addressed early in program activities.
However, there are active areas of R, D, and D support which appear less
important than other areas which have been neglected, and there seems to be a
bias toward technologies which were considered new several years ago, but may
no longer be worth pursuing as much as other "new" technologies.
At this point, it seems more important to evaluate the R, D, and D
procedure, rather than to suggest areas of research need. By assessing
future technologies and energy needs from the new perspectives gained only in
the last three to five years, it is more likely that the R, D, and D effort
will satisfactorily address key energy/environment questions and also be more
compatible with public and agency needs.
Thank you.
DR. REZNEK: Thank you. I find your remarks very interesting and stimulating.
Does anyone have any questions?
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future energy patterns and coal use
QUESTIONS AND REMARKS
DR. REZNEK: As a research manager, I am intrigued by your suggestion that we save
our facts until we get them all together. There are surely good reasons for
doing this. The information may be in error, or it may be misleading.
Still, this policy leads to charges of hiding things from the public.
DR. CALDWELL: Hiding the data?
DR. REZNEK: Hiding the data, or telling the public only what you want them to
hear, and other interesting phrases like that.
Would you care to comment? How do you deal with the problem of not
putting out preliminary information. Granted preliminary information may be
misleading, but almost all Federal agencies operate in a goldfish bowl where
all information has to be made immediately available for public scrutiny.
DR. CALDWELL: My background is in chemistry, but I'm serving primarily as an
information and research coordinator within the University now, and I've
switched from on-the-bench techniques to getting into more of the public eye.
My impression is that the major problem we've got is information
science, and not the specific technologies of energy development, and the
question you asked me would be a nice research topic, I think.
I don't want to avoid it by saying that, but I think it's a real prob-
lem.
As a contract study goes out there's a statement on the front page that
says that this is published by whatever agency is publishing it and it does
not necessarily reflect the agency, it's a contractor study, and somewhere on
there it has the name of the contractor -- sometimes, but not always -- so
you're not always aware of who did the study, sometimes, although it comes
out under agency aegises.
So I think that there's some need for the agency, maybe, to evaluate
the project. Maybe it's a two or three page summary saying that this is an
assessment of this particular project, something that gives it a degree of is
it good, bad, or indifferent, or just is it an initial summary that we can't
evaluate yet, but I think there needs to be some indication of a group on how
good the data are.
DR. REZNEK: Thank you. I'm sure you realize that your proposal is fraught with
difficulties. In my own agency, we have a procedure for denying publication
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Statement of Dr Boyd Riley
to contractor reports we're not satisfied with, although we make the list of
the unpublished reports available, and anyone who wants to can obtain a copy.
We just don't publish them.
DR. CALDWELL: One of the problems is just finding out the reports that are avail-
able, in the field. Of course in Washington, if one knows how the bureauc-
racy works, you're one up on anything else, and if you have access to infor-
mation it largely depends on that you know the system, although there's -- no
one is suppressing the information, you just don't realize that it's avail-
able.
There needs to be something done, I think, in just making available
studies -- or knowledge of studies that are available.
DR. REZNEK: Any further questions?
Thank you.
DR. CALDWELL: Thank you.
DR. REZNEK: Our next witness is Boyd Riley.
STATEMENT OF DR. BOYD RILEY
CONSULTANT
DR. RILEY: Well, in listening to the auspicious affiliations that the previous
speakers have mentioned, I'd like to start off by saying I represent the
world's smallest consulting firm, and I'd also like to start by apologizing
in reading this speech. It begins with an error, it says, "Good afternoon,
gentlemen." And just stops. So I'd like to correct that and say good after-
noon ladies and gentlemen.
It's a pleasure to have an opportunity to present several subjects for
your consideration in this hearing. I plan to briefly address three topics,
each of which is integral to the concept of fossil energy conservation.
By conservation I do not mean pointless depression of lifestyle, but
rather the judicious use of energy in the most efficient manner possible.
As we are all aware, conservation via increased efficiency pays large
dividends. These dividends are direct in that the cost of conserving energy
is almost always less than the cost of replacing the saved energy with energy
exclusively drawn from conventional new energy sources.
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future energy patterns and coal use
Important secondary benefits are derived by using fewer pounds of fuel
to accomplish a specific task. Proportionately, fewer pollutants are re-
leased into the environment and fewer non-renewable resources must be ex-
tracted with attendant adverse environmental effects.
The three subjects I will address today are: the potential for biomass
as a significant domestically produced, renewable energy resource; the need
for a new initiative to accomplish direct firing of high-temperature gas
turbines with high ash fuels; and the importance of maintaining effective
tools for the accomplishment of a selected task.
The last subject may sound unusual, but it impacts directly on the
legal framework required to develop energy conservation programs which will
be of great benefit to the nation.
The first topic, the potential for biomass as a significant renewable
energy resource, must be opened with a definition of biomass. Many defini-
tions of biomass as a fuel resource have been offered. Mine includes any-
thing that burns, is or has grown, and has not been fossilized.
This definition of biomass is extremely important because it emphasizes
the ubiquitous nature of biomass and implies a multitude of potential sources
for any selected region or facility. Thus, it dictates an approach which is
not presently being pursued and which promises significant short and long-
term benefits to the U.S. energy economy.
To achieve maximum benefit, we must organize a management system which
allows us to harvest the equivalent of twenty percent of the land adjacent to
and east of the Mississippi River at a rate of thirty dry tons per acre per
year for fuel purposes.
Such a program will yield about thirty quads per year of an energy
resource which is permanently renewable by solar infusion.
Because of its ubiquitous nature it is highly unlikely that any in-
dividual or organization will ever dominate the production of biomass fuel
resources; however, a biomass production organization could be established,
just as a modern corporation is formed. That is, small contributions by many
individuals. In other words, a middleman is required who is capable of
buying when biomass materials are available, processing these into a storable
form, and then selling as market requirements dictate.
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Statement of Dr Boyd Riley
One configuration for the fuel which appears compatible with the re-
quirements for preparing and storing biomass fuels is the high density pel-
let. Although little is known about the most desired formulation of such a
pellet, there seems to be no technical reason why it could not be prepared to
meet any requirements, including water resistant coatings to facilitate
outdoor storage of the fuel.
Once a sufficient collection and processing system is established, then
any number of applications may be developed for this material. It may be
used as a direct boiler fuel, it may be gasified for a fuel, or used to
create chemical precursors.
None of these applications may be developed, however, if an adequate,
dependable collection system is not developed first. The concept of many
small contributors has many parallel systems to follow — e.g., grain, -- and
will provide a meaningful supplement to farm income, just as grain crops and
what have you, are collected.
The DOE biomass program is only faintly comparable to the program
suggested herein. DOE has organized itself in such a way as to treat biomass
as a series of special materials, such as forest waste or fuel crops, which
must be segmented and not intermingled. Hence, there is no effort at DOE to
develop a regional biomass resource based on multiple inputs.
The environmental implications of improved and expanded use of biomass
are promising. For example, because biomass is renewable by solar infusion,
the coal, oil, and gas which are displaced by biomass will never be mined.
Hence, all of the secondary and primary pollutants produced both by the
mining and by the utilization of these fossil fuels will not be incurred.
In addition, biomass-based fuels appear to contain fewer pollutants
than fossil fuels -- sulfur, heavy metals, that sort of thing. A further
potential benefit of increased biomass utilization is the dedication of
sewage as an irrigation and fertilizing medium, rather than as a disposal
problem.
Biomass production will require significant land resources, and the
irrigation of these lands will significantly enhance the growth rate of the
biomass resource. Thus, generous land areas for sewage disposal via drip
irrigation or what have you could be created and achieve zero discharge.
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future energy patterns and coal use
New technologies offer the promise of low cost sterilization of raw
sewage without significant conventional treatment, thus precluding the trans-
mission of disease through combined food and energy crops.
To develop biomass as a resource contingent on contributions by numer-
ous producers of raw material, several steps are required.
First, one or two demonstration areas must be selected for the testing
of the feasibility of the concept of reliably producing significant quanti-
ties of biomass from small contributors of varying types of biomass mater-
ials.
Second, a macro-environmental impact study must be carried out which
compares the impacts of maximizing the use of biomass with the coal, oil, or
nuclear power which would be displaced by this energy resource.
Third, the feasibility of using municipal sewage as an irrigation and
fertilizing medium for biomass on a large scale should be examined in greater
detail than any studies heretofore directed at this subject.
The next area I will address is the all-important area of the develop-
ment of high temperature, high pressure gas turbines which can be fired with
ash-containing fuels for the generation of electric power. I will not bore
you with the legions of numbers that indicate the significant improvement in
overall thermal efficiency of this type of approach versus conventional steam
electric generating plants. Suffice to say that perhaps as much as one-third
more energy could be produced at the bussbar if such a turbine could be
successfully applied on any type of fuel.
DOE has several programs directed at one approach to high temperature
turbines and combined cycles. These programs all plan to use fuels produced
by gasifying coal, a process which is fraught with technical, economic, and
energy efficiency difficulties. Hence, in the long run any efficiency gain
created by improved gas turbine technology will be offset by the cost of fuel
preparation.
A need unmet by DOE is the creation of the ability to fire fuels with
modest to high ash contents directly through gas turbines. In order to
accomplish this, new technology is required for the removal of particles from
hot, high pressure gas streams without significantly changing these streams.
Historically, the Combustion Power Company, under EPA sponsorship, has
attempted to burn mixed urban waste in a fluid bed and exhaust the gases
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Statement of Dr Boyd Riley
through a gas turbine. Many difficulties were encountered in the project,
principal of which was particulate removal from the gases to a level which
would allow adequate conventional turbine life.
Prior to the CPU 400 experience, the Office of Coal Research committed
several years of effort in the late 1950's to the development of a coal-fired
gas turbine without success. Again, the principal problem was the control of
particulate in the gas stream.
DOE has elected to circumvent this problem by first producing a clean
fuel and then firing it in a gas turbine. Fuel production is accomplished at
significant energy cost and at significant intensification of the capital
investment required for each facility. Thus, another major benefit of the
high efficiency gas turbine is cancelled; that is, the incremental addition
to the electric power generating systems of high efficiency modules.
Two areas which are missing from the DOE program and should be added
are: first, the establishment of an information matrix for the examination
of the potential of direct firing gas turbines with high ash fuels. Such a
matrix would allow one to compare all of the possible combinations of tech-
nologies, and to assess their potential for successfully removing particulate
pollutants prior to the admission of the hot gas stream into the turbine.
Second, the application of high speed centrifugal particle accelerators
to the gas stream has not been explored. The technique of centrifugally
collecting particles with a high speed particle accelerator as a first stage
for the turbine, or as a flywheel type cleaning stage, offers significant
hope that the turbine could be protected from all particles over one micron
in size.
The remaining particles could be controlled by utilizing a cooled blade
turbine which would enhance the efficiency of the system while providing
protection from those very small particles which tend to act like gases
instead of particles during their passage through the rotor and stator stages
of the turbine.
The technical feasibility of this concept needs additional exploration.
However, it offers several benefits over the DOE approach. That is, it
maintains the high efficiency and incrementality of the gas turbine and thus
reduces the planning and construction time to increase electric generating
capabilities.
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future energy patterns and coal use
It also allows one to combust a variety of fuels in the system, none of
which may be classed as premium or imported. The environmental benefits of
such a program, again, are obvious in that fuel conservation reduces the
impact both from primary production of the fuel and from the production of
secondary pollutants.
Finally, the subject of maintaining appropriate tools must be
addressed. For DOE and EPA the principal tools are the contracting
mechanisms, which allow you to acquire the ideas and knowledge of the public
at large and focus these towards the purposes the goals of your programs.
It has been my experience, both inside and outside the Federal estab-
lishment, that these tools have progressively deteriorated to a state wherein
they scarcely work at all.
While there appears to be an adequate mechanism for launching massive
undertakings or buying a zillion pens, there is no mechanism for dealing with
the special problems of the small business or the creative individual. This
is extremely regrettable, since large organizations are psychologically
incompatible with many creative people. That is to say, those that create
are not likely to be found within the structured organizational confines of a
large organization.
If your agencies fail to reach these individuals, then it is likely
that you will fail to reach many of the most creative ideas available in
American society. Hence, your rate of progress will be retarded.
The problems of doing business with the Federal agencies have become so
great as to cause a number of my clients to simply say, "We won't try any
more." Contract award times of eight months to a year, after a twelve-month
planning period, are not uncommon. To initiate an unsolicited program is
almost impossible, and I've even been told that certain programs were simply
too small to be worth doing the paperwork on. Obviously, none of these
impasses are pertinent to the energy and environmental problems which need
solutions.
I realize this subject is an uncomfortable one and, to a certain ex-
tent, beyond the purview of the technical professional personnel within the
agencies, but I feel it has reached the critical point and someone must call
attention to it.
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Statement of Dr Boyd Riley
Thank you for your attention. If you have any questions I'd like to
try to answer them.
DR. REZNEK: Thank you. Do we have some questions?
QUESTIONS AND REMARKS
DR. MACKENZIE: Yes, I'd like to ask you two questions on your biomass estimate.
Here's something I've been looking at recently in our -- we have ourselves.
You cite thirty quads per year. Is that finished fuel, or is that raw input?
DR. RILEY: That's about thirty quads per year.
DR. MACKENZIE: Of what?
DR. RILEY: That was based on dry weights, you could call it finished fuel.
DR. MACKENZIE: I mean that's -- if you convert that into methanol is it fifteen
quads, or is it thirty quads of methanol, for example? If you wanted, say, a
liquid fuel.
DR. RILEY: Well now, the thirty quads would be as a solid fuel, let's say com-
parable to coal.
DR. MACKENZIE: Okay, so probably get — if you converted it to liquid fuel you
would probably lose forty percent of it, or something like that.
DR. RILEY: Or more.
DR. MACKENZIE: Okay. Your productivity at thirty tons per acre a year as far as I
can see is about at least ten times sort of what ordinary crops are, and is comp-
arable to the most highly cultivated sugarcane in the most favorable regions and it
strikes me as being somewhat optimistic to think that you could grow that on twenty
percent of the area east of the Mississippi. I'm wondering what you're growing,
secondly, and -- let me finish it — secondly, the sewage — I am somewhat -- in
addition to sewage — most of the sewage, let's face it, is in the cities where
there's a lot more than organic stuff being thrown in — God knows what else. You
know, mercury and chemicals and heavy metals.
Unless you have a sewage separation system, that's going to pose a problem,
and in fact, of course, at that type of growing, you know, you're mining the soil
of nutrients, and so forth, which is another kind of major problem, all of which
I'd like to see overcome, but I'm just wondering how you comment on that.
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future energy patterns and coal use
DR. RILEY: Well, let's talk about the thirty tons per acre. That is a very high
number. It is achievable with some crops today. It apparently can be
achieved by more specialized breeds that are grown specifically to produce
mass, as opposed to let's say soybeans or wheat or what have you.
In fact, much of the work that's been done agriculturally has been to
reduce the mass produced in order to increase the yield of beans.
I picked that number as a maximum. I doubt that we would ever go much
beyond thirty quads a year.
On the other hand, we're not exactly limited to only twenty percent of
the land for this purpose, either. We may get much lower yields over a much
larger land area.
DR. MACKENZIE: This is comparable -- in fact, it's larger on a percentage basis
than what we devote to agriculture in the country, which is seventeen percent
of all our lands.
DR. RILEY: Right.
DR. MACKENZIE: This must be prime agricultural land that you're devoting here, in
which case it's probably a good part of it. Have you considered what that
means?
DR. RILEY: Not necessarily. The things that could go into biomass don't really
require prime land.
DR. MACKENZIE: At these growth rates —
DR. RILEY: The national flower may turn out to be the almighty weed.
DR. MACKENZIE: Okay, do you have any documentation or -- I mean for the thirty
quads? I'd be interested if you have any of that.
DR. RILEY: It's developed in a report that I did some years ago for EPA. Basi-
cally it's a rough estimate. I wouldn't nail my heart to it at this stage.
On the other hand, if you added up everything that could conceivably be
put into it, I don't think it's that far off, either.
It could be fifty percent off. Could you live with fifteen quads?
It's still a much bigger —
DR. MACKENZIE: That's getting close to where we thought.
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Statement of Dr Boyd Riley
DR. RILEY: Okay.
DR. MACKENZIE: I mean we talked with many experts and everyone said well, ten
seems like it's do-able. Thirty, you know, sounds like quite a bit.
MS. VAN SICKLE: Do you have any data on using aquatic plants like water hyacinths
and things like that as forms for the high density pellets?
DR. RILEY: No data specifically. It seems to me that that increases difficulties
in processing the material by one more step in that the moisture content is
extremely high in acquatic plants.
There's no reason why you couldn't do it, but it seems to me that with
a lot of green things already growing out there, maybe we'd best devote some
attention to learning how to use those before we start trying to develop
other things.
MS. VAN SICKLE: Well that's what I'm getting at. We have tons and tons of water
hyacinths that we have to get rid of, and there are all kinds of harvesters,
but you also have the problem of disposal, so you could have twin benefits if
you could do something like that.
DR. RILEY: Well, I believe DOE has a program on the water hyacinth specifically,
but it's ninety-plus percent moisture, or something like that. You're
harvesting an awful lot of water.
MRS. HARRISON: Did I understand you to say that coal gasification or fluidized bed
combustion of coal is not an environmentally sound technique?
DR. RILEY: No, I didn't say that at all. All I said was that if you had to pro-
cess the coal into a clean fuel form there's no way you're going to get a 99
percent yield. Seventy percent is perhaps your most optimistic, and when you
compare that with a thirty percent increase in efficiency that gas turbines
might offer for generating power, you've just lost it -- by processing the
coal.
DR. REZNEK: I was intrigued by your last comment about the clumsiness of the
research support mechanism in government. I must admit that while I blanched
at the number for the yields on biomass, I didn't blanch at your times to get
contracts out, since we live with that.
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future energy patterns and coal use
When NASA was being put together as a major Federal experiment in
fostering and developing technology, unique Federal contract funding arrange-
ments were developed and instituted. These funding arrangements are the
basis for our contractural procedures today. I have not heard this type of
comment in all of my discussions of energy and environment and the needs to
take action. But it's true. We're operating in a different kind of situa-
tion and the funding mechanisms available to the government are 25 years old
and need some rethinking if, in fact, we are going to get to the new or tap
existing fundamental understanding and ideas.
It's an interesting comment, and I'd like to underscore it.
DR. RILEY: So would I. We're on the other side.
DR. REZNEK: I had some comments about your turbine remarks also. DOE and EPA had
a conference at the end of last calendar year on high-temperature and high
pressure particulate control. This constitutes a difficult physical regime
under which to perform experiments. You do not want to expose an expensive
piece of high-technology equipment like a turbine to the basic substances
that are in coal.
A lot of money is going into research on the problem, but, like fusion,
it's going to take an awful lot of development money to make progress.
DR. RILEY: Well, I agree. There's a lot of money going into the problem. I'm not
sure it's going into this particular aspect of the problem. I think people
are getting discouraged with coming up with a solution.
On the other hand, the work that I was most familiar with, there really
wasn't that much attention paid to solving that particular aspect of the
problem, that was de-entraining particles in a hot gas chamber, starting
necessarily at the bench, so to speak, and working up from there.
It doesn't seem to me that that's an unsolvable problem. Difficult,
yes, and economically perhaps even more difficult, but at this point I don't
even know of a listing of technical approaches where people say it can be
done.
DR. REZNEK: Any further questions?
Thank you.
DR. RILEY: Thank you.
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Statement of Mr Richard Merritt, representing the State of Nebraska
DR. REZNEK: Our next witness is Dr. Richard Merritt, who is a consultant repre-
senting the state of Nebraska.
STATEMENT OF MR. RICHARD MERRITT
CONSULTANT
REPRESENTING THE STATE OF NEBRASKA
MR. MERRITT: I'm not Dr. Merritt yet. Hopefully some day.
I'm Richard Merritt, and I'm here representing Charles R. Fricke, the
Administrator of the Nebraska Agricultural Products Industrial Utilization
Committee, commonly known as the Gasohol Committee. I'm a consultant to the
Committee. I'm a consultant to the Committee and their representative here
in Washington.
I'm going to read his statement, and then if I might take the liberty
of adding a few small comments of my own at the end.
Charles R. Fricke has been the Administrator of the Nebraska Agricul-
tural Products Industrial Utilization Committee -- better known as the
Nebraska Gasohol Committee -- for the last three and one-half years. The
Committee was created as a state agency in 1971 by the Nebraska Legislature
to research and to cooperate with private industry in the development of new
or alternative markets for Nebraska agricultural products.
Chief among the Committee's research and development projects is the
Gasohol program. Presently, this is the only state agency in the United
States researching and developing ethyl alcohol blended fuel on an extensive
basis.
The Nebraska Gasohol Committee is recognized as the national leader in
the research, development, and marketing of gasohol. Gasohol, properly
defined, is a motor fuel consisting of a blend of ten percent agriculturally
derived, anhydrous, 200 proof, ethyl alcohol and ninety percent unleaded
gasoline.
Nebraska has tremendous supplies of grain and other agricultural crops
each year which can easily be converted into alcohol fuels. This is now true
historically of other states in this agricultural region.
Agricultural representatives from fifteen states have now indicated
interest in developing gasohol programs of their own. This is becoming a
reality with the creation of a National Gasohol Commission.
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future energy patterns and coal use
The interest in gasohol has been so strong over the past year that the
National Gasohol Commission was officially formed on January 24, 1978 in
Lincoln, Nebraska. The Commission would: 1) coordinate and disseminate
information on ethyl alcohol fuels among the member states, 2) coordinate and
develop uniform gasohol legislation among the member states, and 3) apply
political pressure on the national level for pro-gasohol legislation.
Initially, this organization will advocate regional development and
distribution of gasohol only. I wanted to lay out this information as a
preface to my remarks to follow regarding the U.S. Department of Energy
Research and Development program.
Gasohol is relevant for testimony at this hearing today due to its
connection with coal. Coal would be used as the conversion fuel for the
production of renewable sources of liquid energy from agricultural products.
Gasohol would be relevent to testimony on solar energy and energy
conservation programs as well.
Gasohol could fit into several DOE research and development programs.
Currently, gasohol -- or any ethyl alcohol fuels from agricultural crops —
is considered under the Solar Energy Division's Biomass Department.
Since ERDA was created very little attention has been directed toward
Nebraska's dynamic gasohol research program until just last year. Only
trivial funds have been directly channeled toward gasohol by DOE. This
amounted to only $30,000 for an economic feasibility study in 1977 to the
University of Nebraska at Lincoln Energy Research and Development Center.
If there have been other grants, I have never heard about them, or they
were very small.
I would like to emphasize here that gasohol is beyond the study stage.
Gasohol is actually being sold at a profit -- not inconsequential -- in
Illinois, is being sold in Nebraska and Illinois today, but only at four or
five service stations that we are aware of.
So, gasohol is technically and economically feasible today.
However, only a small amount of agriculturally derived anhydrous
ethanol is available from only one supplier in the nation, currently. It is
very expensive to transport it from its current site, which I believe is in
Bellingham, Washington.
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Statement of Mr Richard Merritt, representing the State of Nebraska
What I'm saying is that DOE needs to develop a loan guarantee program
providing loan guarantees for the construction of agricultural anhydrous
ethanol plants. Such plants would create supplies that would be close to the
areas where they are demanded and consumed. Then the price of gasohol could
be even more cost competitive. Urgency is essential.
If this country ever expects to be less dependent upon foreign oil,
gasohol is the fastest, least expensive, and cleanest way to do it.
If gasohol could be developed on a regional or a national level, it
would provide positive and constructive means to lessen the balance of pay-
ments deficit and help resolve historical farm problems of this country.
International tension in the Mid-east countries is another reason for
the large-scale program on gasohol being urged. I would hate to think what
another oil embargo could do to this country.
A loan guarantee program needs to be implemented immediately for the
1979 or 1980 budget. A reasonable monetary figure for this loan guarantee
program would perhaps be in the $500 million to $1 billion range.
This is appropriate, compared to the millions of dollars that have been
poured into the research development programs for the development of methanol
and other synthetics from coal.
I am distressed that ethyl alcohol as a fuel or fuel extender has been
greatly and unjustly discriminated against by key DOE officials. However,
recently there are indications that this attitude may be more favorable, due
perhaps to Congressional pressures.
Ethanol is an excellent product for near-term energy conserving fuels.
Ethanol is a clean-burning and an environmentally safe fuel. Ethanol is not
toxic, compared to methanol, which is highly toxic and poisonous.
Possibly these problems with methanol can be overcome. I might say
personally that I think that the best use for methanol is to slurry coal with
into what's called metha-coal.
So, environmentally speaking, ethanol should be acceptable to the U.S.
Environmental Protection Agency as a liquid fuel, either by itself or as a
blend in unleaded gasoline. Several official emission tests show that gaso-
hol emits less pollutants than regular unleaded gasoline.
Ethyl alcohol -- in fact, even methanol — are octane improvers, and
this means we can get the lead out of gasoline completely and raise the
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future energy patterns and coal use
octane in gasoline without the use of lead, and I commend the EPA for their
efforts to get the lead out of gasoline.
Gasohol should be a major permanent part of the Department of Energy
R and D programs. A special department in DOE should be created, solely de-
voted to ethyl alcohol fuel.
Why all of these recommendations and criticisms? The year 1978 will be
recognized as the year that gasohol, the first fuel of the future, gained a
foothold — hopefully -- in the United States. Also, it will be recognized
that gasohol struggled to reality without much -- if any -- help from the
Federal government. Gasohol has arrived, on a small scale, in this country.
Hopefully it is here to stay and grow, but it needs the assistance and
promotion of agencies such as the EPA.
I would like to list significant facts on gasohol as a motor fuel.
One, improved gasoline mileage and higher octane; two, less polluting;
three, no mechanical adjustments are required on any vehicles operating on
ten percent ethyl alcohol, known as gasohol; four, can be burned in any
internal combustion engine, including diesels and gas turbines.
If gasohol is developed on a regional or national basis it would reduce
the importation and dependence upon foreign oil. Thus, the development of
gasohol could reduce the chances of the oil spills in the oceans that are so
disastrous to the environment.
I would like to end my testimony by directing the hearing panel's
attention to a copy of a letter, two reports, and a gasohol brochure that we
have attached to a copy of the oral presentation, which provides additional
support on gasohol and further information regarding DOE activities with
regard to gasohol.
Thank you for the opportunity to present an oral statement on
Nebraska's gasohol program as it relates to environmental and energy pro-
grams. I sincerely hope that EPA officials will promote the development of
gasohol during the deliberations on the energy bill in the next few months.
I would like to personally add that EPA can do a number of things, I
think, in relation to gasohol. One is to consider the topic that President
Carter mentioned in a press conference a few weeks ago wherein he said that
he was aware that farmers in Georgia had been particularly hurt by the afla-
toxin problem, and as I understand, aflatoxin is a cancer agent that infects
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Statement of Mr Richard Merritt, representing the State of Nebraska
corn; I believe in some states in the south fifty percent of the corn crop
has this agent which is a very -- which I believe the FDA has said is the
most powerful natural carcinogen known.
When a corn crop has this in it, it is a total loss to the farmer and
supposedly, I believe, has to be buried in the ground, in which case I wonder
if the toxin gets into our ground water. But toxin corn is a very good raw
material, and indeed has been and is being used in Alabama right now, in
Selma, Alabama, as a raw material to produce alcohol.
So therefore, if you take the alcohol out of the corn you do get some
return to the farmer from the crop, and it should be possible to kill the
toxin agent during the distillation process. That needs further research.
If you did do this, then you could recoup the value of the corn, which
as it is now is a total loss to the farmer.
The second is that biomass fuels, such as alcohol, would have a major
beneficial effect on the greenhouse problem. When you use biomass fuels you
do not add any new carbon dioxide to the atmosphere, which I think in the
long term will be a severe problem and I would hope the EPA would consider
the beneficial effect that alcohol fuels from renewable sources could have on
that.
Thirdly, thermal pollution from nuclear power plants is something that
people worry about, and distillation is a heat consumptive process and to
site a distillery next to a nuclear power plant would absorb perhaps a rather
substantial amount of this heat, which essentially is wasted and creates a
problem now.
Distillation is a low-temperature, low-pressure process and should be
an ideal candidate for siting next to nuclear plants or existing power plants
for co-generation.
Fourth, urban wastes are good candidates for conversion into alcohol,
and we see this as a distinct possibility. I am intrigued by the idea that
garbage trucks will run on alcohol made from the garbage that they pick up,
perhaps in a municipal power plant.
Lastly, new car emissions testing today is done on gasoline specified
by EPA. We would like to urge -- and I think there will be Congressional
action on this — that new vehicles be tested not only on the standardized
fuel, but on gasohol, and we're quite sure that the emissions in new cars
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future energy patterns and coal use
would be reduced from the testing we have seen. But if EPA would specify
either as an alternative or as an additional fuel that all new cars must be
certified on gasohol, this would be a real step in the right direction.
Thirdly, I believe it's EPA that handles the annual rating of vehicle
mileage standards. We would like to see the mileage standards defined as to
exclude the alcohol content, thereby -- if a car is running ten percent
alcohol -- it should have a latitude of ten percent in the mileage standard,
because after all, mileage standards are to reduce the consumption of gaso-
line -- a non-renewable synthetic fuel of which much is imported today -- and
to the extent that we can get vehicles onto alcohol, which is a clean-burning
renewable fuel, that should be exempt, the alcohol content should be exempt
in the Federal mileage standards.
And Detroit engineers have told me that they would welcome this as a
definite benefit to them. Furthermore, it's well recognized in automotive
circles that high efficiency vehicles need a high octane fuel. You can't
have high mileage, high efficiency motor vehicles on low compression engines
with low octane fuel, and alcohol is the only environmentally acceptable
octane improver we have today.
I'd be pleased to answer any questions as best I can.
DR. REZNEK: Thank you.
QUESTIONS AND REMARKS
MRS. HARRISON: If someone put forth a billion dollars for further development of
gasohol, then what would that mean in the course of energy development? What
could we count on at the end of a certain time period of that kind of devel-
opment to reduce consumption of other kinds of energies -- and this would be
replacement.
MR. MERRITT: I would urge that money that would be available — and a billion
dollars would be a nice figure —
MRS. HARRISON: Well you used it. I'm not -- you said 500 --
MR. MERRITT: All right.
MRS. HARRISON: — million to a billion, and I'm saying what if you got a billion?
MR. MERRITT: Well incidentally, that's miniscule compared to the strategic petro-
leum reserve. We would like to see the money that's being expended this
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Statement of Mr Richard Merritt, representing the State of Nebraska
year, which I believe is $3.6 billion -- next year $4.2 billion. We'd like
to see that go into distilleries, good old-fashioned distilleries, vodka and
gin, and we look upon alcohol as a strategic energy reserve that would be far
better than putting your crude oil underground in Louisiana.
So I would have to say that we need a whole new energy industry to
convert a multitude of materials -- not just grain. We need sugar beets,
sugar cane, timber, urban waste. We need new crops, we need plant hybrids
that would produce a lot of alcohol -- the Jerusalem artichoke is such a
thing. It will produce a lot of alcohol.
We need — basically we need the plants. The product works. It's been
sold all over the world for fifty or sixty years by the oil companies them-
selves, incidentally. It's beyond research. Ethyl alcohol works today. You
can dump it in your car. I've done it, and as soon as I get the next drum of
alcohol in I'd be happy to make some available to the panel. You can see if
your own car doesn't run.
MRS. HARRISON: I don't think you're answering my question.
MR. MERRITT: I would say the billion dollars should go into distillery con-
struction.
MRS. HARRISON: I know what you want it to go into. I'm saying what if that hap-
pened. Then what do you think you would produce in terms of reducing the use
of other kinds of --
MR. MERRITT: Well, we would reduce gasoline consumption by ten percent, depending
on the output of the distillery. $20 million -- $20 to $25 million would
give you a distillery big enough to put out twenty million gallons annually
of ethyl alcohol, which would replace that much gasoline.
Yes?
DR. MACKENZIE: You stated that gasohol -- or alcohol for use in gasoline, with
gasoline, is now being sold competitively.
MR. MERRITT: It is.
DR. MACKENZIE: What is its cost in gasoline gallon equivalents?
MR. MERRITT: It's sold in Illinois without any tax exemption at all today at 72.9
per gallon.
DR. MACKENZIE: That's gasohol.
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future energy patterns and coal use
MR. MERRITT: That's gasohol, which is two cents under Amoco premium, which is the
only other premium unleaded fuel you can buy. So it is competitive with
Amoco premium. I paid 74.9 here for Amoco premium.
DR. MACKENZIE: Well my understanding of the cost of ethanol is that it's on the
order of three times the cost of petroleum for a car.
MR. MERRITT: This is true, but it's an octane improver, and we're only adding ten
percent to a gallon of gasoline.
DR. MACKENZIE: But can you -- all right, so you're saying that although it is more
expensive, that because of the special function it's therefore --
MR. MERRITT: It's an octane enhanced product, and we've always paid four to five
cents more for octane improvement.
DR. MACKENZIE: That's a good answer.
MR. MERRITT: And I might say that if we blend the ethanol half and half with
methanol -- which is substantially cheaper, gasohol could be sold if it was
five percent methanol, five percent ethanol, and ninety percent no lead, it
can be sold at four to five cents a gallon over the unleaded fuel, which is
exactly what we've always paid for an octane enhanced product, and this works
very well with catalytic converters. You know, they seem to work better
with -- we have a newspaper in New York City, the New York Daily News is
running a test now in one of their own cars at the New York City Clean Air
Lab and it looks very, very good, and they hope to have a series of articles
soon on that.
DR. MACKENZIE: Have you estimated the cost — I mean the volume of gas — of
gasoline that you could effect in some sort of reasonable way with this?
MR. MERRITT: Well I think gasohol could be a national program. That would be ten
billion gallons of gasoline, if we took in all the raw material bases that
are available to us, including sugarcane and timber, and perhaps a supplement
from methanol.
DR. MACKENZIE: Would that significantly affect food crops, and so forth?
MR. MERRITT: No. Our agricultural excess capacity is somewhere in the area of
thirty to fifty percent of our output today, and we see gasohol as a means of
absorbing surplus crops, which the American farmer has the curse of excess
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Statement of Mr Richard Merritt, representing the State of Nebraska
production today, and we fail to see how exporting grain at $2 a bushel that
costs the farmer $3 to grow so we can buy Arab crude oil at $15 a barrel is
good for the farmer and good for the country.
We say let's keep the surplus grain here, which will perhaps bring up
prices a little bit -- certainly bring up domestic prices -- and I for one
would rather give the farmer more money for energy than more money for food.
We feel that if we have to help American agriculture -- and I think
it's rather obvious American agriculture needs help -- let's not escalate
dramatically food prices, let's get the farmer into the energy business,
because he is an energy producer, he produces food energy. Let's let him
diversify into liquid energy to give us an octane improver that we desper-
ately need for our gasoline.
DR. MACKENZIE: One last question. American agriculture is very energy intensive
and of course if you take these crops and convert them you lose something.
Have you looked at the net energy -- in other words, of a hundred units of
energy that you go out, how much energy had to go in to grow that?
MR. MERRITT: Very definitely, and I have numbers on that and would be pleased —
in fact, I would like very much to sit down with CEQ or anybody and go over
these numbers, but we're also quite intrigued by the idea of actual on-farm
production, where the farmer produces his own motor fuel right on the farm
from his own raw materials.
And if a farmer can dedicate ten acres, it's entirely possible he can
get at least 5,000 gallons of alcohol off of ten acres annually, using high
sugar crops such as the Jerusalem artichoke, things like that.
And if that can be processed in the farm co-op or on the farm then the
energy that he uses to grow his crops was actually provided by the farm, and
this is the happy thing that the farmer had with the horse. The horse was
fueled by the farm and farmers were essentially energy-independent, at one
time.
DR. MACKENZIE: Yes, but it did take something like a third of our agricultural —
MR. MERRITT: A fourth, yes, third to a fourth. Right.
DR. MACKENZIE: A fourth, to run all those mules.
MR. MERRITT: Yes. I have documents with me published back in the forties on this
concept, and they said the farmer will be cursed,with overproduction when the
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future energy patterns and coal use
horse is gone, and that this is the net reason that we have the situation we
do.
DR REZNEK: I suggest -- there's a topic which I received questions from the
audience on the environmental impacts of biomass and biomass systems. We'll
explore that with the panel, and I'd like the panel to explore it when we get
to the end of the witnesses.
Any further questions?
DR. REZNEK: Thank you.
MR. MERRITT: Thank you.
DR. REZNEK: Our next witness is Don Kash.
STATEMENT OF DR. DON KASH, DIRECTOR
SCIENCE AND PUBLIC POLICY PROGRAM
UNIVERSITY OF OKLAHOMA
DR. KASH: I appreciate this opportunity to testify. I should begin by noting that
when I was asked to testify I sat down and prepared 22 pages of testimony.
On the way in on the plane, I read the text and decided that I would submit
it and make some extemporaneous comments.
The following is my prepared statement.
Mr. Chairman, members of the panel, I appreciate this opportunity to
appear as a part of the Public Hearings on the environmental protection and
energy conservation aspects of the Federal Non-nuclear Research and Develop-
ment Program. My testimony today will do two things. First, it will discuss
the general goals of energy-oriented research, development, and demonstration
(RD & D) activities. Second, it will propose several organizational and
procedural modifications which 1 believe would enhance the value of energy
RD&D activities.
My testimony is taken in a major part from a study, funded by the
National Science Foundation, which my colleagues and I completed a year ago.
The results of that study are reported in a book entitled, "Our Energy
Future."
When one examines the various efforts which the Federal government has
sought to take to deal with the energy crisis over the last five years, the
only consistently successful one has been the ability to steadily increase
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Statement of Dr Don Kash
RD&D expenditures. This RD&D response parallels a now well established
pattern in our society, a pattern of opting for what Alvin Weinberg has
called "technological fixes" for social problems -- Weinberg, 1972: 27-35.
The "technological fix" approach recognizes that the resolution of
national problems by more traditional methods -- that is by motivating people
to behave differently -- is a heartbreaking, frustrating business. Our
society has repeatedly hoped for technological fixes, because they offer the
opportunity to solve problems without having to face the difficult social and
political choices implicit in strategies that require changing human at-
titudes and behavior.
Weinberg uses Ralph Nader's campaign for auto safety as an illustration
of the technological fix. He notes that the traditional approach had been to
use inducements and sanctions to improve driver safety. Nader's techno-
logical fix approach, by comparison, is to design safer cars. This strategy
does not get at the root social problems involved in auto safety. In fact,
it might even create other problems such as resistance by automobile manu-
facturers to bearing the primary responsibility for driver safety. But it
does have the potential to reduce auto fatalities.
The nation's approach to the energy crisis parallels this example. It
is politically more desirable to use technology to produce energy from new
domestic sources than it is to require the adoption of less energy-consump-
tive life styles.
BARRIERS TO RD&D PAYOFF
The political attractiveness, then, of energy RD&D is not a question.
Rather, the key issues are what contributions RD&D can make and what consti-
tutes a successful RD&D program. Society supports RD&D programs in the hope
that they will produce technologies or other innovations that can be uti-
lized. But of course utilization is the last of a several stage process. It
is preceded by the four RD&D phases: basic research, applied research,
development, and demonstration.
In cases where technological fixes have been effective -- the most
frequently cited examples being military and space programs -- RD&D usually
has been defined as complete upon demonstration of technological feasibility.
At that point, the production or user segment of the system took over and
applied the technology. That is, a technological fix required only the
demonstration of feasibility, since utilization was already built into the
system.
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future energy patterns and coal use
Energy RD&D, however, differs from these previous efforts in both the
processes by which utilization decisions will be made and the circumstances
surrounding those decisions.
Four factors can be identified which explain the success of the tech-
nological-fix approach for military and space RD&D programs, as contrasted to
energy programs. Very briefly, these are:
1. Developer versus User: In the case of military and space RD&D, the
organizations that funded the activities were also, in some sense, their
purchaser or user. By comparison, the Department of Energy will not use the
products of its RD&D work, but must rely on private companies and individuals
to adopt the technologies developed.
2. Decision making: In the pre-energy cases, decision-making was
relatively centralized and generally limited to a well-defined user com-
munity. Energy utilization decisions, by comparison, will be made in a
highly fragmented decision-making system which includes a variety of interest
groups. For instance, the adoption of new electric power technologies will
be the prerogative of hundreds of electric utilities, both public and pri-
vate. Perhaps more importantly, standards of performance and acceptability
will be set by interests ranging from bankers through the Environmental
Protection Agency to local farmers.
3. Variety of Options: In the case of military and space RD&D, the
number of technological options available for development at any given time
tended to be fairly limited. Nuclear weapons or space capsules are rela-
tively unique responses to national problems. On the other hand, the poten-
tial variety of alternative energy options is extensive. For example, elec-
tricity can be generated from every energy resource, and for each resource
system there are usually several competing technologies.
4. Goals: The goals toward which these earlier technologies were
aimed generally have been well defined: deliver a given ordnance, or beat
the Soviets to the moon, for example. Unfortunately, the goals of energy
RD&D are not so easy to define, given the pluralistic character of our
society and the many participants in energy-related decisions.
The role of energy RD&D, then, must be viewed more broadly than has
been the case with previous national efforts. In addition to serving its
traditional purpose of producing new technologies, it must also address other
non-technological solutions to the problems, and it must explicitly recognize
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Statement of Dr Don Kash
that many of the decisions will be made in the political realm. The purpose
of energy RD&D then might be defined as identifying, investigating, and
implementing innovations in the energy system.
With this broader purpose in mind, the goal of RD&D can no longer be
regarded simply as the production of new technology, but rather the produc-
tion of information useful for energy-related decision-making. This expanded
role requires that RD&D be used to reduce four types of uncertainty: insti-
tutional uncertainty, performance uncertainty, demand uncertainty, and impact
uncertainty.
This contrasts with past efforts where the primary focus was the re-
duction of performance uncertainty. In essence, the need to use RD&D to
reduce the other three types of uncertainty results from the fact that RD&D
must serve the process of political accommodation, which is central to re-
solving the nation's energy crisis.
RELIABLE AND CREDIBLE INFORMATION
If RD&D is to be successful in reducing the four types of uncertainty
mentioned above, and therefore contribute to the process of political accom-
modation, the information produced must have two qualities: reliability and
credibility.
Reliability implies the scientifically estimated range of error in-
cluded in any set of data or body of information. Stated in lay terms,
reliability is a measure of confidence a scientist or engineer has in the
data or information.
Credibility is a measure of the confidence interested parties have in
information. Credibility is a synonym for believability. In general, in-
formation tends to have maximum credibility if it: 1) is responsive to the
concerns of the parties-at-interest, 2) is produced by people or institutions
who are perceived as being professionally competent, and 3) is produced by
people or institutions without a vested interest in decisions to be based on
the information.
A point which deserves emphasis is that the particular characteristics
of credible information vary as much as a reflection of the mix of interested
parties as the characteristics of the researchers. For example, if the range
of parties interested in a decision includes only scientists and engineers,
reliability may be synonymous with credibility. Introduce parties who have
broader social or environmental concerns, and credibility requires more than
a professional judgment of reliability.
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future energy patterns and coal use
To paraphrase a more general analysis by Don Price, the technologist
may only want to know the level of reliability of the data, but the politi-
cian will want to know who provided the information and why it was pro-
vided -- Price, 1965: 132-62.
An illustration of the credibility issue can be seen in the controversy
over natural gas reserves. The procedures for estimating reserves are
thought to produce highly reliable information, yet the Federal Power Com-
mission -- FPC -- estimates of gas reserves were a source of continuing
controversy. The basis for the challenge of the estimates is that the data
are provided by the gas industry. Critics argue that the data are collected
and reported in ways that will benefit the economic interests of the indus-
try. Thus, to certain parties, FPC data were not credible.
Lack of credibility may also be a serious problem when data are not
collected on issues or questions of concern to some parties-at-interest.
Normally, professionals design research to provide information on questions
they consider to be of scientific or technical importance. When such re-
search fails to provide information on questions of concern to parties-
at-interest, credibility becomes an issue.
The most frequent examples of this tend to be associated with research
funded to support preparation of environmental impact statements --EIS. At a
minimum, failure to collect data on questions of concern to some parties-
at-interest is interpreted as evidence of a lack of concern with those ques-
tions. At the maximum, such failure can be perceived as reflecting conscious
choices not to collect such data because they will not support the interests
of those paying for the RD&D.
It should be noted that since credibility is a reflection of the con-
fidence that parties-at-interest have in information, credibility is not
logically dependent on reliability. That is, information with little reli-
ability may be widely believed. I would emphasize, however, that RD&D has
the highest likelihood of contributing to wise decisions when it has both
qualities. An RD&D program, then, should seek to maximize both reliability
and credibility.
I believe it is useful to divide RD&D into three categories, if the two
objectives of energy RD&D are to produce the broad base of information neces-
sary to respond to the four types of uncertainty, and to assure that the
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information produced has maximum reliability and credibility. These cate-
gories are hardware, nonhardware, and demonstration.
As shown in Figure 1, I visualize hardware and nonhardware activities
as two separate streams that converge at the point of demonstration. The
hardware and nonhardware categories are distinguished by the different types
of information they produce. Hardware RD&D produces information aimed at
reducing uncertainty about the performance of technologies. Nonhardware RD&D
aims at reducing uncertainty about institutional, demand, and impact char-
acteristics .
The basic research through demonstration phases shown from left to
right on Figure 1 reflect increasing information reliability and credibility,
or, alternatively, decreasing uncertainty. Demonstrations, then, are con-
ceived as providing both hardware and nonhardware information in the most
credible and reliable form.
In my following written testimony I discuss the characteristics of
hardware, nonhardware, and demonstration activities that have a high likeli-
hood of providing reliable and credible information. I make a number of
general recommendations for organizational and procedural changes that would
enhance the utility of energy RD&D. Those recommendations focus specifically
on nonhardware and demonstration activities which appear to me to be the
areas needing most attention.
HARDWARE RD&D
Hardware RD&D generally includes physical science/engineering activ-
ities, and it seeks to provide technical information about energy processes
or hardware. As I view it, hardware RD&D produces two categories of infor-
mation. The first is design information; that is, information that would be
used by engineers or scientists to design a process or piece of hardware —
e.g., heat-transfer coefficients, chemical-reaction equations, steel-tubing
requirements, and so on.
The second is performance information on the economic costs, energy
efficiencies, materials and manpower requirements, and residual outputs —
i.e., all outputs other than the fuel produced -- of an energy process or
technology.
In general, it is performance information that is needed to inform the
policy process.
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Traditionally, hardware work has been defined as falling into three
phases: basic research, applied research, and development. These phases are
distinguished by their different goals. Basic research seeks knowledge for
its own sake, while applied research is directed toward practical appli-
cations. Development activities are directed toward the production of useful
materials, devices, systems, and methods; such work includes the design,
testing, and improvement of prototypes and processes.
In terms of its utility for decisionmaking, basic research is usually
viewed as providing a theoretical basis for judging whether, for example,
energy can be produced from a given resource using a certain concept. Gen-
erally, applied research tests deductions drawn from these theories. The
development phase then provides information on the process as it is scaled up
in size.
As an energy technology evolves across the RD&D spectrum, increasingly
reliable and credible performance information should be produced, resulting
in a reduction of decisionmaking uncertainty. Each phase in the spectrum
should produce data which can be used to make informed decisions about
whether to move on to the next RD&D phase.
Thus, the reliability and credibility of the information on which these
decisions are based is a very important consideration. Nothing is more
impressive, however, than the frequency with which performance data on emer-
ging and existing energy technologies are challenged. There appear to be at
least four bases for hardware data lacking reliability and/or credibility:
1) the data are out of date -- this is a regular problem regarding economic
costs; 2) the data are extrapolations to commercial-scale plants from small-
scale work carried out in the early phases of the RD&D spectrum; 3) the data
have been collected by the developers of the process, and they may present a
biased or overly favorable picture; and 4) the data are not comparable --
e.g., economic costs of electricity from wind cannot be directly compared
with those from steam plants becuase of the intermittency of wind power.
NONHARDWARE RD&D
Nonhardware RD&D generally includes life science, social science, and
interdisciplinary problem-oriented activities. It seeks to provide descrip-
tions and/or conceptual understanding of the social, economic, and physical
environment in which energy technologies will be utilized and assessments of
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their impacts on the environment. In essence, nonhardware RD&D reduces
institutional, demand, and impact uncertainty.
Nonhardware work is also traditionally divided into the three phases of
basic research, applied research, and development. Both because the informa-
tion produced by nonhardware RD&D is of concern to a much broader range of
parties-at-interest, and because of the difference in level of theoretical
development in the the disciplines involved, achieving reliability and cred-
ibility is more difficult than is the case with hardware RD&D. Although, as
was discussed above, hardware RD&D can have credibility problems, they gener-
ally stem more from the misuse of data than from disagreement on how to
measure such things as, for example, sulfur dioxide emissions from a com-
mercial-scale plant.
In general, challenges to the credibility of nonhardware RD&D reflect
the lower level of agreement on how to measure impacts. This lack of agree-
ment reflects the less developed theoretical underpinnings of nonhardware
RD&D. Most of the disciplines included in the hardware category would fall
into what are jargonistically called "hard" sciences, while our nonhardware
category generally includes those disciplines referred to as the "soft"
sciences. While the distinction implied by "hard" and "soft" is overdrawn,
it is clear that the findings of policy, socioeconomic, and environmental
studies are more likely to be subjected to criticism based on reliability
considerations than are hardware analyses.
Both hardware and nonhardware RD&D suffer from similar credibility
problems resulting from perceptions of bias, but because of the higher level
of reliability, credibility is not as serious a problem for hardware research
as it is for nonhardware activities. The highest credibility for energy-
related nonhardware RD&D appears to require, as a starting point, that the
characteristics of some set physical, biological, or social phenomena be
described and measured over a priod of time in advance of the development of
an energy facility.
In environmental research, this is termed collecting "baseline infor-
mation." More broadly stated, nonhardware research has credibility when a
full range of the parties-at-interest have been allowed to include those
phenomena in the baseline study with which they are concerned. The next step
is to describe and measure the impacts of hardware inputs and outputs on the
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baseline phenomena. For the purpose of energy policyraaking, these kinds of
measurements appear to have the most credibility of any nonhardware research.
In general, then, nonhardware KD&D appears to require three elements if
it is to have credibility for decisionmakers in the energy supply system: 1)
the social and environmental phenomena monitored or studied must reflect the
concerns of the whole spectrum of interested parties, and not just those of a
specialized research community; 2) these data and impact assessments must be
organized around the regional or local environment of social systems most
likely to be affected by energy supply facilities; and 3) they must be funded
and carried out by parties who do not have a vested interest in the outcome
of the decisions to be informed by the RD&D.
DEMONSTRATIONS
As defined in this study, demonstrations of energy technologies have
the purpose of providing hardware and nonhardware information with sufficient
reliability and credibility to inform commercial utilization decisions.
Commercial-scale demonstrations represent the final stage in a scaling-up
process which begins in the laboratory and progresses through various devel-
opment phases. Demonstrations normally take place only after a technology is
thought to be well understood.
From the point of view of hardware RD&D, the main purpose of commercial
demonstrations is to determine what the performance characteristics of a
technology will be with scale-up. Since engineering experience indicates
that the operational characteristics of a process may behave unpredictably
with a major increase in the size of a facility, demonstrations serve as a
final test of the reliability of hardware information.
In the energy context, however, the more important role of demonstra-
tions is to produce credible nonhardware information.
In fact, a RAND Corporation study has stated that demonstrations should
have as a primary focus "market demand, institutional impact, and other
nontechnological factors, the goal being to provide the basis for well-
informed decisions on whether to adopt the technology," — Baer, Johnson, and
Merrow, 1976: 1. Reliable and credible nonhardware information from demon-
strations is thus a key to commercial utilization of new energy supply tech-
nologies.
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Credibility can be built into a nonhardware information program only by
designing it to serve the needs of the diverse group of participants who will
be a part of the utilization decision. An accommodation among these inter-
ested parties is usually a prerequisite for full-scale commercialization.
Looking at the post-1973 energy policy system, it must be recognized that
government nearly always plays some role in the utilization decision, and
through government the various interests nearly always have access to the
decisionmakers — see Holloman, et al., 1975: 11-40.
Unless a demonstration facilitates accommodation, it may represent a
very expensive dead end. For example, a commercial-scale oil shale demon-
stration plant which provides little more than performance information may
improve the reliability of the relevant data base, but it may also result in
a low level of credibility and a reluctance to act decisively. But a demon-
stration which deals with the credibility issue by involving interested
parties in a nonhardware information program may contribute to the creation
of a consensus which will support a firm decision.
CONCLUSION
The three categories of RD&D defined above comprise the framework
around which the following recommendations are organized. Use of these three
categories can help insure that RD&D produces credible and reliable informa-
tion responsive to the four types of uncertainty: performance, institu-
tional, demand, and impact.
' ORGANIZATIONAL AND PROCEDURAL RECOMMENDATIONS FOR ENERGY RD&D
GENERATING RELIABLE AND CREDIBLE INFORMATION
My recommendations address changes in both institutions and procedures.
They emphasize the use of technology assessments and commercial-scale demon-
strations as an integral part of an RD&D program, with general recommen-
dations amplified by more specific proposals for implementing them. And they
address the problem of the limited technical and financial resources of some
of the groups who need to verify the resulting information.
TECHNOLOGY ASSESSMENTS
For every step in the development phase of an RD&D program, there
should be a parallel technology assessment by a group without a vested
institutional interest.
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A useful assessment program will require: a source of funds for the
assessments, an independent organization to allocate the funds, an assortment
of research groups capable of performing credible assessments, and competent
personnel to staff these groups.
A technology assessment is a form of policy study that identifies the
capabilities and impacts of a facility or process. It is motivated by a
recognition that the introduction, extension, and/or modification of tech-
nologies lead to a variety of economic, social, environmental, and institu-
tional consequences. An assessment is a policy study which: 1) anticipates
and systematically identifies, defines, and analyzes consequences; 2) iden-
tifies, defines, and analyzes alternatives which will either mitigate unde-
sirable consequences or enhance beneficial consequences; and 3) identifies,
defines, and evaluates implementation strategies for feasible policy options.
The purposes of a technology assessment are: 1) to provide an early
alert regarding impacts that may enhance or constrain utilization; and 2) to
assist in the creation of a cadre of professionals who have expertise about
the hardware item and its potential impacts, but who do not have a vested
interest in its promotion or demise -- that is, a professional group with
credibility to a broad range of interested parties.
INDEPENDENT FUNDING AGENCY
An independent agency for supporting nonhardware RD&D should be estab-
lished to fund and monitor technology assessments for energy technologies in
the development phase of the RD&D spectrum.
I recommend that an amount equal to five percent of mission-oriented
hardware expenditures be allocated for nonhardware research. I propose that
half of that amount be channeled to a new Federal agency which has neither a
promotional nor a regulatory role in energy policy. The agency would be
analogous to the National Science Foundation in its relation to other parts
of the Federal government.
This research agency would identify needs for independent technology
assessments, select the groups to do the studies, fund them, and assure that
each assessment is conducted so that the results are reliable and credible.
Reliability and credibility require that the research group be professionally
competent, but they also require that representatives of the range of inter-
ested parties be involved as consultants and reviewers -- industry, govern-
ment, consumer interests, and universities — representing the natural and
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social sciences as well as engineering specialties. Because some of the
interested parties lack the financial and manpower resources to participate
fully in such an effort, each assessment grant should provide for the payment
of the costs of involvement.
Also see the following separate recommendation under the section,
"Technical Support for Participants."
In addition to informing the interested parties about the impacts of
new technologies, this participation procedure will add significantly to the
credibility of the results of the assessment. Participation is the only
dependable way to assure that the impacts of concern to all interested
parties are addressed, and it is the only dependable way to screen prelim-
inary reports by the research team for possible bias or misinformation.
Furthermore, such participation prepares the way for disseminating the
information from the assessment, because it alerts interested parties to the
fact that the data will be forthcoming and it gives them confidence that the
work is comprehensive and unbiased. This is esential for assuring that the
information will be utilized.
CREDIBLE NONHARDWARED RD&D INSTITUTIONS
Institutions should be created that have the capability for conducting
credible nonhardware RD&D.
Most existing research organizations are viewed, at least by some of
the parties interested in energy decisions, as having bias because of their
ties with funding sources that have promotional or regulatory interests. For
example, the National Laboratories are charged by the Department of Energy --
DOE -- with carrying out much of its nonhardware-type R, D, and D, but there
is a widely held view that research findings that run counter to agency
policy are unlikely from these captive institutions.
The credibility of various profit and nonprofit private research or-
ganizations is also regularly questioned, because it is believed that the
continuing need for new research contracts imbues them with a sense of cau-
tion -- that, in practice, they become the kept organizations of those who
fund them. Although these organizations often point out that they do re-
search for both regulatory and promotional agencies, critics argue that
controversial findings are skirted or diluted or, alternatively, that they
are provided to the funding agency but not to the public at large. The
normal Federal R, D, & D contract, which requires agency approval before
research results can be released, compounds this credibility problem.
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University research groups are often more credible, because their job
security is somewhat more removed from continuing success in generating
contracts, but they are hampered by organizational traditions. Technology
assessments are interdisciplinary efforts, relying heavily on secondary data
and external reviews. As such, they fit poorly with reward systems accus-
tomed to academic disciplines and traditional basic academic research. In
addition, technology assessments of the kind proposed here need to be pro-
duced on time, according to a schedule that responds to the needs of infor-
mation users outside the university; and this runs counter to an academic
viewpoint that truly creative activity cannot be rigidly scheduled.
Consequently, we believe that a network of new organizations needs to
be built, organizations that depend for their livelihood on support from the
independent agency proposed above. For this purpose the agency should al-
locate half of its funds to institutional support for organizations that can
perform credible technology assessments.
A model for such institutional support is the U.S. Air Force rela-
tionship with the RAND Corporation. A fixed yearly support level allows the
building and maintenance of a research staff. Based on that support level,
the organization is obligated to do research in problem areas identified by
the funding agency, but the research staff is also expected to carry out
independent research of their own choosing.
I would like to emphasize that credibility requires openness. Pub-
lication of research results should not be constrained by contractual ar-
rangements which require prior agency approval.
One of the reasons that I recommend institutional support is to develop
an adequate pool of personnel for non-hardware research. At present, the
personnel base is insufficient -- especially in the availability of social
scientists with experience in interdisciplinary assessments. Because such
integrative research lacks demonstrated methodologies and is characteris-
tically focused on specific substantive issues, we believe that competence
must be developed in the process of doing interdisciplinary assessment pro-
jects. The current practice of project support, rather than institutional
support, has meant that few people have so far been able to stay involved
long enough to become really skilled in doing interdisciplinary studies.
With sustained institutional involvement, it should be possible to build the
necessary personnel base.
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DEMONSTRATIONS
As a general rule, every new energy technology or new technology appli-
cation should be demonstrated at commercial scale before a decision is made
on commercial utilization.
I propose a series of related procedures for making demonstrations the
cornerstone of utilization decisions: broadly conceived baseline studies
before a demonstration, a suspension of the preconstruction environmental
impact statement -- EIS -- requirement, a comprehensive post-demonstration
impact assessment, a "self-destruct mechanism" to assure that undesirable
activities are terminated, and a program to provide financial and technical
support to interested parties that lack the necessary resources to partici-
pate fully in the demonstration effort.
Confidence in performance and impact data is highest when they come
from an actual commercial-scale facility in a given location. Even with a
full program of technology assessments at the development stage, the data
remain unreliable until a technology has been operated and observed at full
scale. At this stage, the interested parties can verify information for
themselves, resolving many disputes about technology characteristics and
impacts by observing a demonstration facility together. Recommended pro-
cedures for gaining full benefit from demonstrations follow.
BASELINE STUDIES
Baseline studies should be initiated for each demonstration facility at
the time possible sites are first identified.
The purpose of a baseline study is to describe the physical, biologi-
cal, and socioeconomic environment of a proposed site before construction and
operation of an energy facility. Later, monitoring and assessment activities
seek to identify changes in the environments that are the result of the
facility.
In order to have a record of baseline data over a period of several
years, the studies need to be undertaken at the earliest possible time. For
instance, fish populations normally fluctuate from year to year, as well as
season to season. Without a data base to document the normal variations, new
energy facilities may be considered the cause of fluctuations that would have
occurred in any case.
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If the baseline studies are to be credible and useful, it is essential
that the entire range of interested parties be consulted about the phenomena
and processes to be included. Broad participation, similar to the involve-
ment previously proposed for technology assessments, will reduce the likeli-
hood that baseline studies will overlook important impact categories. It
will broaden the selection criteria and the discussion of measurements and
interpretations. And it will serve as the beginning of a wide-ranging pro-
cess of participation in the demonstration from start to finish.
SUSPENSION OF EIS REQUIREMENT FOR DEMONSTRATION FACILITY
The requirement for a preconstruction and environmental impact state-
ment should be suspended for energy demonstration facilities.
The primary purpose of a demonstration facility is to generate infor-
mation about its impacts. Consequently, a pre-demonstration impact statement
is, by definition, hypothetical and uncertain. It tends to create opposition
because extrapolations of performance data derived from the development
stages are viewed by some interested parties as unsatisfactory. In order to
speed the gathering of reliable and credible information, we recommend that
the EIS requirement for a commercial-scale demonstration activity be dropped.
It is important to emphasize, however, that this step only makes sense
if it is coupled with the other recommendations in this chapter: technology
assessments during the development phase, convenient access to data, a post-
demonstration impact assessment, and a procedure for terminating undesirable
facilities. In addition to these assurances, the proposed site of a demon-
stration must be assured of full Federal responsibility for adverse impacts,
including guaranteed financial compensation by the Federal government for any
environmental deterioration that may result from the activity.
It is the post-demonstration steps that justify suspending the EIS
requirement. They are especially important because they provide the means
whereby demonstrations can inform the environmental and social controls on
commercial operations. With these and the other recommendations, we believe
that the purposes of the EIS requirement can be met and the generation of
reliable and credible energy supply information can be accelerated.
POST-DEMONSTRATION ASSESSMENT
A comprehensive post-demonstration assessment should be prepared for
each commercial-scale energy demonstration facility.
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After a meaningful period of operating a demonstration facility --
probably one to two years -- the characteristics and impacts of the facility
should be assessed. The assessment should serve as the basis for decisions
on commercial utilization of the technology. This assessment should be the
responsibility of the independent agency proposed above, and the funds to
support it should be a required line item in the appropriation for the demon-
stration.
The post-demonstration assessment is the key step: the final stage
before the diffusion of a new technology, the point of transfer from public-
private cooperation to private commercial decisionmaking, and the time when
the interest of all participants in the evaluation will be the highest.
Assessing the impacts of such a demonstration should be a process involving
broad participation. It is the culmination of a sequence of monitoring and
evaluation activities that began with the baseline studies. As such, it
should include all of the interested parties as consultants, reviewers, and
discussants. It must be conducted by a research group that has the kind of
credibility discussed earlier in connection with technology assessments, but
it should be characterized by a continuous flow of information between the
research team and the interested parties.
SELF-DESTRUCT MECHANISM
The decision to undertake commercial utilization of a technology should
not be made until the post-demonstration assessment has been published. A
negative assessment of the demonstration facility should result in both
shutting down the demonstration and blocking commercial development.
A major obstacle to public support for demonstration activities is the
fear that the first commercial-scale facility is an irreversible beginning
for a much larger commitment. If a demonstration activity is to be accepted
as a basis for a utilization decision, there must be confidence that the
program will "self-destruct" unless the demonstration leads to broad social
and political acceptance of utilization. In particular, a demonstration
plant that is constructed without an EIS must be shut down automatically
after the post-demonstration assessment unless its impacts are judged to be
acceptable. Unless interested parties at potential sites believe that this
will be done, the entire set of information-gathering procedures is less
valuable.
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I believe that, in the context of a pluralistic energy system, a broad-
based assessment process will provide such confidence because of the ammuni-
tion it would provide opponents of development. Alternatively, a positive
assessment should provide powerful support for rapid development.
TECHNICAL SUPPORT FOR PARTICIPANTS
A program should be established to provide financial support for the
development of technically competent staffs for the parties involved in
demonstrations and technology assessments.
It is so important to link interested parties to on-going demonstra-
tions and other assessment activities that funds should be available to
support broad participation. State or local governments, private interest
groups, and other participants with limited financial or technical resources
often find it difficult to enter into discussions of technologies with in-
dustry and Federal agencies, because technical details are inaccessible to
them. Professional staff representation would allow the positions of all the
different parties to be related to the best technical information, and it
would assist in the design of a data-gathering program that is responsive to
the interests of all parties. One of the obligations of a group receiving
such funding would be to provide critiques of assessment reports on the
demonstrations for which they receive funding. I suggest that the support
program be administered by the agency responsible for independent nonhardware
RD&D.
DISSEMINATING RELIABLE AND CREDIBLE HARDWARE INFORMATION
Dissemination has been an integral concern in formulating the pre-
viously recommended procedures for collecting, comparing, and analyzing
energy information. In addition to the dissemination modes that are a part
of the previous procedures, we have identified another major need. The
following discussion outlines problems associated with improving public
access to hardware performance and reserve-resource information.
The absence of any national system for coordinating the dissemination
of performance — input-output -- data for energy technologies has been cited
by a number of studies -- see Senate Interior Committee, 1973: 21-23; Doub,
1974: 17, 21 -- and has resulted in the introduction of legislation to
create a variety of energy-information access mechanisms.
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Examples range from a narrowly defined Bureau of Energy Information in
the Commerce Department to a more comprehensive, independent Energy Informa-
tion Agency or a centralized Energy Commission — Senate Interior Committee,
1974: 11-17; BNA, 1976: No. 139, A-3; Tribus, 1975: 317-22. The primary
motive behind these proposals has been the desire to centralize a system in
which numerous Federal agencies are involved in collecting energy data.
Three major problems have resulted from this fragmented data system.
First, because performance information on energy options frequently has been
collected and analyzed to meet the specialized needs of a particular agency,
significant overlaps and gaps exist in the data that are available. For
example, the Bureau of Mines data activities are organized around the needs
of the specialized mining community. The Bureau of Mines cannot be expected
to collect data of primary interest to the Department of Labor, but Labor may
have no resources to support collection of the needed data in this area.
Second, performance data has been fugitive because it has been managed
by each of the traditional energy policy subsystems: oil, natural gas,
nuclear energy, coal, and electricity. Parties not acquainted with the
informal channels of information used in each subsystem find access diffi-
cult.
Third, this fragmented system is not responsive to new interests which
are without access to a technical staff. The data have been produced for the
use of the traditional industrial and governmental participants who have
their own inhouse technical expertise for purposes of analysis. Without such
a capability, the information can be hard to use. New participants face
serious problems in obtaining relevant energy information, because without
expertise they may not even know what to request. New participants in energy
decisions regularly perceive themselves as operating at a disadvantage
because of their lack of a credible data base. Such interests have suspic-
ions that the older participants with in-depth capabilities manipulate per-
formance data in ways which promote their policy objectives.
The least credible performance information, in the eyes of most new
participants, are economic cost estimates for energy technologies and data
associated with environmental residuals. The debates over oil shale devel-
opment illustrate this information problem. The available data on water
consumption, environmental residuals, and production costs of shale oil vary.
This variability in turn generates policy uncertainty. Any action which
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would provide a more homogeneous hardware data base would contribute to a
more focused debate and improve the prospects of reaching social accommo-
dation among competing interests. Federal RD&D policy should be designed
with this objective in mind.
Our study has identified three sets of data that would benefit from
improved Federal dissemination: 1) resource-reserve data for all energy
sources; 2) performance data — this category does not include information
from nonhardware RD&D — for all energy technologies and processes; and 3) a
siting schedule for all proposed commercial-scale demonstrations and proposed
commercial energy facilities.
The primary deficiency in current resource-reserve data is a lack of
comparability. Most resource-reserve data have been collected using cate-
gories developed by the various energy industries within each resource sub-
system. Definitions of these categories frequently involve distinctions
which lead to misinterpretation by newcomers to the system. The range of
categories for crude oil include: known resources, cumulative productions,
proved reserves, indicated additional reserves, and total original oil-in-
place. By comparison, normal categories for coal data include: identified,
recoverable, submarginal, and undiscovered resources -- Theobald, et al.,
1972. For those not well versed in these systems, data comparability is
difficult.
Assuming the future development of solar energy, it will presumably be
necessary to develop an additional set of solar resource data. Clearly, the
establishment of categories which will facilitate comparisons among the
various "apple and orange" resources is to be desired. As a General Account-
ing Office study of Federal energy data activities concluded:
"Standardization of energy terms and adherence to established defini-
tions are essential for uniformity in the collecting, analyzing, reporting,
and interpreting of energy statistics. The proliferation of data collection
and reporting that presently exists among Federal agencies and the fact that
State regulatory agencies provide data to the Federal Government — which are
subject to their own legal and administrative constraints — makes it im-
perative that such standardization be sought," GAO, 1973: 18-19.
Much the same sort of problem characterized data on the performance of
various energy technologies -- such as economic costs, energy efficiencies,
materials, and manpower requirements, and residual outputs. Performance data
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categories are often poorly defined and, given political accommodation needs,
inadequately reported and analyzed by the responsible agencies. As with
resource data, the new participants in energy decisionmaking find access to
performance data difficult and information comparability often lacking.
Finally, at the present time there is no single source of information
on proposed new energy facility sites. Anyone who has attempted to compile a
list of proposed energy developments must be impressed with the difficulties
associated with assembling a national or regional picture. Since the impacts
of energy facilities are related to the characteristics of the sites as well
as the technologies, knowing potential locations seems an essential first
step to a process of political accommodation.
In addition, a centrally located national energy siting schedule would
have the benefit of providing an early warning system for all parties con-
cerning projected utilization decisions. This would assist policy makers in
identifying interested groups, so that accommodation efforts could be ini-
tiated at an early point.
A NATIONAL ENERGY DATA CENTER
A National Energy Data Center should be established as a central re-
pository for energy resource-reserve data, performance data for energy tech-
nologies and processes, and a national energy siting schedule for all com-
mercial-scale demonstration and commercial facilities.
The previous discussion underlines the need for a National Energy Data
Center. Such a center should be user-oriented, highly professional -- i.e.,
data collection and analysis must conform to rigorous scientific-technical
standards -- and have as its sole functions the collection, analysis, and
dissemination of energy data. Three purposes should be defined for the
Center: 1) to pursue development of a data presentation format which facil-
itates comparisons among alternatives and is usable to the layman; 2) to
facilitate access to energy data for all participants; and 3) to provide data
analyses useful to the range of participants.
FORMAT
A data presentation format should be developed, aimed at maximizing
comparability and usability.
Our conception of such a data presentation format is available in a
study entitled Energy Alternatives: A Comparative Analysis -- Washington:
Government Printing Office, 041-011-00025-4, 1976. That study offers a
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possible starting point for a format that could be used by the National
Energy Data Center. Energy Alternatives includes the three essential in-
gredients for such a format: a description of the various energy resources
and the technologies focusing those resources, quantitative data indicating
the performance characteristics of each technology and resource system, and a
set of procedures for comparing the various alternatives.
The proposed energy data center should publish, each year, an updated
volume providing the three kinds of information. Additionally, performance
or resource data could be maintained and continuously updated through the use
of a storage and retrieval system using such categories as those in Energy
Alternatives.
The energy siting schedule to be maintained by the Center should pro-
vide three types of summary information: the proposed location of energy
facilities, a brief description of the facility itself, and the proposed
construction time of the facility. The schedule should be maintained on a
current basis and include all commercial or commercial-scale facilities that
have either been proposed or are under construction.
ACCESS
All participants should be allowed access to the National Energy Data
Center, and data verification should be accomplished, at least in part,
through this participatory process.
Unless there is a direct connection established between the Data Center
and those groups which have previously been unrepresented in energy deci-
sionmaking, any information provided will inevitably have a lower level of
utility. As long as data verification remains an in-house activity of the
various Federal agencies and their client industries, the public will con-
tinue to raise questions as to its credibility. While traditional verifi-
cation procedures -- such as on-site audits and the submission of raw
data -- should be continued, and even accelerated in many instances, public
participation provides another avenue through which independent data veri-
fication can be accomplished. The open comparison of differing information
bases in a public forum is one of the most effective methods of cross-
checking reported information.
ANALYSIS
Data Analyses aimed at serving a full range of parties-at-interest
should be a central function of the Center.
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Statement of Dr Don Kash
The Federal government currently lacks a focal point for analyzing
energy data. Although the FEA and ERDA have increasingly assumed a larger
portion of the data-interpretation function at the national level, a need
remains for a central place where participants can secure effective energy
data analysis.
This point needs emphasis, because the Center would not make a mean-
ingful contribution to political accommodation if it were only an archive.
It must provide analyses that are responsive to the concerns of the range of
participants in energy policymaking. In this connection the most important
role of analysis is tied to the earlier focus on developing comparable data.
That is, the center should strive to do analyses which allow concerned
interests to compare various energy supply options in terms of their per-
formance characteristics.
We should emphasize that the Center should not be a primary data
agency. That is, our recommendations should not imply that the functions
already carried out by DOI and DOE or other agencies be transferred to the
Center. Rather, it should be a central information source. It does appear,
however, that the Center should be Congressionally mandated. And the legis-
lation establishing the Center should require that resource and performance
data generated with Federal funds be communicated to the Center on a timely
basis. Similarly, it should be a legislative requirement that information on
all commerical or commercial-scale energy facilities be communicated to the
Center.
SUMMARY
The theme of this paper can be summarized very briefly. "The utility
of RD&D information is as dependent upon the manner of collection, analysis,
and dissemination as it is on the content of the information." In every case
the recommendations in this paper seek to involve the new decisionmaking
participants in the RD&D process. Only in doing that will the process pro-
vide information useful to the achievement of political accommodation.
We have sought to provide for that involvement by:
1. Recommending a new nonhardware research community which includes
both a new funding agency and new research institutions.
2. Recommending an expanded role for commercial-scale demonstra-
tions .
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future energy patterns and coal use
3. Recommending public funding of technical expertise needed by the
new participants in energy decisionmaking.
4. Recorraneding more openness on the part of mission agency nonhard-
ware RD&D programs.
5. Recommending a new centralized source of energy resource and per-
formance data.
[end prepared text]
I'd like to talk much more generally than have the previous people
giving testimony.
Specifically, I'd like to address DOE's approach and focus with regard
to its energy RD&D program. It seems to me that to do that it's useful to
start by recognizing that the energy R and D program is in the business of
creating technologies which will have to replace, at some time during our
lifetime, almost all of the commercial technologies that presently produce
energy.
Unless I'm mistaken, we're going to run out of oil and gas, whether
it's twenty years or forty years or fifty years. The evidence indicates that
the light water reactor is going to be a thing of the past, at least if the
predictions of the available uranium are correct. I gather that we don't
have a great many hydroelectric sites left. I've been advocating that we dam
the Grand Canyon, but I can't get anyone to support that notion.
And coal, in conventional combustion, is not going to be acceptable.
EPA has been responsible for developing clean-up technology that can be
hooked on at the end of that process, but presumably we're going to have to
develop precombustion and during-combustion processes also.
So we're roughly in the business of substituting new energy production
technologies. A total replacement is going to take place. That I think is
an event of some substantial significance.
The new technologies that we're going to have to replace our present
production system with are, at least as commercial technologies, unknown. We
don't know very much about how they're going to perform. I have read a
little of the testimony that's been given here, and I must say that a number
of the people are a good bit more optimistic about the processes that are
involved than the evidence I've looked at suggests one ought to be.
So R and D must not only demonstrate what technologies will work in an
economically acceptable fashion, but it must do something else with regard to
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Statement of Dr Don Kash
these new energy technologies, it must identify and assess the whole set of
non-energy impacts that are going to result from this new generation of
energy-producing technologies.
That means that DOE's R and D program has to satisfy two populations.
R&D has to satisfy the potential users of the energy production technol-
ogies -- the utilities, the oil companies. We don't have much experience in
a relationship where government pays for the development of energy tech-
nologies which the private sector picks up and uses.
And the evidence to date is that we're not progressing with a great
deal of speed in that direction.
Now that's not a criticism of anyone. It's simply the new ballgame.
We've never had a major Federal R and D program which was self-consciously
aimed at creating commercially usable technologies, that is, technologies
paid for by the government which would be picked up and used by the private
sector. We've got to learn a lot about that and presumably the DOE program
has to demonstrate that these new energy technologies are going to make a
profit for the energy companies, or they're not going to pick them up.
So that's one set of users that has to be satisfied.
But there's another set of people that have to be satisfied with regard
to the new energy R and D activities, and that's the collection of people
that are going to be impacted by the residuals, by the non-energy outputs of
these technologies.
In general it is my impression that these potentially impacted popula-
tions are suspicious of DOE, and they're suspicious of DOE not because
there's anything peculiarly bad about DOE or its predecessor -- ERDA — but
rather people tend to be suspicious of agencies that promote particular
technologies. They tend to believe that DOE has a certain bias toward
getting the technologies used. I certainly hope DOE has that bias, anyway.
Promoter agencies are thought to play down -- sometimes perhaps even
cover up -- the unanticipated consequences of these new technologies, so that
the DOE R and D program and the Government's energy R and D program must
concern itself with providing not only information on how the processes work,
but information on what the non-energy impacts of using those technologies
will be.
This is necessary, because energy decisions in this society require
building a political consensus. That is, you have to build some kind of a
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future energy patterns and coal use
majority or at least a substantial minority of people who believe that the
adoption of these new technologies is in the nation's interest, or their
interest.
I think that it's clear that this broader public is now demanding that
it be rung in on the process of decision-making with regard to these new
technologies.
In general, it is my impression that the ERDA and DOE programs have not
been as self-conscious about the need to ring in this broader public on the
decisionmaking with regard to energy R and D.
Two things appear to me to be necessary to satisfy this population
which is concerned about the non-energy impacts of the Federal R and D pro-
gram. Research on the impacts of these new technologies is not going to be
credible unless that research is funded by an agency that is perceived as
being more disinterested than DOE.
let me state it. in the following way. The people that I talked to
express a substantial amount of concern and even skepticism about studies of
the impacts of coal synthetic technologies carried out by National Labs.
They express skepticism -- and I'm not suggesting that it's justified, I'm
just suggesting that it exists—they express skepticism because they have a
sense that anything that's too negative will not be widely reported — that
is the impacted populations may not be made aware of any negative impacts.
Secondly, it seems to me if one is going to build this consensus which
includes people who are concerned about non-energy impacts, research probably
has to be carried out by professionally competent and disinterested research
organizations, and there are not many of those around.
It seems to me that in looking at the previous ERDA efforts in this
connection there has been far too little emphasis on producing reliable,
credible information about environmental-social-economic impact of new tech-
nologies, and what work has been done has not been done with sufficient
concern and attention to insuring that the work on assessing impacts is done
in a way that is credible to these impacted populations.
I would conclude my short comments by saying that if I were construct-
ing an ideal world, I would put responsibility for assessing the impacts of
these new energy technologies in a totally independent agency, and in addi-
tion I would have that agency self-consciously get into the business of
constructing a set of research organizations which were its research organi-
zations.
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Statement of Dr Don Kash
The idea of going to non-profits, to National Labs, to profit-making
organizations, or even -- in most instances, I think -- to universities with
the hope that you're going to get credible -- that is believable results,
results that are believable to potentially impacted parties, is not terribly
encouraging, to me. It's not encouraging because most of the research organ-
izations have old and well-established links with either the regulatory
agencies -- which are every bit as suspect, that's EPA — or with a promotion
agency, which is DOE. In both instances it seems to me that this is just not
sensitive to the social-political reality with regard to this consensus
building process.
Thank you.
DR. REZNEK: Thank you. Does the panel have any comments?
QUESTIONS AND REMARKS
DR. MACKENZIE: Well, the last time this conference was held I was on that side of
the microphone and I said basically the same thing, so I'm sympathetic.
DR. KASH: Well, you're a right thinker.
DR. MACKENZIE: I'm wondering -- my own thought was that there should be kind of at
least someone who generates basic data, if not -- and perhaps critical analy-
sis too, but clearly this has to be -- it's going to come within the politi-
cal sphere, and I don't see how you can get your complete, you know, isola-
tion that you would seek.
DR. KASH: Well, there's nothing complete in the real world.
DR. MACKENZIE: Well, how would you see this thing administered? Or where would
you see it administered? A separate laboratory? A national --
DR. KASH: My written testimony has a series of recommendations which start with an
independent agency and then those recommendations go on to recommend that
that agency create a whole new constellation of research organizations.
DR. MACKENZIE: Is this like a technology assessment agency, would you --
DR. KASH: Well, I suppose that that's a label that's in this year, and it's one
that I have some affection for. I don't really care much what the label is.
I think that we are talking, however, and we're legally responsible for
looking at a range of impacts which goes from environmental impacts to a set
of socioeconomic impacts, because that's required by the courts' interpre-
tations of NEPA at the present time.
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future energy patterns and coal use
Now there are a lot of problems in trying to do this with regard to new
energy technology. The first and most striking thing to me -- and note I'm a
political scientist who has spent the last eight years living as a kind of
parasite off disciplines that do things -- that is, looking at the energy
technology area — is the tremendous variation in numbers that one gets about
the quantities of residuals that come out of different technologies. The
variation is incredible.
I'm now inclined to think that I'm very lucky to be in a hard dis-
cipline and not a soft one like most of the engineers are in.
[Audience Laughter]
DR. KASH: The variation is incredible.
Now that starts with the margin of error, and my disposition is to say
that engineers are people that build things within a range of a hundred
percent of margin of error. The error gets a lot greater when you move on to
trying to understand what the impacts of those residuals will be on the
environment and on the social system.
This work is not a science, and it isn't even a very well developed
art. It's a series of speculations and judgments.
Almost every conclusion about impacts can be challenged by legitimate
professionals. If you're going to find this information to be very useful in
this society it becomes doubly important that the people that do it not seem
to have some vested interest in either promotion or regulation.
I think we really have a classic political question involved here, and
we're in a position where we need to try to sanitize these organizations.
You can't make them objective. All you can do is try to eliminate either
regulatory or economic self-interest in a direct and obvious way, and I think
that's pretty important.
DR. REZNEK: Are there are other questions?
Don, assuming Congress wanted to do it tomorrow, how long would it take
to put these institutions having the capability for conducting credible
non-hardware research in place?
DR. KASH: Ten years.
DR. REZNEK: Don, that's kind of —
DR. KASH: If you have enough money.
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Statement of Dr Don Kash
DR. REZNEK: That's kind of unfair, but I've learned over the years to listen to
what you have to say. Now I want to spring a new line of questioning on you.
You can duck it if you want.
One of the major controversies in the energy/environment area right now
is the question of opening up a set of options. I've heard it expressed in
lots of ways. For instance, a few years ago, if you were trying to build a
power plant, you could choose among oil, coal, nuclear, or, I guess, a few
other options. You could even look around for a hydro site. Now you can't
do any of these things. Furthermore, it used to take two years to get a
power plant built and now it takes twelve to fiteen.
The "maximizing options" logic runs along these lines: Let's not try
to make decisions now. Let's try solvent refined coal. Let's try fluid bed.
Let's try gasification. Let's try biomass. Let's try a whole bunch of
things.
The questions I'm leading to are: If you're going to try everything,
then why do we have all this discussion over the numbers that vary a hundred
percent, or what the residuals are? Why try to make those decisions if we
are going forward on all fronts? At this point in time, do you have any
thoughts on putting into perspective the opportunity costs for the various
options to provide input to rational decisionmaking?
DR. KASH: Well, I don't think that anyone knows how to build opportunity costs in
for technologies that are at this stage of development. It's very uncertain.
I must say that I have some more confidence in the political system
than some of my colleagues do at the present time, and I have confidence
primarily because we haven't chosen one or two options.
Given what at least I perceive we know both about the processes and
about the impacts of the various energy processes, I think we're taking the
right approach in keeping open as many options as possible.
That really comes on my part from a kind of basic chemical caution, and
it says that if I haven't got a pretty good judgment about what's going to be
successful, both economically and socially, then I'd like to keep as many
doors open as possible.
I don't think it can be built in at the present time. I would be in-
clined to move on the fairly broad front that it looks to me we're moving on
at the present time, but I do think that it's necessary to start looking at
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future energy patterns and coal use
residuals and potential impacts right now and have those looked at as the
technologies move along.
And I just think it's a silly game to talk about opportunity costs. I
know that there are people in this audience who disagree with me with regard
to various ones of the technologies, but I'm just a gut skeptic. I find what
appear to me to be perfectly credible professionals disagreeing all over the
place on the operation of most of these new technologies. I don't know
whether there are any credible professionals assessing impacts, but we're
stuck with assessing.
MS. VAN SICKLE: It's really difficult for elected officials to set priorities and
select from alternatives when you have so many different sources of informa-
tion. A lot of times they will contradict one another. I agree with Dr.
Kash.
DR. KASH: Well, I, you know, have got an incredibly large ego, and my wife will
testify that I work sixty, seventy hours a week.
Now, I've had that ego and that sixty-seventy hours of work a week
going on for eight years. Someone asked me what I would do if I were made
the energy czar, and I told them that I just really wasn't sure, but I was
reasonably confident that I'd make things worse at the present time.
I really think there's a great deal of uncertainty. We are talking
about substituting the whole -- a whole new technological substructure in the
energy area, in my lifetime. We're talking about a socioeconomic change of a
kind that I see as just absolutely fundamental. And I think we can take some
time.
What we have to do, however, is we have to recognize that we're not
just developing a bunch of technologies. We're talking about a fundamental
social change, and as we develop those technologies we've got to develp the
kind of social-political support for those technologies which make them
operate.
Now, I've been impressed time after time that the first thing that
happens is that many of the people who are spooked by new technologies don't
know anything about them. Well, that's a common criticism of people in the
industry, and it's quite a legitimate criticism.
It's also true that most of those people don't have any way of getting
decent information. That is, they don't have a way in the sense that they
don't have the resources to look at it in detail.
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Statement of Dr Otto Raabe
Now I've at least witnessed one or two cases — well, let me tell a
story about a study that we did a number of years ago that had to do with
off-shore oil development, and I was in Washington one time and I had a
lawyer from one of the environmental interest groups come up to me. And he
said, "Do you know that you guys are responsible for us not taking the
Department of Interior to court to block a lease sale?"
And I said no, I didn't know that. I said, "I assume it was because of
the trenchant character of our analysis, the persuasive arguments we made,
the care with which we approached things."
And he said no, it didn't have anything to do with that. He said, "We
were going to oppose it because we were suspicious of down-hole safety
valves, and we read your description of a down-hole safey valve and we
decided not to go to court."
I said, "But that's the industry's description."
He said, "Well, I know that, but we believe you and we don't believe
the industry."
Now, there is this problem of credibility which has nothing to do with
the question of reliability in the sense that a scientist or an engineer
talks about it, and it is an inherent part of the development of these new
technologies, and we just must address it.
DR. REZNEK: Thank you, Don. Any further questions?
DR. KASH: Thank you.
DR. REZNEK: It's my belief we have one witness left. It's Otto Raabe from the
Radio Biological Laboratory, University of California.
STATEMENT OF DR. OTTO RAABE
RADIO BIOLOGY LABORATORY
UNIVERSITY OF CALIFORNIA
DR. RAABE: Mr. Chairman and members of the panel, I appreciate this opportunity to
discuss important issues concerning environmental and biomedical research
which is needed for the safe development of non-nuclear energy. I am Otto
Raabe, a research scientist and Associate Adjunct Professor at the University
of California Davis, CA. My research activities are performed at the Radio-
biology Laboratory, a laboratory conducting energy and health research spon-
sored by the Division of Biomedical and Environmental Research of the U.S.
Department of Energy.
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future energy patterns and coal use
About one-third of the current research at the Radiobiology Laboratory
is directed at evaluation of health risks associated with coal utilization.
I serve as coordinator of this DOE-sponsored non-nuclear energy related
research program. This program currently involves five projects: (1)
studies of the biomedically relevant properties of particulate and gaseous
products of energy technolgies; (2) health hazards associated with advanced
technologies for fossil fuel combustion in electrical power generation; (3)
reparative and adaptive mechanisms in respiratory systems of rodents and
monkeys exposed to sulfur compounds and fly ash particles; (4) health effects
of coal gasification and liquefaction processes, and (5) assessment of health
effects of energy systems. One of the reports from this Department of
Energy-supported research was referenced by Congressman Andrew Maguire in
earlier testimony (Chrisp, C. E., Fisher, G. L. and Lammert, J. E. "Mutagen-
icity of filtrates from respirable coal fly ash," Science 199, 73-75, 1978)
in which the presence of mutagens in stack-collected fly ash was reported.
My special areas of competence are in aerosol physics and related
inhalation toxicology. I am the author or co-author of over one hundred
scientific papers and government reports concerning aerosol properties,
inhalation deposition, lung airway structure, and retention of deposited
particulate material in the lung. "Aerosol" as you know is the scientific
term used to describe a relatively stable suspension of droplets or solid
particles in a gas, most commonly air. An important aspect of inhalation
toxicology centers on the fate of inhaled aerosols. Respirable aerosol
introduced into or formed in the environment as a result of non-nuclear
energy systems including coal combustion, may lead to ill effects among
members of the population who inhale these particles.
The orderly development of our Nation's energy future requires a
balanced assessment of the public risks associated with various alternative
systems and technologies. There is not currently available sufficient in-
formation concerning potential health risks associated with coal utilization
and many other types of non-nuclear energy technologies to conduct such a
balanced assessment.
As a point of comparison, let me call your attention to the relatively
large body of information available concerning the nuclear-energy-related
health implications. In nuclear energy development we have relatively ex-
tensive data and understanding concerning the important radioactive species,
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Statement of Dr Otto Raabe
their chemical forms, environmental and biological behavior, target organs,
and long-term health effects. This body of information has been developed
primarily under federally funded programs in nuclear energy under the former
Atomic Energy Commission and Energy Research and Development Administration,
and continues to be supplemented by current Department of Energy and Nuclear
Regulatory Commission programs. Although there may be some unanswered ques-
tions, there is enough information available to intelligently predict future
risks from nuclear power. Low-level radiation effects similar to natural
background levels are a concern of some, but review of the health status of
people living in the high background Rocky Mountain states does not reveal
detrimental effects associated with elevated natural background radiation
levels as high as 100 mr/year.
In contrast, adequate detailed information concerning non-nuclear
energy-related biological effects as required for public health risk assess-
ment is not currently available. Some may erroneously believe that greater
information concerning nuclear risks implies lesser hazards associated with
non-nuclear systems. This is most certainly not the case. Most knowledge-
able scientists believe potential health hazards associated with coal utili-
zation are serious and need to be thoroughly evaluated in vigorously admin-
istered research programs. It is possible that the health impact associated
with coal combustion may be 10 or more times as much as that associated with
an equal level of nuclear power generation. Since our country will probably
have to use all available technologies to meet our future energy needs, it
behooves us to give attention to biomedical research at all levels but most
especially during the course of development of new technologies.
With respect to coal combustion, consider the current situation. We
still know relatively little about the exact chemical species of potentially
biomedically important agents released from power plants. Besides large
quantities of oxides of sulfur and nitrogen, these emissions involved fly
ash, primarily aluminosilicate (sand-like) particles containing a spectrum of
naturally occurring but potentially toxic elements (Ni, As, Sb, Se, Cd, Be,
Zn, Cr, Pb, V, Mo, Th, U) in high concentrations, especially in the fine
particle size range. Also there are some iron oxide and carbon particles.
Further, as these aerosols pass through the abatement systems, the smaller,
respirable particles are most likely to penetrate these devices and be re-
leased. In addition, potentially dangerous volatile chemicals including
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future energy patterns and coal use
several important trace metal compounds and polynuclear aromatic hydrocarbons
also are not effectively prevented from being released. Mercury, a known
poison, is probably totally released in the effluent stream as a gas. In the
course of cooling, volatile metallic compounds and hydrocarbons collect onto
fine particle aerosols and coat their surfaces. This leads to much higher
relative concentrations on the small respirable particles (smaller than 2 (Jm
in geometric diameter or approximately 3 Mm i° aerodynamic diameter). Hence,
one can see the scientific prudence of basing control on the release of
respirable particles as is being done in New Mexico, rather than on total
emissions. It is these smaller particles which are coated with biologically
active agents including potentially carcinogenic forms of trace metals and
polynuclear aromatic hydrocarbons which are more biologically available than
material on the inside of the particles.
But until we identify the culprit agents which are released or formed
from the effluents and emissions, and determine their physical and chemical
characteristics, environmental and biological behavior, target organs and
measure their dose-response properties in causing disease, we must base
emission controls and measure of environmental quality on secondary and
possible circumstantial characteristics. For example, two power plants may
release identical masses of respirable aerosols, but because of differences
in mineral contents or combustion temperatures, the potential health impact
of one plant may be significantly greater than the other because of greater
concentrations of specific toxic agents such as vanadium or polynuclear
aromatic hydrocarbons. In our own research on the mutagenicity of fly ash,
we found the ash collected by power plant electrostatic precipitators had no
detectible mutagenic activity, and only the smaller particles released into
the smoke showed the mutagenic activity. Apparently the mutagens pass
through the abatement system independently of the collection of particles.
Hence, even the presence of small particles may be circumstantial if the
dangerous agents are gaseous prior to release. When we identify the bio-
medically important agents we can base control systems and environmental
evaluations on these agents rather than expensive control of total emissions.
Also, we can properly evaluate the environmental and health impact of the
releases that do occur. Based upon currently available information, large-
scale increases in the generation of electric power using coal combustion
should be approached with caution since the public health and environmental
impact may be substantial.
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Statement of Dr Otto Raabe
Meaningful biomedical research requires time and is expensive since
important biological effects to be tested, including cancer and cardio-
pulomonary disease, require controlled studies with experimental animals
whose life-span exceeds five years in order to provide dose-response rela-
tionships that can be extrapolated to people. The needed biomedical research
will have to be part of Federally-sponsored programs. Energy producers in
the private sector are not anxious to conduct extensive research which may
demonstrate adverse effects from effluents currently being released. (An
exception are studies supported by the Electric Power Research Institute.)
State programs tend to be aimed at very specific problems and usually involve
modest funding. Federally sponsored research programs with their stability
have and should continue to have the lead role in developing the substantial
information on health risks from non-nuclear power developments.
The Department of Energy biomedical and environmental research program
is appropriate and particularly valuable. It is during the development of
new energy technologies that essential biomedical and environmental research
needs to be performed and integrated into long-range planning. The Depart-
ment of Energy's important role in biomedical and environmental research
needs to be given continued vigorous support by the Federal government.
Biomedical research by other agencies is also valuable and indeed
complementary. This includes important research being supported by the
National Institute of Environmental Health Sciences, the National Institute
of Health, the Environmental Protection Agency, and the National Cancer
Institute. The various diverse perspectives of these agencies are comple-
mentary and mutually contributory in obtaining the necessary health effects
data. I would oppose a move to centralize all energy-related health research
into one agency since I believe that such a reorganization may be disruptive,
desirable confirmatory information may be lost, the multi-pronged attack of
several agencies is leading to the required results, the current programs are
mutually supportive rather than duplicative or conflicting, and several
centers of reaserch emphasis are both necessary and desirable. A high prior-
ity needs to be given to adequately support biomedical and environmental
programs and create appropriate new programs aimed at providing the necessary
information concerning the potential health effects associated with non-
nuclear energy technologies and especially coal utilization. We must be wary
of underestimating the possible grave public health impacts of large in-
creases of fossil fuel combustion.
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future energy patterns and coal use
That completes my formal comments. I'd be happy to answer any ques-
tions .
DR. REZNEK: Thank you. Does the panel have questions?
QUESTIONS AND REMARKS
DR. REZNEK: I have a brief question. The list of chemical characteristics that
you read off at various points is certainly large. The amount of money that
has been spent on research on the biological effects of radiation over the
past years is enormous compared to what the Federal government is currently
spending on a considerably longer list of chemical characteristics.
I don't think that we're ever going to get to the point where we have
the data base large enough to characterize chemical pollutant problem to the
same degree as we have radiation. Therefore, decisions will be made without
the benefit of scientific certainty. Furthermore, the question of whether it
is better to become more protective or more risky is fundamentally a non-
scientific question.
Have you, in your own experience, adjusted the type of work you are
doing to reflect an awareness of the impossibility of ever generating com-
plete data?
DR. RAABE: I think you're correct in that this whole area of non-nuclear risks is
extremely complicated, and that it may be difficult to totally understand the
kinds of dose-response relationships, as well as we do in the nuclear area.
There certainly has been a tremendous amount of money and research gone
into working with radioactive materials. However, I think that if we can
identify the key culprit agents that are released -- and I think that this is
possible -- then we could base a lot of our estimates of health effects on
these agents.
Also, I think the lessons we've learned in dose response relationships
in the nuclear field and in other areas will apply equally well to the kinds
of problems that we encounter with non-nuclear health effects. So that when
we're doing some extrapolations we would have some understanding of the
possible dose-response relationships by which we can extrapolate.
This is always necessary, since the data base for effects usually
involves relatively high concentrations, as compared to the lower concen-
trations of toxic agents to which the average person in the public maybe
exposed.
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Statement of Or Otto Raabe
DR. MACKENZIE: I just wanted to make a comment that I'm not as convinced as you
that all the effects of the low levels of radiation are well understood. I
agree with you completely that thirty, forty rads or more, people seem to
have a good understanding, but in fact, if you live around here, over the
past several months there's been quite a bit of activity on low levels of
both heavy radioactive nucleides and light ones and I think this is obviously
a difficult one to explore in the laboratory because of the small effects
among large populations.
And I think in fact now it seems to be heating up again, after seven
years of dormancy, the low level effects, of both ionizing and non-ionizing
radiation, seem to be quite --
DR. RAABE: Yes, I agree with you and I feel that this same problem occurs with the
various agents released in non-nuclear power production.
If we put hundreds of tons of cadmium into the air every year from coal
combustion, this represents a low level exposure of our population. We have
exactly the same problem that we have in the nuclear area, and this is what I
meant by saying we could learn from that experience. We could do experiments
in the laboratory with these agents -- such as cadmium — and we can learn a
lot about the dose response relationships that occur. This can be done for
short-term acute exposures and for long-term exposures, but only for higher
doses within a reasonable sized population of experimental animals over a
reasonable time period.
We consequently always must come back to the question of what this
means to low-level exposures to the large population of the United States,
and that is a common problem and is not just a special problem to the nuclear
area.
MS. VAN SICKLE: What were the specific bacteria mutagens that you found?
DR. RAABE: The mutagenic activity studies were done with the salmonella system that
was developed by Dr. Bruce Ames at the University of Californa Berkeley
laboratory, and this is a well-known cell test system for testing mutagenic
activity in chemicals.
Now, the fact that there is mutagenic activity in power plant fly ash
associated with fine particles being released, does not prove that this
material is carcinogenic, by any means. These are not mammalian cells that
were studied, these were bacteria.
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future energy patterns and coal use
However, it certainly does raise a caution flag that we need to do
further work in this area, and to recognize that we may in fact have pot-
entially carcinogenic materials being released from coal combustion, and
released in large quantities. We should try to get the information we need
to evaluate the significance of these releases.
MS. VAN SICKLE: Also, do you have enough data to evaluate the dose-response for
specific things like vanadium and your aromatic hydrocarbons? Is the tech-
nology available such that the plants could actually control these emissions
at this time?
DR RAABE: In some cases. Yes. But I think more importantly -- as I mentioned in
my statement -- that if we know exactly what the culprit agents are, what the
really important hazardous materials are that are being released, we can look
at those.
Currently we're forced to talk in generalities. The whole question of
environmental quality is a generality.
Now, in one case, the state of New Mexico, as one of the speakers said
this morning, has decided that we should control on fine particles. We
should control on respirable particles and not look at all of them, and
that's a step in the right direction, because the bigger ones are not as
important to the health impact.
But a further step is to control on what's in fine particles that's the
problem, because the particles themselves are basically alumino-silicate,
which is probably not a very hazardous material. It's what's on them that's
a problem. So okay, we can control on the fine particles, but if we don't
look at what's on them and figure out which hydrocarbons are the ones that
are really the most potentially hazardous, then we're always working somewhat
in the dark.
I think that's the main point I was trying to make.
DR. REZNEK: Any further questions?
Thank you.
DR RAABE: Thank you.
OPEN DISCUSSION ON AUDIENCE QUESTIONS
DR. REZNEK: I received several questions on biomass. They cover the whole ques-
tion of biomass from its net energy balance, to its ecological impact, to
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Open Discussion on Audience Questions
processing of the biomass materials, to recycling of nutrients. Several
people have questioned the wisdom of not returning fibrous material to the
soil. Another question is what happens if you increase the percentage of
land from which you are harvesting biological materials?
I don't really think that this is a forum to do anything but mention
those questions and say that I know in many cases, DOE, EPA, and other
agencies such as the Department of Agriculture, are trying to look at some of
these questions.
DR. MACKENZIE: I think that's true, and I think that's probably characteristic --
the same questions could be raised about the way we farm, just growing food,
whether or not it has a long-term depleting effect on the soils, and so
forth, and I think it's symptomatic of these new technologies to insure that
the right questions are asked and reviewed, and I think this is just one good
class of questions.
DR. REZNEK: If there are no other questions from the audience for the panel or for
anyone else, thank you. We'll meet again tomorrow morning at nine o'clock to
go through -- that's — the speakers for those days are directed towards
energy conservation, appropriate technologies, and solar programs.
Thank you.
(Whereupon, at 4:15 p.m. the hearing was concluded.)
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energy conservation and solar programs
THURSDAY 30 MARCH 1978
PANEL:
DR STEVEN REZNEK, Acting Deputy Assistant
Administrator for Energy, Minerals and Industry,
Environmental Protection Agency
DR JAMES MACKENZIE, Council on Environmental Quality
MR HENRY LEE, Director, Massachusetts Energy Office
MR ROY GAMSE, Deputy Assistant Administrator for
Planning and Evaluation, Environmental Protection
Agency
MR ERIC OUTWATER, Deputy Regional Administrator,
Environmental Protection Agency, New York
Federal
non-nuclear
energy
R&D Program
155
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contents
MORNING SESSION
PAGE PAGE
159 Introductory remarks, DR STEVEN REZNEK 192 Statement of DR GEORGE LOF, Solar Energy
Applications Laboratory, Colorado State
160 Statement of MR CECIL PHILLIPS University
Executive Director, the Georgia Conservancy Questions and remarks
Questions and remarks 195 DR MACKENZIE
165 DR MACKENZIE 196 MR OUTWATER
165 MRGAMSE 197 DR REZNEK
166 DR REZNEK
167 MR OUTWATER 197 Statement of MR WILLIAM PARTINGTON, Director,
168 MR LEE Environmental Information Center of the
Florida Conservation Foundation
169 Statement of DR WILLIAM JONES, Energy Questions and remarks
Laboratory, Massachusetts Institute of 201 DR REZNEK
Technology 202 DR MACKENZIE
Questions and remarks 202 MR LEE
173 MR OUTWATER
175 DR MACKENZIE 203 Statement of DR MARSHAL MERRIAM, Associate
Professor, Department of Materials Science,
176 Statement of MRS ELLEN WINCHESTER, Chairperson, University of California at Berkeley
National Energy Policy Committee, Sierra Club Questions and remarks
Questions and remarks 240 MR GAMSE
181 MRGAMSE 240 DR MACKENZIE
181 DR MACKENZIE 241 MR OUTWATER
182 MR LEE 242 MR LEE
183 DR REZNEK 243 DR REZNEK
184 Statement of DR CHARLES BERG, Consultant
Questions and remarks
190 DR MACKENZIE
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AFTERNOON SESSION • EVENING SESSION
PAGE
PAGE
246 Statement of DR VIC RUSSO, accompanied by
MR GARY FITZPATRICK and
PROFESSOR DEAN JACOBSON, the Ad Hoc
Committee on Thermionic Energy Conversion
254 Statement of DR THEODORE TAYLOR, Independent
Consultant and Visiting Lecturer, Princeton
University
Questions and remarks
257 DRREZNEK
258 MR LEE
259 MR CUTWATER
260 Statement of DR THOMAS SLADEK, Senior Project
Engineer, Energy Division, Colorado School
of Mines Research Institute
Questions and remarks
266 MRGAMSE
267 MR LEE
268 DRREZNEK
270 MR CUTWATER
271 Statement of MR JOHN ABBOTTS, Public Interest
Research Group
Questions and remarks
285 MRGAMSE
286 MR LEE
287 DRREZNEK
288 Statement of MR GARRY DELOSS, Washington
Representative. Environmental Policy Center
Questions and remarks
291 MR CUTWATER
294 DRREZNEK
295 MR LEE
297 Statement of DR DONALD ANDERSON, Director,
Mid-American Solar Energy Center
Questions and remarks
301 DRREZNEK
303 MR LEE
304 MR CUTWATER
305 Statement of MR NORMAN CLAPP, Vice President,
Energy Development and Resources Corporation
Questions and remarks
307 MR LEE
309 DRREZNEK
400 MR CUTWATER
311 Statement of MR JONATHAN LASH, Natural Resources
Defense Council
Questions and remarks
319 MR LEE
319 Statement of MR DAVID O'CONNOR, Solar Project
Director, Center for Energy Policy
Questions and remarks
325 MR CUTWATER
EVENING SESSION
325 Statement of DR WILLIAM LANG, President,
Strata Power Company,
Questions and remarks
336 MR CUTWATER
337 DRREZNEK
340 Statement of DR RONALD DOCTOR, Commissioner of
Energy Resources, California Conservation
Development Commission
Questions and remarks
346 DRREZNEK
347 MR CUTWATER
ADJOURNMENT
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energy conservation and solar programs
30 MARCH 1978
The hearing convened, pursuant to Notice, at 9 am
Dr Steven Reznek presiding:
opening remarks
DR. REZNEK: Good morning. My name is Steve Reznek, and I'm the Acting Deputy
Assistant Administrator for Energy, Minerals and Industry in EPA. This is
the second day of our hearing. The purpose of the hearing is to review the
relative emphasis given to environmental effects and energy conservation in
the Federal Non-nuclear Energy Research and Development Program.
On the first day, we heard witnesses on the general subject of energy
development patterns and national coal use. Today we're concentrating on the
energy conservation, soft technologies, and solar programs. Tomorrow we'll
examine coal use, particularly synthetic fuels derived from either coal or
oil shales.
We have with us today on the Panel Mr. Henry Lee on my left, who is
Director of the Energy Office in the State of Massachusetts; next to me on
the right is Roy Gamse -- he's the Deputy Assistant Administrator for Plan-
ning and Evaluation in the Environmental Protection Agency; next to him is
Eric Outwater, who's the Deputy Regional Administrator in one of the regions,
New York, that has its share of high-priced energy and energy problems; and
Jim MacKenzie on the end, from CEQ. He's the Senior Staff Member for Energy
in the Council on Environmental Quality.
Our first witness today is Mr. Cecil Phillips from the Georgia Con-
servancy.
If any of the members of the audience have questions which they wish to
address to the Panel or to a witness, there are three-by-five cards avail-
able; just turn them in to the receptionist.
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energy conservation and solar programs
STATEMENT OF MR. CECIL R. PHILLIPS
EXECUTIVE DIRECTOR
THE GEORGIA CONSERVANCY
MR. PHILLIPS: My name is Cecil R. Phillips. I'm Executive Director of The Georgia
Conservancy, which is a private, non-profit citizens' organization actively
promoting environmental quality in the State of Georgia. We are supported by
over 4,000 individuals, families, clubs, and businesses in the state, plus a
number of rather outstanding Georgians who have moved here to Washington over
the past fifteen months.
I wish to begin my testimony by saying that I believe EPA is sincerely
interested in what I have to say. I believe this because we received the
first invitation to this hearing several months ago. Furthermore, realizing
that non-profit groups like ours can't afford many trips to Washington, EPA
has provided some travel expense funds for us. Now, this invitation was in
marked contrast to the hearings held a year ago on the National Energy Plan
conducted by the Energy Policy and Planning Office of the White House, which
has since become the leadership of the Department of Energy.
On that occasion, we received less than one week's notice. We boy-
cotted and protested those hearings as being merely window dressing, not a
sincere effort at public participation. Today, we are pleased to be able to
appear and to commend EPA for going about getting the public viewpoint here
in a sincere and effective manner.
In the subject matter of this hearing, our organization offers no
special expertise other than that of reasonably well-informed citizens who
take a particular interest in matters affecting the environment of our state.
We don't consider ourselves a special interest group because we're concerned
about our economic health as well as our physical health, and we work for the
well-being of all Georgians, including minority groups, low-income people,
business people, farmers, inner-city dwellers, and others.
We advocate a balance between the economic, social, and environmental
needs of society. To take a current example, we have not opposed the ex-
ploration for oil on Georgia's outer continental shelf; rather, we have
worked hard to see that such development is handled in the safest manner and
that our coastal communities plan adequately for the possibility of petro-
chemical-industrial impact. The South Atlantic lease sale number 43 took
place as scheduled on Tuesday of this week.
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Statement of Mr Cecil Phillips
One of the questions that you asked in this material for this hearing
was the government's role in energy RD&D. We feel that the role of the
federal government in energy RD&D should be a strong one. The government
should be in a position to manage this vital resource in whatever ways are
necessary to protect the national security, to avoid economic and environ-
mental shocks or disasters, and to see that narrow special interests do not
dominate any aspect of energy production, distribution, or consumption. We
desperately need for the government to take this role and play it with
vision, good judgment, and technical competence.
No element of our society has played this role creditably in the past.
The energy industry, the universities, the various levels of government have
all failed to prepare this nation for the impending scarcities of oil and
natural gas, and for the adverse environmental and health effects of our
energy production and consumptive patterns.
Although we achieved temporary economic strength during the first half
of this century by exploiting our large deposits of cheap fossil fuels, we
did so by mortgaging our future. We developed a society hooked on cheap
gasoline and electricity. We created a man in the street who takes energy
for granted -- who is incredulous and acutely suspicious of anyone who tries
to advise him that the nation's fuel tank is getting low. He automatically
assumes that if any changes in his energy consumptive habits are forced upon
him, he will suffer some kind of agonizing or fatal withdrawal symptoms.
I might interject here too, we have also created labor unions and
businessmen who believe that conservation measures are bad for employment and
bad for business. I believe these are erroneous beliefs, but this is the
atmosphere we've created.
To document the government's role in contributing to this energy addic-
tion we need only consider the energy RD&D funding from 1953 to 1973: over
99.9 per cent of it -- over $5 billion -- went into only one risky option,
nuclear fission. Conservation and solar options were virtually ignored, in
spite of warnings by scholars, scientists, and environmentalists.
Now, we often hear the argument that if the government botched the job
before, why call on them again? The answer is that the top management job is
clearly a government responsibility; no other sector has the inherent objec-
tivity and authority to do it properly. We know, from the example of the
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energy conservation and solar programs
NASA space program if nothing else, that the government can do it well. It's
our responsibility as voters and taxpayers to see to it that our government
does its job right. That's the burden and the opportunity of our democratic
system.
I'd like to interject another thought at this point, that this belief
does not diminish the role of private industry in research and development
and demonstration. Private industrial laboratories and manufacturing firms
serve as contractors to the Department of Energy and other agencies and
should continue to do so. I'm referring here to the government's role in top
management -- the oversight responsibility. Also, it doesn't diminish the
role of private inventors — and there was reference made to this in testi-
mony yesterday: that sometimes the most creative minds are not in the large
industrial organizations, and certainly they should be encouraged by the
government, too.
I also want to add an issue that was touched on yesterday -- a belief
that I agree with the speaker, Dr. Kash, yesterday. He said that not all
research and development in energy should be within the Department of Energy;
that's, in particular, not a credible source when it comes to research re-
lated to protecting the environment.
Considering the complex nature of our energy problems, one of the most
pressing needs is a systems approach. Our study of the National Energy Plan
and the 1979 energy RD&D budget gives us the impression that a great deal of
work is being done on bits and pieces: a new coal refining concept here, a
weatherization program there, a wind turbine development there, and so forth.
We do not see a concerted effort to pull these pieces together into a cogent,
strategic attack on the energy problem itself and on some of its directly
related problems -- the economy, the environment, and national security.
Let me hasten to interject that we are highly gratified that the energy
program has broadened considerably since the 99.9 per cent nuclear years.
We'll comment further on this later.
But our point here is that now, given the breadth of this program and
the recognition that energy policies and energy technologies have heavy
impacts in the fields of public health, employment, international trade and
diplomacy, and other facets of our national destiny, we need to deal with
this complexity in the most up-to-date manner available. The recent develop-
ments in systems analysis, especially the methods utilizing computer models
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Statement of Mr Cecil Phillips
that enable the analysis of thousands of interrelated variables, would seem
to offer the most effective tools. Are we using them?
In the 1979 DOE budget, we see $8.8 million allocated for "modelling
and forecasting", but we really don't know the nature or scope of this work.
For example, is Dr. Bruce Hannon of the University of Illinois to be employed
to expand his computer studies of the relationships between labor, capital,
and energy alternatives? Or has the government asked Jay Forrester of M.I.T.
to create a national model of energy, economics, and environmental dynamics?
Or has Dr. Howard Odum of the University of Florida been supported in the
refinement of his innovative analytical approach to these same questions? Or
better yet, has RAND or a similar think tank been set up and charged with the
mission of strategic energy planning, incorporating the effects on the econ-
omy, the environment, and national security?
Now, we're not saying that the particular systems experts mentioned
above are necessarily the best or the most appropriate minds to employ on
this problem. We don't know. But their work exemplifies some of the latest
in systems analysis technology, and surely the nation's most crucial resource
problem deserves the most advanced methodology for strategic analysis.
Thus we're asking, what is DOE's thinking on this? EPA's? OMB's? Are
the billions of dollars being spent on energy programs being allocated in
accordance with a systematic strategy, in which the diverse ramifications in
the economy, the environment, and other national interests are understood?
Now, if this is too much to ask at this point -- and it may well be —
what's being done with systems analysis on a more limited scale?
Another question that we ask, along with many other concerned citizens,
is whether the government is looking at the short-range energy problem as a
marketing challenge. We're convinced that enormous savings in energy are
available to the U.S. right now, derived from modest changes in energy con-
sumption habits, using off-the-shelf hardware, and in applications of proven
technologies.
Yet there remains much ignorance about these facts as well as various
institutional barriers. In other words, the products are available at com-
petitive prices, but the potential customers are not yet aware of them.
Describe that situation to any business executive or even a business student
and you would get an obvious recommendation: you need an advertising and
sales promotion campaign.
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energy conservation and solar programs
While there are significant marketing efforts being built into the
energy strategy now, we question whether they are nearly large enough to
match the potential for quick energy savings and to begin to change public
misconceptions about the fundamental energy issues.
Some applications for solar energy, for example, are proven and eco-
nomical now. An extensive demonstration program would add greatly to the
public awareness of these facts and accelerate their widespread implementa-
tion, yet the solar budget has been cut, with the explanation that some of
the technological problems have been solved. It appears to us that DOE needs
a stronger dose of Madison Avenue in its thinking. When you've got a new
product available, you don't just put it in the warehouse; you go out and
promote it.
Another issue mentioned in the advance material for this hearing was
the matter of the factors to consider in reaching decisions on conservation
and solar funding. Some such factors are obvious, such as the potential
payoff in terms of energy savings. This consideration leads to emphasis on
industrial processes and transportation, for example. Other considerations
that we believe should rank high in the priority scheme are the following.
One: the promotional value of the item. Will it help sell conserva-
tion and solar to the public, to builders, architects, and so on?
Two: the value of the item in helping to solve related problems; for
example, provide needed data or ideas to serve the needs of systems analysis.
Some of the related problem areas include air pollution, waste disposal, em-
ployment and inflation, international trade, materials conservation -- that
is, recycling -- litter and other forms of visual pollution, land use plan-
ning, water conservation, agriculture and forestry. Now, private R&D pro-
grams in energy are not as likely to consider these national problems in the
integrated context that appears to be needed.
We promote funding priorities to other promising RD&D ideas not likely
to be funded by the private sector for various reasons, such as the prospect
of a long time before expected payoff or the prospect of a limited market for
products or services. Some aspects of appropriate technology fall in this
category, as well as into the category of being promotional, since appro-
priate technology often deals with adjustments in life styles rather than in
the creation of new business opportunities.
164
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Statement of Mr Cecil Phillips
For example, we commend the work of the National Center for Appropriate
Technology as a highly appropriate service of the federal government in
promoting new attitudes about our way of life.
That concludes my testimony. I'd be glad to answer questions if you
have any.
DR. REZNEK: Thank you. Do members of the Panel have questions? Jim?
QUESTIONS AND REMARKS
DR. MACKENZIE: First of all, Bruce Hannon is doing a study for the Council at the
moment on the effects of conservation on employment and evaluating the vari-
ous taxing strategies and so forth, and Lawrence Berkeley's doing work for us
on institutional barriers to conservation, so --
MR. PHILLIPS: Is that under CEQ?
DR. MACKENZIE: Yes.
MR. PHILLIPS: I see.
DR. MACKENZIE: But it's under non-ERDA monies from the Act which, in fact, spon-
sors this hearing today.
MR. PHILLIPS: Good.
DR. MACKENZIE: There has been some misunderstanding on the budget, and I'm not
certainly going to try and go into it, but in the solar budget, for example,
there is a lot of money which doesn't appear in the budget. For example,
there's the Tsongas Amendment, which brings $19 million worth of photo-
voltaic buys, and that doesn't show up in here and yet it's certainly planned
for to bring about $12 million worth of buys.
And then there are the tax credits on the order of $60 million, ac-
cording to OMB, which was meant to substitute for part of the demonstration
program on heating and cooling. When you factor those in, it may not go up
as much as one likes, but at least it goes in the right direction.
MR. PHILLIPS: I appreciate that information.
DR. REZNEK: Roy?
MR. GAMSE: In the "Factors to Consider in Funding Priorities" section of your
testimony, in point two I think you raise a good point in listing the factors
that you think government can consider in its assessment of technologies and
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energy conservation and solar programs
decisions as to where to place research money -- factors that the private
sector will not consider.
My question would be, do you have any further guidance to give us as to
how to incorporate these factors? One kind of dilemma that I think we would
frequently face is an energy technology which would seem to be, for instance,
very polluting in terms of air or water pollution. One approach would be to
tend to put less money into research in that area; another would be to put
the same amount of money that you would have otherwise, but perhaps put more
money into research in control technology or ways of using that technology
while attempting to minimize the adverse environmental effects.
Do you have any advice for us in that regard?
MR. PHILLIPS: I've already mentioned one bit of advice on that, and that's the way
not to do it. The way not to do it is to have all the research done in the
Department of Energy, because their viewpoint, being promoters of energy
technology and not necessarily promoters of environmental quality, is going
to give a very biased viewpoint. I think we might extend that concept to say
that some of the research might be done in the Department of Agriculture;
some of it might be done within EPA, of course. It might be done in other
agencies or managed by other agencies.
I'm not saying that the work should be duplicative or not controlled or
managed. As I have argued -- I hope strongly -- the government needs to have
an overall body somewhere. Dr. Mackenzie makes reference to the possibil-
ity -- correct me if I'm wrong -- that CEQ is at least looking at strategic
planning. Somebody needs to be doing the strategic planning that considers
all these factors. I don't know who that should be.
The RAND operation in California was very successful in looking at
military and other national strategic planning problems, and something of
that nature with regard to energy and its related areas of study certainly
deserves to be considered, I think.
DR. REZNEK: I was fascinated by your comments about the promotional role of gov-
ernment for these new technologies. This problem raises the fundamental
question of the role of government in our society. The experience in the
past with governmental promotion of particular technologies has been mixed.
Have you done some thinking on how the Federal government should be
involved in promoting, say, solar systems or Franklin stoves or whatever?
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Statement of Mr Cecil Phillips
MR. PHILLIPS: Some. We have in Georgia, not far from Atlanta, what is billed as
the largest building heated and cooled by solar energy. It's the Recreation
Center in the town of Shenandoah, and it's working beautifully. I was there
last summer on a hot day, and the solar-powered air conditioning was working
beautifully; it was very cool and pleasant inside. That's a demonstration
effort funded by ERDA, and it was very effective.
However, there are not many large buildings or opportunities for large
buildings like that. There are many opportunities for homes or smaller
buildings, and it would make sense to me to apply the demonstration funds to
the kinds of structures that there are millions of or opportunities for and
in the population centers where they can be easily seen, and to promote tours
of them and advertise them on TV -- just a little hucksterism with respect to
very fundamental types of applications that are commonly applicable in the
types of housing that we have.
DR. REZNEK: Thank you.
MR. CUTWATER: My problem was the same as Dr. Reznek's -- the difference between
marketing a government policy and public education as a moral issue is very
complicated. I perceive that you, when you talk about the "Madison Avenue
approach" and the private sector, really perceive that maybe a bundle of
money should go out there to sell or to market these particular systems in
the Madison Avenue way. Is that --
MR. PHILLIPS: Yes, because we have different types of barriers to these technol-
ogies. Of course the technical barriers themselves, but some of those are
being overcome already; then you have institutional barriers -- taxes and so
forth -- and those are being approached.
But one of the barriers that is fundamental, it seems to me, is just
the attitude of the public: the attitude of the businessman; the attitude of
the labor union; the attitude of the NAACP, which has made a statement op-
posing some of the energy policies; the attitudes of various interest groups.
It seems to me that the government needs to take an appraoch aimed at these
attitudes. We won't get anywhere if the public-at-large doesn't believe that
conservation can save energy in an effective way without losing jobs — and
there are a number of papers being published on this.
I have one here by the organization called Environmentalists for Full
Employment. It talks about jobs and energy and promotes the idea that energy
167
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energy conservation and solar programs
conservation can mean higher employment. There's a paper here by Widmer and
Giftopolis of M.I.T. talking about "Energy Conservation and a Healthy
Economy", and as far as I can tell, this was not funded by the government but
was funded primarily by a private firm. This was published in "Technology
Review".
Now, some of you people read that and some of us read it, but the man
in the street's not getting this message. I think that the approach I'm
promoting is that the government needs to get to the man in the street and
promote these ideas, if in fact they are valid. It may take research and
development along these lines -- in economics -- and, of course, that's what
I'm advocating, too.
MR. LEE: I just have one question. If you believe that government ought to pro-
vide a program to promote things such as conservation and solar, if you gave
the government promotion money, wouldn't you also run the risk of them pro-
moting things that you don't believe so strongly in?
MR. PHILLIPS: Oh, yes, of course, and that gets back to this question of why give
the government another job when they botched up the last one. I just have
the faith, I have to say, that we have to depend on the government for cer-
tain roles, and strategic planning and long-range development of technologies
and institutional procedures for the energy problem fits into the category of
a government responsibility, and it's up to us to make sure the government
does it right.
Granted there are going to be some bureaucracies and some waste of
funds and some misdirection, but I honestly believe that we need to think out
the proper role for government, as opposed to private industry and univer-
sities, give government that role, and then watchdog the hell out of them and
make sure they do it right.
DR. REZNEK: Any further questions?
DR. REZNEK: Thank you.
MR. PHILLIPS: Thank you.
DR. REZNEK: Our next witness is Dr. William Jones, whose affiliation with the
Energy Laboratory of the Massachusetts Institute of Technology the previous
witness has just advertised.
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Statement of Dr William Jones
STATEMENT OF DR. WILLIAM J. JONES
ENERGY LABORATORY
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
DR. JONES: Thank you for the opportunity to speak before you here today. My name
is William J. Jones, and I live at 86 Bullough Park in Newton, Massachusetts.
I am educated as an Electrical Engineer, and I am presently employed at the
Energy Laboratory of the Massachusetts Institute of Technology in Cambridge,
Massachusetts.
My purpose is to suggest that the Department of Energy, in concert with
the Environmental Protection Agency, or the Environmental Protection Agency
in concert with the Department of Energy, anticipate the existence of a situ-
ation which could be detrimental to the policies and gains in environmental
protection that have been reached in a very difficult way over a long period
of years.
A number of studies of world supplies of petroleum and the demands for
same have been completed recently. In the conclusions, all agree that the
demand for petroleum will probably overtake supply sometime between 1985 and
1995. Clean fuels will be particularly scarce. It is possible that the
optimistic predictions of discoveries may be realized and, along with slow
economic growth and activity, the crunch could slide a few years downstream,
but the situation will have to be confronted in any event.
The current research and development activities for alternatives, such
as synthetics from cleansed coal -- or rather synthetics as cleansed fuels
from coal -- will not result in commercial production at levels sufficiently
high to have a noticeable impact on the situation. There are, it is con-
ceded, always opportunities for surprises and disappointments, but the like-
lihood of surprises within the next ten years that can be beneficial or can
minimize the effects of the crunch are very slim. Review of the regulations
which restrict the use of dirty fuels or require the employment of pollution
abatement measures or equipment are necessary.
Conservation will have to be enacted and practiced with zeal. Conser-
vation, however, includes the concept of increased energy productivity —
that is more usable energy output per unit of input pollution abatement
equipment energy. Pollution equipment and practices are frequently accom-
panied by a reduction in energy conversion efficiency.
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energy conservation and solar programs
As a direct consequence of scarcity of supply and the requirement to
increase energy production and reduction in cost, the Department of Energy
and the Environmental Protection Agency and the myriad of state and local
regulatory agencies will be assaulted by lawyers and deluged with requests to
relax, waive, and cancel the established pollution abatement constraints that
manage, protect, and/or improve our natural resources and environment.
The majority of the petitions will be legitimate. There will be some
that will have been filed because of perceived opportunities to avoid respon-
sibilities considered costly or inconvenient. There will be some petitions
that will have no foundation on or relationship to fuel or energy scarcity
but that purport to be in the public interest.
The Department of Energy and the Environmental Protection Agency must
begin now the preparation of contingency plans and procedures to cope with
the crunch. It is almost certain that if the crunch situation is not anti-
cipated or there is delay in the establishment of plans to take care of the
necessary and desired pollution abatement waivers, the agencies will be faced
with inescapable pressures to make quick and expedient decisions. In the
absence of well-thought-out, equitable, rational plans, the agencies will
have soon lost respect, and the number of successful challenges will increase
algebraically -- that is, the number of successful challenges to environ-
mental protection regulations will have increased algebraically, and, in
effect, there will have been a default of responsibility.
I'm not speaking about the current or ongoing functions and activities
of the DOE and the EPA with respect to environmental management and energy
resource expansion. These activities must continue at the rate that they are
now. What I am pointing out is the need for an ad hoc group -- albeit that
the ad hoc status may exist for several years -- to separately concern itself
with the predicted crisis.
Its attention must be directed towards the anticipation of conflicts
between environmental protection policies and the diminished supply of clean
fuels. The charge to the group should include: to prepare a defense of the
gains made in environmental protection against pressures for waivers based on
real, contrived, or imagined difficulties with energy shortage; to insure
against needless waivers of standards designed to protect our health and
environment; to guard the gains that have been won only after long and bitter
battles with rational, reasonable, and mutually accepted agreements, reached
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Statement of Dr William Jones
as a result of discussions that have taken place long before the fact --
discussions that have taken place in a calm and relaxed atmosphere and dis-
cussions that have involved technicians, economists from both sides, regu-
lators , and community interest groups.
Such agreements reached in the relaxed periods before the crunch can be
far more in the national interest than decisions reached during the crunch
based on narrow issues -- as necessary in legal proceedings -- as a result of
protracted or hasty litigation by an already overburdened court system.
Procedures recommended by the ad hoc committee must not be rigid or
blind in an attempted adherence to pollution abatement regulations. It is
entirely possible that inflexible policies on the part of the government
could be the small pebble in the path of the U.S. industry over which it
could trip and lose any competitive edge or leadership in international trade
that it now enjoys. Too formalized a plan may stifle an agency's ability to
react fast enough to unexpected opportunities or problems.
On the other hand, too loose a plan could result in only post facto
actions, where an agency can only go through the formality of assessing a
situation and is then left only with the option of continuing unenforceable
regulations that have already been neutralized on the books or eliminating
those regulations gracefully.
What is the extent to which the environmental problems should be con-
sidered or should be attempted to be forecast? Two basic situations are
easily imaginable. One, a scarcity of supply of clean fuels results in
petitions to burn, without restriction as to meteorological conditions,
length of time, or geographical location, any available fuel. Two, removal
of pollution abatement equipment or cessation of pollution abatement measures
or actions is requested so as to increase energy efficiency. Flue gas scrub-
bers, as presently designed, cause an increase in the heat rate for elec-
tricity production -- that is, the number of Btu's of input energy required
to produce a kilowatt of electricity increases with most conventional flue
gas scrubbers.
Before any decisions are reached, it is desirable to have an under-
standing of what effects the various responses to petitions for waivers would
have on jobs, inflation, and other requests that lie waiting in the wings.
Any and all measures or actions will cause increased benefits to some sectors
and decreased benefits to others. They must be ascertained, evaluated, and
compared before an adjustment measure is enacted.
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energy conservation and solar programs
Industries and the general public must not be required to face uncer-
tainty as to what they will be permitted or not permitted to do when a dif-
ficulty arises. Waiting for long periods of time until requests are acted
upon will cause anxiety. Perhaps both compensatory benefits and actions to
contain excessive gains will have to be initiated simultaneously and in
proportion to the types and extent of gains and losses. Environmental waiv-
ers can be for specific seasons, specific geographical areas, and at various
levels of intensity as situations warrant or dictate.
Labor, industry, federal and state agencies, and environmentalists must
be made aware of the probability of a crunch; they must be brought into the
discussions about actions and measures that have to be considered for envi-
ronmental pollution abatement; they must be brought into discussions long
before the most pessimistic date of the crunch arrives. These groups must
understand why, when, and how necessary adjustment measures will be imple-
mented. The facts, assumptions, conclusions must be made available to the
public beforehand. Only with the full participation of those affected and
the support of onlookers can a political consensus in support of the deci-
sions be realized.
Research and planning should include assessment of the riskiness of
various options so that one can be well prepared to react, choose, and pursue
any of a set of strategies that represent acceptable levels of risk and cost
to all concerned. The basic notion of uncertainty implies that events will
cause a greater or lesser surprise. Unforeseen or ignored probable events
frequently alter the courses of men's lives. The ad hoc committee's respon-
sibility should be to see to it that unforeseen or anticipated events need
not needlessly affect the course of human events or pollution abatement
goals.
In summary, the Department of Energy and the Environmental Protection
Agency, in concert, should try to be able to predict the effects of the
forecast crunch and to predict the effects in the various sectors of the
economy that are energy intensive and/or dependent. They must begin to
prepare a plan and a scheme that will permit discretionary response, so that
the adverse effects on the national environmental policies as a result of
pollution abatement modifications as required to increase energy efficiency
or to permit the use of prohibited fuels or processes can be reduced or
ameliorated.
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Statement of Dr William Jones
The bureaucratic review and overview during the period of crunch should
be a minimum. Plans that require constant vigilance on the part of regu-
latory bodies are always accompanied by expensive external and internal
costs. The agencies should begin now to organize the ad hoc committee, and
the ad hoc committee should be required to submit for public discussion and
debate by 1982 or 1983, a plan which will permit the agencies to upgrade it
by constant review and adjustment as developments take place.
Thank you.
DR. REZNEK: Thank you. Those are very stimulating remarks. Do we have questions?
Eric?
QUESTIONS AND REMARKS
MR. CUTWATER: I have an observation. I suspect Dr. Jones knows --
DR. JONES: I'd like to make an observation. You have plenty of water on the main
table, but the witnesses --
[Audience Laughter]
MR. OUTWATER: Having been a Regional Official during the energy crunch, when we
were involved in the granting of variances to allow fuel switching —we've
got two things we have to concern ourselves with. One, you're talking about
the long-range review of the whittling away of our advantages —the advan-
tages we've gained in pollution control by virtue of the impact of saving
energy, and then we've got the other thing, and that is the short-term things
that we have to do to safeguard public health.
I must say, from the point of view of where I sit up in New York, I'm
somewhat convinced that the procedures for the revisions of state implemen-
tation plans -- and, as you know, the maintenance of air quality and the
achievement of primary air quality is in the hands of the state — that the
procedures there are pretty good in terms of allowing a review. In fact,
it's almost impossible to grant a variance with less than ninety days.
There's a provision for public participation; there's a provision for public
notice; there's a provision for the review of the documents which, in turn,
allow the type of input, I think, that you're talking about.
We do, of course, have the additional problem now of the PSD or the
prevention of significant deterioration which falls into this, which we're
now struggling with in the courts, but I'm not as discouraged as you are that
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energy conservation and solar programs
there isn't enough of a period here for review and that things are going to
happen so hastily that we're going to lose our gains.
DR. JONES: You've covered a lot of territory. I have to review it quickly.
Number one, the CIA, the Congressional Research Council, the Workshop on
Alternative Strategies as chaired by Carol Wilson, and the World Oil Project
at the Massachusetts Institute of Technology, oil companies, et cetera, all
anticipate this, shall we say, a gap between supply and demand. Somewhere
downstream from there one will have, hopefully, solved the problems inherent
in the liquefaction or gasification of coal and the disposal of the residues
in those processes.
Anything for which concrete is not being poured in a hole today will
take ten years to come on line, and if we look at the opportunities to use
these improved fuels or to use alternatives or for sufficient solar utili-
zation to come on line, this is a period longer than ten years, yet this
crunch 1985, is seven or eight years from now. Again, the time 1985 is a
crossover point; it may slide one way or the other, depending upon what
happens in the Middle East and the OPEC nations and also the level of eco-
nomic actvity.
But before that point, and one should consider it not a point but a
circle, prices will begin to vibrate; supplies will begin to show some per-
turbations two or three years above this, so that the length of time in which
we have to address this situation is relatively short, and it's going to be
universal, in the sense that this will be a world-wide competition for these
fuels. It will be particularly acute in the United States because of the
anticipated dependency on imports.
We can imagine a situation in which there will be a finite length of
time in which clean fuels will not be available. The hazard is that waivers
become permanent; the hazard is that the gains made will be lost or seriously
decreased; the hazard is that decisions will be made quickly under political
pressure because of employment, et cetera.
I think that what the agencies -- that is, the Department of Energy and
the EPA — can do is to really examine situations and come up with tentative
plans. For example, imagine a situation in which an installation burns oil.
It may be desireable to require two storage tanks, one with high sulfur fuel
and the other with low sulfur fuel; and under certain meteorological condi-
tions depending upon the season of the year, one will have to burn 100 per-
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Statement of Dr William Jones
cent low sulfur fuel and under other conditions they may be permitted 100 per
cent high sulfur, or there may be a mix.
I don't know if all equipment can burn all types of a fluid or mixtures
thereof.
One might say that you are denied this opportunity because you are in
an urban area and the background is too high to permit this. There may also
have to be an allocation: "You here on the East Coast can burn high sulfur
because the fallout is over the ocean; you all in the Indiana section are not
allowed to burn high sulfur because acid rain will fall on the East Coast."
Now, I'm not suggesting that these are solutions. What I'm trying to
imagine are some hypothetical decisions or hypothetical rulings that can be
discussed to determine whether these are, in fact, reasonable decisions to
make.
The economy will have suffered, because of high prices or scarce fuels,
enough perturbation, so that any unnecessary or perceived undesirable stress
placed by environmental protection or pollution abatement measures will be
just ignored: "We just can't consider these at all; it's too important to
keep people working" and just strike them off the books. Then one has to go
back to square one and start all over again.
That's the kind of thing I'm suggesting can be taken care of.
DR. MACKENZIE: I have just one comment. I am more pessimistic than you because I
don't think that there will be areas for large substitutions. If liquid
fuels go first, if they start hitting a crunch, you're going to have cars,
homes -- which will certainly not be able to use coal -- and maybe some
industry, which may not have the capability either.
DR. JONES: Well, let me think about this. You know, no automobiles moved within
Boston for five to seven days, and there were some air quality measurements
made, and as I understand it, there was a tremendous reduction in pollution,
which would suggest that perhaps the automobile is the greatest offender.
The allocation of fuels might be such that the utilities are granted far more
leeway than the automobile industry in the use of dirty fuels.
Now, I don't know what percentage of cars will have catalytic conver-
ters; I don't know what the contaminants will be. I'm suggesting that this
situation should be examined. It may very well be that someone would come
back and say, "Bill Jones, there's no problem." I hope so. On the other
hand, he could say "There are no problems except in these areas."
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energy conservation and solar programs
But to stand by and say, "Well, I'm optimistic; I'm not optimistic; and
I think that everything will take care of itself" I don't believe is a re-
sponsible posture to assume.
DR. REZNEK: Any further questions?
Thank you.
DR. JONES: Thank you.
DR. REZNEK. Our next witness is Mrs. Ellen Winchester, and she is the Chairperson
of the National Energy Policy Committee of the Sierra Club.
STATEMENT OF MRS. ELLEN WINCHESTER, CHAIRPERSON
NATIONAL ENERGY POLICY COMMITTEE
SIERRA CLUB
MRS. WINCHESTER: Mr. Chairman and members of the Panel, in speaking today I am
representing the Sierra Club, a national organization of approximately 180,000
members. In the short time I have available, I cannot touch upon all our
concerns relative to the renewable resource aspects of the federal energy
program, and my remarks should not be construed as a complete catalogue of
them.
President Carter has said that his first choice for a future power
source is the sun. The sun is also the first choice of the Sierra Club, and
we would welcome the powerful support of the Carter Administration in bring-
ing our country and the world closer to total reliance on solar energy,
viewed broadly as the full range of renewable resources.
However, the 1979 budget submitted to Congress has gravely disappointed
us by its imbalanced support for the development of nuclear and fossil fuels.
The potential contamination of air and water from nuclear power is suffi-
ciently well known to make it unnecessary for me to dwell on it at this time,
yet the '79 budget authorizes $1,217,000,000 for nuclear energy. It is
equally well known that the world's store of fossil fuels is finite, with the
depletion of oil expected to have an observable impact on energy use within
the next two decades — about the time world energy demand is expected to
double current demand — yet in 1979, we plan to spend $4 billion for a few
months' supply of oil to be used in case our Middle Eastern supply is cut
off.
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Statement of Mrs Ellen Winchester
Even all the dollars in Araby could not buy us enough oil to serve as a
bridge to a renewable resources future, so it is understandable that we plan
to spend about $620 million in '79 on coal research and production, some of
it to make the use of coal less polluting. But coal is also a finite re-
source. Even with the best available control technology, it is polluting, as
your Fact Book illustrates. It imposes on society long-term health stresses
that are not yet well understood. C0~ from its effluents may cause disas-
trous climate change.
Furthermore, we know more about how to use it than we know about renew-
able resources -- the only resources on which we can safely depend for as
long as earth can be expected to last on this cooling planet. And on that
clean and safe ultimate resource of last resort, which we will not be able to
exploit unless we begin while we still have inexpensive sources of energy,
the '79 budget allows only $400 million, including $27 million for biomass.
It seems a tragic ordering of priorities which, if held to in suc-
ceeding years, will close off the renewable option and leave us only a nu-
clear future for as long as it lasts.
Secretary Schlesinger has stated that funding for solar heating has
been cut because it has become cost effective and can now compete on its own.
If he is correct, he is describing a happy situation that nevertheless needs
a great deal of expensive demonstration, manufacturing stimulation, and
public education. In my own state of Florida, where conditions for solar
space heating are optimal, only an adventurous home builder employs it and
only well-off idealists retrofit with it.
Perhaps Secretary Schlesinger was thinking of water heating or of
electric resistance heating as competition for solar, not of oil and gas.
The Solar Intelligence Report states that, vis-a-vis the latter, "Solar space
heating costs remain higher on both twenty- and thirty-year time horizons."
As for solar cooling, it is nowhere, yet the economic growth of the whole
southern half of the United States depends on the artificial environment
electric cooling creates, most of it dependent on oil or gas.
We are very pleased that the House Science and Technology Subcommittee
has added $36.5 million to solar heating and cooling demonstration and devel-
opment, and $13.5 million for research and development. We hope the Senate
Committee will do as well.
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energy conservation and solar programs
An area of solar innovation that has only within the last two or three
years begun to receive much attention is passive heating and cooling based on
principles as old as cave dwelling. It demands a whole new architecture --
one designed to live with nature instead of in defense against it. In much
of the south, passive solar can do the whole heating job, and in the north,
it can handle summer cooling.
We have no doubt that private industry and the public will respond to
the push-pull theory governing market incentives of the National Energy Plan,
but we still believe solar space heating needs more of a push than even the
House Subcommittee has provided.
The Sierra Club believes that biomass has extraordinary potential as a
substitute for oil and natural gas. It can be used as a feed stock, for
petrochemicals, be converted into methane to be burned for space heating and
electricity and into ethanol to be used as an additive to extend gasoline.
We are anxious about the environmental degradation and human suffering
that could result, particularly in the developing countries, from the use of
arable lands for energy production, so we believe fuels from biomass con-
version should be developed with caution, but that they should be rapidly
developed. Biomass conversion can be a means of storing energy; it can
provide fuel for electricity in northern winters; if grown in conjunction
with sewage treatment facilities, biomass can improve water quality rather
than degrade it.
It is encouraging that the House Subcommittee recommends increasing
biomass authorization by $27.5 million, but again, the sum seems a pittance
in contrast to the astronomic sums being spent on the strategic petroleum
reserve and coal liquefaction and gasification. In connection with spending
on synthetic fuel development from coal and oil shale, it should be noted
that mounting evidence shows that limited availability of fresh water will
act as a constraint both on the production of synthetics and on their use to
produce steam-generated electricity, to say nothing of the disturbance of
water quality and supply caused by the initial mining of coal.
On the other hand, wind-generated electricity, certain photo-voltaic
conversion systems, and solar thermal conversion systems use very little
water beyond that required in the manufacture of equipment. Solar heating,
cooling, and passive solar have the same virtues, yet hidden and not-so-
hidden subsidies for non-renewables keep costs down and make it harder for
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Statement of Mrs Ellen Winchester
solar to compete. We believe that if the full environmental costs of fossil
synthetic fuels were factored in, solar energy would seem cheap.
The Sierra Club is keenly concerned about the rapid development of the
photo-voltaic cell, surely one of the world's most magical inventions. Not
only can photo-voltaics provide electricity, they can provide thermal energy,
the equivalent of co-generation, through the use of water pumped over the
back surfaces of collecting cells.
A possible competitive disadvantage of photo-voltaics, the fact that
economies of scale are not anticipated, can be turned to advantage by the
fact that small systems can be built on roofs and walls, wherever the sun
lands on your buildings, than can use this thermal energy potential. Ex-
pensive distribution networks and environmentally damaging high voltage lines
are not needed, a particular virtue in developing countries.
Tailoring to community needs is possible; systems can be built quickly
and jobs can be provided for local building contractors and local labor.
Henry Kelly of the Office of Technology Assessment answers the question
of how much federal spending the government should be willing to invest in
promoting a single photo-voltaic approach much needed to reach low cost goals
by the early 1980s, by pointing to the proposal to spend $2 billion for the
Clinch River breeder.
The Sierra Club is not eager to see the solar energy industry develop
giant power stations analogous to the two- and three-thousand megawatt plants
planned for coal and nuclear today. We prefer decentralized solar strategy,
matching appropriate energy sources with compatible uses, but we do believe
there is a place for smaller central-stationed solar electricity for urban
needs and that much more work needs to be done to develop it. Hammond and
Metz in "Science" say that the size of present power towers is arbitrary, not
the result of careful study. Perhaps it is time for careful study.
CEQ points out that solar collectors using tracking mirrors less so-
phisticated than the power tower can also produce a low temperature heat
needed for food processing and in a variety of other commercial uses. Agri-
culture in the United States and in developing countries urgently needs solar
power for irrigation pumps.
We had understood from earlier Department of Energy reports that wind
was its favorite horse in the renewable sweepstakes. The budget authoriza-
tion of $14.7 million is all the more disappointing. Hammond and Metz also
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energy conservation and solar programs
report little government study concerning the optimal size windmill for
research. We believe a generous system of grants to encourage inventiveness
in the area of small wind machines would make a big return on the investment.
The Sierra Club is not an advocate of the idea that energy problems can
be solved simply by throwing money at them, but we have observed that large
amounts of money spread on the research waters have helped EPA develop its
scientific expertise for analyzing pollution effects. A lot of money also
put men on the moon.
Advocates of rapidly increased funding for solar development are fre-
quently told that the infrastructure to use more R&D funding does not exist,
that the workers in laboratories do not exist. It therefore surprises us
that under the category of "Basic Sciences", no line item is listed for
renewable resources. "Nuclear Sciences" gets $29.7 million.
The House Subcommittee has added $4 million to "Basic Sciences" spe-
cifically for long-range basic research and direct conversion of solar ra-
diant energy to electricity. Anyone who knows anything about university
funding knows that four reasonably ingenious and aggressive professors could
soak up that much money in running four rather small research groups.
[Audience Laughter]
MRS. WINCHESTER: Another aspect of the argument that renewables can't use money
the way fossil and nuclear power can, is that the DOE staff to administer
solar research and development is incredibly small. The exact number varies
according to source, but apparently the staff is no larger than 125 people,
only a small part of whom have the job of actively fostering R&D through
recruitment of proposals and follow-up.
Even an environmentalist working with a very small budget knows that
you have to spend money in order to spend money more usefully, and that's
something EPA excels in. It doesn't seem to us to be naive to be wishful, or
to be wishful to believe that with appropriate funding and encouragement from
the DOE the nation could achieve a lunar landing kind of success with solar
energy.
The Department of Energy should, as soon as possible, develop a total
solar future plan for the whole United States, using all forms of solar,
including low heat hydro, and addressing problems of job transfer. It would,
of course, include plans for increased energy efficiency and lower per capita
consumption.
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Statement of Mrs Ellen Winchester
If we can show the developing nations of the world how to achieve
self-sufficiency with renewable resources, while at the same time we and
other industrial nations scale down energy use, a prime cause of future war
will be eliminated. That would be a clear gain for the environment and would
save a lot of energy.
Thank you.
DR. REZNEK: Thank you. Does anyone have questions?
MR. GAMSE: Yes.
DR. REZNEK: Roy?
QUESTIONS AND REMARKS
MR GAMSE: Most of your comments are addressed towards the need for more money for
solar and other technologies which you see as being desirable. You made some
contrasts between the amount of money deveoted to solar energy reserach and
nuclear energy.
Would you care to be more specific about your desires for research
spending in the other areas besides the renewable resources?
MRS. WINCHESTER: Well, actually I came prepared only to speak to renewables; that
was my arrangement with your program Chairman.
DR. MACKENZIE: Would you care to comment about what you really think the govern-
ment should be doing in implementing solar. Do you think it should be going
far beyond simply research and development and what is a legitimate goal?
MRS. WINCHESTER: Well, we think a much larger procurement effort, for example, for
photo-voltaics on the part of government purchasing would be an excellent
idea in facilitating marketing processes and giving a tremendous boost to
private industry and getting the bugs out of photo-voltaics, making it much
more possible for Sears and Roebuck very soon to have them listed in their
catalogues. That's one angle that we specifically feel government spending
could make a big improvement in the situation.
Another problem -- if I may just speak to that. When I talk to legis-
lative aides, for example, about the necessity for increases in solar budget,
they say to me, "Well, you must come in and tell us specifically how we could
spend this money, because as things stand, we just don't see how we could
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energy conservation and solar programs
spend any more." This is one of the handicaps that an environmental organi-
zation such as mine has. We simply do not have the large staff that can do
the research that is necessary to show us how we can spend money more effi-
ciently and more helpfully on solar energy development.
That's why I called for, in the talk I've just given, more spending in
the Department of Energy on staff that can work on precisely this kind of
problem. It requires a tremendous, even revolutionary change in the way the
United States does things.
Now, to expect an organization like the Sierra Club, with a budget of
about $7 million, to come up with a blueprint for how this can be done is
excessive.
MR. LEE: I just have one question, and that is: the Administration has made it
clear that they feel that the demonstration program that they've run over the
last three years had sort of a diminishing return -- that the technology for
space heating and cooling from solar is really an economic ballgame now; it's
not an R&D ballgame. It is an R&D in photo-voltaics, but not in the other
area.
Can you be more specific on how you would use increased funding for
demonstrations in the solar heating and cooling, because I think that's one
of the major points that's been brought up in controversy between the Adminis-
tration and some of the committees on the Hill.
MRS. WINCHESTER: Well, in the first place, I don't agree that the equipment has
reached that point which they claim for it. If it had, then the various
friends of mine who have invested in the equipment would not be having the
trouble that they are having with it now, and I am very concerned that if we
don't have a lot more government spending in developing the equipment, we are
going to have the very disastrous effect of consumers being disillusioned
with solar and the whole thing will go down the drain, as it were, when it
certainly doesn't need to.
I believe that the research has gotten to the real kick-off point, but
it's just at the edge and it needs a tremendous push to get it there. Do I
make my meaning clear?
MR. LEE: Yes.
DR. MACKENZIE: Let me comment on that again, because we were involved in this sort
of issue during the budget process last fall. In the National Energy Plan,
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Statement of Mrs Ellen Winchester
one of the few things that has been agreed upon by the Conference Committee
is the credits for residential conservation and residential solar energy.
OMB, for example, estimates that it could be up to maybe $50 million out of
the budget to homeowners to purchase solar heating equipment.
I think that that would, in fact, accomplish much of what you're ask-
ing. I think that in the heating business, the problems are less for a need
for government developing a better flat plate collector than to work on the
institutional problems of financing, servicing, reliability, standard pro-
cedures for a claim, performance standards, and that sort of thing. I think
there's more work certainly needed on cooling; I think that there's a clear
research need. But as far as heating is concerned, I think that there is
some merit to the reduction -- you know, building more homes just like the
last one is not going to accomplish the goals nearly as well as an increase
in the tax credit, which will make them more economic, and working on these
institutional problems.
MRS. WINCHESTER: Well, Dr. MacKenzie, I have great regard for your qualifications
to speak on this issue, and you've undoubtedly done a lot more study on it
than I have, but I don't agree with you. The Solar Energy Report, which I've
quoted, does mention that, even using the net tax credits, it would be twenty
or thirty years before solar heating can be cost competitive.
As far as I can see, unless far, far better equipment -- and that
includes the plumbing, which is, God knows, vastly complicated as things
stand today; it includes the materials, which tend to leak today; it includes
simply simplifying systems; it includes a lot that I don't even know about
that will not be improved simply because people have generous tax credits to
go out and buy equipment that doesn't work. They will install it, and then
they will be turned off.
DR. MACKENZIE: People will not install such equipment -- well, all right.
DR. REZNEK: You made the statement that this solar technology, as a small scale
home appliance, does not have to work as poorly as it does. But one of the
contrasts between solar power, as you described it, and a large nuclear power
generating plant is the fact that, because it's dispersed, it will have to be
delivered and maintained by a new human infrastructure, perhaps one involving
the homeowner. The people of this infrastructure cannot and will not be as
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energy conservation and solar programs
highly trained or as technically competent as the people associated with the
higher, more advanced technology, for example, nuclear.
In fact, a movement towards decentralized energy technology will, by
necessity, be accompanied by lesser reliability because of the skill levels
and technical capabilities of the people involved. Don't you agree?
MRS. WINCHESTER: Well, I think there has to be -- and this is something also that
probably needs to be addressed through some sort of special funding — a
means for teaching the homeowner these new skills. We are a great do-it-
yourself nation now, and I think people will learn in community colleges and
adult education courses and things of that sort how to handle this new
technology that will be so much to their advantage, as far as home heating
costs are concerned.
DR. REZNEK: Any further questions? Thank you.
MRS. WINCHESTER: Thank you.
STATEMENT OF DR. CHARLES A. BERG, CONSULTANT
DR. BERG: Thank you. I feel privileged to have been offered the opportunity to
comment on non-nuclear energy research financed and otherwise supported by
the federal government. I'd like to note at the outset that there's a nearly
irresistible tendency in testimony toward the negative, because it is the one
chance that a member of the public has to offer comments on what he or she
may perceive to be deficiencies in federal government efforts and to offer
suggestions toward the remedies of those deficiencies.
For that reason, I would like to begin by saying something about what I
think is right in the government efforts. I think there is a great deal to
be commended. For example, there is finally a unified and independent Fed-
eral Energy Regulatory Commission. It's long overdue that regulation of
energy be unified. There is finally a Department of Energy, and energy is
finally raised to cabinet level consideration.
I think that in commenting upon what are perceived as deficiencies in
the efforts of the government as a whole toward resolution of energy and
resource problems, one should not lose sight of substantial progress that's
been made, and I want to take this opportunity to commend the government on
that progress.
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Statement of Dr Charles Berg
Now, to turn to what remains to be done -- in parentheses, a lot -- and
specifically what could be done better, I shall address myself this morning
to the areas of solar energy and conservation, especially in industry.
The basic problem in these areas of endeavor, as I see it, is, to put
it plainly, a lack of strategy. Both of these areas share a common aspect:
it is that new means of using energy are required, and to approach these
areas, it's necessary to reach an understanding of the nature and the scope
of the problems that will have to be dealt with. Some theoretical framework
for addressing those problems and even delineating them is required.
We do recognize that greater use must be made of abundant energy re-
sources and renewable energy resources to offset the use of increasingly
scarce resources, such as oil and gas. Now, oil and gas have shaped much of
industrial technology. There's a general principle that applies not only to
industrial processes but to all processes, and I would like to cite it. It
is that the form of energy that is used to sustain a process very strongly
influences the design of the process.
We're about to change the form of energy resources that we use to run
our processes. We're faced in that change with a selection of the forms in
which energy might be brought to the process. That implies, although it has
not yet been explicitly recognized, a wide range of choices as to the design
of processes to use the energy forms that we will be able to bring to the
point of processing.
To give some examples of the choices before us, consider the the use of
nuclear fuel or hydroelectricity or solar energy or coal to offset the use of
natural gas in combustion-driven industrial processes. Well, coal, for
example, could be converted to a gaseous fuel; it could be converted to
electricity; it might even be economically justifiable to convert it to
liquid fuels.
Nuclear energy comes as electricity, period, as far as I know, and
hydroelectricity comes as electricity, obviously. For high quality -- in the
technical sense -- thermal performance, about the only thing you can do with
solar energy is to generate electricity.
It therefore follows that if any of those alternative energy forms that
I've just mentioned are to be used to offset the use of natural gas or high
quality distillates in industry, many of the combustion processes now in use
are going to have to be electrified.
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energy conservation and solar programs
By the way, I want to note that my statement is not a plea for whole-
sale electrification of industrial processes; on the other hand, I will state
that I think that that is likely in certain processing areas and I don't
think that it's a necessarily bad thing.
But the principle I stated, that the choice of the form of energy
strongly influences the design of a process is one that I would like to
register. There's another principle, and that is that in processes, partic-
ularly processes of production, it is net productivity that is the measure of
merit, not energy efficiency; it is net productivity.
Now, when you consider the use of the factors of production in a proc-
ess, you have to consider the use of capital, labor, and raw materials. We
have scarce minerals that are used in our production processes; one sub-set
of those scarce minerals is fuels. Another important sub-set is the geo-
chemically scarce materials that are used as alloying elements.
It is my proposition, by the way, that the 1980s will see the emergence
of problems in geochemically scarce alloying elements that will remind us
very much of the problems of scarce fuels in the '70s.
In any event, when one is faced with modifying a process so as to make
use of new forms of energy, it is natural -- since the measure of merit of
the modification would be net productivity -- to take into account that the
processes in many instances were conceptually established over a hundred
years ago; the deficiencies in them have been accepted for a hundred years,
and so when you redo the process, you would try to redo the process so as to
address all those deficiencies holistically.
You would try to control excess use of labor; you would try to control
wasteful consumption of mineral resources, as well as wasteful consumption of
energy. Now, to do this implies that conservation, particularly as that term
may be applied to industry and, in fact, as it's applied to any other sector
of the economy, entails nothing less than fundamental transformation of the
processes we use. That has three fundamental requirements. It requires
basic scientific research to prepare the way for the future, so that the
problems and deficiencies that have been accepted in process technology for,
say, a century can be addressed with more recent findings, and the findings
in science and technology that have occurred over the last hundred years can
be embodied in new approaches to those processes. Fundamental scientific
research is an absolute must.
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Statement of Dr Charles Berg
There's another thing that is required. The second thing is a rein-
vigoration of ventures in risk-taking, so that the findings of basic science
can be incorporated in embodiments that might offer advances in net produc-
tivity — advances that would be constructed so as to resolve problems of
energy resources and other scarce natural resources.
Incidentally, I'm going to interject before I go on to the third re-
quirement that it's my proposition that, whereas in the past, the productiv-
ity component of labor has been the first and the principal component by
which one examined net productivity, we are moving into an era in which net
productivity will first be examined on the use of scarce natural resources.
The third component that's needed is capital formation. Without an
hospitable climate for vigorous capital formation, none of the findings of
research, none of the products of ventures will be applied where they must be
applied to conserve resources.
Now, those observations, I believe, form both the basis for a compre-
hensive strategy to approach the conservation of energy and other scarce
resources, and a basis for friendly criticism of present efforts in conser-
vation.
There are numerous detailed planning documents in energy conservation.
*
The more detailed the planning document, the stronger the tendency of the
author to refer to the product as "strategy". Amateurs, among whom I count
myself, have a tendency to confuse tactical detail with strategy. Strategy
is, after all, the reckoning and the application of the forces at one's
disposal to satisfy policy objectives. There are certain elements of strat-
egy that must be taken into account in trying to devise a strategic plan.
I would say that the strategic aspects of present efforts on conser-
vation are reminiscent of a nineteenth-century military predeliction for the
frontal assaults. They amount to a frontal assault directly upon perceived
energy wastes. They do not incorporate the more subtle and more powerful
aspects of strategy that bring indirect forces into play.
I have a list here of some observations of the three elements that I
think are required in a strategic plan. On scientific research and the
question of whether the government can or cannot play a direct role in scien-
tific research: obviously the government can; it may not be quite so obvious
to you that the government must, but that is my proposition. Otherwise the
entire institution for the conduct and thev support of scientific research
would have to be redesigned. That is the way this country does scientific
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energy conservation and solar programs
research; it's the way that every advanced industrial country does scientific
research. Research is fundamentally a ward of the government.
On ventures: Can the government play a direct role in ventures? My
proposition is that it cannot. I also propose that it never can. Much of
the strategic planning documents, so-called, in energy conservation are in
fact computer models of a synthetic notion of the marketplace, to test out
which ventures might he the best to pursue. There is a fundamental fallacy
here. The government, for good and sufficient Constitutional reasons, is
always held publicly accountable to present consensus. If present consensus
were in any way a valuable guide to the merit of ventures, ventures wouldn't
exist as an area of the economy; it wouldn't need them. The important thing
about ventures is not that one can succeed; the important thing is that one
can probably fail, and the government is, because of its accountability to
present consensus, constrained not to fail. Therefore, the most valuable and
risky ideas, even those that may be predicted to be economically justifiable
over the long term, are probably excluded.
Now, on capital formation: can the government play a role; should the
government play a role? Well, obviously, the government does play a role in
capital formation. For example, public works such as hydroelectric projects
are largely government activities. The question of whether the government
artificially subsidizes those is a minor economic detail, in my estimation.
The more important fact is that the government is the principal in forming
that capital.
There is a question as to the extent to which the government could or
should extend its role in capital formation. I'll give you my own opinion on
it. My opinion is that the government should work through indirect means and
should not use direct means to extend its role in capital formation to
sponsor more efficient technology in industry. I do not believe, for ex-
ample, that the government should go into the steel business.
I will pose as a problem what I perceive to be a kernel of difficulty
in capital formation. It is this: in private capital formation, the essen-
tial ingredient, the vitamin that must exist for healthy capital formation,
is an expanding market. The very reason that we need capital formation is to
enable us to continue healthy production in markets that are constrained
physically by a scarcity of natural resources. We need the capital formation
to regain control of the use of those scarce resources.
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Statement of Dr Charles Berg
There is a conflict there between the societal need for increased
capital formation in markets that physically are constrained from expanding.
This is a political problem. I'm sure that the solution to it can be found
without resorting to radical means. But the political problem remains of how
the government will, if it can, create the means to stimulate capital devel-
opment in areas of the economy that are constrained by natural development of
resources.
Now, I see from the glances and expressions on people's faces that I've
repeated my usual performance and run overtime, and so I will forego exhib-
iting some things. I would like to offer some examples of what I mean by
some of the remarks I have made.
I think it's useful just to cite at least one physical example of
industrial processes in which comprehensive consideration of productivity
would lead one in a different direction and a more productive direction that
a frontal assault on energy waste.
Could I have the first slide, please?
(Slide shown.)
DR. BERG: This is an industrial reheating furnace where stainless steel, which is
mostly chromium and nickel -- about 50-50 -- is reheated for forming. That
furnace, incidentally, when you count up its total efficiency, is about 5 per
cent efficient, and that's not a bad one. The reason it's so low is that
while the furnace may be about 40 per cent efficient when it's used, you
can't turn it off, and you only use it about sixteen hours a day over a
five-day week. But, you have to run it twenty-four hours a day, seven days.
In any event, what I want to point out here as you look into this
furnace and see the stock going in, is that that stock going in there is
extremely expensive. Because of the limitations of combustion technology,
about 3 to 4 per cent of every bit of the stock that goes into there is lost
as oxide scale. Now, that's 3 to 4 per cent of the entire production of that
mill that leaves that furnace as useless oxide scale.
The conversion of this furnace to a different process for heating —
for example, electric induction in a controlled atmosphere or even in a
vacuum -- would have an immensely important effect on the productivity of
that mill. We do not have furnaces right now that are suitable for the sort
of operations that would be required here that would combine electro-
induction with a vacuum; that may not even be the best solution.
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energy conservation and solar programs
The point I'm getting at is that we must consider not only the scarce
natural gas that's burned up in there, but the chromium which is going out as
oxide scale. Every bit of that chromium is imported to the United States.
Moreover, the environmental cost of disposing of that without polluting
ground water is an additional burden on the production of that mill.
(Slide change.)
DR. BERG: This is a picture I just happen to like, so I'll show it. You see that
red streak on the wall there. This is the wall opposite the furnace. That's
thermal radiation coming straight out of the furnace and heating the wall.
It would be nice to take care of that, because, as you see in the next slide,
this is what happens after you heat that stuff.
(Slide change.)
DR. BERG: You see, the reason that you heat that steel almost to 2400 degrees is
so that the thermal radiation leaving it won't cool it to below 1900 degrees
before it gets to the rolls, and it's oxidizing all the way across the plant
as it goes.
What I intend to show you from this citation of this fairly elementary
physical example is this: Knowing that chromium is an extremely scarce
resource, knowing that natural gas is an extremely scarce resource, knowing
that capital is not exactly easy to raise and that skilled labor is not
exactly easy to find, if you were going to do something about the operation
of the stainless steel industry right now, you would not put twentieth-
century insulation on a furnace of nineteenth-century concept; you would try
to find a new concept for reheating -- one that would conserve the scarce
resources that are consumed there.
That's all I need on the slides, thank you.
I think I registered my point as well as I can in the time allowed to
me; I'll just have to be satisfied with it. I'll close now.
DR. REZNEK: Thank you. Are there questions?
QUESTIONS AND REMARKS
DR. MACKENZIE: Charlie, let me make sure that we have it in English -- exactly
what you want to see done. First, you want a lot more basic scientific
research into industrial processes as a basis for revamping them and so on,
is that right? So first there's basic research.
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Statement of Dr Charles Berg
DR. BERG: Yes.
DR. MACKENZIE: Okay. Number two, more ventures in risk-taking.
DR. BERG: Well, the way I put it was a reinvigoration of ventures in risk-taking.
DR. MACKENZIE: Indirectly by the government rather than directly.
DR. BERG: Indirectly.
DR. MACKENZIE: So this is taxing policies and so forth. Is that basically the
tool that you'd use?
DR. BERG: Well, that's one very important tool. Another important tool is the
role of the government as a purchaser.
DR. MACKENZIE: But basically government policies to encourage risk-taking and so
forth.
DR. BERG: Yes, yes.
DR. MACKENZIE: Okay. And the third one: a hospitable atmosphere for capital
formation. Is that again indirect government policy to encourage industry to
do this itself, is that it?
DR. BERG: Well, that would be what I would recommend. I think that there's a
political consideration involved as to how much of a direct role in capital
formation, as opposed to how much of an indirect role, the government should
assume. My preference would be the indirect role, because I think it happens
to work a little better, especially in respect to the admissibility of new
technology.
DR. MACKENZIE: So you're saying if these three major areas were addressed, then
energy conservation in, say, industrial processes would be encouraged much
more than through present routes.
DR. BERG: If I may respond to that at some length, it would be encouraged much
more effectively; it would be encouraged in such a way as to conserve energy
in ways that advance net productivity, and that I feel is the key.
DR. MACKENZIE. Okay. So you —
DR. BERG: If I may just add to that.
DR. MACKENZIE: Yes.
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energy conservation and solar programs
DR. BERG: The three elements I've outlined there suggest to me or indicate to me
that the proper field for conservation and for solar research, which I really
was not able to address myself to by example, is one that pervades all the
functions of government. For that reason, I have very strong doubts that the
Department of Energy is the proper place for the conduct of a comprehensive
government effort on conservation and solar energy.
They certainly can contribute through basic scientific research. But
in my estimation, the Treasury, the Commerce Department, and the authority of
the Presidency itself are required in setting comprehensive and pervasive
policies throughout government, to contribute much more effectively in the
final two elements I mentioned.
DR. REZNEK: Any further questions?
Thank you.
DR. BERG: Thank you.
DR. REZNEK: Our next witness is George Lof of the Solar Energy Applications
Laboratory, Colorado State University.
STATEMENT OF DR. GEORGE LOF
SOLAR ENERGY APPLICATIONS LABORATORY
COLORADO STATE UNIVERSITY
• •
DR. LOF: Gentlemen. Thank you for your invitation. I'm appearing here repre-
senting no one but myself. I am a member of the staff at Colorado State
University in the Solar Energy Applications Laboratory, where we have a
sizeable program of research and development on several solar applications.
I also am an officer in a manufacturing company that makes and sells solar
heating systems for buildings.
I've been in the solar field for about thirty years, and I have a few
comments based on that experience. I would then be pleased to answer ques-
tions.
The connection of solar with environmental quality is of course through
its substitution for fossil and nuclear fuels; it has a double benefit in
reducing environmental problems as well as reducing the requirements for
domestic and imported fossil fuels. The principal objective in solar devel-
opment is to maximize, within economic limitations, the use of solar energy
and to minimize the time for its introduction.
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Statement of Dr George Lb"f
Now, I think it's clear that use of solar energy will happen by itself.
It will be introduced into the economy on a very wide scale, even without
federal aid, but of course it will develop much faster if aided.
The solar uses that I'll talk about briefly are mainly for the heating
of buildings and the heating of water supplies -- moderate temperature
heat -- which comprise about one-third of the national energy consumption.
This is the early application of solar; it's going to precede the others
because the economics are better.
Electric power generation from solar energy which is another big seg-
ment of the national energy use, is going to happen later because the eco-
nomics are unfavorable. Transport is a very unlikely prospect, perhaps
forever, because of the problems of insufficient solar availability for that
application.
The economics of solar energy for space heating and hot water, I am
sorry to say, are not very well understood nor is there full agreement. We
hear all kinds of numbers from enthusiasts of various kinds. Today, to put a
solar heating system in a building, total installed costs are in the neigh-
borhood of $30 per square foot of solar collector. This includes all of the
hardware and all of the installation. A number of installations are going in
at substantially higher costs than that, but $30 is a reasonable and practi-
cal estimate.
This cost results, in a sunny climate, in heat costs of about $20 per
million Btu, if amortized at a reasonable rate and with interest charges at 8
or 9 per cent. So $20 per million Btu is reasonably sound price for solar
heat today. That's the equivalent of six cents per kilowatt hour of electric
resistance heating. Solar heat is therefore competitive with electric re-
sistance heating where electricity prices have already risen substantially.
The likelihood of that cost coming down is remote. If we can keep the
cost about there, in terms of current dollars -- in other words, if we can
avoid price increases for a few years due to inflation and can make modest
improvements and economies, we shall be doing well.
These costs are not discouraging, because as our fuel prices go up -- 7
to 10 per cent per year — and as we see electricity prices already at those
levels in several parts of the country, the opportunity for solar heating to
compete with electric heating is great.
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energy conservation and solar programs
There is also an opportunity, perhaps, for solar not only to substitute
for the fuel that is burned in power plants, but also to substitute for
generating capacity -- a very critical problem today. Some of you may have
seen comments of Dave Freeman in relation to his work with TVA, that perhaps
a new power plant of a thousand megawatts could be deferred by substitution
of solar water heaters in the TVA area. Since that is a summer-peaking
network, the use of half a million solar water heaters could eliminate the
need for a thousand megawatts of electricity.
The relative investment requirements are about the same. A thousand
megawatt nuclear plant costs about a billion dollars and half a million solar
water heaters would also cost about a billion dollars, so the proposal looks
promising. This concept might also be extended to space heating although
there the capacity substitution will require some storage of electric heat on
site. Solar heating systems would have to stay off the peak in each utility
network by storing some electric heat at night for use in the daytime.
Solar energy can therefore be regarded as a substitute for fuel by
replacing electricity for heating, and with proper research and development
and application, also as a substitute for some electric generating capacity
requirements.
Let us now examine the government role in this field. What is the
government doing and what should it be doing? The near-term prospects for
solar space heating and hot water require the generation of a viable market.
The market today is very small. The principal government role should be the
stimulation of that market. Research and development on solar heating is an
obvious need, and government is already involved in increasing the quality of
the hardware and reducing its cost.
The claim has been made that this technology is all developed and that
industry can take over. Industry isn't going to take this over until it sees
early profits. The small companies can't afford to, and the big companies
have more profitable uses for their money. So it is clear that the govern-
ment must continue strong support of research and development in solar
heating, even though applications are being made today. It is gratifying
that the House Committee has marked up the budget for solar heating
research -- and that includes cooling -- to $46 million.
Solar heating demonstration is another activity that the government
should vigorously continue; it must show the public that this technology is
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Statement of Dr George L'df
practical. The demonstrations must be improved in quality. There have been
too many poor demonstrations, too many that show solar heating is expensive
and ineffective. We have to be sure that the demonstrations are not testing
programs for unproven equipment. We must also obtain data from these demon-
strations because of insufficient information on the performance of operating
systems.
The third role of the government is providing incentives for use of
solar energy. The tax credit in the National Energy Act will be helpful.
The provision of a $2,000 tax credit for space heating systems will stimulate
the market. In addition, I think we will need government loans for solar
heating systems at attractive interest rates.
Finally, the training of architects, engineers, and installers of solar
heating systems is going to require much additional emphasis and support. We
don't have enough trained people. That situation is partially responsible
for the large number of poor installations that have been made. I have said
nothing about solar electricity generation, because I think that application
is several decades in the future. I don't agree with massive efforts to
pilot plant and demonstrate solar electric at this time, because the results
are going to be put on the shelf. Solar electricity is not going to be
competitive with commercial electric power generation until the price of
fuels for commercial power goes up severalfold. At that time, solar elec-
tricity can be expected to move in.
Thank you.
DR. REZNEK: Thank you. Are there questions?
QUESTIONS AND REMARKS
DR. MACKENZIE: I would just like to make an argument in favor of non-economic
electric demonstrations -- maybe we disagree and maybe we don't.
Photo-voltaics, as you know, are still quite expensive, on the order of
anywhere from $6.00 to $10.00 per peak watt, depending on whether they use
collectors and so forth, and that's very expensive electricity. Nonetheless,
the advantage of doing demonstrations now with them is that you get the
learning experience of how they will be used as costs do drop, as they are
anticipated to do and as they are, in fact, occurring, so that when the
crossover point occurs, this won't be a new instrument that no one has used.
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energy conservation and solar programs
Secondly, in many parts of the world, as I'm sure you're aware, elec-
tricity costs on the order of fifty cents per kilowatt hour, and the markets
are, in fact, opening up and don't need any subsidies both there and in
places like remote DOD installations and so forth, so in many cases these
expensive installations will make sense very shortly.
I guess that's all.
MR. CUTWATER: Dr. Lof, we heard Mrs. Winchester talk about her concerns with the
quality of the types of installations that people are getting today. I
presume from your remarks that you're saying that the hardware is really
pretty good; it's the training of the people that are putting it in now, in
terms of residential applications at least, is that right?
DR. LOF: I think both problems exist. There's a lot of very poor hardware being
sold today, unfortunately. There are people in the business that know abso-
lutely nothing about it. Today, inexperienced individuals and companies
assemble some solar device and sell it to a customer who doesn't know the
difference between a good one and a bad one.
Installation is a second, and very real problem. You can take excel-
lent hardware and put it together into a system that just won't perform at
all.
DR. MACKENZIE: May I ask: how would you address that in terms of government
programs? What is the most effective way of showing that there are duds as
well as good ones? Do you want to get the government directly involved or do
you want to do it indirectly?
DR. LOF: Indirectly, but as with many things, the government is very influential.
In the most recent federal demonstration programs, requirements for qualified
hardware and warranties that really put the responsibility on the suppliers
are going to help a great deal. I wish that had been done early in the
program rather than now. I hope the horse hasn't been stolen already. Some
of the earlier demonstrations will have a negative effect because of fail-
ures. I hope now we can remedy those mistakes.
MR. OUTWATER: On residential solar applications, do you perceive that there are
going to be radical changes in the types of installations we're going to see
on residential homes, say, in the next ten years, or do you think that the
state of the art is pretty much there today and it's just a matter now of
getting better quality and better application?
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Statement of Mr William Partington
DR. LOF: I don't expect to see any major changes. There will be minor, steady
improvements, primarily, I think, in the direction of durability and effi-
ciency increases, but no radical changes.
DR. REZNEK: My understanding of your remarks is that if the market place were
operating correctly, which is to say, if people were going for the lowest
cost, then you'd find a far greater number of solar system installations in
new facilities, both new homes and other new buildings, than is actually
happening. The present cost structure favors solar power, but extraneous,
non-economic factors such as unfamiliarity, fear of the unknown, etc., are
hindering free market functioning and thus delaying the expected cost mini-
mization and widespread use of solar systems at this point in time. Is that
right?
DR. LOF: That's correct, if it is assumed that electricity is the alter-
native. Natural gas and oil are both cheaper than solar heat. If you
can't get either one, solar is competitive with electricity in a few
places today. New York and Boston are examples. And on a life cycle
cost basis, over a twenty-year span, solar becomes the cheaper source
of heat than electricity almost everyplace in the United States.
DR. REZNEK: Any further questions? »
Thank you.
DR. LOF: Thank you.
DR. REZNEK: Our next witness is Mr. William Partington, Director of the Environ-
mental Information Center of the Florida Conservation Foundation.
STATEMENT OF MR. WILLIAM PARTINGTON, DIRECTOR
ENVIRONMENTAL INFORMATION CENTER
OF THE FLORIDA CONSERVATION FOUNDATION
MR. PARTINGTON: It is with some trepidation that I follow Dr. Lof.
On behalf of our Foundation, we would like to thank you for providing
this opportunity to speak on energy conservation and solar aspects of the
Federal Non-Nuclear Energy Research and Development Program.
At both yesterday's and today's hearings, I sensed that the Panel and
most speakers are extremely sympathetic ^to the needs to conserve energy,
protect the environment, and to protect the citizens' quality of life. The
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energy conservation and solar programs
problems we seem to be facing are, among others, "how to" problems: how to
coordinate research with policies; how we may encourage more conservation;
how we decide which technologies deserve highest priorities; how do we get
more businesses, industries, and the public to practice conservation because
they want to conserve.
We at our Foundation are dealing with the public directly along at
least some of these lines, and I will offer some suggestions on how we might
all do a better job, but first I have some general statements to make.
The public is said to be apathetic to the energy crisis, just as it is
said to be apathetic to participation in programs such as 208 water quality
planning in some areas. If people try to deal with unresponsive officials or
hear complicated reasons why something can't be done, it is understandable
that they will become apathetic, turned off of nationally important issues,
and will withdraw to being concerned primarily with themselves, their
families, and with close friends. This has happened, but it is not
irreversible.
The really great things this nation has accomplished often have
resulted from the activities of a far-sighted, dedicated few who inspired
others through their dedication and examples. Even if the polls should
someday show that only 25 percent of the public feels the energy crisis is
real, that still means that there are over fifty million people who do
believe that it is real, and that is a lot of people to work with.
Through reactions to our publications and workshops, we believe there
is a powerful element of citizens who want to conserve energy and who will be
effective, but these people have largely been overlooked in present federal
and state programs. The people I'm referring to are home craftsmen -- the
do-it-yourselfers who take pride in their projects and who have an urge to be
busy making or repairing something.
We started having lots of contact with home craftsmen three years ago
when we first started publishing directions for building a good, solid solar
water heater, based on time-tested design -- a Model A Ford sort of heater,
if you will -- made of easily available parts. Some 25,000 or more copies of
that publication have now been distributed, and some people who have pur-
chased the booklet come back for more information for their specific
installation.
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Statement of Mr William Partington
A random poll of some 300 who had the plans revealed that as much as 10
percent had built or were building or were intending to buy or seriously
intended to build solar water heaters, and most of those that we have talked
to that have built them claim at least that their heater works very well and
produces savings. We have no way of checking on what these savings are; I'm
sure that in some cases they're exaggerated.
These do-it-yourselfers are not concerned with national policies,
although the majority appear to believe that the energy crisis is real for
them, and they feel that the energy crisis may be caused in some cases by
true shortages of fossil fuels, perhaps by government ineptness, or perhaps
by corporate tricks or whatever, but the important thing is that they are not
people who are about to be very much concerned with federal overall policies,
even though they are an effective group that I feel we should approach.
These people need direct one-on-one help, and booklets such as ours are
really only a start. They also need local hands-on workshops and some per-
sonal guidance on solar heaters, insulation, and energy equipment improvement
information for their homes. These are people who are saying, "Help us to
help ourselves." They need simple information that is technically sound and
tested, offered by sympathetic teachers.
The problem will be to find or to train competent and sympathetic
instructors. These people must be good craftsmen, among other things; they.
must have an understanding of the basic principles involved, in order to
explain why something should be done; and thirdly, they should enjoy dealing
with people.
Perhaps the most important of these criteria is that they like other
people. It appears easier to train a person-oriented person or a good
craftsman in enough of the technical principles than to teach a technician to
deal and communicate with the public. Such people may be found through local
trade associations, or they may be found in civic or conservation groups.
Most would like to do this work, we feel, on weekends, when other home
craftsmen have the time to spend on such sessions.
Incentives to be a workshop leader could include community recognition
for their roles, certification for having taken or passed the training pro-
gram, and some pay for leading the sessions. However, the sessions should
require only a minimum cost to the person taking it -- say in the range of
$4.00 to $5.00 — enough to make sure that he's taking it because he really
wants to, but not enough to stop him because of the cost.
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energy conservation and solar programs
In keeping with this theme of more actively involving people in helping
themselves, I have a mixture of six other suggestions which are related to
some extent to the foregoing.
The first one is: emphasis must be placed on retrofitting existing
homes rather than encouraging destructive and potentially wasteful sprawl of
new homes. In Florida, I suspect, and I suspect in other parts of the
country, most of our homes are fairly new; they will last another fifty
years, but they were not built to emphasize energy conservation.
The second one is that similar workshops to those that I have mentioned
earlier should be held for practicing architects, engineers, and others, few
of whom, by their own admission -- with whom we have had contact -- have
sufficient expertise to advise new home clients or builders of commercial
buildings on how large a certain window should be, how many windows would be
needed, or how high a ceiling should be in order to provide insulation or
space for ventilation unless they have expensive consultants. In Florida,
too much insulation, we are told, may not allow a building to cool at night
in the summertime.
Training sessions for such professionals and others would be most
desirable.
The third one is grants for small projects, perhaps up to $5,000.00,
for planning, training, workshops, producing materials, demonstration pro-
jects and so forth; these should be easily available for groups or even
individuals to obtain. They should have a minimum of red tape. They might
be doled out through regional appropriate technology centers or such organi-
zations, perhaps, as are run by non-profit groups, through trade associations
or certainly with the advice of trade associations, or even through regional
federal offices.
The fourth one I have is: exhibits of soft technologies or appropriate
technologies or whatever you wish to call them should be favored in areas
highly visited by tourists, such as in Central Florida where I'm from. At
least some tourists want to feel that they get something useful out of a
vacation, and while they have the time to absorb new thoughts, these should
be offered and they should be offered as opportunities.
The fifth one is: we need help with reincarnating or discovering or
inventing passive systems that may be useful in the humid Southeast.
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Statement of Mr William Partington
The sixth one I have is that federal information programs should
emphasize the hardware and technology that are currently available. The
public needs accurate information on what they may expect for their money to
make their own decisions on what to buy on a cost-effective basis, according
to their own location and financial situation. They should be told how to
evaluate collectors, for example. From having seen collectors that have been
built or that have been brought to our office over the past few years, I
would agree with Dr. Lo'f that there are a great number that fall short of
being very adequate, although there are some good ones too.
The main thing would be to tell people how to evaluate these — what
points to look for so they can make their own judgments.
In conclusion, energy conservation and soft technologies, applied on a
local level by people who want it, may not only be a means of conserving
diminishing resources, promoting a lesser consumptive lifestyle, reducing
sprawl, and setting examples for others that will follow, but it even can be
good for the local businesses, since it depends largely on local supplies and
people helping themselves.
That's the end of the statement that I have prepared.
DR. REZNEK: Thank you. Does the Panel have comments?
QUESTIONS AND REMARKS
DR. REZNEK: In listening to your remarks, an exercise in which both EPA and DOE
participated comes to mind. I refer to demonstration projects for home
insulation, particularly in the north. Night infrared photography was taken
of houses and roofs and an information office was set up. People could come
to the information office to find out whether or not their house was showing
up as heat-leaking and to learn how to calculate the cost discount associated
with the capital investment of reinsulating their homes. These demonstration
projects were, I think, quite popular and quite succesful in the cities in
which they were tried.
I assume that you are modeling some of your projects for solar heating
and cooling on these earlier demonstrations since they are the same kind of
activity, namely, an information exchange to teach people how to do a cost
discount.
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energy conservation and solar programs
MR. PARTINGTON: This is the sort of thing that we would either like to do or we
would like to encourage others to undertake. Now, part of the problem in
Florida is that we do not have the intense changes of temperature between a
house, say, at zero temperatures and a house being heated so that you can get
those photographs to show the amount of heat being leaked.
We have a different sort of situation, and I'm really speaking, I
think, from the point of view of where I come from, in that air conditioning
is probably a larger energy consumer than the heating. For that reason, we
have a different set of problems, but also the humidity problem is another
one that we have, and to my knowledge, people have yet to cope with that
seriously.
Some suggestions have been made that perhaps desiccants could be worked
out that would remove humidity from the air that would be naturally venti-
lated; however, how to remove the water and return the desiccant so that it
would be cooled down and not be heating the air in return is apparently a
large problem, and if somebody has suggestions along these lines of what to
do, we'd certainly like to know how to do it.
I purposely throw out these remarks about workshops and so forth to
hopefully stimulate some thinking, because I sense that everyone here is very
sympathetic to this whole cause, but somehow or other we've got to get out
and get these things going where people are learning to help themselves. I
think we do have a vast number of friends out there, and we can start a lot
of these programs tomorrow, if we just somehow give them some help.
DR. MACKENZIE: I'd like to ask Mr. Lee -- Henry Lee -- who's a Director of the
Massachusetts Energy Policy Office whether this might be something that could
be done through the Energy Conservation Plan that the various states are
developing. Does this seem like it could -- you know, workshops and solar
and insulation and this sort of thing?
MR. LEE: In many cases, the answer to that is yes. We tried to do the do-it-
yourself training sessions, and the first year we ran them it went very well.
The second year, the attendance dropped off markedly. We had certificates of
graduation; we had paid instructors; we did do it on weekends, and in the
second year, the attendance dropped so badly that we're not going to have a
third year. We're going to run a similar type of operation using high school
students next year.
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Statement of Dr Marshal Merriam
DR. MACKENZIE: Do you have any idea why it failed? I mean, this seems to be an
obvious thing.
MR. LEE: It depends on the different areas. You could say that in some areas it
wasn't promoted as strongly as it could be, but in other areas it was, and
even in the areas where we promoted it very strongly, the attendance wasn't
that high. I think it's just a question of there not being enough interest
for it.
We think possibly in a high school we'll have somewhat more of a cap-
tive audience, and we might be able to be more successful.
MR. PARTINGTON: I believe that Mr. Lee's experience fortifies my statement that
non-government organizations, such as trade associations, and grass roots
groups, should be encouraged to organize and promote solar workshops. The
school approach could also be very productive.
DR. REZNEK: Thank you.
MR. PARTINGTON: Thank you.
DR. REZNEK: Our next witness -- and I guess our last witness before lunch — is
Dr. Marshal Merriam of the University of California at Berkeley.
STATEMENT OF DR. MARSHAL F. MERRIAM
ASSOCIATE PROFESSOR, DEPARTMENT OF MATERIALS SCIENCE
UNIVERSITY OF CALIFORNIA AT BERKELEY
DR. MERRIAM: Thank you. My name is Marshal Merriam; I'm a member of the Engi-
neering faculty of the University of California at Berkeley, and I'm here to
speak about wind energy. I have been engaged in work with solar and wind
energy for the past six years, and in the wind energy area specifically, I've
been a consultant to various government bodies at various times: the State
of Hawaii, the State of California, the U.N. Environment Program, the
National Academy of Sciences Committee on Nuclear and Alternate Energy study
last year, and the Federal Energy Administration. I recently spent several
months in Denmark, and I am familiar with the history and present status of
wind programs there.
As a consultant to the FEA, I prepared a paper discussing the possible
role of wind energy as a source of electricity in the United States, and I
would like that paper -- of which I left twenty-five copies with the suaff —
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energy conservation and solar programs
to be incorporated as part of the proceedings today. The title of that paper
is "Wind Energy Use in the United States to the Year 2000".
WIND ENERGY USE IN THE UNITED STATES TO THE YEAR 2000
INTRODUCTION
The object of this study is to develop a set of projections for the use
of wind energy in the United States during the years 1985, 1990, and 2000.
These projections are to be used, along with other studies, in delineating
the policy options available to the United States as it endeavors to avoid
energy imbalances in the next quarter century. Uncertainties in predicting
the future use of wind energy in the United States are large, and the reli-
ability of predictions is low. To say what can be done (given the right
government actions and overlooking cost problems) is relatively easy, but to
say what will occur is another matter.
The major uncertainties, roughly in order of importance, are:
1. Will energy demand (i.e., consumption) continue to increase a few
percent each year for the next 23 years, as it has in the past?
2. Will the price of imported oil increase moderately, not at all,
rapidly, or catastrophically in the years to come?
3. At what rate will the cost of conventional electric power plants
(oil, coal, nuclear) increase in the years to come?
4. Will a shortage or lack of availability of energy sources for gen-
erating electricity, such as a nuclear moratorium or an oil em-
bargo, occur or be perceived to be likely within the time period
under consideration?
5. Will an economic way be found to make electricity from sunshine?
6. How much encouragement will wind energy receive from the govern-
ment?
7. What will large wind machines cost in quantity production?
8. How large is the wind resource over the parts of the United States
within reach of electricity markets?
9. How densely can large wind machines be placed in windy regions?
10. How many of the millions of potential dispersed users of wind
energy are located in areas of sufficient wind and would be able to
make use of wind energy?
It will be noted that the first five of these have nothing to do with
wind as such. Of the others, one concerns government policy, one is a ques-
tion of applied science, two are questions of meteorological survey, and one
is techno-economic.
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Statement of Dr Marshal Menriam
There is very little doubt that large aerogenerators can be built and
that they can be operated to produce electricity for existing networks. It
has been done already, and more than once. Wind energy installations are not
likely to encounter the ever-increasing environmental and political obstacles
which have caused so much trouble for nuclear and coal plants. There is not
even much doubt that land sites, or near off-shore sites, exist for enough
large windgenerators to make an appreciable contribution to U.S. energy
needs. However, there is some uncertainty about just how large the con-
tribution could be.
Wind energy has been "tried before", in the United States, United
Kingdom, Denmark, Germany and France, and elsewhere, as a source of commer-
cial electric energy, but large wind machines have never been produced and
installed in more than prototype quantities. ("Prototype quantities" usually
has meant just one machine.) Experience with the prototype units led in each
case to the conclusion that wind energy would be more expensive than, or at
least not substantially cheaper than, the other alternatives available. At
that time the other alternatives were much lower in cost than they are today
and no one perceived any limit to petroleum availability. Moreover, nuclear
power, it was believed, would become extremely inexpensive.
Today, when the economics of wind energy are believed to be more favor-
able (because the cost of oil, coal, and uranium has increased), there is
still no rush to wind electric systems. The situation is marked by uncer-
tainties. The electric utility companies are uncertain about the cost and
performance of big wind turbines, and about the magnitude of the wind
resource which may be available to operate them. The potential suppliers of
large wind turbines are uncertain about the size of the market, or if a
market even exists.
In order to be able to offer a product for sale at a commercial price,
with guarantees about life-time and performance, a market must exist for at
least several hundred units. When these uncertainties are resolved, by
government action or otherwise, commercial wind energy will become a
reality -- if the price is right.
Likewise, smaller windmills used in a dispersed manner for household
electric supply, space heat, or water heat have not appeared in large
numbers. Prices are high and reliability is uncertain — again, mainly
because of insufficient volume of production and sales.
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energy conservation and solar programs
We are accustomed to look to R&D and to technological issues as key
elements in determining the viability of a new energy source. There are
indeed important technological problems in the operation and in the design of
wind power plants, and there is an important role for R&D. Unlike fission,
fusion, coal conversion, photo-voltaic solar, ocean thermal conversion,
geothermal, or oil shale, however, technical issues are not primary in
determining wind energy utilization.
TASK 1. PROJECTIONS
The projections relating to wind energy use in the United States in the
years 1985, 1990, and 2000 are given for the amount of energy delivered, for
the number of machines installed, and for the total installed electrical
rated capacity of the machines in each of the three years, for centralized
(electric utility) and decentralized (dispersed mode) applications, and for
both a base case and an accelerated case.
The base case is defined as including the effects of programs and
activities identified in the President's energy policy (1977). The accel-
erated case reflects the effects of a credible group of incentives and
eventualities, discussed below. The accelerated case is intended to repre-
sent the maximum credible wind energy penetration which could be expected on
a peacetime non-coercive basis. It is to be taken as a reasonable upper
bound.
Realization of the accelerated case would require a number of the
following eventualities and incentives.
Eventualities: a) Expanded nuclear fission capacity disappears as an energy
option, because of serious nuclear accident, excessive
costs, public resistance, or for some other reason.
b) An OPEC embargo is imposed on shipments of oil to the
United States, persisting for many months and causing
dislocation and hardship.
c) Another tripling of crude oil prices by the producer's
cartel is put into effect.
d) Greatly increased public support results in a political
imperative for rapid implementation of renewable energy
resources. Wind energy receives a large acceleration
from such a program because it is implementable in the
near term.
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Statement of Dr Marshal Merriam
Incentives: a) A federal policy that all capital expenditures on wind
energy equipment until the year 2000 will be regarded as
part of the engineering development process in imple-
menting this new energy source and may be treated as R&D
for tax purposes.
b) Any local property tax assessed on the owner of an oper-
ating wind machine will be paid by the federal government
until the year 2000.
c) For electric utility companies, revenue from wind-
generated electricity, net of fixed costs, and O&M
(operation and maintenance) charges will be free of
federal tax until the year 2000.
d) Electric utility companies will receive, for each KWH of
wind-generated electricity, sold, a federal supplemen-
tation payment of C/KWH. A reasonable value under
1977 conditions might be 3C/KWH, decreasing to 2C in
1980. This payment is partly justified as a recognition
of the reduced social costs resulting from replacement of
polluting sources by wind.
e) Electric utility companies installing wind electric
capacity in the 1970s have 90 percent of the capital cost
reimbursed by the government. Wind electric capacity
installed in the 1980s is 75 percent reimbursed; in the
1990s, 50 percent.
f) Large government purchases of smaller windgenerators for
dispersed mode applications (1 -50 KW size) are made to
stimulate the market. The units are put to use at
federal buildings, military bases, and other installa-
tions .
g) Manufacturers of windgenerators up to 50 KW receive a
federal supplementation payment based on the number of
units sold. Initially this could be 100 percent; i.e.,
for every dollar received from a customer, the manu-
facturer is rewarded with a dollar of federal payment.
The size of supplemental payment could decrease in future
years. Though similar in effect to a tax credit for the
consumer, this scheme is better. Not all consumers pay
federal taxes (e.g., non-profit organizations, local
governments). Also, the administration is easier.
h) It is made a matter of federal policy that electric
utility companies are prevented from implementing tariffs
and policies which have the effect of discouraging the
use of wind energy by consumers already connected to the
electric grid. This requires recognition of the social
desirability of wind capacity, overriding the usual
economic basis for utility rate setting. Similarly, a
utility has little to gain by accepting synchronous
inverter interconnection with small windgenerators, but
there is a societal benefit in multiplying the number of
small windgenerators.
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energy conservation and solar programs
The quantity of energy to be supplied by wind is not very large on the
scale of total United States energy consumption. In 1976, U.S. energy con-
sumption was about 75 Quads. About one-fourth of this was used to make
electricity, which means that the amount of energy used as electricity was
only about 8 percent of the total, or 6 Quads. Both the total energy use and
the electricity use are projected (by others) to increase considerably by the
year 2000. Thus, wind energy is not likely to supply a major fraction of
either the energy or the electricity used in the United States in the year
2000.
However, this does not mean that implementation of wind energy should
not be pursued. Though not a major fraction of total use, the amounts of
energy and electricity supplied are large in absolute amount. If, as many
believe, considerable shortages of energy and electricity supply develop in
the 1980s and 1990s, installed wind capacity will be important.
The fact that even a minor percentage contributor to U.S. energy can
have great value can be seen by considering the importance of hydroelectric
power today, when there is not even any great shortage of energy sources.
Hydro supplies only about 1 percent of U.S. energy or several percent of the
energy restated on a 10,000 Btu/KWH basis. No one questions its value.
TASK 2. METHODOLOGY UTILIZED TO ARRIVE AT PROJECTIONS
The steps carried out were:
1. Review the available literature touching on this problem.
2. Review the previous recent projections of possible wind energy use
in the United States in the next 10-50 years. Compare, analyze for
plausibility and technological feasibility, apply corrections for
relevant information not known to the authors or ignored by them.
3. Develop a set of internally consistent numbers in the format and
for the years required for the report, using the results of Step 2.
4. Estimate future trends in costs of windgenerators and in conven-
tional power plants. Form an opinion about the future of fuel
prices. Compare with the assumptions which are built into the
results of Step 3.
5. Consider how much wind energy is likely to be available as a func-
tion of cost. Better sites are associated with lower cost energy.
6. Evaluate present and estimate future effectiveness of the govern-
ment wind energy program in stimulating wind energy development in
the United States.
7. Combine Steps 3-6 to arrive at the projections.
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Statement of Dr Marshal Merriam
Essential elements of the above process were:
1. Cost of windgenerators today.
2. Cost of windgenerators under quantity production conditions.
3. Cost of energy from windgenerators. Comparison with price of oil.
4. Extent to which windgenerators can displace capacity in electric
power networks and in dispersed uses, and extent to which they can
be effective as fuel savers in networks with fossil fuel generating
stations.
5. Estimates of the amount of wind energy available in the United
States subject to practical considerations like transmission costs,
transmission loss, at locations where wind machines would be
erected effectively.
6. Physical constraints on the utilization of this wind energy. For
example, environmental constraints, limits on the total amount of
extractable energy in a region (independent of the number of
machines erected), energy unextractable because of unfavorable
windspeed-time characteristics.
7. Cost of conventional electric power plants in the United States.
8. Present and planned ERDA wind energy program.
9. Cost of oil, coal, uranium, natural gas between now and the year
2000.
10. Estimate of availability constraints for oil, coal, uranium, and
natural gas between now and the year 2000.
11. Estimate of the probability of low cost electric energy from solar
by any of the various possible direct technologies.
Discussion of the steps carried out and of the essential elements:
Step 1.
The literature is quite extensive and growing rapidly. No purpose
would be served by listing it all here. A very selected bibliography is
given at the end of Task 4. Items listed are mainly those referred to in the
discussions following. Also provided is a list of available wind energy
bibliographies.
Step 2.
Recent projections of possible wind energy use in the United States
have been made by Lockheed-California Corporation (Ugo Coty, Principal
Investigator) and by General Electric Company, Space Division (John Garate,
Program Manager). These two large (approximately one-half million dollars
each) ERDA-contracted Mission Analysis studies are the only large, funded,
recent studies of wind power potential in the U.S. which are nation-wide in
scale.
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energy conservation and solar programs
Considering the lack of certainty about nearly all the key elements,
they reached conclusions which are remarkably similar. Both studies found a
large potential for wind energy in the U.S. over the next twenty years, even
without fuel price escalation.
Other authors (Hewson, Reed, Donovan) made estimates on wind contour
maps and general assumptions about machine spacing without attention to
costs. LeBoff argues that wind power for electricity generation on a large
scale is not feasible because of non-favorable costs. The Dubin-Mindell-
Bloome study (for Long Island only, not for the whole U.S.) claimed that wind
energy could supply a major part of the energy needs of the region and at
lower costs than other alternatives. Professor William Heronemus of the
University of Massachusetts was associated with the wind energy portion of
this study.
Steps 3, 4, 5, and 6 were carried out by use of conceptual judgment,
without computer modeling. For a discussion of the ideas on which the judg-
ment was based, see the discussion below, under Essential Elements.
Essential Elements 1: Cost of Windgenerators Today
This is not as trivial a question as it seems. It is not even obvious
in what units the cost should be quoted. Conventional power stations are
usually described as costing a certain number of dollars per kilowatt. This
number is obtained by taking the total cost and dividing by the rated out-
put --the nameplate capacity of the generators. For a wind machine, the same
procedure gives a considerably less meaningful number. When we speak of a 1
MW wind turbine, what is meant is that the electrical generator is rated 1
MW. To drive that turbine with mechanical energy extracted from the wind by
the blades of the windmill requires very long blades if the average windspeed
is low and shorter blades if the average windspeed is high.
The blades of the John Brown unit were 50 feet in diameter and those of
the NASA-ERDA machine were 125 feet, though both were driving 100 KW gener-
ators. The difference is in the rated windspeed. The machine delivers the
full rated power when the wind is blowing at rated speed or above. If the
wind machine is properly sized to the winds at the site, this is considerably
less than half the time. If the wind is blowing at less than the rated
windspeed, some fraction of the rated output is obtained. Thus, most of the
time a 1 MW wind turbine is delivering considerably less than 1 MW of power.
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Statement of Dr Marshal Merriam
A low $/KW figure can be obtained by simply putting a large generator
behind a small propeller and rating the combination at some high windspeed.
The high rated speed means that the full rated output will be hardly ever
delivered at a typical site. Only in a few very windy locations will the
combination represent a sound engineering design.
2
Another way to quote the cost is in $/m of swept area, corresponding
2
to the $/ft so commonly seen in discussion of solar collectors. This ap-
proach would seem to have merit, but it's hardly ever done.
If the aerogenerator is considered to be an energy source rather than a
power source, then the correct number to talk about is the cost per unit of
useful energy delivered -- C/KWH or $/MJ. The trouble with this is that the
number for the cost of energy is strongly site dependent -- the same machine
will give different cost of energy at different sites. Confusion results
when talking about reduction of machine costs by mass production economies.
We will try to use all three measures, understanding that when $/KW is
used it is presumed that the machine is properly matched to the site. A
machine properly matched to a site operates with a plant capacity factor
(PCF) of about 0.35. The number of KWH delivered in a year is equal to the
product of rated output, the number of hours per year (=8766), and the PCF.
Another reason the "cost today" problem is not trivial is that almost
all the large units built so far have been one-of-a-kind prototypes. The
costs are not well-defined in this situation. The design and development
costs in particular, being charged to just one unit, are unrealistically
large.
General Electric prepared a detailed quote for NASA for the construc-
tion and installation of two 1.5 MW aerogenerators, two-blade propeller type,
190 feet in diameter, rated windspeed 22 mph. In 1975 dollars, the quote was
$1586/KW for the second unit. These were prototypes with no follow-on order
expected; consequently, they carry a high learning cost, development cost,
and overhead burden. GE projects that the price would be somewhere in the
range of $250-$500/KW if 1000 units were built.
Lockheed numbers were not based on firm quotes, were somewhat lower,
and were for considerably larger rotors. Putnam, in 1945, made a very care-
ful study, based on bids from suppliers for supplying components in 100 unit
quantities, of the cost of building wind generation capacity based on the
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energy conservation and solar programs
Smith-Putnam design (two-blade propeller, 175 feet in diameter). His numbers
were updated by Hewson in 1973, with no allowance for economies resulting
from better engineering materials and design improvements and with probably
some loss of accuracy in the updating. Hewson's figure for the cost of 1.25
MW Smith-Putnam wind turbines in 1973 was $700/KW.
A similar exercise, updating the known costs of the 200 KW Gedser aero-
generator (Gedser, Denmark), carried out by a committee of the Danish Academy
2
of Technical Sciences, recently gave a figure of $280/m of swept area, which
was converted by M. Ryle, under certain assumptions, to a value of $700/KW.
The CANVA turbine, a 37 m high Darrieus rotor installed (summer 1977)
on the Hydro Quebec system at a very good site (Magdalen Islands) was quoted
by the manufacturer as costing about $1000/KW (not installed) in 1976
Canadian dollars for the first machine. A second machine would be under
$900/KW. Costs per KW depend upon the site, since a small rotor can drive a
big generator on a very windy site, whereas a big rotor will be required on a
less windy site.
Small windgenerators now commercially available cost well over
$1000/KW. The corresponding energy cost is 20-25C/KWH. If a large wind-
generator market developed for dispersed applications, mass production and
especially mass distribution would drop these costs.
Essential Element 2; Cost of Wind Generators Under Production Conditions
The aircraft industry is accustomed to estimating production costs of
expensive individual items produced in quantities which vary from one to
several thousand. One of the accepted fictions, which is known as "learning
curve", states that for each doubling of production quantity, the cost per
unit drops by a constant factor called the learning curve coefficient or "per
cent learning". Thus, if the first unLt costs $1000, the second will cost
$900, the fourth $810, the eighth $729, and so on for learning curve co-
efficient 0.9 or "90% learning". Quoted values of the learning curve co-
efficient vary downwards from 0.9.
The concept clearly has its limitations, since the cost saving at
increased production volume must depend on many factors: labor/material
ratio, production rate, fraction subcontracted, et cetera. The GE Mission
Analysis study tabulated all costs for two learning curve coefficients, 0.90
and 0.85. It makes quite a difference in long production runs what value of
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Statement of Dr Marshal Merriam
this coefficient is chosen. For example, if the cost of the first unit is
$1586/KW, the cost of the thousandth unit is $480/KW with a learning curve
coefficient of 0.90 and $250/KW with a learning curve coefficient of 0.85.
The Lockheed group used a more complex, and presumably more realistic,
learning curve. They assumed no learning at all for the first ten units,
then 0.85 for units eleven through one hundred and 0.87 for units between 101
and 1000. The 0.85 is claimed to be consistent with experience in manu-
facture of similar products. Some one-time costs were assumed to be present
also, to be amortized over however many units are produced.
To obtain benefits of the learning curve, it is necessary that the
design be fixed as to length of rotor, shape of airfoil, size of generator
and gearbox, et cetera. When this is done, the benefits of matching the
windgenerator exactly to the site are necessarily compromised to some degree.
However, there seems little doubt that the most cost-effective strategy is to
give up the benefits of exactly matching the generator to the site in the
interest of improved production economy.
The Lockheed group did a detailed costing exercise for a 2 MW design,
260 feet (79.2 m) in diameter rotor on a tower of height 180 feet (54.9 m).
The propeller was two-blade, all metal, designed to turn at constant rpm
(13.9 rpm). The design was optimized for a site having mean windspeed of
15.7 mph (7 m/s). At that windspeed, the tip speed ratio is 8.2. Account
must be taken of the fact that windspeed varies with height above ground:
the 15.7 mph is at 10 meters height.
They assumed non-recurring costs of $4.5 million and supposed 100 units
were built. Then the unit price, including profit, was $1.7 million. If
1000 units were built, the unit price dropped to about $1.1 million. These
numbers correspond to $860 and $550/KW. The GE design (190 feet in diameter,
1.5 MW) was for a slightly higher mean windspeed. Another GE design for
comparable mean windspeed, resulting in a 219 feet in diameter rotor, 1.5 MW,
and with the GE costing formula, was estimated at $820 and $50/KW for 100 and
1000 units respectively, if the 0.90 learning curve coefficient was assumed.
At 0.85 learning, the numbers were $500 and $300.
In another study, Boeing-Vertol Company, at the request of a group
studying wind energy prospects in the Texas Panhandle, estimated a cost of
$531/KW leading to an electric energy cost of 2C/KWH for a machine rated 1 MW
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energy conservation and solar programs
at 22 mph. It was assumed that a total of 1000 units would be produced. The
cost estimates were in 1975 dollars.
Probably the Lockheed estimates are the most careful, but there is in
any case considerable agreement among the three estimates.
It is essentially impossible for anyone outside a manufacturing company
to do the kind of detailed costing that leads to the Lockheed and GE es-
timates. Anyone can make a guess at the learning curve, but the cost start-
ing point -- the cost of the first few units -- and the one-time costs of
setting up production cannot be accurately determined without access to all
the details that are known only to those in the industry.
Essential Element 3: Cost of Energy From Windgenerators, Comparison With
the Cost of Oil
The cost of energy from an aerogenerator depends on a variety of
factors ranging from the strength of the wind to the local interest rate.
Some of these factors are different for privately-owned utilities and pub-
licly-owned utilities and for utilities and non-utility users, such as indus-
tries and residences. Taxes and interest rates fall especially into this
category. Thus, the cost of wind energy depends on who is using it.
However, the cost of fuel oil is generally about the same for all large
users. Geographical location and quantity of purchase have a small effect on
the cost, but the institutional nature of the buyer does not -- at least not
much. (This could change if there are changes in the way fuel oil is taxed.)
The consequence is that replacing fuel oil with wind energy may be advanta-
geous for some users and, at the same time, not be advantageous for others,
even if both have equally windy locations.
To illustrate the above, consider this adaptation from reference 11.
For two different interest rates and considering various kinds of taxes, the
annual charge on capital (based on thirty-year depreciation life) necessary
to amortize a wind power plant is compared for three different types of
user -- private utility, public utility, and federal agency.
For the higher interest rate (10 per cent private, 6 per cent public, 6
per cent federal agency), the annual charge rates are .185, .108, and .096
respectively. The meaning of the annual charge rate is that the annual cost
of generating energy is 18.5 per cent of the initial installed cost of wind-
generator in the private utility case. To obtain the cost of energy, it is
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Statement of Dr Marshal Merriam
only necessary to calculate the number of KWH which the wind machine delivers
in a year and divide.
To calculate the amount of energy delivered in a year is not easy.
"Estimate" would be a better word than "calculate". The result depends both
on the wind characteristics at the site -- which are never known exactly --
and on the design of the wind machine. Some allowance must be made for
maintenance time. A very important assumption is that all the electric power
the wind machine can deliver can be used. This is the conventional assump-
tion, but if it is not true, then a further reduction in useful output must
be factored in.
For the Lockheed 2 MW, 260 feet in diameter unit, the output, estimated
as carefully as possible, is 8.1, 9.6, 10.8 million KWH/year at mean wind-
speeds of 6, 7, and 8 meters/second respectively (1 m/s = 2.25 mph). The
mean windspeeds are for 10 meters height; the variation of windspeed with
height has been taken into account (since the windgenerator uses the wind at
heights much greater than 10 meters) by assuming a relationship between the
T? a
H /H \
windspeed at height H and at 10 meters: = [ — ] with a = 0.23. Other
V10 \10/
authors have used smaller values of a. This value is the one recommended by
Justus.
Looking at these data, it is apparent that: (1) the tax and interest
rate differences associated with the different kinds of users have more
effect on the cost of wind energy than anything else; (2) the number of units
produced is next most important; (3) the mean windspeed is third most impor-
tant. Though it does not show up in the data explicitly, the engineering
design of the windmill is probably fourth in order of importance in the
factors influencing wind energy costs.
There are various public strategies possible which could shift the
private utility 0.185 charge rate (10 percent interest) to 0.145 or even
less. These include government-guaranteed loans, issuance of tax exempt
bonds, direct subsidy for the energy generated in recognition of its pollu-
tion-free nature, et cetera.
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energy conservation and solar programs
The cost of fuel oil used to generate electricity can be easily stated
on a 0/KWH basis. Suppose the price of diesel fuel oil is $15/bbl. There
are 132,000 thermal Btu in one gallon of oil and 42 gallons in a barrel.
About 10,000 thermal Btu are required to generate one kilowatt-hour of elec-
tricity, on the basis that all the Btu chemically present in the fuel are
counted as thermal Btu. Combining these numbers gives 2.7C/KWH. For diesel
engine sets and gas turbines, which are less efficient, a better number is
3C/KWH.
Windgenerators are economically feasible now as fuel savers for public
utilities and federal agencies at 100 unit production runs and for private
utilities at 1000 unit production runs, provided suitable sites with mean
windspeed of at least 6 m/s (13.2 mph) are available.
Essential Element 4: Extent of Capacity Displacement/Fuel Savings
The cost of electricity produced by fossil fuel/nuclear power stations
is partly attributable to the cost of fuel and partly represents an amorti-
zation charge on capital. The proportion varies, being mostly fuel for an
oil-fired peaking plant and mostly capital for a large nuclear plant. Typi-
cally, the two components are comparable in magnitude.
If it were possible for a collection of windgenerators totaling 1000 MW
rated capacity to eliminate the need for building a new 1000 MW conventional
station in the system, the worth of the windpower would be substantially more
than it would be if the conventional station still were needed and the wind-
generated electricity only went toward saving fuel.
Eliminating the need for the conventional station is known as "capacity
displacement". If it could be shown that a substantial amount of capacity
displacement is practical with windgenerators, the enthusiasm of the electric
utility companies for this unconventional source would increase noticeably.
The straightforward way to improve the supply reliability of a wind
generating station -- i.e., to increase the probability that 1000 MW of wind
generation capacity can deliver 1000 MW of power when called upon to do so --
is to provide storage. How much storage is required?
Some results obtained by Sj5rensen are of interest in this regard.
S^rensen used the known generating characteristic of the 200 KW Gedser ma-
chine and known hourly windspeed data from the 56 meter meteorological mast
at Ris0, Denmark. By combining these, he was able to determine what fraction
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Statement of Dr Marshal Merriam
of the time a wind machine at RisjS would be able to deliver at least its
average power. With no storage, this fraction is approximately 0.42. With
storage, the situation improves.
When output exceeds the average, the excess is assumed to go into the
storage to be withdrawn when needed in order to keep the combined wind gene-
ration and storage output at the average power. Using hourly data for an
entire year, it was found that ten hours of storage would improve the frac-
tion of time the plant can deliver at least its average power to 0.62;
twenty-four hours of storage raises it to 0.73.
The PCF (plant capacity factor) of a nuclear or fossil fuel base load
plant which is controlled by scheduled and unscheduled maintenance downtime
is not a great deal more. In fact, the industry-wide average for nuclear
plants is in the range of 0.5 to 0.6. Since sometimes the nuclear plant
operates at reduced capacity, this corresponds to a fraction of time that the
plant delivers average power of 0.6 to 0.7. The PCF of a windgenerator is
controlled by the wind statistics, so the non-generating time cannot be
scheduled, though to some extent it may be predicted.
On the other hand, 1000 MW of wind capacity will never be shut down
without warning for unscheduled maintenance, since the wind capacity consists
of many hundreds of individual units which can hardly all fail at once.
Weight may also be given to the fact that the 'fuel' for the windgenerators
cannot be interrupted by embargo or strikes. It is apparent that the wind
system has elements of reliability that no fossil- or uranium-fueled system
can have.
In any case, the reliability of a wind system can certainly be improved
to be comparable to that of any other power plant if storage is used. The
amount of storage is not excessive. From ten to one hundred hours is enough,
depending on requirements and local wind characteristics.
The technology and cost of the storage is, at this point, not clear,
and the best trade-off between storage cost and increased worth of the wind
energy resulting from better PCF is also not clear. The cost of pumped
hydraulic storage -- the only on-line large-scale technology -- is at present
$150 to $300/KW. The cost of short-term electrochemical (battery) storage on
a power system scale has been estimated by the Lockheed group at $15/KWH plus
$48/KW rating for batteries which last ten years. This amounts to $200/KW
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energy conservation and solar programs
for a system to store 1000 MW for ten hours. Battery storage for dispersed
mode (small scale) applications is currently in use: it costs $50 to
$70/KWH.
If the hundreds of wind generating stations making up the 1000 MW of
wind generating capacity are sufficiently dispersed geographically, somewhat
less storage than would otherwise be necessary will suffice to achieve a
given PCF. The magnitude of this effect and the extent of geographic dis-
persion necessary are not well known at present.
The worth of windpower in a utility system with a mix of generating
sources has been discussed by Putnam. The situation is very complicated and
depends a great deal on the nature of the other generating sources in the
system.
Sometimes storage will be necessary even to obtain the fuel-saving
value of wind-generated energy. For example, the wind energy may be avail-
able at a time of low demand (middle of the night) when the only other plants
operating in the power system are large, high capital cost, low fuel cost,
nuclear, or fossil fuel stations. It may be impossible to economically turn
these large plants off and on to accommodate changing wind.
A few systems run diesel generators and/or gas turbines a large frac-
tion of the time, though these are normally intended to be used for peaking
power. Some systems have hydro capacity, which amounts to easily controlled
zero cost storage. The water is simply held behind the dam when the wind-
power is available -- a concept we call "displacement storage". Sometimes
(as in run-of-river plants), displacement storage is limited because of
limited reservoir size or need for the water downstream.
In general, however, systems with hydro or systems which run diesel or
gas turbine generators most of the time will be able to make full use of wind
energy without building separate storage facilities. The utility systems
with large base load stations requiring perhaps thirty minutes to turn on or
turn off, supplemented by infrequently operating peaking sources (one or two
hours per day, for example) and not having access to hydro will have diffi-
culty making economic use of windpower unless storage is provided. Inter-
ties with other systems, in some cases, can relieve the need for storage.
Utility systems having good wind sites, where output from windgener-
ators can be expected to be available most of the time it is needed, can save
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Statement of Dr Marshal Merriam
money by replacing base load capacity with wind capacity in parallel with
dedicated oil-fired peaking capacity (e.g., gas turbines). This is because
base load capacity costs four to five times as much as peaking capacity. Of
course the economies disappear if the peaking capacity, which consumes lots
of expensive fuel, has to run too often.
An ideal use of wind energy is to serve an interruptible load — one
which does not require a constant flow of power. Examples are: pumping
water (crop irrigation, animal or human domestic supply, pumping from hydro
powerhouse afterbays into upper reservoirs, et cetera), heating water (with
immersed resistor or with mechanical friction), making ice by vapor com-
pression refrigeration, cooling a large building or refrigerated warehouse,
making hydrogen or anhydrous ammonia, and many others. Some of these inter-
ruptible loads are well suited to large-scale wind systems; some are suited
to dispersed applications.
The creation of a new class of 'truly interruptible1 utility service
with supply reliability 50 percent or less and very low rates would be a
creative way to stimulate this type of load.
The preceding are some of the considerations bearing on the question of
the extent to which windgenerators can displace capacity in the electric
power networks and in dispersed uses, and the extent to which they can be
effective as fuel savers in networks with fossil fuel generating stations.
Unfortunately, appreciation of the various considerations does not lead
to an answer for the question. To answer the question requires that the
amount of storage provided be specified in each application and also requires
that the other generating capacity in each system for which wind generation
capacity is proposed be fully characterized, even down to such details as
part load efficiencies, start-up and shut-down time profiles and the like for
each generator, boiler, or nuclear reactor. Also, the wind profile at the
wind sites to be used must be characterized. Use of national averages for
some of this information will give wrong answers for national fuel saving or
capacity displacement by wind.
I have prepared the estimates of Task I by supposing that capacity
displacement by wind will be negligible to the year 2000, but that all the
wind-generated energy available may be used to save fuel.
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energy conservation and solar programs
Essential Element 5: Amount of Wind Einergy Available
There is an unfortunate tendency to think of wind as an energy source
comparable to, say, natural gas, and then to try to specify the amount avail-
able in the same way one might try to specify the amount of natural gas
reserves.
Wind is an energy source, and it is appropriate to discuss the mag-
nitude of the resource, but the comparison to reserves of a fossil fuel is
inappropriate. The fossil fuels are highly concentrated energy -- suffi-
ciently concentrated so that when found, they are quite likely to be worth
extracting. The problem is finding the resource. Economically extracting it
and converting it to electricity or heat is usually not the problem.
With wind energy, the problem of extracting, converting, and trans-
porting the energy in an economical manner becomes dominant. Though there is
indeed a problem in locating the regions of very high wind energy density,
wind energy, in fact, is widely distributed. The problem becomes more one of
economics than of prospecting.
The total amount of wind energy circulating over the world, or over the
United States, is very large and not very relevant. We are certainly not
likely to be able ever to economically tap more than the lowest 200 meters or
so, and then only in selected locations.
Considering now the electric utility applications, energy in the wind
will never show up as useful energy in the powerline unless the installation
and operating of wind turbines can be demonstrated to be an economically
rational activity for the electric utility companies or federal agencies or
other users who will have to invest the capital and make use of the power.
The cost of wind-produced electricity depends on many things, as
earlier noted. Windspeed is one of them. Studies presently indicate that
the Texas High Plains are windy enough to make installation of wind turbines
a paying proposition now for a private utility in Texas, and that Minnesota
is not. Thus, the wind over Minnesota is presently not a usable resource,
whereas the wind over Texas is. In the future, the situation could change.
The size of the wind energy resource depends on the price of oil.
Power in the wind increases with the cube of windspeed, so it is
important to locate sites having high average windspeed. If a large number
of such sites exist in regions which are not hopelessly isolated, then it is
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Statement of Dr Marshal Merriam
possible to estimate a large total amount of potentially available wind
energy. There are two major difficulties in attempting to form such an
estimate with any accuracy.
The first is that stations which have been set up to measure windspeed
have been established for some reason other than wind energy study. Thus,
they are not located in high wind places. The usual locations are airports
and city centers: both airplanes and humans prefer to congregate in places
which are not excessively windy. If the several dozen wind-monitoring sta-
tions in Nevada, for example, show an overall average annual windspeed of 12
mph, it does not mean that a reasonable average windspeed for all the land
area where windmills might be sited in the state is 12 mph. In fact, there
are probably many sites — perhaps more than half the land area of the
state -- with annual average windspeeds of 15 mph or even more.
The second of the major difficulties is that what wind data there are
usually are taken at 10 meters (33 feet) height above the ground. Large wind
machines would use the wind in a strip from a little above ground level to
perhaps 90 meters height, depending on the rotor diameter. Windspeed
increases with height above ground; the question is how much. As already
mentioned, the height dependence is usually expressed as a power law:
V / \a
H /H\
rr— = I Tft)» where ¥„ is the unknown windspeed at height H; Vir. is the wind-
V10 \10/ H 10
speed at 10 meters; and a is an empirically determined coefficient.
The most commonly cited value of a is 0.14. This is based on data from
anemometers at different heights on a few television towers. Justus, after
extensive analysis, concluded 0.23 was the best choice for a. If H is 50
meters, the two choices give 1.45 and 1.25 for the velocity ratio. Cubing
the ratio, the available windpower estimated if the 0.23 number is used is
1.56 times that estimated if the 0.14 number is used, so it makes a
difference.
There is good evidence that a varies from place to place and even at
different times during the day in any one place, and the variations are not
small. Thus, wind data extrapolated from 10 meters height upwards to wind
machine height lose most of their reliability.
Because of the preceding two difficulties, windpower estimates based on
contour maps with contours of constant windspeed (isovents) are not very
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energy conservation and solar programs
accurate. However, they do suffice to show that there is probably plenty of
wind energy available and that considerations other than the quantity of
windpower in the air will limit wind energy utilization.
The Lockheed group used a somewhat more detailed method to estimate the
land area having high mean windspeeds. They found the mean annual windspeed
for all stations having ten years or more of good data -- over 700 in the
United States. Then they determined the percentage of these having mean
windspeeds of more than 7 m/s (15.7 mph). (This was chosen because it was
thought to be the lowest windspeed economically utilizable today.) The
result was a small percentage -- about 2 percent.
It was then hypothesized that the same percentage of the total land
area had mean windspeeds over 7 m/s. From the total land area, they sub-
tracted the highways, military bases, national parks, urban areas, et cetera,
and supposed that 2 percent of the remainder would be the usable wind loca-
tions having mean windspeed, at 10 meters height, of over 7 m/s. Then an
assumption was made about the increase with height and about the allowable
machine spacing, and the machine characteristics were factored in.
12
The result was that 10 KWH annually could be obtained from the land
12
area of the United States. 10 KWH is a lot: U.S. consumption of elec-
12
tricity in 1977 will be about 2 times 10 KWH. Incidentally, only a tiny
part of the land area is used by the machines themselves; most is required to
avoid wake interference. Because of the conservative way the uncertainties
were handled and the fact that offshore areas were not included, it could be
12
argued that the correct number should be two or three times 10 KWH/year.
The conclusion from all analyses is that the amount of wind energy
potentially available for generating electricity in the United States is very
substantial on the scale of present electricity use. Since less than 10
percent of U.S. energy use is in electrical form, this does not necessarily
mean that the amount of wind energy is large on the scale of total U.S.
energy consumption -- especially if this consumption figure is projected
twenty-five years into the future, increasing a few percent each year
compounded.
The accuracy with which the amount of potential wind energy available
is known is not good at all. A careful program of wind measurement might
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Statement of Dr Marshal Merriam
show that the actual amount is three times -- or perhaps only one-third --
what we now think it is. "What we now think" depends on whom you ask. I
12
would say 10 KWH/year from an installed capacity of about 300,000 MW.
All the preceding has been for the case where the wind energy is used
to make electricity to go into regular transmission lines operated by public
utility companies. There is a potential for dispersed applications, small
machines near the point of use providing energy for electricity, hot water,
or space heat, or for agricultural and industrial purposes. Dispersed use
would show up in the national energy accounts as a reduction in demand.
Since the value of electricity at the point of use is greater than it
is when put into the power company's transmission system (commercial tariff
in the Northern California area in late 1977 was 4.7C/KWH versus a cost to
the power company at the source of about half that), lower windspeeds can
economically be used. Moreover, the independence or partial independence
from the main power grid could become important as future supply becomes
insufficient and load-shedding becomes common.
Use of wind energy as heat eliminates the storage-intermittency prob-
lem, as does interfacing at-home wind-electric systems with commercial power.
Dispersed applications are not economically viable now because the small
machines are too expensive.
Studies of the potential wind energy available for dispersed appli-
cations have not been made. To make a rough estimate, let us suppose that
there are ten million dwelling units which could make use of wind machines
rated at 30 KW. Using an average PCF of 0.35 for the machines gives 300,000
12
MW installed and about 10 KWH/year, the same as the centralized appli-
cations. Whether the amount of dispersed capacity which will be installed
will turn out to be comparable to the centralized wind electricity capacity
is another matter.
In any case, the amount of energy in the winds of the United States
seems large enough so that it is not likely to limit wind energy utilization
in this country for some time.
Essential Element 6: Physical Constraints on the Utilization of Wind Energy
Consider a flat plain with a high average windspeed. Suppose the
windspeed is everywhere the same over this hypothetical flat plain, though it
may vary with time. How much wind energy may be extracted?
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energy conservation and solar programs
This turns out to be not such a simple question. There are two
physical limitations on how closely wind machines may be spaced. One is wake
interference. Downwind of a large operating wind machine is a wake, where
the wind is altered in form (made more turbulent) and reduced in magnitude
(energy has been removed from it). If a second machine is located in the
wake interference region, it will not deliver as much energy as it would if
the first machine were absent.
The other physical limitation is overall depletion of the wind energy
in the lowest 100 meters or so of the atmosphere, which is the layer the wind
machines extract energy from. If the whole plain is covered with large wind
machines, those in the central portion of the array and on the downwind edge
will not be able to deliver as much energy as those on the upwind edge unless
the machines are spaced far enough apart to correspond to the rate at which
energy is coupled into the lowest layer of the atmosphere from the winds
above.
The first of these problems, wake interference, has been investigated
with model wind turbines in a wind tunnel and also by field measurements
behind the NASA-ERDA 100 KW Sandusky, Ohio machine. More work remains to be
done, but the problem is reasonably well under control. It appears that a
spacing of 5 rotor diameters is adequate to avoid excessive wake inter-
ference, provided only that the wind turbines are not laid out in straight
rows.
The second problem is not completely understood. At present, the only
approach is through calculation. The calculations become quite involved and
depend on models of the terrain and the atmosphere which may or may not
correspond to the actual situation.
Railly has estimated that the allowable density of wind machines on a
large flat plain in order that the undisturbed windspeed be available to all
2 2
the machines is in the neighborhood of 1500 m of wind turbine area per km
of land. For machines with 200 feet (61 m) in diameter rotors, that density
2
is only 0.5 machine per km -- a separation of thirty-five rotor diameters.
This is much greater than the wake interference limit, and, if true, says
that available wind energy is likely to be limited by the ability of the
winds at greater heights to couple energy into the layer of moving air next
to the ground.
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Statement of Dr Marshal Merriam
Environmental constraints seem unlikely to limit the use of wind
energy. Large wind turbines do not make much noise. According to earwitness
reports, the operating noise of the 100 KW Sandusky unit cannot be heard over
the general wind noise. Bird kills, insect kills, or other direct inter-
ference with fauna of the region are expected to be negligible. In fact,
there is every expectation that land beneath and close by operating aero-
generators will be usable for agriculture.
Some interference with human activity or aesthetics may occur (for
example, interference with television reception up to a distance of about a
mile), but these seem likely to be minor. Visual impact is cited sometimes
as a possible negative factor, but it seems unlikely, judging from past
experience with tall buildings, TV towers, and transmission lines, that this
will seriously constrain wind machine deployment.
It is possible to imagine a situation where a site which would appear
very promising on the basis of high average windspeed is in fact not promis-
ing because of an unfortunate windspeed-time characteristic. For example, if
the diurnal pattern were such that the wind usually blew at high speed in the
middle of the night when demand was low and the energy had low value, and at
very low speed other times, then economic viability of the site for wind
energy would be less than one would at first have thought.
Another bad situation would be if the ten-year expected maximum wind
was so high that survivial of the wind machine was doubtful. Other bad
situations are imaginable. It seems doubtful to me that any unfavorable
windspeed-time situations are likely to occur with sufficient frequency to
cause a downward revision in the estimates of windpower availability.
Essential Element 7: Cost of Conventional Power Plants
The cost of coal base load capacity today is about $500/KW, oil
slightly less -- perhaps $450 -- and nuclear somewhat more, perhaps $850.
Hydro and geothermal are highly site dependent and are usually not possible
anyhow. Oil-fired peaking capacity costs only $150-$300/KW. The tendency is
to compare the (uncertainly known) cost of wind power plants with these
numbers.
However, a straightforward comparison is simplistic. Variations in
supply reliability, fuel requirements, future fuel supply uncertainties,
environmental impact, construction lead time, political opposition, and many
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energy conservation and solar programs
other factors make the inter-comparison a vastly more complicated process
than simply comparing the apparent first cost. Even on a first cost basis
the comparison is misleading, because a wind station started now will be
working in two or three years, whereas a nuclear station started now will be
working in eight or ten years. A comparison of today's prices is not
appropriate in a world of changing costs.
There is an even more fundamental difficulty. Comparing alternatives
in terms of money costs makes sense if a number of alternatives are available
and only one is to be purchased. We seem to be moving toward an energy
supply situation where this is not the case. It may well be that a perceived
shortage of supply sources will motivate the procurement of at least some
wind energy conversion equipment because it does not depend on a fuel which
could become unavailable and because it can be procured with certainty.
Essential Element 8: ERDA Wind Energy Program
The extent to which wind energy is used in the United States between
now and the year 2000 depends a great deal on the vigor and effectiveness of
the federal wind energy program. It is difficult to imagine a private firm
taking the full risks associated with a completely new product of this
magnitude.
Unfortunately, the federal government has never brought a new tech-
nology into being with federal R&D money and subsidy when cost effectiveness
was important. The principal contractors in the ERDA large wind turbine
program have a long and successful history of accomplishment which does not
include effective cost control.
If a number of "demonstration" windgenerators are installed and only
serve to demonstrate economic infeasibility, wind energy utilization will be
delayed. If the wind program concentrates exclusively on R&D of new types of
machines, the prospect of large cost reduction through production of estab-
lished types will disappear.
It appears to me that the ERDA Wind Energy Branch is proceeding in a
coherent and effective manner at present. The guiding philosophy is con-
cerned with reduction of risk by reducing uncertainties -- uncertainties in
machine performance, in machine cost, in knowledge of the wind resource, in
systems application.
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Statement of Dr Marshal Merriam
At present, ERDA itself is the customer for all the large wind machines
produced. When the time comes to move from engineering experimentation to
commercialization, it will become necessary for ERDA to take some action to
reduce financial and business risk to the first manufacturers and operators.
This action will have to be production-oriented, not R&D-oriented, which is
an unfamiliar stance for government.
In making the estimates of Task 1, I have supposed that the federal
wind energy program will continue to be effective. As noted, the "accel-
erated case" involves substantial incentives and/or major eventualities.
Essential Element 9: Cost of Fossil Fuels and Uranium to the Year 2000
This is a subject which has been reviewed by many economists, energy
specialists, and general prognosticators at great length. Past predictions
have not proved notably accurate. Major determinants of fuel prices are not
subject to numerical analysis or quantitative extrapolation, being political
or monopolistic in nature. Fuel prices are not determined by cost of pro-
duction in a fuel-short world.
Some predict that fuel prices will rise no more rapidly than general
inflation, or at most, 5 percent or so more rapidly than general inflation.
In fact, this sort of future view is often regarded as the only responsible
one by corporate or governmental planners. On this basis, there is certainly
a place for wind energy, but not as large a place as if a more rapid esca-
lation of fuel prices is assumed.
My judgment is that fuel prices will rise in an erratic and irregular
pattern between now and the year 2000, and that the overall rate of rise will
be substantially greater than 5 percent above general inflation when averaged
over the whole time interval. The rate of increase of energy costs will
contribute substantially to inflation and will lead the way. Labor costs in
the United States will decline relative to energy costs, which means that the
competitive position of wind and solar technologies will improve.
The basis for my belief in future substantial fuel price rises is
geologic and political. I believe that oil and gas supplies world-wide will
be noticeably depleted by the year 2000, though far from exhausted, and that
the countries with small populations and large fuel reserves (e.g., Saudi
Arabia) will have the strength and control to limit production when it is in
their own interest to do so.
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energy conservation and solar programs
I am less certain about the future of uranium prices than I am about
oil prices, but I believe the same considerations apply. In any case,
uranium will remain a less important fuel than oil. Development or non-
development of the breeder reactor is unimportant in this context.
Essential Element 10: Availability Constraints on Fuels to the Year 2000
Governments in the fuel-consuming countries, such as the United States,
are likely to intervene in the market to limit price rises initiated abroad,
especially during periods of rapid price increase. Failure to let the market
do the rationing will certainly result in availability constraints. Such
availability constraints, which could be considerably more severe than the
natural gas shortage in the Eastern United States in the winter of 1976-'77,
will have a stimulative effect upon the introduction and use of the inex-
haustible sources, including wind.
Essential Element 11: Probability of Low Cost Solar Energy
This is an important consideration in assessing the market penetration
of wind energy. The solar resource is widely distributed, and the avail-
ability does not vary as much from site to site as for wind. Arizona has
2
typically 250 watts/m (year-long average, including night hours), and New
York has typically 150, leading to the conclusion that a solar technology
which is economically successful in Arizona is already at least marginal in
New York.
Low cost electric energy from solar-photothermal or solar-photovoltaic
or solar-OTEC or solar-biomass or any other solar technology would raise a
serious issue as to whether wind energy was worth pursuing with a major
effort. Not only centralized wind energy exploitation would be affected, but
also decentralized applications, at least those where it is planned to use
the output of the wind machine as heat. However, it is unlikely that the
wind program would be as seriously set back by progress in the heating and
cooling of buildings program as it would be by major cost reductions in the
cost of solar-generated electricity.
In my mind there is little doubt that wind-generated electricity will
be substantially less expensive than solar-generated electricity for many
years to come. Official ERDA predictions have recently been heard to the
effect that the cost of photo-voltaics will drop to $ I/watt within two years.
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Statement of Dr Marshal Mernam
Even if this should be true (and I do not believe it), the number is
$l/peak watt, corresponding to $5000/average KW: not competitive with wind
machines. Solar power tower is likely to prove an expensive white elephant,
and OTEC may not even work in an engineering sense. (Of course the pro-
ponents of these schemes do not see it quite this way!) Solar-biomass is the
least known, though possibly the most promising solar route to low cost
electricity.
I do not expect that low cost solar electricity will limit the appli-
cation of windpower before the year 2000. If it does, so much the better for
all of us.
TASK 3. REVIEW OF OTHER PREDICTIONS AND METHODOLOGIES
First, before discussing methodologies, we summarize some of the pro-
jections published by reputable and knowledgeable people in recent years:
1. E. Wendell Hewson Bull. Am. Meteorological
Oregon State University Society 5_6 (7), July 1975,
pp. 660-675.
12
Windpower available to man over the whole earth: 10 watts.
Windpower is capable of supplying at least 10 percent of the nation's
electrical energy requirements by the 1990s, at a cost which will be
competitive with conventional power sources.
2. Jack W. Reed "Wind Power Climatology",
Sandia Laboratories Weatherwise 27 (6) 236-242
(1974).
Several times the national electricity consumption could be extracted
from the winds in the High Plains of the U.S.
3. William Heronemus cited in SCIENCE 184 1055-58 (1974).
University of Massachusetts
12
By the year 2000, windmills could be supplying 1.5 x 10 KWH/year of
electricity to national power grids.
4. NSF/NASA Solar Energy Panel "An Assessment of Solar Energy as
a National Energy Resource",
p. 69, (1972).
(cited by LeBoff, ref. below).
A reasonable value of expected power (note: must mean "energy") from
12
the wind by the year 2000 is about 1.5 x 10 KWH/year; this is about 8
percent of the projected total U.S. energy demand in the year 2000.
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energy conservation and solar programs
5. J. Peter LeBoff "Windpower Feasibility", Energy
Resources for the Future, Inc. Sources 2 (4) 361-376 (1976).
Windpower is non-competitive with other energy sources at the present
time, and so no appreciable contribution by wind energy to national
energy supply is to be expected for the forseeable future.
6. Ugo Coty "Wind Energy Mission Analysis"
Lockheed-California Company Report LR 27611, Oct. 1976,
Burbank, California Executive Summary
If fuel prices rise as much a 7 per cent above annual inflation rates,
wind turbines could furnish 1.21 trillion KWH/year (=1.2 x 1012 KWH/
year), about 19 per cent of U.S. consumption forecast for 1995. If
oil, gas, coal do not escalate in price above inflation trends, as much
as 4.8 per cent of 1995 national electrical demand can be furnished by
wind turbines at a price less than the equivalent fuel cost.
Wind energy that can be extracted over coterminus U.S. exceeds 48
trillion KWH/year or over seven times the high forecast electrical
demand for 1995. Over open range land, more than 15 trillion KWH/year
can be generated.
7. John A. Garate "Wind Energy Mission Analysis"
General Electric Report COO/2578-1/1
Space Division Executive Summary
There is sufficient wind energy available in the United States to
12
provide over a trillion KWH/year of electricity (10 KWH/year), which
is equivalent to 13.6 percent of the projected energy demand in the
year 2000. This estimate is conservative. It is unlikely that all the
available wind energy will be utilized in the year 2000. A more rea-
listic estimate of the energy contribution from wind in that year is
12
0.5 to 7 percent of the energy demand (=0.04 to 0.5 x 10 KWH/year).
The potential for decentralized electricity uses is about a fourth of
that for centralized electricity generation.
Comparing these, we note several things:
a) Two of the estimates, #6 and #7, are based on a great deal more
work and analysis than are the others, and consequently should be
weighted more if we are to engage in an exercise of seeking truth
by consensus.
b) Bearing in mind that the national consumption of electricity in
1977 is about 2 x 1012 KWH/year, we note that //I, #2, #3, #4, and
#6 are in general agreement about the magnitude of the possible
future contribution of wind energy to national electricity require-
ments. The estimate of source #7 is somewhat lower, and that of
source #5 is very much lower -- approaching zero, in fact.
c) None of the sources feel that the amount of wind energy utilized
will be limited by the amount of wind. There is plenty of wind.
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Statement of Dr Marshal Merriam
d) Most of the sources stress the application of wind energy to pro-
ducing electricity for centralized grids, though some consideration
of decentralized uses is given by #7 and //6. In other more recent
work, the author of //3 has become a promoter of decentralized use
for heating.
Next, discussing the various methodologies:
#2, Jack Reed's remark, need not be considered further, since it is
entirely climatological in nature and does not relate to the question of how
much of the available energy actually will be used.
#1, #3, and #4, which are all in agreement, cannot be discussed further
because no details of the methodology used were given in the papers I looked
at. In some cases, there probably was not much methodology.
//5, LeBoff's analysis, is clear and to the point. He concludes that
windpower is not a feasible proposition because it's too expensive, so
there's no point in worrying about how much is there. Being too expensive
now doesn't guarantee it will be so in the future -- if fuel costs escalate
sufficiently, anything can work out -- but to postulate a substantial esca-
lation is not a sound basis for planning, Mr. LeBoff apparently feels. We
now explain and criticize his argument.
According to LeBoff, the key is to write the busbar cost of electricity
as a function of the various elements which contribute to it, as follows:
(CC) (FCR) + (FC) + (PC) + (MC) BBC = busbar cost (C/KWH)
BBC = (PR)(LF)(HPY)CC = capital cost
FCR = fixed charge rate
FC = fuel cost
OC = operating cost
MC = maintenance cost
PR = plant rating (KW)
LF = load factor
HPY = hours per year (8766)
For wind, FC = 0 and OC and MC are expected to be small. CC is of
major importance. Also of major importance is LF, which is equivalent in
this analysis to PCF, which we defined earlier.
For CC, LeBoff considered various values mostly in the $500-$1000/KW
range, considering especially the $700/KW which was Hewson's update of
Putman's analysis. As an FCR he took 0.17. As an LF, he considered a range
from 0.30 down to 0.10.
Since the Hewson $700/KW was in 1971 dollars, LeBoff compared the re-
sulting BBCs with actual BBCs from conventional power plants in 1971 — these
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energy conservation and solar programs
are published numbers. Under the most optimistic LF assumption, he found the
cost of wind-produced electricity to be five times the BBC of conventionally
produced electricity and thus infeasible.
In my opinion, there are serious errors in the LeBoff analysis, though
the method is fundamentally sound. The most glaring is that the crucial
comparison was made on the basis of 1971 conventional BBCs when the nation's
power stations were running on pre-embargo oil and cheap natural gas (a later
comparison in his paper used 1974 costs). Another problem was the use of an
LF range from 0.10 to 0.30, whereas I would have used 0.25 to 0.45, and
Justus has pointed out that the NASA-ERDA Mod-0 machine would run at more
than 0.6 in some locations (though the Smith-Putnam machine would not).
Another criticism of LeBoff's analysis lies in his comparison of
average BBCs from national utility industry statistical information. It is
to be expected that the utilities presently having low BBCs will not be very
interested in windpower utilization, arid that windpower will be used first by
those utilities and companies having high BBCs.
I believe Mr. LeBoff is correct, however, in that there is no reason to
seriously consider wind energy if it can be assumed that fossil fuels will
indefinitely remain available in any desired amount at a price which, when
corrected for inflation, will not increase over today's price. Although
LeBoff did not explicitly state that these were his assumptions, it seems to
be implicit in his work that in fact they were.
We now move on to consider #6 and #7. To discuss the methodologies of
these two large Mission Analysis studies seems rather presumptuous. In both
cases the methodology of analysis was a central task, and a great deal of
thought was given to it. Each study was something like ten professional
man-years in extent. We can, however, make some comments.
The Lockheed study (#6) estimated the number of high wind sites by
considering the fraction of all weather stations showing high wind and
assuming the land area fraction to be the same. This seems sound to me and
even conservative, but of course it is basically an unvalidated procedure.
The GE study (#7) drew contour lines on a map to delineate high, moder-
ate, and low wind regions, and then supposed the number of acceptable sites
could be derived by combining land use maps with these contour maps. I
believe the GE method is less reliable than the Lockheed method. The packing
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Statement of Dr Marshal Merriam
density used by Lockheed (2.7 units per square mile) was approximately twice
that used by GE for the same size rotor machine. At present, no one knows
the allowable packing density. This subject has been discussed under Task 2.
The amount of harvestable wind energy is certainly affected by whatever is
assumed.
The assumptions of the two studies regarding cost-production volume
relationships have already been discussed under Task 1. I have no reason to
dispute either one. They are in reasonable agreement.
Both studies correctly consider that the utilization of wind energy
will be limited by cost effectiveness of the wind machines, not by avail-
ability of wind or limitations of as yet undeveloped technology. They sup-
pose that the fuel against which the wind machines will mainly have to com-
pete will be imported oil -- a supposition with which I concur. However, for
some of the special applications, particularly the forest products industry,
biomass not presently utilized may cover most energy requirements in a world
of higher oil prices.
A fault I find with both studies is their blind acceptance of projec-
tions for U.S. electricity demand and energy demand. These projections are
based on extrapolation of the past twenty-five years in order to predict the
next twenty-five -- a procedure I believe to be basically unwarranted. The
argument "Well, what else is to be done?" is no argument at all. The proper
way to deal with uncertainty here, it seems to me, is to run scenarios with
drastically different rates of growth.
Another fault — and one which I do not know how to avoid myself -- is
to use a standard inflation correction to convert costs from 1975, say, to
1985. To characterize inflation by a single number is wrong. In this case
it is a central problem, since the whole analysis depends on projected costs.
Another difficulty is that no quantitative cost allowance is made for
the environmental benefit of windpower versus fossil fuel or nuclear, except
insofar as it is assumed that the environmental costs of the latter will be
increasingly internalized. Also, no cost allowance is made on the prowind
side for its better international-geopolitical and national security aspects.
In general, however, I think the methodology of both studies was well
thought out and is effective in bringing coherence to a difficult and multi-
faceted analysis.
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energy conservation and solar programs
TASK 4: COMMENTS AND PERSPECTIVES
1. Quantity of Energy Derivable From Wind
The numbers in this regard are very uncertain. They're hardly more
than a reasonable expectation in the "base case" instance and a reasonable
upper limit in the "accelerated case". They are not to be regarded as the
results of any kind of exact calculation, and they cannot be justified rigor-
ously.
Still, they are quite useful. For example, most of the numbers are
quite small in comparison to total U.S. energy consumption (75 Quads in
1976). This means that zealots who see salvation from wind alone should not
be taken seriously. It is extremely unlikely that wind will ever provide as
much as half or even one-fourth of total U.S. energy, so long as consumption
of energy continues at anything like present levels. However, that does not
mean that wind energy is quantitatively unimportant in the U.S. energy pic-
ture. It is only the zealots who see it as the total solution who should not
be taken seriously. Proponents who argue that wind energy can be part of the
solution -- important, though not dominant -- in the mix of U.S. energy
sources should be listened to.
It is entirely possible, for e_xample, that the quantity of energy
provided by wind in the United States could come to surpass that provided by
hydro well before the year 2000. Wind is also likely to surpass geothermal
energy and energy recovered from burning trash. Solar energy for the heating
and cooling of buildings is currently regarded as very promising, and indeed,
I believe that it is.
However, as of the beginning of 1977, statistics for the total square
feet of solar collectors sold indicated, in the units of Table 1, total solar
energy provided of 0.003 Quads. The wind contribution is likely to reach
this order of magnitude before too long.
2. Compatibility with Existing Economic Institutions
One of the difficulties in implementing sources is that they do not fit
in well with our existing economic system. In some cases (conservation),
there are not many companies and organizations effectively selling it,
because it is difficult to arrange things so that an acceptable profit can be
made. In other cases (solar industrial heat), one of the big problems is
that the return which industries normally require on their investments is
greater than the return which would be considered satisfactory from the
overall socio-economic viewpoint.
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Statement of Dr Marshal Merriam
Wind suffers somewhat from these difficulties, but not completely. A
major part of the installed capacity is expected to be owned by utilities, in
individual units rated in the megawatt range. This kind of equipment re-
sembles, in some operational and business aspects, the small unattended hydro
stations which many utilities now operate.
No other solar-electric technology is as close to realization or as
likely to operate in a trouble-free manner. Most utilities are under public
pressure to show activity in the solar-renewable resources area: wind capac-
ity is an opportunity to do this which is entirely consistent with normal
business practice and could even be profitable.
3. Importance of Further R&D
Both the Lockheed and the GE Mission Analyses called for expansion of
federally-funded R&D and stressed its importance as a way to lower costs. To
a degree, I agree.
However, as discussed previously, engineering design is of minor impor-
tance compared to other factors in determining the cost of windpower. Thus,
engineering research and development alone is of limited value in acceler-
ating the implementation of wind energy as a U.S. energy source. Funding R&D
is something the government is accustomed to doing. There is no reason to
doubt that R&D funding in wind technology will continue and expand, and this
is all to the good.
However, this is not the crucial element in accelerating wind utili-
zation. To go to the moon or to build a ballistic missile required us to
learn how to do a number of things which had never been done before. This is
not the situation with wind energy.
In particular, exotic designs and schemes for wind devices and systems
should be funded for study and analysis and for experiments when indicated,
but commitments to develop such designs and schemes to full-scale imple-
mentation should not be made simply because they are new.
4. Wind in the U.S. Energy Future
The future, beginning in a very few years, will feature a much more
diverse mix of energy sources than in the past. The commercial energy sector
will have to operate with biomass burners, windmills, mini-hydro (under 10
MW), direct solar, and various other things, in addition to oil, gas, coal,
nuclear, and big hydro (and geothermal where possible). In this increased
diversity, which will come about because of the decline in availability of
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energy conservation and solar programs
the major sources and which will be accompanied by higher costs, wind energy
will play an important role.
DR. MERRIAM: Well, first I will say a few words about wind energy, and then I will
say a few words about federal policy issues.
Wind energy seems unreal to most, people who are concerned with energy
questions, and it seems unreal, really, except in an historical sense, to
most people. There's a feeling that it. should be just not considered because
it belongs to the time of Don Quixote and it is not worthy of consideration
in our enlightened century, or that it shouldn't be seriously considered
because it's not really a high technology kind of operation: it doesn't
depend on mysterious and unseen forces.
But in fact, the flux of wind energy through a square meter maintained
perpendicular to the wind direction, in many places in the United States, is
as high as 400 watts per square meter, day and night average, and in many,
many places exceeds 300 watts per square meter. The highest solar flux, in
contrast, is perhaps 250 in the sunny Southwest.
So the flux of wind energy through a square meter of area is higher
than the solar flux, and the wind energy is already in mechanical form. This
means that if you want to make electricity out of it, you are much better
off, and in fact, you can convert 25 to 35 percent of that wind energy into
electricity on a realistic basis, whereas you can convert a much smaller
fraction of the solar flux into electricity.
The technology for making electricity out of wind energy is certainly
known, although it's certainly in need of improvement. Large wind-generating
machines have operated long before ERDA and DOE ever existed. In fact, there
is one machine which operated for nine years, connected to a power grid, as a
regular operating part of an electric power system.
Now, let me just detail some things which are true about wind energy in
the United States or anywhere. Wind generation of electricity is one of the
very few ways to produce electricity which does not require any water at all.
That is a matter of great importance in many parts of this country and espe-
cially in the High Plains area of the Southwest, which is one of our wind
resource areas.
Wind generation produces no pollutants at all. Wind generation has
essentially zero environmental impact, according to me.
[Audience Laughter]
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Statement of Dr Marshal Merriam
DR. MERRIAM: There are many people who feel that nothing has zero environmental
impact; however, I am deliberately not counting the question of visual pol-
lution of the landscape, which some people speak of -- the aesthetics of
large numbers of machines -- and I'm not counting TV interference, because I
do not think they are environmental impacts. They are effects upon human
amenity, but they do not affect human health, and they do not affect the
health of any animal or plant species.
Furthermore, I think they are often not real, either. I have looked at
more large windgenerators, probably, than anybody in this room. I think the
aesthetic issue is entirely a false issue. However, that is to be resolved
in other ways.
Wind generation is marginally cost-effective today in high fuel cost
situations, of which there are quite a few. Basically, when you have a
diesel generator providing electric in a region where the average windspeed
is high, then it would not be correct to say that wind generation is cer-
tainly cost-effective in those situations, but it's marginal already, and
that makes wind generation way ahead economically of any other solar electric
conversion scheme. There's no other solar electric conversion scheme that
shows any promise of being anything near as cost-effective as wind generation
does.
Wind electric capacity will necessarily be dispersed in many units. If
you want a thousand megawatts of wind capacity, you have got to settle for a
thousand units of one megawatt each -- or maybe five hundred units of two
megawatts, but not many fewer than that.
Now, many people feel that's another reason to reject it outright. It
just seems so preposterous to have large numbers of individual units. How-
ever, there are great advantages in having it so modular: you never have the
thousand megawatts fail; you'll only have one or two units fail at a time, so
the whole plant does not go down. That leads to improved system stability.
It is also true that it's possible to implement it in a modular manner.
Today, if you're building a thousand megawatt generating plant of any type,
you cannot get any value for all your money spent until the last bolt's in
place and the thing is turned on, and that is not the case with wind gener-
ation.
Wind generation will never be the backbone of U.S. energy supply, but
it could certainly be significant. The potential in the United States is
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energy conservation and solar programs
very difficult to estimate with accuracy, but probably we're talking about
producing something like 1 to 10 percent of U.S. energy needs. The estimate
I made in the FEA paper, and which is consistent with other people's esti-
12
mates, is about 10 KWH/year. That is half the electricity used in the
United States last year, but of course it's much less than half of the total
energy.
So we're talking about something comparable to hydro, and hydro is
certainly an important energy source. No one would deny that.
The major determinants of the cost of wind energy are, in order of
importance: first, the fixed charge rate -- whether you are a public utility
or a private utility or a government utility and so what the interest charges
that are relevant to you are and the taxes and so on. That has nothing to do
with the wind, but that's the first thing that determines the cost of wind
electricity.
The second thing is the scale of production of wind machines -- whether
you make ten of them or a hundred of them or a thousand of them, because
these are mechanical devices. The complexity is not greater than that of an
automobile, and there is, in fact, a mass production economy possible if many
alike are produced. So the second most important issue is the scale of
production.
The third most important determinant in the cost of wind energy appears
to be the mean windspeed at various sites. You have to find the places where
the wind is. The power in the wind depends on the cube of the wind velocity.
The fourth most important is probably the type of technology and the
efficiency of the machine. That fourth issue is the one to which most of our
federal funding has been addressed so far.
Now I will pass to the federal policy issues. First, there is an
environmental policy issue. It would help windpower economics a lot if the
EPA or some other appropriate branch of the federal government, after due
study and careful consideration, could produce a number that represented the
worth -- the additional worth -- of a non-polluting electric power source.
Is it worth one cent per kilowatt hour to have zero pollutants emitted? Or
is it worth a half a cent or two cents per kilowatt hour? But if there is
some definite credit, which could be written down, that reflected the fact
that the generation does not require any water and does not emit any pol-
lutants, that would be a desirable thing.
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Statement of Dr Marshal Merriam
I think it's also a legitimate policy issue to ask whether wind power
plants could perhaps be categorically exempted from a large number of the
usual certification procedures which are designed to protect the environment.
That would, in fact, make it possible to build them rather quickly and
improve their appeal to electric utility companies.
One of the features of wind generating plants is that, as far as the
physical considerations go, they can be implemented very quickly. There is
no reason why you cannot produce quite a number in a very few years of lead
time.
Another thing is that today environmental regulators are often in a
position of having to approve something bad because it's the best of a number
of bad choices. If wind energy were promoted and nurtured to the status of
what was widely seen as a viable alternative, then regulators would have a
basis for saying no to many of the other bad choices because there would be
at least one viable alternative that wasn't bad.
As an example of this kind of thinking, I saw a position paper by the
staff of the California State Energy Commission called "Wind Energy: Alter-
native to Sun Desert" -- Sun Desert being a nuclear power plant proposed in
Southern California.
The nature of the government stimulation of the market or intervention
in the market for best results in promoting wind energy I don't want to
discuss in detail; it's a complicated question and it's a DOE problem. I do
think the budget for wind energy should be a lot higher. I cannot see the
rationale, for example, for having the budget for magnetic fusion ten times
as high as the budget for wind energy, when magnetic fusion does not work and
may never work, and wind energy certainly does work and is marginally cost-
effective right now. It just doesn't employ any physicists and it doesn't
have a heavy R&D component.
[Audience Laughter]
DR. MERRIAM: I, by the way, am trained as a physicist; I think I understand that.
There are some R&D questions, but let me not go into that, since my
time is up. I will just summarize by pointing out again that wind energy is
a major resource comparable to hydro; it's already very close to cost-
effectiveness and can likely be made cost-effective without new inventions or
new breakthroughs. No other solar electric technology is in that position.
Wind energy is generated without any pollution and without requiring any
water.
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energy conservation and solar programs
I will close with a case point illustrating that the environmental
impact of wind energy is not only negligible, it may even by positive. When
I recently visited the demonstration windgenerator at Clayton, New Mexico,
one of the local people, a rancher there, said that if one could put a
battery of such wind machines in front of the town -- upwind of the town --
with the result of slowing down the wind going through the town -- with the
result of slowing down the wind going through the town, people would be
willing to pay for that -- that wind breaks had a positive economic value.
Thank you.
DR. REZNEK: Thank you. I was surprised to learn of another one of the benefits of
wind energy, and that's television interference.
[Audience Laughter]
DR. MERRIAM: Right.
DR. REZNEK: Does the Panel have any questions?
QUESTIONS AND REMARKS
MR. GAMSE: What is your estimate of the current costs and do you have an estimate
of how much further they might be brought down?
DR. MERRIAM: Well, as to the current costs, the Canadian installation on the
Magdalen Islands is supposed to be able to produce electricity, if it lasts
twenty years, for three cents per kilowatt hour, and that is equal to the
fuel cost that they are currently paying at that place at today's oil price.
That's the first unit, and it was stated by the manufacturer who produced
that unit that the second unit would cost something like 65 per cent as much
as the first one, and after that there would be some further reduction with
production scale. Of course that's a high fuel cost area.
DR. MACKENZIE: Why aren't the utilities beating the door down to get to it? What
are the principal barriers to the introduction of it?
DR. MERRIAM: Well, I think one is the feeling that the whole idea is preposterous.
Another is that our program -- our federal program -- has demonstrated high
costs, because of the nature of the way we buy and demonstrate things.
The utilities -- and fortunately so, I might say I feel, are conser-
vative people, and they want to make sure that they see something working for
quite awhile before rushing after it. The large windgenerator in Denmark,
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Statement of Dr Marshal Merriam
which ran for nine years, was eventually shut down by the utility that was
operating it because the maintenance cost exceeded the value of the elec-
tricity produced. Now, it is felt that that's not a fundamental problem and
that that wouldn't occur today, but that's not certain.
MR. CUTWATER: You said it has no environmental impact. Being a little defen-
sive -- I don't want you to put me out of work -- there must be a noise
problem associated with these, isn't there, and also a non-ionizing radiation
problem, and I would presume also an entrainment/impingement as far as
insects, birds, and that sort of thing is concerned.
DR. MERRIAM. Okay. Now, the noise problem I don't think is there. I have stood
next to the large generator at Gedser when it was operated, and as soon as
you are two or three rotor diameters away, you cannot hear the blades over
the wind noise. According to testimony from other people who have stood next
to many other large machines when they were operating, that is also true.
It is possible, of course, to do it wrong and have a lot of gear noise
or something like that.
Now, as far as the birds and insects go, there has been an exhaustive
environmental study by Battelle-Columbus, under DOE sponsorship, focusing
mostly on the test machine at Plumbrook, and they find no evidence of bird
kills or insect kills, and especially no evidence of bird kills or insect
kills exceeding those expected of a stationary object of a similar size.
I have seen a few birds killed by Darrieus rotor in Bushland, Texas,
but again, I don't think they probably exceed those of a similar-sized object
that was stationary.
Now, the other one you mentioned, non-ionizing radiation --
MR. CUTWATER: That would just be for transportation of electricity. There would
be a certain effect depending on the size of it.
DR. MERRIAM: Well, yes. There are environmental impacts associated with the
non-windmill aspects of it, and of course there's production of the steel and
building roads and so on, but as to the specific part that's wind, I am
unable to find any real environmental impact.
DR. MACKENZIE: Could you give me your guesstimate as to what the installed
capacity might be by the end of the century or how many kilowatt hours might
be available by the end of the century? If we get into a vigorous instal-
lation program.
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energy conservation and solar programs
DR. MERRIAM: Yes. They could be, based on plausibility of manufacturing rates and
things of that sort, centainly.
DR. MACKENZIE: Is that in your paper?
DR. MERRIAM. Yes, that's in my paper, and there are several different scenarios,
but it's on the order of 1 to 10 Quads of energy, or --
DR. MACKENZIE: Ten Quads would be the full trillion kilowatt hours?
DR. MERRIAM: Yes, 10 Quads is the full trillion kilowatt hours.
DR. MACKENZIE: Do you think we might get there if we worked on it?
DR. MERRIAM: Well, I think at present there is great deal of uncertainty in the
knowledge of the wind resource, and that is unquestionably something that
must be resolved by direct and primary measurements. No further amount of
studies will resolve that; the primary data are not there at the moment.
By the end of the century, the optimistic numbers call for an installed
capacity of 330,000 megawatts in electric utility systems and another 65,000
megawatts in dispersed modes, which I didn't speak about very much here, but
it's quite possible to have windgenerators on peoples' farms with the wind
electricity being sold into a utility grid as an additional cash crop.
The economics are unclear. It's being done in Denmark; I visited some
installations where the men were hopeful about the economics already.
MR. LEE: I have just two quick questions. In the paper, you cite the price of
25C/KWH for small wind generation. That's a very pessimistic price from what
I've seen coming out of any research that we've seen in the New England area,
where the price we're looking at is closer to 12C/KWH -- it's still higher
than conventional electricity. How did you arrive at that 25C figure?
The second question is: how important is the whole R&D effort to do
with storage batteries in this, to the wind area?
DR. MERRIAM: Your first question about the price -- the 25C is pessimistic. It
was supposed to represent what I thought was reality right now, today, con-
sidering the mix of customers who normally buy the products of the existing
windgenerator industry, which is not only a small industry, it's microscopic.
There is no economy of distribution of anything, and the customers are those
in remote locations almost completely. So I would think that probably the
difference between the 25C and the 12C can be explained rationally on that
basis.
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Statement of Dr Marshal Merriam
The question as to how important is research in batteries and other
storage devices -- I do not feel that's crucial. It is very important for
the present windgenerator industry, because they sell to people who are not
connected to power grids. I look for a big contribution to the U.S. energy
picture from windgenerators connected to power grids, and consequently, the
storage is in the grid; basically it's in unburnt fuel elsewhere in the
system.
DR. REZNEK: If I read you correctly, you don't see capital investment in wind
power as displacing any of the capital investment in conventional generation
capacity, and furthermore, that the economic viability of wind power depends
only on the cost of fuel for conventional systems. Is this correct?
DR. MERRIAM: That is a subject of continuing research and great controversy. The
studies -- tremendous controversy in it depends entirely on whom you read,
but there is certainly going to be some capital displacement possible. It
might be as little as 1 or as much as 30 per cent of the installed wind
capacity.
I have trouble worrying about that at the moment, because certainly
until we get something up -- you know, until the wind becomes a half of 1 per
cent or something like that of the installed capacity, no one is going to
give it any capacity credit. But that will affect the economics; you're
quite right.
MR. CUTWATER: Dr. Merriam, I'm not quite sure I understood geographically what
parts of the country should be considered for windgenerators.
DR. MERRIAM: Well, some of the regions which are known to have high wind energy
potential are the Southwestern High Plains, which is a large area geogra-
phically; the coasts in the Northeast and Northwest; the mountains in the
West; and probably some strips along the Northern border of the country as
well, and there may be other places, too. There are maps which indicate wind
potential; they are based on very sketchy data.
Furthermore, you may have a generally low wind region, but because of
some funneling effect of the terrain, there is a high wind pocket. That
represents a resource. It cannot be treated like solar energy, where you can
make fairly reliable maps and integrate the area on the maps. There is great
uncertainty about the total available supply.
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energy conservation and solar programs
MR. GAMSE: You alluded to an unfortunate experience with federal R&D already in
this area. Do you have advice as to how the federal government can make
positive contributions of a stronger nature?
DR. MERRIAM: Well, yes. I don't want to be in the position of saying that the DOE
effort in wind energy is misguided and fruitless; that is not at all the
case. However, it is true that they have some pretty high cost
installations.
Yes, I would personally like to see the federal subsidy -- the federal
money -- spent in such a way that it directly rewards performance, rather
than buying R&D or paying part of the capital cost.
In particular, wind energy, unlike solar energy, has the unique feature
that it can be directly metered. The output is practically always elec-
tricity, and you can meter electricity cheaply and easily. I would like to
see a direct subsidy of, say, two cents per kilowatt hour in the 1980s for
every kilowatt hour of wind energy produced by whosever machine, under what-
ever conditions, with the subsidy being reduced in future years.
This would, I feel, foster the greater diversity of manufacture and of
marketing which our country has historically excelled at. I would rather see
that than see a great expansion of the totally federally-funded demonstration
projects.
MR. GAMSE: Why has the federal project been so expensive?
DR. MERRIAM: Well, we have two completely different groups of industry in this
country: one type which sells mainly to the federal government, and one type
which avoids selling to the federal government -- or at least doesn't parti-
cipate in the contract-RFP-PERDA game -- and their costs are greatly dif-
ferent. I don't see anything conspiratorial or bad about this, but in fact,
if you buy things from that high-cost, high-performance-oriented type of
industry, you're going to get high cost products. That's one major reason, I
think.
I don't say that it would have been easy to do it differently at this
beginning stage, but that's one thing I see. It's General Electric Space
Product Division that's building a MOD-1 machine, it's not GE Washing Machine
Company that knows something about mass production.
[Audience Laughter]
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Statement of Or Marshal Merriam
DR. REZNEK: One of the aspects of wind power that has always been difficult for me
to accept is the small scale and thus the large number of towers you need.
The number that would be needed for the ultimate wind potential is so large
that it means the landscape will be covered with them. You will be able to
see from one wind tower to the next no matter where you are in the country.
Is this right?
DR. MERRIAM: Oh, no. Only in the high wind regions, I would say. In the South-
western High Plains it might be true that you would see almost as many as you
see transmission towers today. I think that's quite possible.
[Audience Laughter and Applause]
DR. REZNEK: Only if you look towards California.
DR. MERRIAM: I must say that in Denmark, I made a special effort to interview
people who had been concerned with, for a long time, the Gedser wind machine,
which was built in 1957 and operated until 1967, and has stood there un-
operating until now, and now it's operating again, and no one knew of any
case where anyone had complained about the appearence, and that is only two
kilometers from a substantial town and within easy sight of the highway and
railway.
DR. REZNEK: Where is it?
DR. MERRIAM: It's in a southernmost town in Denmark, facing the --
DR. REZNEK: Obenroll? Never mind.
DR. MERRIAM: No, it's on the island of Falster, facing East Germany across the
Baltic.
MR. OUTWATER: Let me ask a question. Do you have a windgenerator on your own
home?
DR. MERRIAM: No, I have no wind. I do not live in a --
MR. OUTWATER: I thought you lived on the Coast.
[Audience Laughter]
DR. MERRIAM: I live in Berkeley, California, but that is certainly not a high wind
region, and most people do not live in high wind regions. If the wind is not
strong enough to make you miserable, it is not a good place.
[Audience Laughter]
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energy conservation and solar programs
DR. MERRIAM: That's a very rough statement. That's why you look to these fairly
small fractions of the country that do have high mean windspeeds and probably
must also not have high frequency of terrible storms, because that could
destroy the machines. The top of Mt. Washington has high mean windspeed, but
it's probably not a super wind site because of the extreme speeds.
MR. LEE: There is a windmill on top of Mt. Washington.
DR. MERRIAM: But I imagine that it may have a limited life. I don't know.
DR. REZNEK: Is there a safety problem when their life comes to an end?
DR. MERRIAM: Well, the safety question, I feel, is very real and is soluble.
However, I feel the great majority of machines will be far from human
dwellings. That is something which must be worked out.
DR. REZNEK: Any further questions? Thank you.
DR. MERRIAM: Thank you.
DR. REZNEK: We'll break for lunch and return at quarter past 1:00.
AFTERNOON SESSION
DR. REZNEK: We can reconvene. Our next witness is Vic Russo of the Ad Hoc Com-
mittee on Thermionic Energy Conversion.
STATEMENT OF DR. VIC F. RUSSO
ACCOMPANIED BY MR. GARY 0. FITZPATRICK AND
PROFESSOR DEAN L. JACOBSON
THE AD HOC COMMITTEE ON THERMIONIC ENERGY CONVERSION
DR. RUSSO: Mr. Chairman and members of the Panel, I am Vic Russo, Director of New
Technology Development at Rasor Associates. With me is Gary Fitzpatrick,
Manager of the Thermionic Energy Conversion Program at Rasor Associates, and
Professor Dean Jacobson of Arizona State University.
We are here today on behalf of the Ad Hoc Committee on Thermionic
Energy Conversion, which is a group of fourteen individuals from the indus-
trial, university, and national laboratory engineering community. A list of
the members of the Ad Hoc Committee on Thermionic Energy Conversion and their
professional affiliation is attached to my statement.
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Statement of Or Vic Russo
We appreciate this opportunity to appear before you today to discuss
the Department of Energy Thermionic Energy Conversion Program. We would like
to present some facts about the thermionic energy conversion process and its
potential for fossil fuel conservation and make some general comments con-
cerning the program priority relative to other coal-fired advanced power
systems presently under development.
Most of the technologies which are being developed to reduce the envi-
ronmental impact of central station power plants exact an energy penalty and
directly increase plant capital costs. As a result, the cost of electricity
goes up, as does fuel use, waste heat and water use. We are here today to
discuss a technology which reduces emission, reduces thermal pollution and
water use, and at the same time has the potential to decrease the cost of
electricity, all while decreasing the fuel use.
It should be mentioned that in contrast to the usual conservation
measures, which require either changes in lifestyle or restrictions on eco-
nomic growth, the program to increase power plant conversion efficiency will
not change the way people live in any way, and could free billions of dollars
per year of capital for more economically productive activities, such as
providing jobs.
As I'm sure the members of the Panel are aware, the United States
Department of Energy is developing a number of advanced coal-fired power
systems to increase the conversion efficiency of central station power plants
from the present 36 percent to over 50 percent. As shown in our first
figure, the comprehensive program of the Department of Energy, Power System
Division of the Office of Fossil Energy, could potentially conserve as much
as 30 percent of the total energy consumed in this country, and at the same
time reduce environmental degradation significantly.
We have prepared a list of figures, and I'm referring right now to the
first figure which is entitled "Thermionic Energy Conversion Development
Payoff". It is, of course, true that the same benefits would accrue from
developing any of the advanced power systems which will increase the power
plant efficiency from 36 to over 50 percent.
I might mention that the 3 billion barrel equivalence of fuel savings
is equivalent to approximately $45 billion of fuel at current prices. The
fuel savings resulting in the reductions in pollution which are indicated on
that chart result solely from the ability to extract more energy from the
fuel, and consequently produce more electricity while utilizing less fuel.
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energy conservation and solar programs
You'll note that the figures listed for the sulfur dioxide, nitrogen
oxides, and particulate reductions correspond to approximately a 30 per cent
reduction in atmospheric emissions from central station power plants. Rela-
tive to the water use, that figure represents a 50 per cent reduction in
water use, since the 50 per cent figure is appropriate for reductions in
thermal discharges from power plants.
The energy conversion community in general, and our Ad Hoc Committee on
Thermionic Energy Conversion in particular, believe that the DOE Power
Systems Division can provide this needed improvement in conversion efficiency
if the federal government will increase the priority attached to this
advanced energy conversion program.
As an example of the need for increased priority, we would like to cite
specifically the example of thermionic energy conversion. Thermionics is a
well-established, internationally recognized technology for converting heat
directly to electricity, and the schematic for a thermionic converter is on
the second page of that handout.
The thermionic converter consists of two plates, one of which is heated
hot enough to boil off electrons; the electrons cross a narrow inter-
electrode gap, and condense on a cooler electrode. This process sets up an
electric current which delivers power to an electric load. In effect, the
temperature difference is driving electrons through a load. There are no
moving parts; that's all there is to this converter.
These converters have thus far operated for up to five years without
any degradation, and at levels high enough to save 25 per cent of the waste
heat presently wasted in power plants, if they could be used economically in
power plants. Unfortunately, the present converters cannot be, and there is
an active program supported by DOE, NSF, and NASA to reduce the costs of
thermionic converters.
These converters have a number of attractive features, including a
modular nature and operation at extremely high power density levels. The
feature responsible for DOE interest in the technology in the power plant
application results from the fact that the cooler electrode, which is indi-
cated in that figure, is still at a high enough temperature to generate high
quality steam. So this unit is well-suited to use as a topping system in a
fossil power plant.
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Statement of Dr Vic Russo
The next figure indicates how this might be accomplished. In this
figure, there is a comparison made of a conventional steam power plant and a
thermionic power plant. In the conventional plant, fossil fuels are burned
at approximately 3500 degrees Fahrenheit, and that heat is utilized at about
1000 degrees Fahrenheit by the conventional steam system to raise steam.
The thermodynamic availability of the heat in the range between those
two temperatures is completely lost in the conventional power plant. The
thermionic module operates in precisely this temperature interval and, as
indicated in the bottom figure, the inclusion by either retrofit or design of
a new power plant from the ground up could, in effect, extract energy from
that thermal stream twice.
The thermionic module could accept the heat at 3500 degrees and reject
it at 1000 degrees at sufficiently high temperature to go directly into the
steam system and continue to operate the conventional plant.
The Power Systems Division of DOE has prepared plans calling for in-
creased priority for each of the advanced power systems presently under
development. In the case of thermionic energy conversion, these plans call
for the development of the technology, and the objective of the plan is to
begin a retrofit demonstration program in 1984. So it does qualify as a
near-term energy technology, according to President Carter's definition.
However, budgetary restrictions have not allowed the implementation of
the DOE plans in this area. The present situation, as shown on the last page
of that group of figures, shows the first two columns representing the re-
sults of studies which have been done on three of the different energy con-
version systems, related to the cost of electricity and the potential im-
provement in conversion efficiencies.
You'll note that all of the advanced energy systems presently under
development would reduce environmental degradation significantly, by virtue
of the fact that a significant reduction would occur in fuel use, reducing
all of the pollutants that I have previously mentioned.
Really, the need for increased priority in this important area is
evidenced in the second-to-last column, which shows the present funding
situation in these programs.
In summary, in consideration of the potential for significant fossil
fuel conservation with concomitant reduction in environmental degradation
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energy conservation and solar programs
which would accrue from commercial utilization of these advanced power sys-
tems, the Ad Hoc Committee on Thermionic Energy Conversion would recommed
that the federal priority attached to these programs be increased to allow
implementation of DOE operational plans, particularly in the case of ther-
mionic energy conversion.
Mr. Chairman, that concludes our presentation.
PREPARED STATEMENT
Thermionic energy conversion is a well-established non-mechanical
method of producing electric power directly from heat. A thermionic con-
verter consists of a hot electrode (called the "emitter") facing a cooler
electrode (called the "collector"). The region between the two electrodes
contains a highly conducting plasma at low pressure. Electrons are evap-
orated from the hot emitter and flow across the inter-electrode gap to the
cooler collector, where they condense and return to the emitter through the
electrical load. In effect, the emitter-to-collector temperature difference
drives the electrons through the load.
The thermionic cycle therefore employs a basic process similar to that
occurring in the conventional electron tube which is widely used in indus-
trial, military, and consumer products. Due to their modular nature, ther-
mionic converters can efficiently produce electric power from a few watts up
to the multi-megawatt levels of modern central station power plants. The
U.S. successfully developed thermionic nuclear fuel elements for space power
application, and a thermionic space reactor system has been operated for
several years in the U.S.S.R.
DOE studies have now shown that thermionic technology offers the po-
tential for increasing fossil fuel power plant conversion efficiencies to 50
per cent or more, as compared to the conventional steam plant efficiency of
approximately 36 percent. The efficiency projections for thermionic central
station topping systems are supported by studies carried out in the U.S.S.R.,
which has a thermionic development program over ten times larger than that of
the U.S. As the members of this Panel are aware, such an improvement in
central station power system efficiency could result in an energy conserva-
tion equivalent to about three billion barrels of oil annually.
Thermionic converters have thus far demonstrated efficiency of greater
than 15 percent -- a level high enough to save 25 percent of the heat cur-
rently wasted by power plants, if they can be used economically in power
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Statement of Dr Vic Russo
plants. Thermionic converters can have extremely long operating lifetimes,
since they are no moving parts to wear out. For example, converters have
operated continuously up to five years without any degradation of
performance.
Studies show that if converter efficiency can be increased to 25 per-
cent, thermionic topping of central station power plants could reduce the
cost of electric power. Achievement of this increased efficiency is an
objective of the current U.S. Thermionic Energy Conversion R&D Program.
The U.S. program is jointly supported by DOE, NASA, and NSF. The DOE
thermionic fossil energy program has in the past been supported jointly by
its Office of Nuclear Energy and the Office of Fossil Energy through a memo-
randum of understanding between these two divisions. Nuclear support for
this fossil application resulted from the historical interest in and develop-
ment of the technology for use in space nuclear power systems.
In mid-January 1978, the entire DOE thermionic program was transferred
to Fossil Energy. The current FY 1978 funding level for the thermionic
program is presently uncertain because of the transfer, but it is likely to
be significantly less than the $1.7 million called for in the DOE program
plan.
The primary objective of the DOE thermionic program plan is to demon-
strate the commercial viability of thermionic topping of central station
power plants by 1987. The plan includes two near-term tasks: first, a
Thermionic Materials Research and Technology Task will improve converter
efficiency and demonstrate long-term materials compatibility. Technical
approaches have been formulated to increase converter efficiency as well as
demonstrate materials with long lifetimes in the combustion environment.
For example, materials already have been operated for over 15,000 hours
(two years) under simulated conditions for coal-fired heating of thermionic
converters, and these tests are continuing. Significant reduction in plasma
and electrode energy losses have been demonstrated in laboratory converters
both here and in the U.S.S.R. This has resulted in a significant improvement
in converter performance over that of the converters developed for the space
program. These demonstrated basic advances must now be consolidated for
subsequent reduction to engineering practice in the power plant topping
application.
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energy conservation and solar programs
The other near-term task of the program plan involves evaluation of
specific thermionic power modules for fossil-fueled power plant topping.
This Thermionic Power Modules Evaluation Task will take three years. After
selection of module designs, the technology will be reduced to engineering
practice and prototypes demonstrated by retrofitting the thermionic modules
into existing power plants between 1984 and 1987. The use of existing plants
as test beds for the modules greatly reduces the development time and cost.
At the end of the retrofit period, that is by 1987, there should be suf-
ficient operating experience to justify commercial use.
Perhaps the best way to gain a perspective of the potential of ther-
mionic energy conversion relative to its current funding level of less than"
$1.7 million, is to compare it with two other advanced conversion methods
being developed for advanced electric power plants: MHD and fuel cells.
These are quite different technologies, but they both can also poten-
tially convert coal to electric power at efficiencies of 50 percent or more.
The MHD system has the advantage that it can operate by direct combustion of
coal. However, high efficiency is obtained only in very large MHD units of
100 megawatts or more.
Fuel cells have the advantage of efficient electro-chemical operation
at relatively low temperatures and the great advantage of modular development
and construction. However, they require preprocessing of the coal into clean
fuels, which imposes additional costs, inefficiencies, and environmental
impacts.
The thermionic system combines the advantages of both of these other
systems, in that it can operate efficiently at high temperatures using the
direct combustion of coal, and has, in addition, the advantage of modular
development and construction. System studies show that all three systems --
MHD, thermionics, and fuel cells -- have about the same overall efficiencies
and approximately the same total costs of generated electricity.
However, because of their modular nature, thermionic and fuel cell
systems can be developed more rapidly and with a much lower investment than
the MHD system. It is projected that about $150 million will be required for
the commercial demonstration of prototype thermionic and fuel cell power
plants, compared with the $600 million projected for MHD commercial demon-
stration. FY 1978 federal expenditures of less than $1.7 million for ther-
mionic technology should be compared with the approximately $36 million and
$65 million expenditures for fuel cells and MHD respectively.
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Statement of Dr Vic Russo
From an environmental standpoint, thermionic topping appears to be
substantially superior to other advanced power systems. The increase in
efficiency resulting from use of any of the advanced power systems would
reduce NO , SO , particulate and thermal discharges by an amount equivalent
A A
to the additional electric power generated.
As recently pointed out in work supported by the EPA, the alkali metal
seed material utilized in MHD generators represents a potential adverse
environmental impact which requires recovery of the seed material. The same
work also points out potential leachate and sludge disposal problems re-
quiring solution before large-scale use of fuel cell technology is achieved.
On the other hand, thermionics is a static technology utilizing heat
only. The only impact associated with the use of thermionic topping units is
a reduction in the environmental factors associated with coal combustion. It
should be mentioned that fugitive emissions associated with the mining,
transportation, and storage of coal for use in central station power plants
have not been addressed as yet.
The Ad Hoc Committee on Thermionic Energy Conversion believes that it
is essential that the federal government increase the priority given to the
development of thermionic central station topping units. Considering only
the potential waste of national resources, each year of delay in achieving
commercial use of efficient thermionic power plants can result in the waste
of energy resources corresponding to billions of dollars, as compared to the
small investment required to buy a year of progress now.
There is an even more important reason to increase the priority of the
thermionic development program. A decision on the demonstration of advanced
power systems must be made at some stage. Due to the great cost involved in
demonstration, it is likely that only one or possibly two systems will be
chosen. This decision will be based on the existing technical data base at
the time of decision.
Although thermionic technology was developed to a high level in the
space program, it is only recently that studies have shown the potential for
thermionic energy conservation in coal-fired power plants. Other advanced
systems were not seriously considered for the space application and have been
devoted to the power plant application for a longer period. Consequently,
these other systems have had more time to build the technical data base
needed for an informed choice of the best approach to be commercialized at
great subsequent cost.
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energy conservation and solar programs
Because we believe such a choice will be made in the early 1980s, a
delay in carrying out the DOE thermionic program plan may result in insuf-
ficient time to build this required data base. Therefore, it may be neces-
sary at the time of decision to pass over the thermionic system for lack of a
sufficient power plant data base in spite of its promising potential. This
situation must be avoided if meaningful and cost-effective decisions on the
demonstration of any of the advanced power systems are to be made in the
early 1980s.
END OF PREPARED STATEMENT
DR. REZNEK: Thank you. Does the Panel have any questions?
DR. REZNEK: Thank you.
DR. RUSSO: Thank you.
DR. REZNEK: We'll go on to the next witness, who is Ted Taylor from Princeton
University.
STATEMENT OF DR. THEODORE B. TAYLOR
INDEPENDENT CONSULTANT AND VISITING LECTURER
PRINCETON UNIVERSITY
DR. TAYLOR: I am convinced that the prospects for wide-scale use of solar energy
in the United States and the rest of the world are much brighter than pre-
sented in most recent overviews of the energy situation for the following
reasons.
First, public opinion appears overwhelmingly to favor solar energy over
the other major long-range alternatives -- that is, coal and nuclear
energy -- if it can be provided at the same or perhaps somewhat higher costs.
This preference is largely based on much lower perceived environmental,
safety, and national security risks associated with solar energy than with
the use of coal or nuclear energy.
Second, new ways to collect and use solar energy can often be con-
ceived, designed, and demonstrated with small resources, sometimes by one
individual.
Three, solar energy is available everywhere on earth. Even at very
high latitudes there are ways to store energy collected when solar energy is
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Statement of Dr Thedore Taylor
abundant -- as during the summer -- for use in the winter or during extended
periods of cloudy weather.
Four, solar radiation, unlike any alternative large sources of energy
found in nature on earth, is pure energy. It is not mixed with any material
when it arrives at the earth's surface. The amounts and kinds of waste
products associated with its manipulation can be controlled. This is in
sharp contrast with the absolute necessity of producing waste products from
the combustion of coal or the fission of nuclei.
Five, we are in the midst of a sudden, world-wide surge of new concepts
and new combinations of old concepts for collecting and storing solar energy
and converting it to distributable heat, chemical fuels, electric power, and
heat sinks for cooling and refrigeration at reasonable costs.
A few specific examples are the following: architectural concepts,
some of which come to us from ancient times, for rejecting solar energy in
summer and absorbing and storing it in winter, to reduce needs for air con-
ditioning and heating; so-called "biogas" generators for converting energy in
animal and crop wastes to methane and for producing high grade fertilizers.
More than four million very low cost biodigesters are reported to have been
built in the People's Republic of China since 1972.
Sugar cane, casaba, and other types of potential fuel so-called "plan-
tations" such as those now being developed in Brazil for example, for pro-
ducing such fuels as alcohol for motor vehicles; integrated, small scale
energy, food production, and water management systems, such as those now
being developed at the New Alchemy Institute in Massachusetts; collectors
made of air-inflated plastics, sand, or other low-cost materials for produc-
tion of hot water below its boiling point at very low costs; hot water ponds
covered with insulating, air-inflated plastic pads for storage of heat from
summer to winter, with small heat losses, if large enough to meet the energy
demands of several dozen or more houses.
Engines that use the expansion of low boiling point liquids, such as
Freon, to convert thermal energy in hot water below the boiling point to
electricity, with overall efficiency of about 10 percent; for places with
cold winters, such as right here in Washington, ice ponds for making and
storing ice reservoirs several meters thick to serve as heat sinks for re-
frigeration or air conditioning of clusters of houses or large buildings in
the summer.
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energy conservation and solar programs
Major advances in the configurations and production techniques for
solar cells, based on the photo-voltaic effect, now look likely to do better
than meet the Department of Energy goal of $500 per peak kilowatt by 1985.
Meeting or exceeding this goal, coupled with the use of present or improved
batteries for overnight storage, could make this type of solar electric power
economically competitive with alternatives in areas without large seasonal
fluctuations in solar insulation, as in most parts of the developing
countries.
I am also convinced that more attention should be given to systems for
using solar energy to provide for all energy needs for small communities and
large urban areas than to active heating or cooling systems for individual
houses or to large solar electric power systems designed to substitute for
very large fossil-fueled or nuclear generating plants.
Solar energy systems look best when they are adapted to local settings.
In rural and many urban fringe areas, solar energy systems can be coupled to
food production and water management systems in ways that make multiple use
of the components of each.
For example, water collected as runoff from solar collectors can be
first used for storage and distribution of heat, and then for irrigation,
making double or sometimes triple use of collectors, storage reservoirs, and
water distribution systems.
My main suggestions for modifications of the present Department of
Energy solar energy program are the following: first, give more emphasis to
concepts that offer the possibility of major reductions in the costs of
collectors, energy storage, and energy conversion to electricity, chemical
fuels, and distributed heat.
Two, establish a few long-range programs under the same management for
carrying out research, systems analysis and assessment, development, field
demonstration, and stimulation of wide-scale diffusion of selected approaches
to using solar energy to meet major fractions of local and regional energy
demands. Assessment of the environmental, economic, social, and political
impact of the selected technological approaches should commence at the be-
ginning of such programs and provide feedback to their subsequent design and
implementation.
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Three, allocate substantial funds for the support of novel and prom-
ising research and development programs proposed directly to the Department
of Energy, in addition to funds for programs selected on the basis of com-
petitive bidding.
Four, establish solar technology assessment programs that include a
wide range of assumptions concerning future energy demands, by type of end-
use and form of end-use energy, giving special attention to opportunities for
major increases in end-use efficiency.
Five, perform assessments of opportunities for constructive coupling of
solar energy, food production, and water management systems on regional bases
for the entire nation.
Six, select and establish specific programs designed to be of major
assistance to the developing countries in their efforts to make greater and
more effective use of solar energy.
And finally, do not carry out demonstration programs related to solar
energy technologies that, in their demonstrated form, are not economically
attractive ways to meet a significant fraction of national energy demands or
for which the environmental impact of wide-scale use has not been assessed.
This concludes my prepared testimony. I'd be glad to try to answer
your questions.
QUESTIONS AND REMARKS
DR. REZNEK: Thank you. I was interested in your remarks about water management.
If I understood you right, you're proposing using the solar panels to collect
rainwater?
DR. TAYLOR: That's one use. Any form of solar energy is going to require a lot of
area to be covered with collectors. In cases where one is supplying essen-
tially all of the local energy, in a high energy consumption society like
ours, the areas that are involved are quite large.
It turns out, for example, that the rainfall on a collection system
needed to support all the energy needs of a set of households is about equal
to the average amount of municipal water those households use now. There are
other examples of catchment basins that would go beyond the collectors them-
selves but would make use of land prepared for solar energy application.
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energy conservation and solar programs
MR. LEE: I just wanted to ask a question. Am I correct in -- as I listen to you,
you are putting more emphasis on community use of solar energy technologies
than individual use of solar energy technologies. The example you gave, I
think, is demonstrative of the type of community-based technologies, and
while a great many of the programs that have been put forth up to now have
been either very large-scale solar electric, like the tower of power concept,
and then very small-scale collectors on individuals' homes, you're sort of
saying more emphasis should be on a more sort of middle area, where you could
use it for community-based systems.
DR. TAYLOR: Exactly. If I had to characterize my main criticism of the present
federal program, it is that it's left out that middle part.
I might add though, because I don't want to be misunderstood, that
there are situations -- as in the New York metropolitan area and much of the
area around here -- where there just isn't enough land to do this -- at least
land at anything approaching acceptable cost. Under those conditions, one is
going to have to move out into the fringe areas at least, and perhaps further
out than that, to have enough land to put out collectors and storage ponds
and so on.
But still, the guiding principle is, I think, generally, to collect the
solar energy as close to the consumers as possible, but don't go to such a
small scale that each householder has to look after the whole system and
protect himself against big trees being grown next door and that sort of
thing.
There are also economies of scale, which, as far as we can tell, top
out somewhere around a few dozen houses.
DR. REZNEK: Do you envision solar systems replacing conventional heating and
cooling systems of existing residences, or will most solar systems be in-
stalled in new buildings?
DR. TAYLOR: Well, I can see it penetrating existing -- being used in existing
houses, particularly those houses that are now hooked up to district heating
systems. There's a surprisingly large number of such houses in the United
States; although district heating is not extremely common, it is the main way
in which most clusters of houses at universities, faculty housing, many types
of new developments are actually heated.
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Statement of Dr Thedore Taylor
So there is an immediate possibility for plugging in, if you will, to
hot water district heating systems that now exist. I think that I don't want
to make too much of a claim that single-family house solar energy systems are
not worth it. I believe I said that house designs, which can even be re-
trofits of old designs, of existing houses that tend to absorb energy in the
winter and reject it in the summer are possible with most houses today that
aren't properly designed.
So I think there can be a major commercial activity on the solar energy
front, making use of these examples that already exist, of cases where even
community-scale solar energy systems could be plugged in. Eventually, I
think, attention to the scale appropriate for solar energy would make it look
best if it were put into the original plans for new developments.
MR. CUTWATER: On number seven on the last page, there, where you talk about dem-
onstration programs that don't seem to meet the significant fraction of the
national energy demand, I presume you're talking about some that are now in
existence, is that right?
DR. TAYLOR: Yes. I'm thinking particularly of a large fraction of the solar
heating and cooling demonstration programs in which it's evident on the face
of it that that particular system that's being demonstrated is not going to
make it economically, except under very unusual cases, such that when all
added up, they amount to a tiny fraction of the total energy demand of the
United States.
Some of the demonstration programs are simply uneconomical on the face
of it for any application. I see no excuse for that.
DR. REZNEK: Perhaps the most important barrier to multi-unit demonstrations is the
documented short discount rate in new housing. The up-front costs and fi-
nancing are much more important to the developer than to the individuals who
would invest in their own solar system. A developer having twelve houses,
for instance, has to find twelve people who are willing to extend their
discount rate from the usual three-year return obtainable in the housing
market. This might well be difficult. I wouldn't envision a penetration of
a multi-house market without some sort of low interest bonding. Don't you
agree?
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energy conservation and solar programs
DR. TAYLOR: I agree with that. I think the mechanism for doing that is to try to
put these first costs into the same tax category as such things as the un-
derground water systems that feed houses now with municipal water, the sewage
systems, and so on, that are, in effect, paid for when one buys a house but
through an effective charge for the so-called "improved" land, I don't think
it's too far out to consider possibly a role even for municipal utilities to
play, which is similar to what they play now with respect to supplying other
services to houses in a conventional way.
That is, if a development is modified or a development is built which
has, for example, a district heating system using solar energy, I don't see
any fundamental reason why that could't be paid for in the same way that
people pay for underground sewage pipes.
DR. REZNEK: Any further questions?
DR. REZNEK: Thank you.
DR. TAYLOR: Thank you.
DR. REZNEK: Our next witness is Dr. Thomas Sladek, Senior Project Engineer, Energy
Division, Colorado School of Mines.
STATEMENT OF DR. THOMAS SLADEK, SENIOR PROJECT ENGINEER
ENERGY DIVISION
COLORADO SCHOOL OF MINES RESEARCH INSTITUTE
DR. SLADEK: Thank you, Mr. Chairman. I have a prepared statement which I'd like
to read. Unfortunately, I did not bring along enough copies for you to have
individual ones. I'll read through it verbatim, and I guess it will be
gathered into the Record of the proceedings.
I'm a Chemical Engineer. I'm employed in the Energy Division of the
Colorado School of Mines Research Institute, which is a not-for-profit con-
tract research corporation somewhat tied to the School of Mines.
I have been involved in fuels research and development for about ten
years, and most of my work has been focused on alternative energy sources,
which I will define as anything except the conventional petroleum and natural
gas which currently dominate the U.S. energy supply picture.
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Statement of Dr Thomas Sladek
Included in this category of alternate energy sources are oil shale,
coal processing, and conversion of coal to liquid and gaseous fuels, tar
sands, utilization of carbonaceous waste materials, and biomass conversion.
The subject of my talk today is the latter item, biomass energy, and in
particular the production of ethyl alcohol motor fuel from agricultural
commodities. I will concentrate on ethanol gasoline motor fuel blends, the
substance that the Nebraska Agricultural Products Industrial Utilization
Committee has called "gasohol".
I notice from the program that Mr. Dick Merritt was one of your speak-
ers yesterday, and I assume that he at least introduced this subject to you.
It was mentioned briefly by the previous speaker also.
My most recent involvement with gasohol dates back to last November,
when my company was hired by the Colorado Gasohol Task Force to assist in the
preparation of a proposal to the U.S. Department of Agriculture. The pro-
posal is to be in response to a USDA solicitation regarding guaranteed loans
for construction of "pilot projects" to manufacture alcohol and industrial
hydrocarbons from agricultural commodities and forest products.
This program is outside of the DOE Energy Development Program, but
there are some good opportunities for interface with the Department of Energy
research programs.
Since November, my activities in this project have been rather intense,
because the time frame was perhaps not what might be desired. I expect that
they will continue to be so until the final project proposal is delivered to
the USDA sometime in October of this year.
The people of Colorado are very interested in the creation of a fuel
alcohol industry in the state, and this interest is particularly noticeable
in Colorado's extensive agricultural community. The farmers in Colorado are
currently economically depressed, and they view fuel alcohol as an oppor-
tunity to improve their income, to improve the quality of life in Colorado's
urban and rural regions, and in addition, to contribute to a resolution of
the nation's energy problems.
I'm personally very excited about fuel alcohol development in Colorado.
My excitement may be a reflection of my ignorance of the technical and
economic problems which restrict utilization of alcohol fuels. I know quite
a bit about other potential sources of synfuels, and I'm certainly not as
excited about them as I am about this particular topic.
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energy conservation and solar programs
It may also be that after devoting much feverish activity to preparing
a proposal for a Colorado alcohol project, I've come to the point where I'm
beginning to sort of metabolize my own nonsense. It may also be -- and I
hope that this is the case -- that there are really some advantages to the
alcohol fuel concept, and that it does represent a potentially viable alter-
native source of liquid fuels for the transportation sector.
Certainly the alcohol project has been unique in my experience, because
unlike potential projects to recover energy from coal or oil shale, the
gasohol project has the enthusiastic support of a great diversity of people,
including our federal legislators, our state governor, the Colorado State
Assembly, the farm community, the academic community, and, with some degree
of caution and reservation, the media and the environmental sector.
I have never encountered another situation in which the energy devel-
oper and the environmentalist can agree that perhaps this concept is worthy
of some consideration after all, and that perhaps energy can be extracted
from this resource without doing permanent damage to the delicate eco-system.
The Colorado Gasohol Project is such a concept, and therefore I believe
that it's appropriate to discuss it at this vital hearing.
Fuel alcohol has many advantages, which I will enumerate now, and
several disadvantages, which I will discuss subsequently. The first advan-
tage is that it can be obtained from a renewable resource called biomass, a
non-fossil fuel which is generated by the sun and soil with considerable help
from the farmer.
In Colorado's situation, the biomass type which has received the
greatest attention is agricultural produce, such as wheat, corn, grain
sorghum, sugar beets, root potatoes, and other commodities. Alcohol may also
be obtained from trees, from field residue such as cornstalks, and from other
cellulosic commodities.
The biomass resource is vast and it is renewable. In Colorado, enough
wheat, corn, sorghum, sugar beets, and potatoes are produced under normal
conditions to generate over 430 million gallons of absolute ethanol each
year. If blended with gasoline at the 10 percent level to produce what is
commonly known as gasohol, this quantity of alcohol would supply three times
as much motor fuel as is now consumed in the state in the form of gasoline.
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Statement of Dr Thomas Sladek
About 10 percent of the agricultural production of these five major
crops would supply enough gasohol to replace all of the gasoline which is
currently consumed in the Denver metropolitan region.
A second major advantage of fuel ethanol is economic, and relates to
the creation of a new market for farm produce. Colorado farmers and farmers
in most other states are in an economically depressed condition, due to a
current oversupply of food in the world market. The American farmer is
perhaps too efficient and too hard-working for his own good. He has managed
to produce more crops than the market can absorb, and he is now faced with
surplus capacity, over-production, and market prices which do not even cover
the costs of production.
If a reasonable portion of farm production capacity could be diverted
to fuel, the increase in demand should have decidedly favorable effects on
the farmer's income and lifestyle.
The third advantage of alcohol fuels is related to societal benefits
and to national security. If a barrel of motor fuel is produced from bio-
mass, then it does not have to be obtained from petroleum. The oil does not
have to be imported, or alternatively, it does not have to be obtained from
our increasingly scarce domestic reserves.
As indicated earlier, sufficient agricultural capacity does exist to
provide a considerable quantity of fuel alcohol. Furthermore, alcohol fuels
can be obtained from diseased or distressed commodities, from residues, and
from other wastes which are otherwise unfit for consumption by human or
animal. If these commodities are utilized for alcohol production, fuels can
be provided to the transportation sector without reducing the net food
supply.
The fourth advantage, and the last one I will discuss today, is en-
vironmental, and is responsible for much of the enthusiasm in Colorado for
fuel alcohol. The air in Colorado's urban corridor is heavily polluted by
what we residents call the "brown cloud" — a dome of airborne sewage which
extends for about fifty miles along the front range of the Rockies during the
winter months, when we experience one of our frequent thermal inversions.
I'm sure you have all seen similar phenomena in the Los Angeles basin,
over industrial cities in the Midwest, and even over Washington. The prin-
cipal constituents of this brown cloud are nitrogen oxides, carbon monoxide,
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energy conservation and solar programs
unburnt hydrocarbons, ozone, particulates, and sulfates. Over 60 percent of
this air pollution has been related to automotive emissions.
This component results from the inability of conventional internal
combustion engines to burn gasoline efficiently.
As part of my work for the Colorado Gasohol Task Force, I have been
able to review several publications which indicate that automotive emissions
can be reduced substantially if gasohol is substituted for gasoline. One
example of this is the results of the two million mile fleet test, which was
recently completed by the State of Nebraska. Mr. Merritt may have mentioned
this yesterday.
The results show typical reductions of approximately 30 percent in
carbon monoxide emissions when gasohol is substituted for unleaded regular
gas. The study did not reveal any significant changes in nitrogen oxide
emissions, nor in release of unburned hydrocarbons. The Nebraska study
involved cars and light trucks which had been tuned for maximum performance
with gasoline, and which were not retuned for gasohol.
In contrast, a 1975 study reported to the Society of Automotive En-
gineers that gasoline-powered cars and gasohol-powered cars emit similar
levels of carbon monoxide and hydrocarbons when they are tuned to equivalent
air-to-fuel ratios. However, the same study showed reductions in nitrogen
oxide emissions of up to 20 percent for gasohol-fueled engines, when operated
under the same conditions.
Unfortunately, these prior studies were conducted at much lower eleva-
tions than are common in Colorado. Our elevations range typically from about
5000 feet to a maximum of about 14,000 feet, with most of the people in the
state living at elevations of about one mile. Most of the studies reported
on previously have been performed at or quite close to sea level, and of
course the change in elevation and the change in air density does affect the
way that automobiles operate.
Colorado is presently initiating an emission study to determine if the
residents of Colorado will realize the same benefits noted in the other
locations. This work is critical to continued public support of the Colorado
Gasohol Project.
If we are patient, it is likely that much of the brown cloud will go
away, as our older cars are replaced by the new models, which are equipped
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Statement of Dr Thomas Sladek
with catalytic converters and other environmental controls. This gradual
attrition process will take many years, because, like California, the benign
climate in Denver's urban corridor results in very long automobile service
lives.
It is difficult for the people of Colorado, and particularly those in
the Denver area to be patient with this advice during the periods of health
alerts, and it would be preferable to do something about the air pollution
problem before it becomes so serious that the public health is threatened on
a regular basis.
It appears, from what we've been able to obtain from the literature,
that alcohol fuels may offer at least a temporary solution to a portion of
the problem.
Coincidentally, addition of ethanol to a low octane gasoline blending
base produces a high octane fuel, which is very suitable for older, high
compression engines. These engines are not commonly equipped with catalytic
converters, exhaust gas recirculators, or fuel injection, and these engines
which are most in need of help, from an environmental viewpoint, are most
benefited by the use of gasohol as a motor fuel.
In essence, the use of gasohol in these old engines produces a fuel
retrofit. It does not require any modifications to the engine or drive train
itself. Although emissions from gasohol-powered vehicles, particularly the
older ones that have no emission control devices on them, would still not be
within current EPA specifications, the reductions may be very significant and
could help alleviate much of the air pollution problem in Denver.
As mentioned earlier, these potential benefits still need to be veri-
fied for the Colorado situation, but steps are being taken to see that this
objective is accomplished.
On the negative side, fuel alcohol is expensive, and fuel alcohol
manufacturing is energy-intensive. Fermentation ethanol is presently at
least twice as expensive as refinery gasoline, and the pump price of gasohol
would be from four to nine cents more per gallon than unleaded regular. This
cost differential could be reduced substantially through innovative manufac-
turing techniques and through use of feedstocks which have no other marketing
opportunity.
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energy conservation and solar programs
Alternatively, if the public decides that potential societal benefits,
such as farm stabilization, pollution abatement, and reduced fossil fuel
requirements, outweigh the factors of conventional economics, gasohol produc-
tion could be incentivized through excise tax relief, through favorable tax
accounting procedures and tax credits, or through other government subsidies.
Energy requirements for alcohol production can also be reduced through
good engineering practices and with innovative processing techniques. Our
preliminary studies of state of the art European fermentation plants indicate
that fuel ethanol can be produced with a net gain in process energy. The
energy balance becomes less favorable if the energy consumed in farming is
included, but this problem can be resolved by using as fuels the field resi-
dues which are generated as co-products of farming operations.
In summary, ethanol motor fuels from biomass fermentation are techni-
cally feasible sources of liquid energy for the transportation sector. The
processing technology is currently available, and it is very likely that
significant process improvements can be achieved with relatively little
supporting research and development.
The benefits which would be accrued by society due to use of fuel
ethanol would include farm stabilization, reduced reliance on scarce fossil
fuels, utilization of solar energy through a renewable resource, and possible
reductions in air pollution from automobile engines. These potential bene-
fits, I think, warrant your consideration, and I hope you will give them the
attention they deserve.
Thank you for your attention. I'd be pleased to answer any questions
that you might have.
DR. REZNEK: Thank you. Any questions?
QUESTIONS AND REMARKS
MR. GAMSE: What do you think the federal R&D program should be like in this area?
Are there specific needs that the federal government should emphasize or
incentives that need to be set up for the private sector, or what?
DR. SLADEK: DOE does have quite an active program in obtaining energy from biomass
resources. A lot of the research and development that's currently being
funded by DOE in this area is pretty long-range and would require, perhaps,
five to ten years to commercialize the technology that is currently being
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Statement of Dr Thomas Sladek
developed. I believe that there are process improvements that could be
implemented in the industry in a very short period of time without a great
deal of R&D. I think these should be directed towards reducing the energy
requirements for alcohol manufacturing and towards utilizing food residues
such as cornstalks and other types of grain stover as fuels either in the
plants themselves or in other, let's say, power-generated stations.
This is commonly done in the sugar refining industry in other coun-
tries, particularly in countries which obtain sugar from sugar cane. The
sugar refining plants will use the solid component of the cane, called
bagasse, to generate process steam and electricity for use in the plant.
There's generally so much of this material available that they produce a
surplus of power, which can then be sold into the power grid that also pro-
vides the plant.
I think the USDA program is quite a bit ahead of what DOE is presently
contemplating. It is really designed to commercialize an alcohol industry
within a very short period of time -- within the next, say, two to three
years. People in Colorado, particularly the farmers, are doing everything
they can to see that this industry gets started in Colorado.
DOE's goals are much more long-range than that. I think there needs to
be some work in the middle ground on improving existing technology to make it
more energy-efficient and less costly.
MR. LEE: I just have one question. You're dealing with a technology or a solution
that still depends on nine parts gasoline to one part ethanol. The fact that
you need the nine parts gasoline as we now know it -- is that an inhibiting
factor when you take a look at projected oil supplies into the latter part of
the 1990s and into the twenty-first century?
DR. SLADEK: Well, it is true that some gasoline is going to be required for use of
the material called gasohol. I think that a 10 percent reduction in that
supply is significant. That amounts to something like 700,000 barrels of
fuel oil each day that would not have to be consumed for this purpose.
Alcohol itself is quite a good motor fuel, and it's possible to visu-
alize the transformation away from gasoline and towards a pure alcohol fuel
economy.
MR. LEE: Do you think more research should be done on that?
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energy conservation and solar programs
DR. SLADEK: Well, the combustion properties of alcohol are pretty well known. The
problems that are created when you try to put alcohol through an engine
designed for gasoline are pretty well known and quite easy to solve, although
it does require some engine modification.
I think the research that would be directed towards producing alcohol
for gasohol would be directly applicable to producing alcohol for use as a
fuel by itself. So I don't really see any need for any shift in emphasis.
DR. REZNEK: What's the price of alcohol as a pure fuel?
DR. SLADEK: The current production cost of alcohol ranges anywhere from $.80 to
about $1.20, depending on the type of process used and the cost of the feed-
stock consumed in the plant. It is possible to purchase ethyl alcohol made
from converted wood sugar out of the Georgia Pacific Plant in Bellingham,
Washington for $1.22 per gallon. Our estimates indicate that to produce
absolute alcohol in Colorado would entail a market price of about $1.00 per
gallon, which is about twice to two-and-a-half times the current price of
refinery gasoline, so it's considerably more expensive.
DR. REZNEK: If you bring about an alcohol market, do you anticipate the displace-
ment in agricultural production of foodstuffs?
DR. SLADEK: Well, one of the most interesting things about the alcohol production
technique is that the fermentation by which the sugar in the commodity is
converted to alcohol acts only upon the sugar in the plant; it does not
affect the protein that's available in the plant, nor does if affect the
cellulose. It's possible to process grain through the plant, recover a
protein-rich concentrate, which is then available for use as a cattle feed
for example, and if used as a cattle feed, would displace the corn which is
normally consumed in the feed lot. That corn could be made available for
human consumption, or alternatively, the acreage that produced that corn
could be diverted into other food crops.
It's also possible to extract the protein from the grain before it's
processed to alcohol to produce a protein isolate, which can then be used for
human consumption.
It appears, from the limited statistics that I've been able to gather,
that about 25 percent of our farm acreage is currently held in set-aside
acres. In other words, it's not used for food production because there's
just too much food available, at least in the domestic market.
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Statement of Dr Thomas Sladek
If this acreage could be converted to producing commodities for alcohol
production, certainly the amount of food available to the world would not be
affected whatsoever.
DR. REZNEK: Have you done studies on the energy input, fertilizer, and that type
of material necessary to produce an energy crop?
DR. SLADEK: I have not done studies personally; quite a bit of work has been done
on this subject by the University of Nebraska and by the University of
Illinois. The energy balance figures are not favorable, if you go back to
the farm and look at the amount of energy that has to be put in, in terms of
fertilizers prepared from natural gas, pesticides, and so forth.
There is a way around this, and I mentioned using the field residues as
fuels. There is much more energy contained in the field residues than is
contained in the food component of the agricultural commodity, but these
things are currently simply plowed back into the soil and the energy is
wasted totally.
There is another area of research that I did not mention, and it's a
little difficult to relate this to DOE's prime function, but it would be
developing crops which are ideal alcohol feedstocks, but which do not require
as much farming energy as is currently employed for grain and sugar beet
production.
DR REZNEK: When you plow the remaining material back into the field, you waste its
energy value, but you return its nutrients and soil conditioning value, don't
you?
DR. SLADEK: , You return a portion of the nutrients to the soil. Some work that
Nebraska has done indicates that you actually only have to return about 25
percent of the residue back to the soil to keep the nutrient level up to
where it should be for further crop production.
DR. REZNEK: That's with no other artificial fertilizer additives?
DR. SLADEK: Well, no. I'm not being clear, I guess. If you don't put back 25
percent of the residue regardless of what else you're doing in terms of
fertilizing and enriching the soil, you get into trouble. You interfere with
the ability of the soil to produce. If you do put back 25 percent, then
you're all right, provided that you carry on as you did before.
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energy conservation and solar programs
So according to Nebraska anyway, you can remove 75 percent of the
residues and use them for other purposes -- the soil doesn't need them.
DR. REZNEK: If you do remove 75 percent, you'll increase the requirement for
fertilizer and therefore energy input.
DR. SLADEK: I haven't examined that question in detail, but I believe that the
University of Nebraska's findings indicated that you would not have to in-
crease the amount of fertilizer.
DR. REZNEK: Thank you. Any other questions?
MR. CUTWATER: Yes. Is the capital investment to produce a gallon of this about
the same as for a gallon of gasoline?
DR. SLADEK: The capital investment is about a dollar per gallon of annual capac-
ity, so a 20 million gallon a year plant would require a capital investment
of roughly 20 million dollars.
MR. CUTWATER: What is it in the oil industry?
DR. SLADEK: It's comparable; I think slightly larger, but on the same general
order of magnitude.
MR. CUTWATER: Would you perceive, then, that the oil industry would pick this up
as a portion of their production as their own reserves started to diminish?
Is that where the scenario would go?
DR. SLADEK: I would think that would be extremely logical -- that they would get
on to this as another potential source of raw material.
MR. CUTWATER: Is any portion of a refinery now utilizable in terms of this
material -- for producing this material?
DR. SLADEK: Well, not unless you considered the utilities that go into a refinery.
Producing alcohol from grain requires steam and electricity just as a re-
finery does. The alcohol, being a biological product, is quite different to
obtain than, say, straight run gasoline or diesel fuel, so the processing
equipment would be quite dissimilar.
Once you have the alcohol, all you have to do to prepare gasohol from
it is to mix one part with nine parts of gasoline. That can be done in an
oil drum or in the tank of the car.
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Statement of Mr John Abbotts
DR. REZNEK. Any further questions?
Thank you.
DR. SLADEK: Thank you.
DR. REZNEK: The next witness is Mr. John Abbotts of the Public Interest Research
Group.
STATEMENT OF MR. JOHN ABBOTTS
PUBLIC INTEREST RESEARCH GROUP
MR. ABBOTTS: Mr. Chairman and members of the Panel, thank you for the opportunity
to testify. I am a Staff Member of the Public Interest Research Group (PIRG),
an organization founded by Ralph Nader in 1970. PIRG's energy activities
have included reports and testimony on nuclear and non-nuclear programs of
the Energy Research and Development Administration (ERDA). PIRG representa_
tives also testified at the 1975 and 1976 hearings held by the Council on
Environmental Quality, on ERDA's non-nuclear energy programs.
My comments generally cover the Department of Energy 1979. The DOE
budget suffers from the major defect of ERDA budgets -- the bias toward
nuclear options at the expense of non-nuclear energy sources. I will also
comment on an ERDA memo prepared for the Carter transition team, which indi-
cates that the DOE budget slights solar energy.
DOE BUDGET
It is not possible to discuss non-nuclear energy programs without
discussing nuclear programs: tilting toward one category will cause the
other to suffer. DOE's fiscal year 1979 (FY '79) budget, like previous
Energy Research and Development Administration budgets, contained a heavy and
unjustified bias to nuclear programs.
Charts A and B, attached, compare the funding for FY '78 and FY '79 for
programs which ERDA listed in its "Energy Research, Development, and Dem-
onstration" category for fiscal year 1978. As the charts indicate, some of
the nuclear programs are hidden in the DOE budget under new categories; they
have been included in Charts A and B for a consistent comparison with last
year's budget.
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energy conservation and solar programs
FUNDING SUMMARY - CHARTS A & B
Budget Authority
Category FY '78 Percent FY '79 Percent
Conservation 307 9.4 407 12.5
Fossil 684 21.0 724 22.2
Geothermal 106 3.2 130 3.9
Solar 411 12.6 400 12.3
Non-Nuclear Total 1508 46.2 1661 50.9
Fusion 455 14.0 460 14.1
Nuclear Fuel Cycle
and Safeguards 521 485
Breeder 517 367
Other Fission 260 291
Fission Total 1298 39.8 1143 35.0
Nuclear-Fission
and Fusion Total 1753 53.8 1603 49.1
Energy Budget Total 3261 3264
This budget, to be sure, does represent a milestone: it is the first
federal energy budget which gives less than half its funding to nuclear
energy, although just barely so. So while credit must be given where it is
due, DOE can only be credited with continuing the snail's-pace reallocation
of funds from nuclear to non-nuclear programs.
The difference in the nuclear power budget from FY ' 78 to FY ' 79 is
exactly the reduction in funding for the breeder reactor. The Department has
yet to present a balanced energy research program which is either free from
bias or justified by the potential of technologies to deliver energy. One is
left with no other conclusion than that the only justification for this DOE
budget is historical inertia, with a grudging reduction of the nuclear
budget.
SOLAR BUDGET
The solar energy budget, moreover, has been reduced both in absolute
dollars and percentage of the energy budget. Despite this reduction, there
are clear indications that DOE can usefully spend more money on solar power.
I wish to insert for the record the attached memo, titled "Realistic Maximum
and Minimum Solar Energy Programs." This document was prepared by the Energy
Research and Development Administration for the incoming Carter transition
team. The Public Interest Research Group obtained this memo in July 1977
through a Freedom of Information Act request.
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Statement of Mr John Abbotts
As a baseline program for fiscal year 1979, the memo suggested a budget
of $520 million. This figure is in good agreement with a recent General
Accounting Office report, which concluded that the solar program directors in
the Department of Energy would be able to spend $555 million in fiscal year
1979, if they had the money.
But beyond the baseline budget, the memo notes that an additional $190
million could be spent on a "maximum realistic" program, taking the total
funding for solar to $710 million. Most of this additional funding could go
to distributed solar systems, to provide power for irrigation, houses, com-
munities, and other on-site applications.
As the memo notes, many of these applications are presently served by
liquid and gas fossil fuel, which the Administration increasingly is
recognizing will not be displaced quickly by greater electrification.
Lastly, the memo to the transition team established a "minimum realis-
tic" program. By reducing or eliminating demonstration projects from the
baseline program, the minimum program would spend only $440 million for FY
'79. As the memo notes, "the present public attitude would very likely be
strongly opposed to a minimum solar R&D program so that option would be
exceedingly difficult to implement without a sound rationale, which cannot be
constructed at this time".
The Carter Administration's total solar budget of $400 million is $40
million below the "minimum realistic" budget, and Administration officials
have not been able to develop a sound rationale for this miserly funding
level. Officials have defended the solar budget by noting that, except for
the cuts in the solar heating and cooling demonstration program, this year's
budget is similar to last year's.
For example, the White House press office, responding to a question
from a Washington Post reporter, noted that the bulk of the budget reduction
had been in the heating and cooling area, and the reduction was justified by
increases in other areas totaling $18 million. Simple arithmetic, however,
shows that an $18 million increase does not offset a $23 million decrease in
the heating and cooling budget.
Thus, the best that can be said of the Department's treatment of solar
energy is that it reduced the heating and cooling demonstration program, but
did nothing to compensate for that cutback. In short, DOE has little ima-
gination or creativity in the solar area. Vhile the Department attempts to
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energy conservation and solar programs
keep nuclear projects at their present funding levels, in spite of growing
disenchantment with the nuclear option, DOE fails to come up with new solar
programs.
DOE should dramatically increase its solar funding and decrease its
nuclear funding, if for no other reason than to come closer to the balanced
energy research program that the Atomic Energy Commission and the Energy
Research and Development Administration never had.
LACK OF PROGRESS IN ENERGY BUDGETS
It is frustrating to .be giving this testimony before EPA. That is not
because I expect little from EPA: the Council on Environmental Quality, as a
result of its hearings on non-nuclear energy research, provided valuable
recommendations for redirecting ERDA programs, and I have faith that EPA can
follow that CEQ precedent.
But it is frustrating that public input to the Department of Energy
must come from this roundabout route. Although ERDA did hold regional hear-
ings on its national plans (ERDA-48 and ERDA 76-1), the Agency never held
hearings in Washington, B.C., where the persons most familiar with the
Agency's defects could present their comments directly to ERDA.
I suggest that one of EPA's recommendations to the Department of Energy
be that DOE hold its own hearings, regionally and in the district, so criti-
cism may be directly presented to Department officials.
I also recognize that this week's hearings will have little effect on
the DOE budget for fiscal year 1979. That budget is already well on its way
through Congress, and I can only hope that these comments will induce DOE to
reform its budget next year. But we have already seen several years of
hoping that next year the AEC or ERDA budget would become more balanced, and
each year little progress has been seen.
I suspect that my frustration may be shared by such agencies as the
Council on Environmental Quality (CEQ) and the Office of Technology Assess-
ment (OTA). These offices no doubt hoped that their valuable suggestions for
reforming the ERDA budget would be reflected in the following year's pro-
grams. Unfortunately, their criticisms remain valid for this year's DOE
budget.
In 1975, for example, the Office of Technology Assessment found that
"ERDA's program overemphasizes energy supply technology" relative to energy
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Statement of Mr John Abbotts
conservation. In 1976, OTA noted that ERDA had recognized conservation as an
area for priority, but that its budget for conservation remained small. That
criticism is still valid for the FY '79 DOE energy research budget.
In 1975, OTA noted that "The ERDA Plan appears to overemphasize elec-
trification", and commented in 1976 that "Non-electric energy technology
development is still underemphasized." Those remarks are still valid for the
DOE budget.
OTA also noted both years that this overemphasis on electrical options
extended to the Agency's solar programs. That comment also remains valid:
DOE's budget gives $250 million, or 62 percent, of its solar budget to elec-
trical applications, and the solar electric percentage is slightly higher
than for the FY '78 budget. OTA also noted in 1975 that "The ERDA Plan
relies on assumptions which appear to bias its priorities toward high tech-
nology, capital-intensive energy supply alternatives." DOE programs still
suffer from an overemphasis on high technology projects, such as synthetic
fuels, fission, and fusion.
The Council on Environmental Quality, in its September 1976 report,
noted that ERDA needed to perform comparisons of different energy options so
that the options could be ranked and priorities established rationally. CEQ
noted that a sensible energy research, development, and demonstration (RD&D)
program would require:" a process for deciding what RD&D should be done,
based upon ongoing comparisons of all potential RD&D options whether they are
supply- or conservation-oriented; comparisons based on comprehensive assess-
ment of the energy, economic, environmental, and social impacts of the
options."
ERDA never did perform such a side-by-side comparison to establish
priorities among energy technologies. The Department of Energy has no intent
of performing such a comparison in its National Energy Supply Strategy (NESS)
analysis, and there are indications .that the NESS might not even rank options
merely by the amount of energy they can supply in the near- and long-term.
Even performing this analysis would provide some rationality to DOE's
research budget.
For example, ERDA, in 1975, established five scenarios as part of its
National Plan for Energy RD&D. In the "No New Initiatives" scenario, solar
energy, the breeder, fusion, and biomass all would provide no energy by the
year 2000. In all other scenarios, solar -- including biomass -- was pro-
jected to provide more energy than the breeder and fusion combined.
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energy conservation and solar programs
Since 1975, the breeder's prospects have dimmed considerably, while
even pro-nuclear officials in DOE are more optimistic about solar energy.
Yet FY '79 will be the first federal budget which gives less money to the
breeder than the entire solar program, and fusion still receives more money
than solar. There is little to justify this state of affairs besides the
inertia of historical biases.
In summary, this DOE budget is a business-as-usual budget, reflecting
neither imagination nor the reform that is long past due.
In 1975, ERDA defended a miserly non-nuclear budget by noting that it
was a new agency established with the funding imbalance of the Atomic Energy
Commission. ERDA also denigrated the idea that funds to nuclear programs
would detract from non-nuclear programs: the Agency promised to boost fund-
ing for all energy options and pursue each aggressively.
In 1976, ERDA asked observers not to judge the Agency's priorities by
its funding levels: ERDA announced that conservation would be a high-
priority item, but the budget for conservation changed little because exist-
ing programs — chiefly nuclear power projects — had an inertia which made
their funding levels larger than higher priority programs. If that was the
case, then there is all the more reason to cut back drastically on programs
whose only rationale is history.
Finally, DOE has presented a budget which suffers from the same defects
as ERDA budgets: although the numbers have changed somewhat, the overall
flavor of the energy research program has not. It is still biased toward
nuclear over non-nuclear options, energy supply over conservation options,
and high technology, centralized projects over distributed energy options.
One can also see that ERDA's previous statements about non-competition be-
tween energy sources were misleading: this DOE energy budget is almost
exactly at the same level as last year's, and non-nuclear funding has grown
only as nuclear funding has diminished.
Citizens have already waited too long for "next year's" budget to show
the balanced energy program that the Atomic Energy Commission, ERDA, and now
DOE have failed to produce, and it is long past time for a rational energy
research program. DOE should conduct a side-by-side comparison to rank
energy technologies; it should explain the rationale for its ranking; and it
should adjust its budget to reflect that ranking. I urge EPA to make just
such recommendations to the Department of Energy.
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Statement of Mr John Abbotts
CHART A: NON-NUCLEAR ENERGY
Budget Authority, ERDA, and DOE budgets, Fiscal Years '78 and '79
(All figures rounded to millions of dollars)
Conservation FY '78 FY '79
Electric Energy Systems 40 40
Energy Storage Systems 50 58
Industrial Energy Conservation 30 49
Buildings and Community Systems 55 59
Transportation 65 98
Improved Conversion Efficiency 59 78
Energy Extension 8 25
Conservation - Total 307 407
Fossil FY '78 FY '79
Coal 579 618
Petroleum 74 80
Natural Gas 31 26
Fossil - Total 684 724
Geothermal - Total 106 130
Solar FY '78 FY '79
Solar Heating 87 64
Solar Electric and Other 303 309
Biomass 21 27
Solar - Total 411 400
CHART B: NUCLEAR ENERGY
Budget Authority, ERDA and DOE Budgets, Fiscal Years '78 and '79
(All figures rounded to millions of dollars)
Fusion (a) FY '78 FY '79
Magnetic Fusion (c) 325 334
Laser Fusion (d) 130 126
Fusion - Total 455 460
Nuclear Fuel Cycle and Safeguards (a) FY '78 FY '79
Fuel Cycle (c) 285 247
U-235 Process Development 130 100
Uranium Resource Assessment (b) 65 95
Nuclear Material Security and Safeguards (d) 41 43
Nuclear Fuel Cycle - Total 521 485
Breeder - Total (c) 517 367
Other Fission (a) FY '78 FY '79
Nuclear Research and Applications (c) 227 278
LWR Facilities (c) 28 10
Fuel Storage (c) 5 3
Other Fission - Total 260 291
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energy conservation and solar programs
Charts A and B Notes:
(a) Categories are taken from Statistical Highlights, U.S. Energy Research
and Development Administration, Amended FY 1978 Budget to Congress, May
1977, pp. 6-14.
(b) Figures for FY '78 and FY '79 come from Budget Highlights, U.S. Depart-
ment of Energy, FY 1979 Budget to Congress, January 1978, Energy
Supply-Production, Demonstration, and Distribution, pp. 38-40.
(c) Figures for FY '78 and FY '79 come from Ibid., Energy Supply-Research
and Technology Development, pp. 33-37.
(d) Figures for FY '78 and FY'79 come from Ibid., Atomic Energy Defense
Activities, pp. 50-51.
ATTACHED MEMO
REALISTIC MAXIMUM AND MINIMUM SOLAR ENERGY PROGRAMS
I. ISSUE
Define options for realistic maximum and minimum programs, including
justification for each and proper program mix within each. Include acceler-
ated efforts in industrial process heat in the maximum case.
II. BACKGROUND
The federal solar energy program comprises varying amounts of research,
development, and demonstration in each of seven major solar technology and
end-use areas. These programs are aimed at bringing concepts to the point
where demonstration projects can show technological and economic feasibility
to potential customers, such as private homeowners, process industries, and
electric utilities. Two solar technologies have potential to have signifi-
cant near-to-mid-term impact.
The first technology is based on the direct use of solar energy for
heating and cooling of buildings and for process heat in agricultural and
industrial applications. This technology is relatively simple, and it is
close to or actually economically competitive in several regions of the U.S.
today. An industry is developing that can be the nucleus of the large indus-
trial base needed to meet the goals of the program. To speed this develop-
ment, ERDA is involved in research and development for product improvement
and cost reduction, in demonstration programs, information dissemination, the
development of standards, and in the identification of incentives.
The second near-to-mid-term technology is based on the conversion of
biomass (e.g., cornhusks, wood chips, peanut shells, etc.) into gas and
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Statement of Mr John Abbotts
liquid fuels through various chemical or biological processes or by direct
burning. The technology already exists to convert biomass on a relatively
small scale, and R&D on technology improvement and larger scale process
development is beginning. The efficient growth of trees and/or plants for
later use in biomass applications is another key element of this technology.
At present, biomass, mainly through burning of wood and wood residues, pro-
vides nearly one percent of the U.S. energy supply.
Solar electric power generation technologies include the following:
the concentration of solar energy to produce steam to drive steam turbines or
irrigation pumps; the employment of ocean temperature differences to drive
heat engines that in turn generate electric power; wind energy; and the
direct generation of electric power through the use of solar cells. All
solar electric programs have demonstrated technical feasibility, but their
economics are not yet competitive with alternate energy sources.
Wind technology is closest to being economically competitive. It needs
a factor of 2-3 cost improvement; OTEC needs a factor of 3-5; thermal power,
20-30; and photo-voltaics, 30-50. The primary emphasis of the solar electric
programs is on cost reduction through R&D and process engineering. If suc-
cessful, this could lead to successive demonstrations of the economic feasi-
bility of each technology in the 1982-to-1995 time frame.
Of the four solar electric technologies, only the OTEC program seems to
have the potential of providing base load electric power capacity. The other
solar electric technologies will have their most immediate applications as
fuel savers used in conjunction with intermediate load plants, and, in
limited situations, will result in capacity replacement of intermediate
oil-burning systems. A cost breakthrough in energy storage could permit
applications of these technologies to stand alone, distributed or base load
capacity systems.
The present allocation of funds to the various solar technologies is
the result of balancing a complex set of variables, including potential
short-term and long-term impact of the technology, market readiness, tech-
nology readiness and complexity, degree of industrial capability, social and
economic impact, and non-technical/non-economic barriers. No single factor
can justify the mix and the present allocation is somewhat arbitrary, having
been determined by management perceptions of the relative impact of the
variables and the requirements needed to overcome existing problems.
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energy conservation and solar programs
Recently, the Assistant Administrator for Solar, Geothermal, and
Advanced Energy Systems requested that the ERDA General Advisory Committee
undertake an in-depth analysis of the present balance of the solar program in
view of the ultimate promise of each technology, because there is reason to
question the present distribution of effort.
It should be noted that solar heating and cooling of buildings, agri-
cultural and industrial process heat, wind, and some elements of biomass are
close to economic viability, while the solar thermal, photo-voltaic, and OTEC
options require significant R&D before proceeding to market-oriented
demonstrations.
III. STRATEGY OPTIONS FOR SOLAR ENERGY DEVELOPMENT
The development of any new product within the framework of the free
enterprise system proceeds through three distinct phases. The first, often
called the "create phase", consists of the research and development needed to
establish the potential competitive position of any new concept in the
marketplace.
The create phase is followed by manufacturing and market phases that
are usually carried forward concurrently. A number of different options are
possible in each phase. The choice depends on a number of factors, and,
depending on which option is chosen in each phase, the product will advance
more or less quickly into the marketplace.
The strategy of the present solar energy program consists of pursuing
an agressive, sequential, primarily federally-funded research and development
program in the create phase, followed by a program that relies on private
industry to shoulder the responsibility in the manufacturing phase, and
finally, a strong consumer-oriented incentives program to stimulate market
growth in the marketplace. Strategies for pursuing maximum and minimum
programs are shown and brief rationales for the paths chosen are included in
the discussion of each option.
IV. OPTIONS
A. Realistic Maximum Program
It must be recognized at the outset that a detailed program plan or
benefit-cost analysis for a realistic maximum program has not been carried
out. This Issue Paper thus represents preliminary views on necessary associ-
ated new initiatives and provides preliminary estimates of the resources
required to carry out a program where the private sector can fully exploit
the results of the federal effort with minimum risk.
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Statement of Mr John Abbotts
In contrast to the present program, a realistic maximum program would
focus on a strong federal role in each of the create, manufacture, and market
phases. The program strategy would involve a maximum effective federally-
sponsored effort in the create phase by paralleling, to the maximum extent
possible, research and development programs. In the manufacturing phase,
federal funding or subsidization of manufacturing facilities to assure a
strong manufacturing base would be undertaken.
In the marketplace, maximum incentives for buyers or users would be
provided by the government. New federal initiatives in each of the phases
would build on the current program to increase the probability of wide-scale
deployment and commercialization and accelerate the acceptance of solar
technologies.
Initiative No. 1 - Assure a Total Manufacturing and Delivery Capability by
1981-82 by Increasing Number of Solar Heating and Cooling Demonstrations
The present program plan calls for the demonstration of 3000-4000 units
to address most technical system options, regional differences, key building
types, and economics. In spite of this large demonstration, large-volume
automated collector manufacturing lines will probably not be in place at the
end of the demonstration period (1980). In order to assure a total manufac-
turing and delivery capability, this initiative would increase by a factor of
four the federally-sponsored demonstrations on both private and federal
buildings, and increase the industrial process heat demonstrations from 20 to
200. The additional funding required for this initiative is approximately as
follows:
FY'78 FY'79 FY'80 FY'81 FY'82
Additional Cost ($ million BA) 30 50 55 40 25
In order to have the desired impact by 1985, this initiative would have
to begin immediately and build rapidly to a maximum by 1980. All elements of
the demonstration program would be underway by 1978 and would be complete by
1982. Only modest follow-on costs would be expected beyond 1982.
Initiative No. 2 - Increase Development and Demonstration of Systems that
Permit Distribution Use of Solar Energy
Distributed solar systems may have a number of attractive applications.
At present, many of these applications are served by conventional energy
sources, such as propane and natural gas, which are costly and susceptible to
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energy conservation and solar programs
curtailment. A rough distribution of resources allocated in the present
program to central power applications, as opposed to distributed power appli-
cations, is as follows:
PROGRAM ELEMENT
Heating Solar
& Cooling Electric Biomass
Central Power Application 0% 95% 10%
Distributed Power Application 100% 5% 90%
TOTAL 100% 100% 100%
The heating and cooling options are intrinsically distributed applica-
tions; no central utility is envisioned. Solar electric options are now
heavily oriented toward central utility applications. Biomass can have
central power applications as well as be a distributed source and produce
transportable fuels. A realistic maximum program would support an aggressive
effort to emphasize distributed solar use for irrigation, houses, commun-
ities, and other on-site applications. The additional cost of the initiative
is shown below:
FY'78 FY'79 FY'80 FY'81 FY'82
Additional Cost ($ million BA) 50 75 95 105 110
This level of effort will permit a great many more distributed use
systems to be designed, tested, and demonstrated. If successful, this ini-
tiative could stimulate commercial use of such systems by 1985 and increase
the impact of solar energy in the 1990-2000 period.
Initiative No. 3 - Parallel Research and Development Paths
This initiative takes advantage of the opportunity to increase the pace
of research and development by paralleling those activites that are being
funded sequentially in the present program. In addition, the initiative
could encourage the investment in high-risk, high-payoff concepts that would
not otherwise be supported.
The major elements of the initiative include research and development
for air conditioning systems, retrofit components for solar heating and
cooling systems, photo-voltaic processes for the direct production of elec-
tricity, high temperature collectors, and storage. The additional cost of
the initiative is shown below:
FY '78 FY '79 FY '80 FY '81 FY '82
Cost ($ million BA) 35 65 70 90 90
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Statement of Mr John Abbotts
Primary R&D emphasis in the '78-'79 time frame would be on air condi-
tioning systems and high temperature collectors, with later funding empha-
sizing the development of solar storage and retrofit systems. Throughout the
period, a significant effort would be devoted to investigating cost reduction
concepts related to solar cell systems.
Initiative No. 4 - Parallel Demonstration of Solar Electric Systems for
Utility Application
The present plan allows for a limited number of utility-oriented solar
electric systems. This initiative would allow for the concurrent demon-
stration of additional systems meeting different end-user requirements.
Through these additional demonstrations, we could increase the probability
that the configurations chosen would more nearly match varying utility market
requirements. The additional funds required for this initiative in the next
five years are shown below:
FY '78 FY '79 FY '80 FY '81 FY '82
Cost ($ million BA) 0 0 30 50 100
Funds are not requested in FY 1978 and FY 1979 because this initiative
assumes parallel demonstration of the electric options on initially the same
scale as the present program. However, major capital investments would be
required in the period beyond 1982 to complete this initiative.
Funding Summary for Key Initiatives
Funds to be added to the present plan for the realistic maximum program
initiative are shown below. The four major new initiatives are estimated to
cost two billion dollars above presently projected program costs over the
next decade.
The program resulting from these increased funds would assure meeting
present goals and would, through the first two initiatives, make possible a
far greater impact for solar energy in the near term (1985).
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energy conservation and solar programs
TOTAL FUNDING INCREASE REQUIRED IN ADDITION TO
PRESENT PLAN FOR REALISTIC MAXIMUM PROGRAM
INITIATIVE '78 '79 '80 '81 '82
Accelerate SHACOB & AIPH 30 50 55 40 25
Increase Distributed R&D 50 75 95 105 110
Increase Parallel R&D 35 65 70 90 90
Central Utility Demos - - 30 50 100
115 190 250 285 325
Present Program 415 520 550 595 660
TOTAL FUNDING 530 710 800 880 985
B. Minimum Realistic Program
The minimum realistic program consists of a sequential research and
development option in the create phase of the solar energy development pro-
gram. The R&D effort would be followed by a manufacturing phase in which
incentives would be applied to encourage a reasonable entry of large indus-
trial firms into the solar market. Such a program would rely on normal
market forces to commercialize solar energy systems.
The additional assumptions needed to develop this minimum plan are that
the federal research and development program would proceed with minimum
parallel technical development; that development of solar technologies by the
federal government would not go beyond minimum size, pilot plant demonstra-
tions; that national policy would provide the fewest incentives necessary to
entice industry to invest risk capital; and that the government would not be
utilized as the first market to show economic viability. The change from the
presently projected program to a minimum realistic effort would reduce
expenditures over the next decade by about one billion dollars.
The reductions in the projected budget that might be made under this
program result, almost entirely, from elimination of demonstration facili-
ties. The solar heating and cooling of buildings demonstration program would
be reduced to a minimum level consistent with the intent of the Solar Heating
and Cooling Demonstration Act of 1974. Other demonstration programs would be
highly selective. Each solar electric technology would be limited to a
single demonstration project at the 10 MW pilot plant level, as opposed to
the currently planned 100 MW levels. In the research phase, reliance on
sequential activities would be mandated.
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Statement of Mr John Abbotts
The minimum realistic program would be success-oriented -- i.e., the
risk of failure would be greater than in the current program, but the program
goals could still be met if major technical barriers do not arise in the
research and development program; if all the objectives are met on schedule;
and if the postulated manufacturing incentives successfully stimulate con-
sumer demand and sustain market growth.
V. CONCLUDING REMARKS
There is a great public interest in solar technologies because of their
attractive environmental and safety characteristics and because solar energy
is free and available to all. As yet the public does not understand the very
difficult cost barriers that must be overcome to make solar technologies com-
petitive with alternate energy forms. Nevertheless, the present public atti-
tude would very likely be strongly opposed to a minimum solar R&D program,
and so that option would be exceedingly difficult to implement without a
sound rationale, which cannot be constructed at this time.
END - ATTACHED MEMO
MR. ABBOTTS: That completes my prepared testimony.
DR. REZNEK: Thank you. Any comments?
QUESTIONS AND REMARKS
MR. GAMSE: We heard this morning that some of the environmental groups and other
public interest groups, while advocating increased spending in areas such as
solar energy, didn't have the technical basis for suggesting specific pro-
grams .
I'm not familiar with the ERDA memo that you have attached here, but
I'm wondering if that provides some of the specifics of the experts that
might be helpful with this problem.
MR. ABBOTTS: The memo is fairly general, but it does mention a couple of areas.
The memo describes areas where ERDA could have gone from the baseline budget
to a maximum realistic budget, and the additional funding there is, $190
million, and most of the applications would be distributed applications.
One area was an expanded heating and cooling demonstration program. I
think, although the memo doesn't mention it, one of the areas that has been
lacking in the heating and cooling demo program is the passive program. I
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energy conservation and solar programs
think passive is being much more favorably viewed, particularly in the past
few years, in the architectural community as probably the most cost-effective
way for solar home heating.
If that's the case, I think that you'd want to -- If you want to en-
courage people to put solar units on their homes, one of the things you'd
want to do is to make them aware of the option that's probably most cost-
effective. So I think there's a potential for using heating and cooling demo
funds for passive.
The second area that's identified in the memo refers to an "aggressive
effort to emphasize distributed solar use for irrigation, houses, communi-
ties, and other on-site applications." And the third area that's identified
is an area called parallel research and development paths, and the memo says:
"The major elements of the initiative include research and development for
air conditioning systems, retrofit components for solar heating and cooling
systems, photo-voltaic processes for the direct production of electricity,
high temperature collectors, and storage."
In terms of where DOE can spend the money, the General Accounting
Office report that I referred to identified the different solar technologies
and also identified where the money could be put, if the Program Directors
had additional money.
MR. LEE: I'm just sort of curious about one thing. You talk about the need to
rank -- and I agree with you on that — and you talk a lot about the import-
ance of stressing the solar budget over the nuclear budget. Do you believe
that solar is really the top-ranked thing rather than conservation research
and development at this time? Do you think that's where we ought to put the
emphasis, or do you think we ought to do parallels in both conservation and
solar?
MR. ABBOTTS: Well, I think that solar and conservation are areas that interact.
Take the home heating area as one example: a solar home basically has to
be -- a new solar home has to be designed from the ground up, and as part of
the design you start with a very energy-efficient home.
In terms of ranking for energy R&D, I guess I would put solar ahead of
conservation, because I feel that there are many conservation applications
that are cost-effective right now.
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DR. REZNEK: In designing an energy technology research program, two things are
important. One is the promised net energy return. The other is the expected
return on the research investment, which is to say, the extent to which
research can help realize this promise. There can be great benefits to the
society or to the nation of adopting an energy technology. Yet the utility
of Federal investment in research in that area may be very limited. Some new
technologies are technically fairly mature. Marketing, rather than research,
is needed to realize their promise.
One of the steps in plotting a research strategy is to lay out what you
expect to be the return of a research investment. Have you had any thoughts
on how to incorporate expected return from research investment into a
strategy for research allocation?
MR. ABBOTTS: Let me answer the question in a second, but preface it with sort of a
philosophical viewpoint.
I would guess that, from a philosophical basis, I would really like to
see no government involved in any energy technology: ideally, they should
all compete in a free market in the real world.
But I think the political reality is that that's not going to happen,
and with regard to solar versus other energy technology, the political real-
ity is that the other technologies have had thirty years or so at least of
government assistance in one way or another. In terms of "Where do we go
from here?", the political reality is that we try and balance — bring solar
up to speed with the others.
In terms of the question of what your return is on an investment for
different levels of funding, I have not done that analysis. The General
Accounting Office did make the recommendation in their report that that does
need to be done for the solar program, and I would agree, but I would also
add that it shouldn't stop with the solar program. That analysis needs to be
done for the other energy alternatives.
So the answer to the question is no, I have not done the analysis, but
yes, I certainly agree that it would be beneficial.
DR. REZNEK: One of the concerns that is reflected in the federal energy research
strategy is the enormous decrease over the last ten years in energy options
available to energy decisionmakers in, say, the electrical utility industry.
At one time they could burn natural gas, petroleum, or coal. Now many, if
not all, of these options are shutting down. Boiling water reactors are, in
fact, shutting down.
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energy conservation and solar programs
One of the purposes of the Federal energy research program is to open
up options for energy decisionmakers. The effectiveness of research re-
sources in opening up conservation options seems to be limited, compared to
opening up breeder reactor options or wind power options.
Can you comment on that perspective on research investments?
MR. ABBOTTS: I can very generally and sort of off the top of my head. The con-
servation option, to me, is not a one-time thing. In other words, there are
conservation options that right now are cost-effective, but that doesn't
preclude new processes from being developed in the future -- and I guess that
particularly would be in the industrial area.
In the area of building design and probably insulation, it may be true
that while architects know how to build buildings that use half the energy of
buildings that were built five years ago, there may not be that much more of
a reduction. I really don't know.
But I would expect that, particularly in the industrial area, there is
really a potential for advanced conservation technology.
DR. REZNEK: Any other questions?
Thank you.
MR. ABBOTTS: Thank you.
DR. REZNEK: Our next witness is Mr. DeLoss, the Washington Representative of the
Environmental Policy Center.
STATEMENT OF MR. GARRY DELOSS
WASHINGTON REPRESENTATIVE,
ENVIRONMENTAL POLICY CENTER
MR. DELOSS: I apologize for not having more copies of my statement, but I'll leave
it with you for the Record. Unfortunately, I just got done writing it this
morning; our copy machine's broken.
Basically I've narrowed my comments down to one point. I'm here to
explain why I believe that the Department of Energy's decision to reduce
spending on its solar heating demonstrations is wrong, and why, instead,
spending on demonstrations of solar heating and energy conservation in
buildings should be increased.
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Statement of Mr Garry DeLoss
In the proposed fiscal year 1979 budget for the Department of Energy
which President Carter sent to Congress, the spending for the solar heating
and cooling of buildings demonstration program was reduced by $28 million,
from $64.4 million in fiscal year 1978 to $36 million in fiscal year 1979.
Critics of this decision have received a two-part rationalization for
the cut in funds: first, that solar heating has been proven to be tech-
nically and economically feasible and its further development should be left
largely to the forces of the private market; and second, that the prospect of
federal tax credit for solar energy investments will more than offset the cut
in funding for the demonstration program. Both these explanations are in-
adequate.
Let us examine first the argument that since the technical and economic
feasibility of solar heating has been adequately demonstrated, government-funded
demonstrations should be cut back in favor of allowing market forces to take
over. There are two flaws in this argument.
First, the economic feasibility of solar heating has not been ade-
quately demonstrated due to weaknesses in the federal demonstration program,
including failure to promote development and demonstration of low-cost solar
heating systems, and failure to collect sufficient cost data on solar heating
demonstrations that are funded.
The failure to promote low-cost solar heating demonstrations is illus-
trated by the past failure to promote demonstration of passive solar heating
designs. Only recently has DOE begun to think seriously about promoting
passive solar systems. I might interject that even in the area of active
solar systems, if you look at some of their contract fundings, you have to
really search hard to find any kind of a contract in a research and develop-
ment or demonstration program that specifically tries to elicit low-cost
collector systems.
The failure to collect adequate cost data is a result of DOE's prede-
liction for collecting too much data. According to one expert observer whom
I consulted on this point, only 1 to 2 percent of the present demonstrations
are being instrumented to collect performance data that will disclose the
dollars per Btu cost of energy from the solar systems. His view is that it
would be better to develop a less sophisticated and less expensive means of
collecting performance data and apply it to about 20 percent of the demon-
stration projects instead of the 1 to 2 percent I noted.
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energy conservation and solar programs
He believes that rough cost data, with an error range of plus or minus
15 to 20 percent, on a large sample of projects would provide the information
needed by potential investors.
Even if the technical and economic feasibility of solar heating had
been demonstrated, there would be a second flaw in the argument that govern-
ment funding of solar heating demonstration should be ended. It is well
understood that there are many barriers to the use of solar heating beyond
technical and economic feasibility. These non-technical and non-economic
barriers are generally characterized as institutional barriers to the devel-
opment of solar heating.
A major institutional barrier that government-funded demonstrations can
reduce is the reluctance of consumers and builders to invest in an unfamiliar
technology. The building construction industry is notoriously slow to adopt
new technologies, largely due to its extreme fragmentation. There are
300,000 firms in the building industry, and 90 percent of them produce fewer
than 100 units per year.
Turning now to the'argument that a prospective federal tax credit for
solar energy investments will make up for the reduced funding of solar heat-
ing demonstrations, one must ask how many more people would respond to the
tax credit incentives if they could see a nearby demonstration project.
Rather than being viewed as mutually exclusive, government promotions of
solar heating, the demonstrations and the tax credits should be viewed as
mutually reinforcing programs.
The more widespread our government-funded demonstrations, the more
potential investors in solar heating will gain a first-hand familiarity with
nearby solar demonstrations and hence be moved to take advantage of the tax
credit.
There are other basic problems from relying too much on the tax credit
as a means of stimulating use of solar heating. One problem is that 40
percent of the housing in this country is rental housing. Renters won't
install solar heating systems in a landlord's building, and landlords won't
make the investment because they don't pay the utility bills and because they
can't find a way to bill their renters for solar energy.
Some novel demonstration projects are needed to cope with this problem.
Perhaps a demonstration of a solar heating system for a multi-family dwelling
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Statement of Mr Garry DeLoss
could be designed to permit landlords to collect a return on their investment
in the solar heating system.
Another problem with the tax credit is that its incentive effect is
primarily on the consumer who orders a custom-built home, rather than on the
developer who builds dozens of homes on speculation. The mass builder, who
is gambling large amounts of money on a housing development, is very skepti-
cal about something as new and untried as solar heating, even when tax in-
centives are offered. More solar heating demonstrations are needed to con-
vince builders and their sources of financing that solar heating is a good
risk.
Perhaps the case where government-funded solar heating demonstrations
are most needed is for passive solar heating systems. At least in the case
of active solar heating systems, there is a developing industry of manufac-
turers and vendors of solar water heating systems and solar space heating
systems who will work hard to promote their products to consumers and de-
velopers.
In the case of passive solar systems, however, there is no hardware
industry of inventors, entrepreneurs, manufacturers, vendors, and installers
knocking on the doors of consumers and building developers. Since private
forces by themselves will be less likely to lead to consumer and builder
acceptance of passive solar systems, as contrasted with active solar systems,
more government demonstrations and other educational efforts are needed.
Ironically, then, the most economic systems for solar heating -- that
is, the passive systems -- may require the most government intervention to
achieve widespread public acceptance.
In summary, I believe that a good case can be made for expanding the
federal funding of solar heating demonstrations rather than cutting back on
that program.
Thank you.
DR. REZNEK: Thank you. Are there questions?
QUESTIONS AND REMARKS
MR. OUTWATER: Mr. DeLoss, what you're advocating is sort of a demonstration in
every backyard?
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MR. DELOSS: Sure, I'd be glad to say that. I think, for example, you could at
least have one in every county seat in the United States. They're usually
fairly centrally located; people go to and from them to market and to busi-
ness with their local governmental entities.
MR. CUTWATER: You mean you really believe that the public still isn't particularly
informed on solar energy and really wouldn't make the investment if the case
were made clear that they would get some tax incentive and it would be really
worth it? What we seem to have heard this afternoon is that there seems to
be hardware around, but there seems to be a lack of good hardware and there
seems to be a lack of certifying warranties to this; there seems to be a lack
of people to install the stuff. In essence, there seems to be a lack of
enough impetus in the industry to get behind this and get a good solid pro-
gram going of making these units.
Just for the government to go out and start funding a whole bunch more
of these things would be silly when we've had a number of witnesses who said
"Let's not fund any more lousy demonstration projects".
DR. DELOSS: Well, let's just look at my point about passive systems for a minute.
Let's say that you deal satisfactorily with all of the institutional barriers
to the adoption of active solar systems that have been raised, including the
standard-setting, the warranties -- you have the infrastructure in place, and
so on. Those people are marketing active systems, and as I pointed out, they
aren't out selling passive systems because there's not much hardware to sell.
You know, what do you sell? The thermal fly-wheel? Some extra concrete
blocks or water tanks to soak up the sun when it comes in the window? Or
maybe some extra glass for the south side of the house?
Really, I would like to see especially a lot of passive systems demon-
strated, because I think there is a growing awareness that there are some
regional distinctions you want to make with passive systems. That's all the
more reason not just to demonstrate them in New Mexico, for example, where
they have a very interesting side-by-side demonstration of different passive
systems in some dormitory buildings there.
I think that the need to convince consumers and builders who are going
to make these investments applies still to active systems as well as passive
ones, even after you solve all the institutional barriers, because one of the
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Statement of Mr Garry DeLoss
biggest institutional barriers is really consumer confidence -- investor
confidence, and demonstrations are aimed at that.
MR. CUTWATER: I have one other problem, and that is with your number of renters.
One of the places I think we seem to agree that solar energy doesn't have an
immediate application is in congested urban areas where we don't have the
room for the panels, and I would suppose that most of our renters are in
urban areas, isn't that correct? Or is that incorrect?
MR. DELOSS: Well, I come from -- my home originally and which I return to fre-
quently is a small town in Iowa of about 10,000, and there are a lot of
renters in a town like that, especially since it's growing and there's a
transient population.
I have some personal familiarity with the landlord problem, because my
mother and my brother are both landlords, and when I go home and talk to them
about solar energy, they're very interested and curious, but they won't make
investments in it.
However, I think that on high-rise buildings, you can make investments,
as well as in the smaller single home rental and, let's say, a four-, six-,
or eight-unit apartment building. Even in a large high-rise building you
could make investments in solar water heating. Space heating requirements,
after all, in a building like that are lower than in the smaller units any-
how, and so what you might really want to focus on is solar hot water
heating.
But again, the landlord has a problem in seeing how he's going to
recoup his investment, and I don't think this has been addressed, frankly. I
spoke with Alan Hirshberg about this yesterday, and he was Product Manager
for Project SAGE in California, which was a demonstration program involving
multi-family housing, but I don't believe that they focused on the
problem —you know, took it another step further.
They were looking at technical and economic feasibility, but they
weren't looking at this question of making it an attractive investment for
the building owner. I don't think that was part of what they were looking
at, and somebody should be thinking about this.
There must be ways to do this. Now, the one way that I've heard of
that's been talked about, and which is going to be the subject of a workshop
here in Washington tonight and tomorrow, is getting utilities involved, and
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energy conservation and solar programs
to a certain extent, that addresses the rental housing issue, because then
the utility would be charging the renter some kind of a fee for the use of a
solar system.
Now, maybe landlords could find a way to do that. But it has to be
addressed. In Washington, 65 percent of the housing is rental, and if you're
talking about getting a very big market penetration in housing, you've got to
address that. And don't forget that even in the owner-occupied housing, as
I've pointed out, a lot of the so-called "incentives" really aren't going to
operate very well, so you're really talking about more than 40 percent
nationally and more than 65 percent in Washington, where things like the tax
credit really don't work.
With the tax credit, you may only be talking about a price signal and
an incentive that only reaches a very small fraction of the total housing in
this country; it may be 25 percent or 20 -- I don't know. But it's much less
than most of its advocates believe.
DR. REZNEK: Isn't it true that at current funding levels you could build a solar
house in every county seat?
MR. DELOSS: Well, that may have something to do with this overly sophisticated
instrumentation I was referring to.
DR. REZNEK: But the current funding is large enough to do that right now.
MR. DELOSS: You mean for solar demonstrations?
DR. REZNEK: Isn't it large enough?
MR. DELOSS: If you looked at -- what was the number for fiscal '79? It's going to
be $36 million in fiscal '79.
DR. REZNEK: How many counties are there? There are 2200 or 3000. It seems to me
you could put one in every county with one year's funding.
MR. DELOSS: Well, it's not being done that way.
DR. REZNEK: Well, perhaps its more efficient not to do it.
MR. DELOSS: I can go back and do some arithmetic and try to figure out roughly
what it might cost to do this, but remember, if you're talking about demon-
strating passive systems, you're talking about a different kind of demon-
stration program. In fact, in the passive plan that's being developed at
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Statement of Mr Garry DeLoss
DOE — I talked to people over there this week, and they are not talking
about building buildings that are heated by passive systems. They're talking
about a design award system to get architects to think about it.
What I'm talking about is actually putting one in -- building the
structure that has these design elements in it. Now, that's maybe more
expensive than the active system demonstration program, and so this same
amount of money may not spread around as widely as if you were just demon-
strating solar water heaters.
DR. REZNEK: Could you do that with next year's funding? I am perhaps being a
trifle aggressive. My point is — perhaps further demonstration is not
necessary. What may be necessary is documentation of what has been achieved
and dissemination of the information.
MR. DELOSS: Well, I'll be glad to respond; I'll be glad to try to figure out what
I think, roughly speaking, it would take to create an adequate number of
demonstrations -- let's just focus on one issue here -- of passive design
systems, where you might want to have side-by-side demonstrations of two or
three or four basic passive designs, regionally adapted, in a certain number
of population centers around the country.
I didn't do anything that elaborate for this testimony, but I'd be very
happy to try to respond to that in some detail. I think it's a very proper
direction to think about.
DR. REZNEK: Thank you.
MR. LEE: I have one question I asked the preceding witness. You represent the
Environmental Policy Center, and you spoke here today on solar energy, and as
you know, any budget has certain limitations. There's a ceiling on how much
money there can be in it, and it is our job really to allocate within certain
bounds.
Why have you felt that solar should be the priority in the R&D budget
over things like conservation or some of the other solar-related activities
that we heard about today — wind and biomass? Why do you put your priority
on solar?
MR. DELOSS: Well, I wouldn't say I would put my priority on solar above conserva-
tion. Especially when you're talking about passive design factors, you're
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energy conservation and solar programs
really talking about a building that is designed with conservation in mind
and then passive solar gain in addition to that, so you have to start with
conservation.
However, my primary concern for conservation in residental buildings,
which is the topic I was addressing in the solar area, has to do with the
government regulatory process and not R&D, because I'm very interested in
mandatory retrofit of existing housing at the point of sale -- something that
the State of Minnesota is already moving toward. So I really didn't address
that issue.
With respect to the alternative investments in the solar area, I guess
I can give at least a two-part answer. One is: I wouldn't accept the con-
straint on the solar budget that's presently placed around it and say we have
to shift money around in the solar budget only. I would look for money
outside of that and move it in.
Number two: after you decide how much you are going to have in the
solar budget -- if you could add some from the outside, it would be great --
then I would try to establish some priorities that have to do with your
payoff. I think one of the problems is that, in the past, in ERDA and now at
DOE, there hasn't been enough concern for ranking priorities.
First it was not ranking priorities comparing solar to other investment
opportunities in the RD&D area; they've specifically avoided that. I
testified mostly on that point at the last hearing on the non-nuclear R&D
budget. Since they have avoided it in general — doing this kind of rank-
ing -- that means they've ended up avoiding doing it specifically for solar
as well as for everything else, and I think it's a long-neglected area that
people should be working on.
I don't think that people on the outside such as myself have the
capability to do it for them. Now, we have some very broad conceptual views
on this, and there is some practical experience that would point people in
the right direction, but the really tough work that should be done here has
been neglected for years, and they really should be allocating a lot more of
their resources in the direction of ranking so that they can come out with a
budget that has the right priorities.
DR. REZNEK: Any further questions?
Thank you.
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Statement of Dr Donald Anderson
MR. DELOSS: Thank you.
DR. REZNEK: Our next witness is Dr. Donald Anderson, Director of the Mid-American
Solar Energy Center.
STATEMENT OF DR. DONALD ANDERSON, DIRECTOR
MID-AMERICAN SOLAR ENERGY CENTER
DR. ANDERSON: In a sense, I appear here describing the results of the planning
process funded by the Department of Energy, and of course also as a represen-
tative of an organization which was designated by the North Central states as
one of the four groups planning for regional activities in commercialization
of solar energy and related conservation activities.
More importantly, I am looking at the issues addressed at this session.
I would like to, in a sense, act as a spokesman for some 852 experts in the
twelve North Central states, who are participants in this planning process,
and without going into any detail of the material that I've presented here as
a written record, to attempt to summarize the intent of this planning process
and some of the findings of the process.
The way in which the planning operation in the North Central states was
accomplished under a planning grant from the Department of Energy --
originally ERDA -- between July and January in this last six months, was to
ask the governors of the twelve states represented—basically the two North
Central census districts--to designate their representative on an advisory
council of states.
In turn, the planning team asked those designees the following ques-
tion: would you please identify, in eighteen different areas of expert
interest, those you would turn to first for advice in regard to solar com-
mercialization?
These eighteen areas ranged from societal and institutional issues to
those that were strictly technological. In this way we were able to gather a
total group of some 852 North Central states' representatives, whose back-
grounds ranged, for example, from finance through education through those
involved in the legislative process both at the local and the state level and
the like.
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energy conservation and solar programs
In turn, representatives from these groups were invited to attend
topical planning conferences at which they themselves generated the elements
of questionnnaires, which were mailed out to the entire group of experts,
asking a series of questions in three different questionnaires, identifying a
number of issues with regard to their perceived priorities for different
solar commercialization activities, and equally importantly, their perceived
relative significance of the performance of these priority activities at the
national level, at the regional level, at the state, local, and finally in
the private sector.
By going through this process -- for example, in the first question-
naire asking this panel of experts to respond to some 356 different question
elements and then processing these — I think we managed to obtain a good
deal of information which is quite quantitative and specific as regards at
least the interest of the twelve North Central states.
As I commented, we were one of four planning teams involved in per-
forming activities of this sort for the fifty states. In comparing notes
with those involved in planning in the other regions and looking at the
nature of the responses to the questionnaires and participation in the
planning process, I think that, in many cases, it's very much the case that
this is fairly representative of the interests and concerns of the entire
nation.
In the first of the three questionnaires which was presented, we asked
a series of questions with regard to relative priorities of different actions
that might be taken to assist in the development of viable solar alternatives
as a meaningful part of the energy mix in the twelve state region, both with
regard to the priority of the action itself and with regard to the relative
importance of the different performers who might take part in such actions,
ranging from national to private industry.
It turns out that, first of all, to that particular questionnaire,
there was close to a 55 percent response on a questionnaire that took some
hours to respond to per person, and there was a rather tight correlation and
fairly good agreement among the participants in each of the twelve states and
through the eighteen different interest areas.
I would like to read from page 11-21 of that representation and the
pages that follow those items that were identified as the ranked products,
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Statement of Dr Donald Anderson
first of all, of maximum interest in general activities at the regional
level, then going on through the ones that follow.
With regard to regional concern, seven different areas were identified
as being of primary importance, both for being performed and for being per-
formed on a regional level. In general, they have to do with disseminating
information -- and if I can add, in a sense, an overview of the results of
this full questionnaire process, the closest one can come to a consensus of
this broad range is that of recognizing that the decisionmakers, in the
process of commercializing as opposed to R&D, are spread through a broad
spectrum of different interests, ranging, of course, from the energy users
through those who would anticipate, in a sense, making a market or having a
business part in the applications of solar energy, whether it's wind,
biomass, or thermal applications, and including, then, those who are involved
in the energy issues from a regulatory or legislative process as well.
In almost all areas, the general concern was that providing credible
information pertinent to the particular application in a format that was
appropriate to the user of that information -- which is obviously different,
for example, for the person who would make a decision with regard to mortgage
commitments on a passive solar home than it is for, say, an architect who
would like to become much more competent in energy-efficient design -- is by
far the highest priority level activity.
There are many of these things that are appropriate for regionally
cooperative efforts, since they are frequently quite specific to climatic
variables, to local building practices and the like, and to state involve-
ment, since they're so heavily involved in the information delivery process
known as education.
The specific activities felt to be most important in this regard had to
do with collecting, disseminating, and exchanging solar energy information.
The results of research specifically and quite highly placed those things
that have to do with climate issues, and, in particular, a perceived concern
that modeling of the resource available -- wind, solar, and the like -- as it
pertains to a particular application, in a standard format, so that the
designer of a particular application who is not promising different perfor-
mance than a competitor, as a consequence of, for example, promising more
sunshine, is a very important aspect.
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energy conservation and solar programs
Information regarding systems and hardware available; collecting, dis-
seminating, and exchanging information on economic and financial issues are
ranked very highly. In a very real sense, of course, many of the factors
involving the decisionmaking process in the commercialization venture had to
do with full insight, and in many cases, education concerning them -- life
cycle cost payback issues and the like.
Interestingly enough, with very high correlation of those who partici-
pated in the process from the legislative group, there was a high priority on
providing educational programs and energy-related information for legislative
and regulatory bodies, who are very definitely recognizing their limitations
on having, again, credible and unbiased information in an appropriate
fashion -- an overtone, of course, as I mentioned before, of educational and
instructional issues.
The questionnaire could be cross-sorted to identify those things that
were pertinent to the involvement at the state level and at local levels, and
finally, private responsibility.
Rather than going through all of these -- because this is much more
than a ten-minute summary -- I would like to, in a sense, go to the opposite
end of the spectrum and look at the concerns of this same group with regard
to the highly-ranked private responsibility issues.
There was considerable concern on providing appropriate vehicles for,
in a sense, the doing and performing of technology-related activities, in-
volving the private sector as heavily as possible. Assistance to, for
example, emerging industries and the small businesses who must be a part of
making a market not only, for example, in manufacturing hardware, but in
terms of design, installation, maintenance activities and the like — these
were ranked very highly by this grass roots set of sectors as things that
have to occur before we can really have a commercial marketplace.
In the same sense, providing education programs for manufacturers
themselves, for the installers and the like, was felt to be an appropriate
and high priority for the private sector where the involvement did have to
occur.
The general consensus within this twelve-state region, by the way, is
quite favorably inclined to solar energy in the broad sense -- wind, biomass,
and direct solar applications -- as having a good deal of promise in the
future, and as being potentially cost-effective for many of the applications,
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Statement of Dr Donald Anderson
if the full infrastructures develop so that all of the parts of the commer-
cialization process are in place, and if sufficient activity can be
developed.
In a general sense, those twelve states are at the end of the pipeline
with regard to almost all forms of energy, and a rather surprising statistic
is that if you look at the net energy imported into these heartland states
from outside the boundaries of the twelve-state region, and compare that to
the net energy imported into the United States in total, 126 percent of all
energy imported into the United States is imported into that twelve-state
region, much of it from Canada, and of course much of it by shipment and
trans-shipment with other parts of the United States.
But we have a combination of a high base of agriculture, and, of
course, related, a good deal of interest in biomass applications; a great
deal of concern about the need for climate control, not as a comfort heating
application but for sheer survival in a typical winter; and a favorable
combination of climatic variables -- a long heating season and relatively
high costs of the conventional forms of energy in the near future. So I
think there's a good deal of promise for development of a significant total
solar activity in these areas.
I report the results of these questionnaires to you primarily to pro-
vide a rather extensive series of prioritized activities and some fairly
informed opinions with regard to the appropriate part in the puzzle for state
activities, local activities, the private sector, and where national activi-
ties could take place.
I think that's enough to summarize, in a very broad sense, much more
than I can go into in detail. Thank you.
DR. REZNEK: Thank you.
QUESTIONS AND REMARKS
DR. REZNEK: Just to nail it down firmly, I'd like to address your emphasis on
disseminating technical information, making it available and putting it in a
form that is usable by a spectrum of users. I take it, though you didn't say
it as directly as maybe I would have, that you feel this good technical
communication is not happening.
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energy conservation and solar programs
DR. ANDERSON: That's right. And knowing that within the computer system all
things ever published are available is of no help to someone in many of the
different sectors that we have available. It's not packaged appropriately,
and they don't have the capability, in a sense, of also critically assessing
conflicting claims and promises of performance from different kinds of
alternative energy sources and projections made based on measurements or
modeling done in different parts of the country, as it pertains to a par-
ticular application and location.
DR. REZNEK: There are several ways of getting that type of information and making
it available to the public. A federal clearing-house would be one way.
Another would be to foster an independent underwriters' laboratory to eval-
uate technical reports and documents. Perhaps such an underwriting estab-
lishment could be initiated with federal support, and as it matured, it would
develop an adequate clientele and become self-supporting.
Have you looked into alternative mechanisms for making that kind of
information available?
DR. ANDERSON: Rather extensively, and going along with the recommendations of this
broad body of opinion. I think it is important to remember that as a viable
industry develops, this might well be quite appropriate for the private
sector itself to undertake, and it will do so, as for example the American
Gas Association has done many activities in the past, very credibly and very
reliably.
The primary problem is that of not saying that the federal government
needs to intervene in order to make it happen. It's much more appropriate to
say that by having intervention and support in the early stages, we can
compress something that normally takes two or three decades into a much
shorter period of time by having clearing-house kinds of activities -- un-
biased advocates of the general alternative energy scheme, but not of the
particular manufacturer or particular process, carefully assessing the claims
and promises of different options for different applications and then making
that information available -- packaging it, and letting it flow through a
very extensive delivery mechanism, that already exists, of course, within the
nation through the educational institutions and the like.
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DR. REZNEK: I don't know if Panel members are supposed to say this, but I must say
I certainly agree with you.
DR. ANDERSON: Thank you.
MR. LEE: I'd like to just ask you one question. Accepting that the information is
collected, the information is obtained, and you're disseminating it, when you
are setting up the discussions of the Mid-American Solar Energy Complex -- I
guess you'd call yourselves --
DR. ANDERSON: Right.
MR. LEE: What role does the Complex play versus the role of state government,
versus the role of local education and counties in disseminating that infor-
mation? Have you developed a matrix of how that happens?
DR. ANDERSON: In a general sense, yes. In detail, obviously, this takes some time
to flesh out, and I would like to do this by using an example -- and it's an
example I've used many times.
In the absence of any regional activities or support from outside of
the state matrix, you will find, without question -- and it's already occur-
ring -- that, for example, a given educational institution, in looking at its
continuing education programs, may well say, "Let's develop a program to
retread architects." In other words, add to their total matrix skills the
energy sensitivity in design features that was not a part of the curriculum
of the average architect of even a few years ago.
Without other forms of support, you would find a given university, as a
consequence, releasing a staff member for probably a summer to become an
expert in solar energy and to write class notes. He would then pilot it with
his first program and continue with this.
You can get a tremendous amount of overall improvement in the informa-
tion package available and in their ability to deliver this, if you could
just provide a vehicle for having, for example, twelve states with common
regional concerns have a common workshop over the course of one summer to
develop a total curriculum. Then each of them would take it back, pilot it
in one particular program, perhaps refine that in the second summer -- to
take the edges off it -- and have a set of information disseminated through-
out the region that was much more extensive, in terms of looking at all of
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energy conservation and solar programs
the options and weighing the different options, than if each of the twelve
tried to do it separately.
To a large extent, it's trying to find ways to matchmake, to facili-
tate, and to link existing performers and existing information dissemination
routes, rather than establishing new ones, that can give us a lot of impact
in a hurry.
MR. CUTWATER: As long as you've got a questionnaire, I think it's interesting --
I'm sorry the rest of the people out here can't see it -- but, for instance,
in a ranked national responsibility, it's interesting to see that demon-
stration projects are like seventeenth in there --
DR. ANDERSON: There were a number of surprises.
MR. CUTWATER: -- whereas right at the top is financial incentives.
DR. ANDERSON: Yes.
MR. CUTWATER. Higher than that, the first is, I guess you would say, promoting
conservation, since it's promoting public awareness of the energy crisis.
But your questionnaire seems to follow the general trend of the people that
have been testifying this afternoon, when you get down to state responsi-
bilities and some private; when you get to the training of operators, the
warranties and equipment, and the sort of things that have come up
occasionally this afternoon.
DR. ANDERSON: I think it was quite gratifying that, by taking this large a
sample -- and far from a random sample, but rather a structured cross-
section--through what are basically, in their own area, informed expert
sources of opinion, which may or may not be, for example, education or
finance -- there was as much consensus and strong correlation as we did find
in this process.
DR. REZNEK: Any further questions?
Thank you.
DR. ANDERSON: Thank you.
DR. REZNEK: Our next witness is Mr. Norman Clapp, Vice President of Energy
Development and Resources Corporation.
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Statement of Mr Norman Clapp
STATEMENT OF MR. NORMAN M. CLAPP, VICE PRESIDENT
ENERGY DEVELOPMENT AND RESOURCES CORPORATION
MR. CLAPP: Mr. Chairman and members of the Panel, first of all, perhaps I should
identify myself and my role here. I am Vice President of the Energy
Development and Resources Corporation, which I guess is perhaps better known
by the name of its Chairman of the Board and Chief Executive Officer, Mr.
David Lillienthal.
I'm here to work both sides of the street. You're interested in con-
servation and solar power; what I want to talk about today is properly
classified in both categories, namely hydroelectric development and partic-
ularly the hydroelectric development that is available to us by the use of
existing dam structures.
I know I do not need to refer you to the report of the Corps of
Engineers, which came out of its ninety-day study directed by the President
last year, dealing with the potential in this field.
Briefly, I'm here to urge upon this Panel, in its evaluation of the
research, development, and demonstration programs of the Department of
Energy, the importance of taking a very hard look at the urgency of devel-
oping this particular potential.
Briefly stated, the case simply goes this way. We do have an energy
problem, and I think it's no exaggeration to say that it is an energy crisis.
We are reliably informed that, within two to five years, at least certain
sections of the United States will have their reserve capabilities for the
supply of electrical energy well below the danger line. We are encountering
various problems in the development of additional capacity to take care of
that.
There are environmental concerns involved in the development of the
major contributors to the energy needs. But herein, the potential of
small -- it's sometimes referred to as "small", sometimes referred to as "low
head" -- but whether it's small or low head or large, what we're really
talking about is the utilization of the unused potential of existing dams.
The potential, as quantified by the Corps of Engineers, is at a maximum
of 57,000 megawatts. This would almost double the current hydroelectric
development in the dams of this country at the present time.
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energy conservation and solar programs
Now, this truly is a maximum figure; it's an outside figure, but it
represents a significant potential, and the Corps goes on to report that if
this potential were fully developed, this could offset the deferrment of some
16 or 17 percent of the projected fossil-fueled or steam capacity that is
planned at the present time, through the period of 1979 to 1985.
I don't say that by way of recommending that we deliberately postpone
that capacity, but we are already -- unwittingly or inevitably -- developing
some lags in developing that capacity, and this represents a potential that
is subject to relatively quick results.
Now, how does this get involved in the research, development, and
demonstration program of the Department of Energy? It has come into the
present program really as a result of .some very substantial interest in the
general public, as expressed through the Congress. I think ERDA was somewhat
surprised that it inherited this sort of responsibility: it got placed in
the Geothermal Division.
This year $10 million is being devoted to this program: $4 million of
that is devoted to the technological type of research, which ERDA has been
known for; $6 million has been budgeted for a general demonstration program,
of which $2 million is earmarked for one project out in Idaho -- Idaho Falls.
Of the remaining $4 million, $2-1/2 million is earmarked for funding an
anticipated fifty feasibility studies on low head hydro sites, and the other
million-and-a-half, it is expected, will be devoted to the development of two
demonstration projects for which the specifications have not been announced.
I think the Department is certainly to be commended for moving ahead on
this front, and I think the efforts are entirely in the right direction. We
certainly would not want to be misunderstood on that score.
But developing the potential of small hydro at existing dams really
requires a reversal of a general trend that has been taking place for the
last fifteen to twenty years, in which the economies of scale have over-
shadowed the old historical patterns of electric generation. As a result,
many of these projects have been abandoned in recent years, as part of that
trend.
To turn that around requires overcoming a good deal of uneasiness and
skepticism, particularly on the part of the industry, and to some extent, on
the part of public decisionmakers. It also requires some actual experience
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Statement of Mr Norman Clapp
in substantiating the economics involved and in working out the marketing
patterns that will be necessary to integrate these smaller projects into the
present electric systems.
This -- I don't want to get involved in a game of semantics here --
perhaps is the kind of demonstration that has not normally been regarded as a
part of the demonstration program of a highly sophisticated agency such as
the old ERDA organization is. Their emphasis has historically been on tech-
nology, on hardware -- the development of new kinds of hardware and the
proving out of their mechanical and scientific feasibility.
Here the demonstration required is more in the application of tech-
nology that is pretty well established. Now, there probably are some re-
finements -- there are indeed some refinements that are being worked out on
low head turbines, but essentially the demonstration that is required in this
field is one of application and the proving of the economics by actual prac-
tice and the development of the marketing patterns that are necessary to fit
this into our overall systems.
So I come back to my original point, and that is that I'm here today,
really, to urge you gentlemen on this Panel, in your evaluation, to take a
very hard look at the need for demonstrating this technology, which is more
immediately and more readily available than many of the other soft tech-
nologies that are spoken of, and which will bring some rather immediate
dividends in terms of power supply, at a time when power supply is going to
be rather critical.
I might add one further point: That this is the kind of technology,
when we're talking about using existing structures, where, it seems to me,
happily, those who are concerned about power supply and energy needs can meet
on common ground with people who are also concerned about environmental
impacts, because with the existing structures -- although in certain circum-
stances, there no doubt are environmental impacts that have to be
considered -- those impacts are minimized.
That's my testimony, Mr. Chairman.
DR. REZNEK: Thank you. Are there questions?
QUESTIONS AND REMARKS
MR. LEE: I have a question. In Massachusetts — in New England -- we've been very
concerned about this, and we think there's a lot of potential. We think
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energy conservation and solar programs
sometimes the federal programs seem to be biased toward the Western dam
situation, especially the FTC requirements.
But I think one of the problems we've encountered a great deal has been
who's going to be able to finance these dams and the renovations, and this
has been compounded lately by the Department of Interior requirement of fish
ladders on all renovated dams, which has increased the expense consider-
ably -- to the point where even some people who were willing to do it are now
having second thoughts.
What recommendations would you make towards the Department of Energy,
as to their budget and their allocation of resources, in attacking the
financial problem of renovating existing dams?
MR. CLAPP: I think, Mr. Lee, that the approach that Senator Durkin from New
Hampshire has taken, with substantial support from many parts of the country
and certainly almost solid support from New England, is a very sound
approach.
Again, there is really no way quite as effective to demonstrate the
feasibility of this approach than by doing it. As you point out, in so many
cases, these properties are in the hands of either agencies or individuals
who are really not professionals in the electric generation business. They
recognize the potential, they would like to do something with the property,
but they do not have the professional expertise in-house or the financial
resources to do it.
So, as I say, although I would certainly commend the Department for
going in the right direction in doing what it is doing now, I think it is
woefully underfinanced, and I would hope that an approach such as the Durkin
Proposal, which offers loans to projects of this kind -- which can be for-
given if they prove to be unfeasible -- this is really a way of supplying
front-end money -- would become part of the program of the federal
government.
MR. LEE: Do you also have a concern about the Interior requirement of fish ladders
and how that will affect the ability, especially in the area of -- we have a
lot of anadromous fish that -- Do you have any opinion on that question?
MR. CLAPP: Well, this has come up. We have helped a number of applicants prepare
their applications for these feasibility studies, and I understand I'm not to
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Statement of Mr Norman Clapp
discuss individual projects here and I won't identify it specifically, but we
have, in the process, become familiar with a project in Connecticut, and this
is a site that is under the jurisdiction of the state Environmental
Protection Agency.
They are putting in fish ladders in this particular dam. They have
indicated their support for the development of hydroelectric power in that
dam on the condition that any incremental expense in the fish ladders, as a
result of the installation of turbines, would be met as a part of the cost of
the power project.
So in answer to your question, I feel that there should be some funding
available for the conservation aspects of the fish ladders. I think the
power projects ought to stand whatever additional cost the power projects
incur.
DR. REZNEK: Is your 50,000 megawatt estimate just physical generation capacity, or
does it reflect the marginal cost price to some extent?
MR. CLAPP: That's physical.
DR. REZNEK: That's physical, okay. And presumably some fraction of that would
then be cost-effective?
MR. CLAPP: Yes, and they, of course, point out in the report that this is subject
to a number of constraints, and as I say, it's a maximum figure. I cite it
simply to indicate that there is a substantial potential here.
I think no one can, at this moment, say exactly what the economics are
of this type of development. Every project is going to have its own
particular economics, but generally speaking, with the price of fuel going
up -- that is, of fossil fuel, and for that matter, nuclear energy -- this
has provided a whole new spectrum of costs against which you judge the eco-
nomics of these smaller hydro projects.
I think we've seen enough of it to be pretty well satisfied that most
of these projects can be developed economically and cost-effectively if we
can work out the mechanics of fitting them into the marketing system.
DR. REZNEK. One of the problems is finding someone who either owns a dam or has an
interest in it, who would also be interested in turning a profit -- using the
electricity profitably, isn't it?
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energy conservation and solar programs
MR. CLAPP: There are those. We're working with some who have exactly that moti-
vation. On the other hand, there are many -- it's a whole wide range of
possible owners. We're familiar with one company that has water rights and
the physical property of a dam adjacent to an industrial building which they
are using to manufacture insulating material, and they propose to develop the
power from this dam and use it in their manufacturing operation.
Public agencies are interested, either to generate electricity for the
use of their own people or to sell or exchange as part of an arrangement with
a neighboring utility.
Certainly we've seen enough interest, so that I think there is not a
problem of locating developable sites with owners who are willing and ready
to go, but as Mr. Lee points out, financing is one big stumbling block. I
think that we need not expect that every dam in the country is going to have
to have some financing provided by this program of the Department of Energy.
It's a question of how you build the momentum for the thing to take off, and
right now we're just beginning to taxi, and we need considerably more
momentum than we have.
Once that momentum builds, then I think the financing will show up in a
lot of quarters.
MR. OUTWATER. I'm not sure that federal non-nuclear energy research and develop-
ment money should go into this type of program. As I look at it, there's no
new technology here; it's a matter of stimulating a need for these things or
a perception of the need for them. Wouldn't it be better for Mr. Lee to go
back to Massachusetts and say to his Public Service Commission, "Look, I'm
the energy man, and there's an energy potential out there, and I want you
fellows to run a survey"?
Who can better finance these things than the utilities industry, where
they have still bonding capacity. Isn't that where it should somehow lie —
folded into the existing energy framework, rather than start a whole new
fresh set of entrepreneurs with little generators sitting on dams, hopefully
looking for a customer?
MR. CLAPP: Well, in some instances, I think it probably will result in that. You
have Niagara Mohawk in the State of New York, which has announced a general
hydro program of some size that they're going to develop over the next ten
years.
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Statement of Mr Jonathan Lash
Other utilities don't have hydro sites. The hydro sites reside with
somebody else. A lot of the hydro sites in New England, for instance, are
parts of industrial properties. That's what produced the first industrial-
ization in New England -- water power: water power used directly on the
place where it fell for industrial production.
Certainly much can be done through the utilities, but again, I say that
part of the problem is that, with the utilities, you're dealing with people
who, at one time, used those sites in many cases, and then the economies of
scale just got them completely oriented in the other direction.
MR. CUTWATER: We've got utilities making low-cost loans today for insulation in
homes. Now, it doesn't seem to me to be too much different for a utility to
go to an industrial user and say, "Look I'll give you a low-cost loan to
develop the power potential on that dam."
MR. CLAPP: I'm not saying we shouldn't do it. I'm saying we ought to use every
device we can. But I think the lead has been started here in this program --
and fortunately it has been started -- and I think it would be extremely
important to put far greater emphasis on it than has been possible in this
present year.
MR. LEE: Could I just add one thing? In terms of Massachusetts, we have talked to
utilities, and you're talking around $10 million for some of these dam sites;
we've identified seventeen sites that are under active consideration, in only
one of which a utility is actively involved.
DR. REZNEK: Any further questions?
Thank you.
MR. CLAPP: Thank you very much.
DR. REZNEK: Our next witness is Mr. Jonathan Lash of the Natural Resources Defense
Council.
STATEMENT OF MR. JONATHAN LASH
NATURAL RESOURCES DEFENSE COUNCIL
MR. LASH: Good afternoon. My name is Jonathan Lash. I'm an attorney with the
Natural Resources Defense Council. I work in particular with the Clean
Energy Project of NRDC, which may give you some idea as to the positions we
take with respect to energy matters.
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energy conservation and solar programs
The Natural Resources Defense Council appreciates this opportunity to
appear before this Panel and present its views on the federal Non-Nuclear
Energy Research and Development Program. NRDC is a non-profit organization
which, over the past seven years, has participated in administrative, legis-
lative, and judicial proceedings involving a variety of environmental and
conservation issues. The Clean Energy Project of NRDC participates in such
proceedings to advocate policies which we believe will assure the nation a
lasting and plentiful supply of energy without serious detriment to the
environment.
Rather than discuss the merits of particular programs which have or
have not been developed by the government, I would like to address an aspect
of policy which is too often taken for granted: the tools by which it is
carried out.
Whatever policy is pursued by the government -- and a little later in
my testimony I'd like to pursue that question -- some determination must be
made as to how to achieve it. Often that determination is made not in a
conscious effort to match the methodology to the goals, but rather as a
matter of political practicality, habit, or custom. There are certain types
of programs that we're used to using to achieve particular types of goals.
If I might, for a moment, employ a metaphor: assuming that our
national energy policy is a house -- a house which we desire to build so that
it is as energy-efficient as possible, easy to maintain, cheap, and simple to
construct, we still have to decide what kind of tools we're going to use to
build it. If we don't tell the carpenter or the mason or the sheet metal
worker what kind of tools to use, he will use those with which he is fa-
miliar. He will use those with which he has experience. He will use those
that he has in his toolbox and doesn't have to run out and purchase.
At least in the course of the past three or four years, there's been
some evidence that the Congress and the Department of Energy or its pre-
decessors have utilized tools which are the most familiar and the least risky
and require the least new investment of bureaucratic capital, in terms of
personnel and development of new methods.
Let me first outline some of the available tools and then look at some
of the ways they've been utilized in the course of the development of energy
policy over the last four or five years. I'd rank them from most coercive or
involving most governmental intervention to least coercive.
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Statement of Mr Jonathan Lash
We have some examples of direct participation by the government in the
function it wishes to have carried out. The Postal Service is an example of
that: the government has set up a corporation which is essentially govern-
ment-controlled which just does that. Military service is an example of
that. In the field of atomic energy, the government has a long history of
direct participation.
There are proposals now for the development of demonstration plants for
synthetic fuel processes, to be constructed and paid for by the government --
or at least in part by the government. That would represent direct inter-
vention.
Somewhat down the scale are mandatory programs -- the commands of law
and regulation. Those may be civil commands or criminal commands; they may
involve enforcement by the Department of Justice, a regulatory agency, or by
private citizens -- private attorneys-general. They may involve injunctive
relief, where the violator of a particular command is instructed not to do
what he's been doing or to do something he hasn't been doing, or where he's
penalized for conduct in violation of the command.
Commands are, by their nature, profound interferences in private
decisionmaking. Commands are, by their nature, risky, in that they require
certain conduct; they are not flexible; they don't permit adjustments when it
turns out that some of the premises that underlay the development of the
commands are faulty.
On the other hand, they're effective and they tend to work quickly.
They tend to work even when there's significant public opposition or fear.
The range of examples of mandatory programs is very wide. One example of a
mandatory program used for energy conservation is the fleet gas mileage
requirements, generally conceded to be an extremely effective method of
conservation.
The Environmental Protection Agency, of course, has long and complex
experience with mandatory systems for compliance. They lead to complex
battles for enforcement.
Down the scale still further, in terms of the amount of interference in
private decisionmaking, is the whole vast range of subsidy programs. Those
may include grants -- familiar research and development grants; loans --
direct loans to entrepreneurs that we've heard some discussion about in the
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energy conservation and solar programs
last several minutes, with regard to hydroelectric power; they may include
loan guarantees, just to make the capital available; interest subsidies; they
may include government purchases of a particular product or service at above
market rate or simply to stimulate the market; they may include tax incen-
tives, or, in a backwards way, tax disincentives. Tax disincentives, of
course, subsidize all the alternatives which are not subject to the dis-
incentives.
Subsidies, unlike commands or direct participation, leave freedom of
choice to the potential recipient of the subsidy. He need not apply. He may
make his own decision as to the viability of the program which the government
desires to promote. He will be left considerable freedom in the method used
to achieve a goal. If the goal is the development of solar technology, well,
there will be a whole spectrum of experimental technologies which will be
eligible for subsidy.
Subsidies, however, are expensive. No matter how you look at them --
whether in the forms of direct grants or even loan guarantees -- in the end,
they involve government capital. They operate much more slowly in getting
the desired effect, and they have very little impact where public resistance
is not based on economic factors.
One example of this is a program which was initiated by EPA. In Sep-
tember of 1975, EPA issued regulations requiring the recycling of certain
paper products in federal buildings with over 100 employees. I've spoken to
the GSA officials responsible for the administration of that program in the
Mid-Atlantic region -- five states are involved and some 320 buildings. It
turns out that, by the end of this year, that program will involve the re-
cycling of 1,700 tons of paper a month and a profit to the government of over
$90,000 a month.
Now, those economics existed before EPA promulgated the recycling
regulations; there's been no great leap in technology. The same impetus in
economic terms existed for the government to undertake recycling, but nothing
was done until the command to recycle was initiated by the EPA regulations.
Where the question is not an economic one, commands may be necessary.
A subsidy would not have accomplished anything, with respect to recycling
from federal buildings, because the question wasn't economic.
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Statement of Mr Jonathan Lash
Another example is the approach that the Department of Energy has, at
least up until this point, taken with respect to solar technologies. Almost
all of the expenditures on solar technologies have involved what may be
classed as subsidies, and the subsidies have been directed to research and
development.
If the problems in the use of solar energy and the introduction of
solar energy as a commercial alternative for home heating and building heat-
ing generally are technological, a subsidy program, which permits tech-
nological development with government grants, is useful. If the problems are
not technological -- if the problems are economic -- then a subsidy program,
which permits direct grants to consumers or to businessmen wishing to com-
mercialize solar technologies, will be effective.
If the problems are neither technological nor economic but attitud-
inal -- that consumers simply regard solar technology as too far out, too
unreliable -- then subsidy programs may simply not achieve the end of com-
mercializing solar technology, and we may have to resort to some other form
of governmental intervention if we wish to see solar technology commer-
cialized.
A fourth form of governmental intervention -- that which is least
coercive and, in many respects, least effective — is persuasion. Presidents
have, for generations, resorted to persuasion. Persuasion, of course,
doesn't require prior legislative approval; persuasion doesn't involve the
expenditure of any funds; persuasion is generally deemed to be a mark of
leadership.
In the field of inflation, over the past ten years, we've repeatedly
seen resorts to jawboning: wage-price guidelines, implicit threats by the
White House.
But at the bottom line, persuasion always permits the target to ignore
it. Another example of persuasion is something the Coast Guard does. When
the water gets very rough and the wind begins to blow, they put up a little
triangular red flag on the Coast Guard station to encourage yachtsmen not to
go out because of the danger. Nothing happens to the boatman who ignores
small craft warnings: if his boat begins to sink, the Coast Guard will still
come and rescue him; if he's caught going out through the huge waves, nobody
will hand him a citation, nobody will fine him, nobody will haul him into
court.
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energy conservation and solar programs
Persuasion in that sense is purely informational. It's an effort to
advise a particular segment of the population of a set of conditions which
may persuade them to modify their conduct.
I would suggest that, over the past four or five years, almost all of
the government's conservation programs have been on the level of persuasion,
or in some cases, subsidy. We've heard a lot about riding the bus and
"dialing down", but one can identify relatively few direct mandatory conser-
vation programs.
I've discussed one of them — that's the fleet gas mileage requirement.
There are a few others.
In the proposed National Energy Act, the conservation program takes one
step up and rises to the level of subsidy in the form of tax incentives. Tax
incentives, I would note, are among the least coercive and least controlled
of the subsidy tools available. They are so because, since the government is
not contracting with the recipient of the benefit, the government's unable to
attach conditions to the recipient of the benefit.
When you receive a federal grant, the grant is always hedged around
with a great many requirements for conduct. Some of those are relevant to
the purposes of the grant; some of those are totally irrelevant, but the
grant is amenable to controls imposed with the design of furthering the
purposes of the particular grant. Tax incentives and tax disincentives are
non-amenable to that type of controls. One proposal, which does not appear
in the Administration's proposed legislation but which has surfaced in the
Congress nevertheless, is the solar development bank or the solar energy
bank. That is a proposal for development of a new technology which is ob-
viously pure subsidy. It proceeds on the assumption that if the economics of
solar energy can be slightly adjusted, then solar energy will become
feasible.
It is important, before choosing that alternative as a method of pro-
moting solar energy, to make the decision as to what the obstacles are to
development of solar energy.
Another example: testimony before the House Energy and Power Subcom-
mittee of the Interstate Commerce Committee on conservation options -- a
number of utility representatives testified about rather innovative programs
that have been undertaken for conservation -- the use of utility capital as
loan funds for the retrofit of homes; the development by the utilities of
applicable technology.
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Statement of Mr Jonathan Lash
Universally, a fear was expressed by the executives testifying that
they would be subjected to disadvantages as a result of their active efforts
to conserve. They expressed the fear, in the case of the gas companies, that
if the amount of gas consumed by their customers was reduced, their alloca-
tions of gas would be reduced.
They expressed the fear that if the amount of gas their customers
consumed was reduced, their profit margins would be reduced; their ability to
undertake new technology would be reduced. And, most importantly, that
financial institutions -- the business community, in looking at their be-
havior, would, because the demand was not growing, decide that they had a
poor future. This despite the fact that they were undertaking among the most
innovative programs to generate new supplies -- conservation programs —
among the cheapest programs to generate new supplies.
That kind of problem can only be resolved by action on a national
level. It is non-amenable to subsidies. The questions are non-economic.
The questions are those involving the regulatory schemes applied to the
utilities and the attitudes of the people involved.
I'd like to discuss one final example that I think brings out another
problem in the selection of tools. Several months ago when Secretary
Schlesinger was testifying before the House Committee, he was pressed on the
Administration's supply strategy, and he promised that within ninety days he
would produce a National Energy Supply Strategy.
Indications are that that strategy will be based principally on the
development of synthetic fuel alternatives, and that the synthetic fuel
alternatives will be promoted by four measures. Number one: price guaran-
tees. The fuels will be purchased at no less than the equivalent of $25.00 a
barrel for oil.
Number two: subsidies for the development of the technology, but those
subsidies are to take the form of the construction of demonstration plants,
either solely by the Department of Energy, or by the Department in coopera-
tion with some of the larger oil companies.
Number three: a roll-in requirement -- a requirement that at least a
certain percentage of the products of each refiner or a certain percentage of
his sales should be synthetic fuels. These measures will certainly help to
promote the development of synthetic fuels. It's inevitable.
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energy conservation and solar programs
There was a fourth alternative, which involves a purchase by the De-
partment of Defense of a substantial amount of shale oil. With that kind of
subsidy and that kind of mandatory roll-in requirement and direct government
intervention in the development of the technology, synthetic fuels will get a
tremendous boost. But it has certain side effects.
It emphasizes certain of the synthetic fuels. Since some of the non-
fossil synthetic fuels, while they may be subject to the price guarantees and
may be available as roll-ins, will not receive the subsidy in the form of the
direct government purchase and will not receive any benefit from the direct
government participation in the development of the demonstration plants, they
will almost inevitably be left behind.
Any effort to develop the non-fossil synthetic fuels will be virtually
cancelled out by the fact that the major producers will have to rely on the
technologies they've invested in so heavily in order to meet the roll-in
requirements. There's no sense in making any investment in the non-fossil
synthetic fuels if the other measures are going to be pursued, which will
make the use of the synthetic fossil fuels inevitable.
Different tools act to reinforce one another or cancel one another out.
It seems to me almost inevitable that, despite the turn of the country away
from mandatory requirements and governmental restrictions, in energy policy
we will have to increase our resort to mandatory requirements and to com-
mands .
The time is short. The existing system represents a tremendous vested
economic interest, one which will be difficult through subsidy programs to
modify. Consumer attitudes can change only slowly, particularly where con-
sumers are not yet convinced that there's any crisis, that there's any need
to change, or that the new technologies are viable.
Where conservation requires some inconvenience and the failure to
conserve only involves some expense, the evidence is that at least a sub-
stantial proportion of the population would avoid the inconvenience and
undertake the expense.
If we concede that we are in a time where we have to act quickly, it
seems inevitable that we can't tolerate the time involved in changing those
attitudes through non-coercive, voluntary measures, and we must turn toward
coercive measures.
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Statement of Mr David O'Connor
I think that one of the factors which has skewed the selection of tools
has been the fact that we are still arguing about values. We have no defined
policy; we haven't decided what our priorities are. Since each new program
involves a discussion of what our priorities are, there's little time left to
discuss tools.
That completes my testimony, and I would be happy to answer any
questions.
DR. REZNEK: Thank you.
QUESTIONS AND REMARKS
MR. LEE: I just have one question. Can you, in a couple of sentences, relate this
discussion on tools to the problems this Panel has to wrestle with, which are
the non-nuclear R&D and the solar conservation areas.
MR. LASH: Yes. I think that it is essential that, in determining in which areas
we are going to expend limited funds for research and development, we focus
on those areas in which research and development will meet the problem which
is obstructing the development of those new sources of energy, and that we
not simply use research and development as a safe way of saying "We're deal-
ing with that area" and avoiding the crucial decision of whether we're going
to take the risk of compelling the nation in some form to move into commer-
cialization and utilization.
DR. REZNEK: Any further questions?
Thank you.
MR. LASH: Thank you for the opportunity to present our views.
DR. REZNEK: Our next witness is Mr. David O'Connor, Solar Project Director for the
Center for Energy Policy.
STATEMENT OF MR. J. DAVID O'CONNOR
SOLAR PROJECT DIRECTOR
CENTER FOR ENERGY POLICY
MR. O'CONNOR: Good afternoon. My name is David O'Connor. I am Solar Project
Director at the Center for Energy Policy in Boston, Massachusetts. I'd like
to thank you very much for the opportunity to be here today to comment on the
non-nuclear energy research and development budget, and in particular to
mention a little bit about the views of the solar energy industry with regard
to the problem of solar commercialization.
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energy conservation and solar programs
Before I begin, let me say that in my work, I receive a great deal of
assistance from the Massachusetts Energy Policy Office and Mr. Lee, and I'd
like to take the opportunity to thank him very much, personally and pro-
fessionally, for all of his support. I am a go-between for the solar energy
industry and the government. During the past year the Center for Energy
Policy has been contractor to the Department of Energy on a study of solar
commercialization in New England. Recently I authored a report for the
Department entitled "Solar Energy Application Centers: A Strategy to Facil-
itate the Commercialization of Solar Energy". I am presently working for
Booz, Allen and Hamilton, Inc. on a study of solar energy systems installed
in the Northeast that have received no federal funding. We hope to compare
costs and performance of these systems in relation to those that have re-
ceived federal subsidies.
In short, I spend a great deal of time inspecting solar energy systems,
talking with installers, distributors, and manufacturers of solar systems
about their problems, and I try, to the best of my ability, to translate
their needs into practical policy recommendations for the federal government.
It is oftentimes difficult for either one to understand the other, and I'm
afraid I spend too much time trying to justify the ways of one to the other
and probably not enough time thinking about why they're wrong.
It seems to me that there are far too many activities undertaken by the
federal government that foster a negative kind of environmental awareness.
Bottles should be recycled because they are unsightly, air pollution should
be eliminated or we will get chronic bronchitis, and so on. I'll surely not
surprise anyone by mentioning nuclear power and the negative environmental
awareness that that tends to engender.
Solar energy should be supported actively by those committed to the
environment for two reasons. This is not so because it is theoretically a
good thing, but because number one, it effectively displaces the use of
alternative and limited fossil fuels, and number two, it encburages an indi-
vidual, positive awareness of our environment.
I'd like to give you an example of the latter. Can you imagine a time
in the future when most of the children in our country grow up in homes
heated by solar energy? It is not as far off as you may think. You would
probably not be surprised to learn that those children would grow up with a
far better understanding of the causes of sunlight and cloudiness; of the
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Statement of Mr David O'Connor
consequences of daily and annual temperature averages; of the difficulties in
storage and distribution of heat; and so on. In general, they will appre-
ciate and understand the conservation of all natural resources because they
appreciate and understand solar energy.
It seems to me significant for environmentalists to consider that and
to understand that they have a vested interest in the rapid development of
solar energy. If my thesis is correct, and if you find some merit in my
recommendations, I suggest that the EPA should actively promote the use of
solar energy. It seems to me essential that that kind of mutual interest be
clearly understood.
During my time involved in solar energy, I've found that there is a
great deal of resistance in the solar industry to government involvement in
the commercialization of solar energy. Interestingly enough, there is also a
great deal of concern among government officials about being involved in the
commercialization of solar technology. Both seem to believe that solar
energy is the one last frontier for pure capitalism in our society and ought
to be left alone completely by the government if this is at all possible.
This seems to me to be a terribly mistaken attitude about the purpose
and effect of free market capitalism and, more seriously, it simply is com-
pletely impractical, given the kind of obstacles that solar energy faces. It
seems to me that a well-targeted government support program can really en-
hance the competitive nature of the industry rather than diminish it, yet I
continually find that there is an all-consuming fear that the government will
somehow eliminate competitiveness in the solar industry as soon as it becomes
involved. That simply will not happen. In fact, competition will more
likely decrease if the government does not get involved in the direct support
of solar than if it does.
Let me try to explain why.
Imagine the situation today, of a person who is a distributor or a
small manufacturer of solar energy systems. How can he market his product
when all his customers are waiting for a decision on the National Energy
Plan? This is extremely serious because it tends to cause a withering of
interest and willingness to purchase solar energy systems. Many, many of
the persons who are thinking seriously about solar energy, are waiting for
the tax credit, and they are waiting to see what happens to the price of
alternative fuels.
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energy conservation and solar programs
Therefore, those persons who are trying to stay alive in the solar
energy industry are suffering terribly while the decision on the Energy Plan
is delayed. It tends to drive out moderate-sized solar manufacturers, dis-
tributors and installers; they simply do not have the capital or the re-
sources to maintain themselves during a slow down in the market such as this
causes. If people expect the government to be involved and it does not act
on its promise, what is the industry to do? Therefore it is absolutely
essential that the National Energy Plan be passed as soon as possible. They
simply cannot survive if it is not, and without them the industry will be
left with less competition and innovation, I am sure.
One is left with a solar energy industry dominated by large corpora-
tions well capitalized from their dealings in other areas of the energy
spectrum.
It seems clear that the National Energy Plan will cause increases in
the price of fuels that compete with solar. Every study of solar energy
commercialization points out that existing artificial supports for alterna-
tive fuels must be eliminated if solar energy is to become competitive in the
marketplace. Present government subsidies for fuels other than solar effec-
tively eliminate competition by the solar industry with established energy
and fuel industries.
A more long-term problem is the one of a lack of venture capital for
new solar businesses. I hear time and time again from new and potential
solar manufacturers and distributors that there is simply no way that they
can arrange to get funds to keep them alive.
I would suggest strongly that any programs to be undertaken by the
Department of Energy in the area of solar commercialization look very, very
seriously at the problem of a lack of venture capital and what it tends to do
to the solar energy industry. I think it would be found that it, first of
all, hurts it. Second of all, venture capital could be made available by the
government at very, very low cost through loan guarantees for small
businesses and a low-interest business loan program. I believe that these
programs should be structured to weight "innovativeness" just as heavily as
"reliability". It is obvious to me that in the midst of our energy problems
a program could make wise use of tax revenues.
A lack of venture capital and a terrible cash flow situation caused by
the failure to bring forth promised incentives creates a deadly problem
within the industry. As moderate-sized manufacturers fight to survive, they
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Statement of Mr David O'Connor
encourage an attitude of "territorial exclusivity". Most solar manufacturers
allow a distributor to represent their product alone. Distributors complain
to me continually that this is really hurting the solar energy market because
they need to have an array of systems and kinds of facilities to make avail-
able to buyers. It's extremely difficult for them to represent only one
manufacturer but most are not willing to have their materials or systems
displayed with those of five or six other manufacturers. They are just not
willing to risk having a distributor selectively promote their system. It's
a very, very serious problem for distributors and for the ultimate com-
mercialization of the technology.
The other problem, I think, that's worth mentioning, with regard to the
lack of venture capital and the ability of middle-and small-level manufac-
turers to stay alive, is the fact that it simply tends to keep production
costs high, and therefore final retail costs are high -- much higher than
they need be. If there were a capacity to produce in greater volume -- that
I do not think needs to be encouraged through direct government funding of
production but by providing these people with the capital that they need --
it would immediately work to reduce the retail cost of solar energy systems.
There are a great many forward-looking people building new homes and
new businesses who are seeing the direct financial benefits of an investment
in solar energy over the long term.
However, the fact of the matter is that many people who buy solar
energy systems are doing it for much harder-to-predict reasons. They involve
things like environmental awareness, a commitment to more natural life
styles, and so on.
In fact, there is really an inadequate understanding of why people who
buy homes buy solar energy systems.
Commercial and industrial purchasers of solar energy systems have
available to them a number of incentives to buy solar. Namely, they have a
capacity for rapid depreciation of the equipment; they have available capital
to make the investment -- especially if they are building a new building,
they can write this into the terms of the cost of the construction loan at a
comparatively low interest rate; they understand the principle of life-cycle
costing, and it works for them because they are going to be a stable facil-
ity. Businesses do not move as rapidly as homeowners and therefore, they can
see the benefits of solar energy over the life of the building. Even if they
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energy conservation and solar programs
move out, very often they continue to own the building and lease it. The
benefits will accrue to them over its lifetime.
Perhaps the most significant reason for a business or a commercial
industry to invest in solar is its advertising potential.
In any case, businesses have clear incentives. Residential homeowners
and home buyers do not, and they have virtually none of the tools that I
mentioned available to them now. (Clearly, these need to be made available
and the most significant would be a tax credit.)
But an inadequate understanding of why and when consumers buy solar
energy systems leads to a great deal of confusion on the part of manufac-
turers and distributors as to how to set up their wholesale and retail out-
lets: how to make their systems available, how to distribute them, where to
market them and when, and also at what cost — whether to take losses in
certain areas at certain times. It seems to me that a great deal more work
needs to be done, with assistance from the Department of Energy, to illumi-
nate the market potential for solar. The industry is not yet able to handle
this sizable task on its own.
So, in sum, let me run through a number of recommendations and then
answer your questions.
The National Energy Plan must be passed immediately and the price of
alternative fuels must be allowed to rise, however quickly or slowly it is
politically feasible to allow, to their true marginal cost of replacement if
solar is to become competitive.
Second, the Department of Energy Solar Commercialization Program,
which, if you notice in your budget outlays, has a budget during the coming
year of $2.7 million -- very small for the job at hand — is simply unable to
provide the kind of production incentives that I think are necessary:
namely, support through loan guarantees and subsidies for venture capital and
for other kinds of production incentives. This must be increased. There
must be more venture capital made available.
Finally, it seems to me that there ought to be a significant increase
in the number and kind of studies undertaken to determine who it is that is
buying solar, when and how they buy it, and in particular, which fuels solar
energy tends to displace. Whether it's oil, electric, or gas, with the
installation of a solar energy system there is always going to be a dis-
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Statement of Or William Lang
placement of alternative fuels. I think we have not yet discovered the many
advantages in short that solar energy will provide us nor the ways in which
the lack of government support for commercialization slows rather than speeds
the realization of those advantages.
Thank you very much.
DR. REZNEK: Thank you. Are there comments from the Panel?
QUESTIONS AND REMARKS
MR. CUTWATER: Yes. I've got to say that at this time of the day your enthusiasm
and eagerness on this subject is really impressive. I think it's just great.
I'm just sorry you're not out selling conservation as well. I don't have a
question to ask — I thought what you said was very good.
MR. O'CONNOR: Don't misunderstand me. I'm a thorough conservation advocate and I
am well aware of how closely they are related. Today I chose to focus on
solar.
MR. CUTWATER: I admire you for your stamina and interest. It's just incredible.
DR. REZNEK: Any further questions?
Thank you.
EVENING SESSION
DR. REZNEK: Our next witness is Dr. William J. Lang, President of Strata Power.
STATEMENT OF DR. WILLIAM J. LANG
PRESIDENT, STRATA POWER
DR. LANG: My name is William J. Lang. I'm the President of Strata Power Company.
This is a company that was originated for the purpose of developing under-
ground compressed air energy storage about twelve years ago, and has been
engaged more or less full-time in this for that full period of time.
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energy conservation and solar programs
PREPARED STATEMENT
INTRODUCTION AND OVERVIEW
Energy storage is the most direct and clear path to upgrade the entire
national electrical system. While not as glamorous as replacing all of the
older system with some new space age power systems, it offers major energy
conservation benefits through efficiency upgrading of every existing base
load power plant. Retrofitting or plant modernization is not required but
merely improving load factors through auxiliary energy storage systems. The
difference is analogous to the differences in fuel economy from one auto-
mobile driver to the next when one accelerates and stops erratically while
the other drives smoothly. The electrical power industry operates currently
like a drag strip hot rodder, but through energy storage could become like a
skillful trucker who effectively transports large loads without extravagant
fuel consumption.
The electrical power industry across the nation is faced with erratic
loads which commonly vary as much as 250% over a 24-hour period. Well over
99% of this load is met by electricity generated the very instant it is used.
The effect is high cost due to erratic system operation resulting from in-
effective capital utilization and excessive fuel consumption. Differential
between peak capacity and off-peak periods continues steadily increasing as
it has over the last 40 years.
There are two short range and practical remedies to the erratic load
problem. One, the nation, from the greatest industries to the smallest
individual users, can be deprived of readily available electricity. Two,
energy storage can accomplish the same results without disruption of our way
of life. Further extensive development of major energy storage systems can
provide the means for shifting large blocks of energy production away from
oil or natural gas over to the more abundant coal or nuclear fuels. The
shift is also away from low efficiency peak or midrange power plants to
highly efficient base load systems while at the same time improving the
latter. Effective energy storage is also a necessary adjunct to the har-
nessing of intermittent and variable sources of energy such as wind, solar
and tides.
The estimated budget outlays in 1978 and 1979 for Energy Supply
Research and Technology Development of DOE clearly shows their failure to
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Statement of Dr William Lang
discern the cost effectiveness, far reaching and short range potential
benefits to the national electrical grid and excessive petroleum consumption.
About l%% of the budget is for electrical energy storage.
Fuel substitution, heat rate improvements and exotic power development
are subjects finding much attention in government energy research, but
another matter may override these concerns. A new word on the horizon is
"energy famine". It seems not from new energy technology but the lack of it.
The term refers simply to the shortage of electrical power generating
capacity and distribution facilities. Warning of a coming national energy
famine has been heralded only by few in the past but is now coming from
numerous quarters. The imminent problem is not one of overall total capacity
but temporary shortages during periods of hot weather or especially cold
days. Electrical energy storage can offset this situation by increasing the
total output of existing plants by levels as significant as 25 to 30%. It
can be the quickest and least expensive means to increase the national elec-
trical output.
The problem of short sighted budgeting of the federal electrical energy
storage research is further aggravated by gross mismanagement of the funds
which are expended. I would like to point out one such segment of this
research as a specific example.
CAES, AN EMERGING ENERGY STORAGE TECHNOLOGY
Gas turbines are simply special types of air motors where air is com-
pressed with turbocompressors, heated by burning fuel in it and expanded
through expansion turbine blading. The surplus energy, after subtracting
that used from driving the compressor is then used as a power supply. Gas
turbines gained wide acceptance in the electrical power industry for driving
generators because of their low capital cost, minimum installation require-
ments, low pollutant emissions, quick starting and flexible operating char-
acteristics. After reaching about 17% of the nation's total power generating
capacity in 1974, these systems fell rapidly out of favor because of two
disadvantages. They burned only refined petroleum fuels or natural gas and
furthermore did so with the lowest efficiency of any modern plants. The fuel
crisis has caught up with this once thriving gas turbine industry and reduced
it to a shadow of former years. A number of gas turbine manufacturers in the
U.S. and abroad have ceased production and shelved the technology.
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energy conservation and solar programs
PEAK POWER
OUTPUT
AIR STORAGE
SYSTEM
Air
Figure 1: CAES and Gas Turbine Comparison
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Statement of Dr William Lang
Another use of this technology which has been known for thirty years is
that gas turbines can be separated into components and coupled with under-
ground compressed air storage for electrical energy storage purposes.
(Figure 1). Large scale energy storage has historically been only by means
of pumped hydro systems. This practice has been found to be a desirable
adjunct to generation systems in about 40 locations around the country.
Pumped hydro is restricted to hilly or mountainous areas. Also, site selec-
2
tions involve a low power density of .015 Kw/Ft and modify the environment
or recreational areas to such an extent that bitter litigation almost always
ensues and few sites, even where conditions are favorable, have more than a
remote chance of success. By contrast, CAES involves minimal surface dis-
2
ruption with power density of .9 Kw/Ft (2). In other words, a 600 MW CAES
plant would involve about 15 acres of surface land compared to 900 acres for
a comparable sized pumped hydro.
Underground storage systems for CAES include salt cavities, mined hard
rock cavities and porous rock reservoirs. The latter are presently known in
sizes large enough to serve as regional energy banks serving perhaps as many
as a dozen utilities simultaneously from one site. Plants with ultimate
capacities of 10,000 MW or more can be built starting with equipment unit
sizes as small as 150 MW and expanding at will. Unlike the open cavity
storage systems which normally by economic necessity must be restricted to
peaking use, the aquifer storage systems often will be able to operate for 10
to 12 hours per day. This is made possible through the lower incremental
cost of storage expansion typical of aquifers.
PRINCIPLE BENEFITS OF CAES
Gas turbine power generating systems have been most desired because of
low capital cost, easy installation, compact size, quick starting capability,
versatility to accommodate quick load changes and minimal environmental
impact. They have been least desired because of a very poor heat rate
(around 16,000-oil-Btu/Kwh) and fuel costs (about 5C Kwh). Modifying gas
turbines for compressed air energy storage sacrifices little with regard to
the desirable aspects of gas turbines, while at the same time it markedly im-
proves the heat rates (about 11,000 Btu/Kwh: 4200 Btu/Kwh-oil and 6,800
Btu/Kwh—coal or nuclear). Fuel costs are cut in half. Multiplying the oil
savings of CAES over gas turbines (about 11,800 Btu/Kwh) for all of the
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energy conservation and solar programs
nation's peak power would save about 350,000 BBL oil per day. Bringing
energy storage into midrange power production could increase this savings to
the million-barrel-per-day range.
With regard to the predicted energy famine, energy storage systems of
this type would permit expanded use of existing base load systems and provide
the least expensive and shortest term means of boosting total power and
energy outputs.
The CAES technology can be operational in less than two years in the
simpler forms but offers numerous avenues of system optimization and advanced
stages for stimulating challenges to the researchers. Further it can be com-
bined most beneficially with the emerging fluidized bed combustion technology
(4), thermal storage—intercooler and aftercooler waters or hot air, and with
solar power (5), tidal power (7), and wind power (6).
FOREIGN DEVELOPMENTS
At Huntorf, West Germany, the world's first compressed air storage
peaking power plant has just been constructed and is currently undergoing
extensive commissioning runs. The system is a 290 MW fully automatic, remote
controlled unit which utilizes high pressure salt cavity air storage. It is
a highly sophisticated plant employing variable blade pitch compression,
synchronizing clutching and numerous other technical innovations. In spite
of first time design and manufacturing setup costs, multiple stage com-
pression, combustion and expansion, the completed facility cost only around
$200/Kw of capacity. This is about the same cost as advanced cycle peaking
or midrange systems which burn only premium fuel at. about the same heat
rates. Turbomachinery designed for low pressure storage is considerably more
simple and is practical in the case of aquifer storage systems where volume
specific reservoir development costs can be exceedingly low.
U.S. STATUS
The Department of Energy, after many months of delay, has recently
awarded contracts for site explorations and feasibility studies which are
hoped will lead to demonstration air storage electrical power plants in salt
caverns and mined rock caverns. There are further stalled contract nego-
tiations with a midwest utility team for site exploration and evaluation for
aquifer storage. The latter is advancing from the status of "months pending"
to the category of "years pending" and even when started would not advance
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Statement of Dr William Lang
beyond the paper study stage for about three years. An appropriate question
is how did the U.S. program get so far behind the European efforts and what
still holds it back?
The following treatment is an attempt to trace highlights of the his-
tory of the U.S. program over a period of time and detect where, when and how
the technology development got off track. Although the summary is obviously
incomplete, at least a few dates and events can be used for an overall yard-
stick to assess the progress, or rather regress.
1966 Studies for air storage with compressors and expanders began at
LSU, Baton Rouge.
1968 Brown Boveri, New Jersey/Strata Power study directed toward
small gas turbines and selected aquifer sites found the
concept practical, technically feasible and economical.
Projects were vetoed from Switzerland due to U.S. utility
resistance to foreign gas turbine products.
1968 Gilbert Associates/Metropolitan Edison/Strata Power feasibility
study and system design concluded underground compressed
air-energy storage in aquifers was practical, economically
competitive and feasible with existing turbomachinery equip-
ment. Project halted for lack of suitable reservoir site in
the desired area (Southeastern Pennsylvania).
1970 Westinghouse Research studied aquifer CAES technology proposals
by Strata Power. The studies including reservoir computer
modeling proved quite favorable. Planned projects were
vetoed by Turbine Division due to preoccupation with the
thriving gas turbine sales and difficulties meeting manu-
facturing schedules.
1972 AEP-headed utility consortium with Stal Laval planned air
storage project up through detailed contract negotiations.
Discontinued for fear of jeopardizing a pumped hydro project
then seeking approval.
1972 Worthington International with regard to a NIPSCO/Strata Power
project offered to manufacture from existing expanders and
compressors a 36MW CAES plant for installation on a pretested
and developed aquifer site for $l44/Kw. This price included
turnkey installation with full commerical gurantees. G.E.
offered a better system modified from the 5000 series turbine
at a lower price ($63/Kw plus installation) but stated that
manufacturing time would be three or four years because of
manufacturing schedules and other priorities. The utility
finally declined at least largely because they already had
the highest load factor in the nation and had no shortage of
peaking power.
1972 AEC study at Oak Ridge concluded CAES technology in open
caverns was promising and practical. This study did not
include aquifers.
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energy conservation and solar programs
1972 NWK of Hamburg begins discussions and hires a geological group
to study and select a site for CAES using one of many salt
domes in northern West Germany.
1973 AEC study at Battelle PNL again concludes CAES technology is
favorable and competitive with pumped hydro in certain cases.
(Aquifers again were not included).
1974 NWK of Hamburg orders the world's first compressed air storage
power generating plant from Brown Boveri Sulzer.
1974 AEC-Energy Technology Branch receives and rejects proposals for
CAES site exploration and air injection testing of known
aquifer sites which were partially predeveloped. Late in the
year this group decided on a broad study reassessing all
previous studies in the hopes that this would somehow
catalyze application of the needed technology.
1974- ERDA rejects all industry participation proposals related to
1977 specific site testing, evaluations and plant development
ranging in size from $250,000 up to $24 million with industry
group at times offering to pay 85% of the total costs (1).
Approximately another dozen studies are funded.
1978 FWK Huntorf plant completed and operating in commissioning
stages.
1978 DOE Energy Storage Program continues with the contracting and
implementation of protracted long term studies in hopes of
leading to sites and eventual demonstration.
The policy of the Energy Storage Systems Division of the Conservation
Section of ERDA/DOE has been stated in the Division Program Approval Document
FY 1977 dated October 1, 1976. It states: "The Energy Storage Program will
support high risk, long term R&D areas less likely to be developed by indus-
try alone." This is a sound policy which few would question. Perhaps in
their zeal to assure success of the policy and give an illusion of effective
R&D, the Energy Storage Systems Division of the DOE has sandbagged* the
program by taking short term, low risk R&D programs already nearing indus-
trial contract status and forcibly deforming them into the policy mold. The
following is an attempt to determine how this was done:
I. Government energy research had to adopt a posture of complete domina-
tion in the field to force various interested utilities and corpor-
ations to back off. Promises or threats to throw vast sums of money
around has the effect of stopping all nonfederally funded projects.
This included EPRI as well as private research efforts in the past and
continues to this day. ERDA staked a controlling claim on this tech-
nology by representing themselves to be more prepared to follow through
^Overstated the handicap in order to qualify under conditions calculated to
assure success.
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Statement of Dr William Lang
than they have ever been. The long-stalled, postponed and delayed programs
speak for themselves. After turning down several low cost, site specific
testing and demonstration programs in 1974, the AEC Energy Technology Branch
decided on an intensive restudy of earlier AEC, other governmental and in-
dustry feasibility and design studies for underground compressed air storage.
Coming at a time when many large company research staffs around the country
were ordered to find government subsidy for their work, there was no problem
in getting dozens of responses to the study RFP. This study which was com-
pleted a couple of years later (ERDA 76-76) managed to create so much con-
fusion and misunderstanding as to make necessary a series of much larger and
more specific but largely redundant studies.
II. ERDA promoted national confusion about availability, cost and charac-
teristics of porous rock reservoirs.
A. Reservoir conditions in every hypothetical situation studied were
at the best marginal with regard to permeability (the ease of
receiving or delivering air) and vastly inferior to each of
several sites specifically offered for testing in prior unso-
licited proposals. Finally the unavailable Brookfield site
which was selected for detailed design and operations studies was
submarginal with respect to both permeability and hydrostatic
pressure, thus compounding its unsuitability. The study gave no
hint that many sites existed and were available with 10 to 30
times greater permeability and more appropriate hydrostatic
pressures. Neither was it hinted that a direct correlation
exists between permeability and reservoir development cost to the
extent that costs would be cut by 90% with proper reservoir
selection.
B. The confusion arising from ERDA 76-76 was then again compounded
when several of the same parties of the ERDA study extended this
confusion with the aid of EPRI at a major national report at the
American Power Conference (8). Major areas of the nation which
are most suitable for aquifer storage were designated as not
suitable at all for compressed air energy storage. The misin-
formation which was credited back to ERDA 76-76 had the effect of
killing most of the last few independent underground air storage
projects. This error to this day has never been publicly
corrected.
III. Aquifer gas storage is a well proven and accepted technology in several
midwest states. Subsurface geological information is abundant, known
and available sites are plentiful and the region has tremendous sur-
pluses of nighttime nuclear and coal power. Federal site exploration
activities for aquifers has been confined to the State of California
where there is little low cost nighttime energy available for storage.
This State is also especially blessed with topographic conditions which
make possible the alternate and area proven pumped hydro energy
storage.
IV. From the viewpoint of detailed equipment design and manufacturing, the
AEC/ERDA/DOE philosophy has been that conceptual design and turbo-
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energy conservation and solar programs
machinery manufacturing innovations are necessary for the development
of this new technology. This is true only if they insist upon using a
few selected manufacturing favorites and continuously ignore others who
already have and have had for some time the necessary equipment ready
to sell with full commercial guarantees. At times the equipment could
have been purchased and installed on a turnkey basis which would make
almost all of the federal research efforts redundant.
V. The ERDA/EPRI Compressed Air Storage Workshop of December 1975 called
for a highly qualified and broadly representative group of technical
experts to make recommendations for the advancement of this technology.
In spite of this panel's recommendation (3) that there was little
research merit in duplicating the European compressed air solution
mined salt cavern project, as the information concerning the details of
this have at all times been freely available and widely disseminated in
this country, the federal solution mined salt cavern CAES program has
been the leading DOE-sponsored project and will surely yield in four or
five years the same information. The specific technology further has
ultimate usefulness only in a narrow Gulf Coast belt and should be
categorized as a regionally exclusive utility subsidy, not disguised as
a technology innovation.
VI. The energy storage program has been continuously confused throughout
and disordered through a practice of persistently shifting responsi-
bilities. On an average of about once every six months, the high level
federal management responsibility for CAES' R&D shifts. Whether the
musical chairs business is a major cause of the confusion with the
programs or a necessary byproduct of it may be difficult to discern.
At any rate, the net effect is to set the program back about six months
for every major transition.
To summarize the reasons for failure of the U.S. government-dominated
CAES program, it is principally because their program is designed to reinvent
that which is invented, restudy that which is known, rediscover site situa-
tions which are available and redemonstrate that which is demonstrated and
commercially available. It is hard to fix a rigid timetable for such a
program, considering that it is possible to stretch it out indefinitely.
The aquifer portion of the CAES program at present standing could not
be to the point of final construction and manufacturing contracting in less
than four years. The 1982 date will see the program about to the same place
where it was in 1972 when firm and guaranteed site specific manufacturing and
construction prices were quoted. Then a three- or four-year construction
program is anticipated rather than 13 months as earlier offered. The federal
CAES program since the embryonic stages about four years ago has set the
state of technology development back approximately 10 years already and is
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Statement of Dr William Lang
continuously widening the gap. They have not discovered the real problems
constraining CAES development which are almost entirely legal and financial,
but have instead created imaginary technical and manufacturing problems
perhaps more to their liking. The geological and reservoir engineering
aspects of these underground technical adventures are especially complicated
by the fact that the AEC/ERDA/DOE research effort in this area has contin-
ually operated without the benefit of anyone with even elementary knowledge
in these technical fields on the staff team. Consultants must write the
RFP's, evaluate and interpret the responses in language understandable to the
federal research management teams. If some of these consultants had vested
interests in the projects it would be beyond the managerial team to identify
these matters for they must implicitly trust their outside advisors.
SUGGESTIONS AND RECOMMENDATIONS
The President has declared that he was addressing the national energy
problem as a declaration of war. It is herein suggested that he point some
cannons toward the stagnant and redundant federal energy storage program for
electricity. The following should be done to salvage this technology from
the grips of the endless study propagators:
1. Cancel all existing CAES contracts, demonstration projects, and
paper study programs which have been conceived and directed under
the federal program paying just compensation wherever damage is
caused by the cancellations.
2. Institute loan and loan guarantee programs similar to those in geo-
thermal energy development to offset the risks associated in
finding and verifying air storage sites. Currently utilities are
not geared for such risks as they cannot charge their customers for
the inevitable unsuccessful site exploration efforts.
3. By direct grant support worthy demonstration projects which are
clearly original and pertinent to the technology advancement.
4. Continue to sponsor workshops and information exchanges on the
emerging technology wihout extraordinary delays in publishing the
data.
5. Examine the continuously ignored concept of regional underground
energy storage banks operated by a federal corporation or with
federal loans that guarantee equitable regional power distribution.
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energy conservation and solar programs
6. A priority standing with regard to fuel allocations should be given
to CAES during any time of national crisis since this technology
saves twice as much petroleum fuel as it uses in contrast to
existing alternates for peak and mid-range power generation.
This testimony and the conclusions reached have been directly my own
views. While they may not reflect a consensus of all those involved in CAES,
they are quite likely to represent a consensus of views of all those who have
been directly involved with this technology for more than five or ten years.
REFERENCES
1. Blancher, Carroll, Chairman and Chief Executive Office, Public
Service Indiana, Proposal Letter to Dr. Robert C. Seamans, Jr.
Administrator of ERDA, November 10, 1975.
2. Day, W. H., Alff, R.K., and Jarvis, P.M., "Pumped Air Storage For
Electrical Power Generation, IEEE Energy Development Conf. 1974.
3. ERDA 76-124, Proceedings CAES Workshop, p. 532.
4. Harboe, H., "Importance of Coal." Stal Laval paper 354 E 03.73,
1973
5. Hutchins, L.E., Apparatus for the Utilization of Solar Energy.
U.S. Patent 2,942,411, 1960.
6. Johnson, C.C., Smith, R.T. and Swanson, R.K., Wind Power Develop-
ment and Applications, Power Engineering, October 1974.
7. Sorensen, K.E., and MacLennan, C., Tidal Power and Its Integration
Into the Electrical System, 1973, Tidal Power Consultants Limited,
Montreal.
8. Vosburgh, K.G., et al, "A Compressed Air Energy Storage Plant With
a Cavern in Salt", Preprint American Power Conference, April 1977.
QUESTIONS AND REMARKS
MR. CUTWATER: Are you asking for funds, Dr. Lang?
DR. LANG: I certainly am not.
MR. CUTWATER: We're here talking about RD&D.
DR. LANG: Okay, well, this is remotely related. Maybe we're talking about the
same thing. I thought we were talking about technology development, which is
not R&D.
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Statement of Dr William Lang
But the first thing that I'd recommend is that they cancel all existing
compressed air energy storage contracts, demonstration projects, and study
programs which have been conceived and directed under the federal program,
paying just compensation for whatever damage is done.
MR. CUTWATER: I'm sorry I asked the question.
DR. LANG: There is an area where they could help, and that's by loan and loan
guarantees. These are areas of risk that the utilities are not set up to
handle. There are a certain number of failures that are inherent in this
exploration. Utilities have to be very conservative. They cannot stand
these failures and they can't put them in their rate base, so that means they
have to take them out of their stockholders' pockets.
This is the first area where they need loan guarantees, and I believe
that this is the most effective means through which this technology develop-
ment for energy can advance. Perhaps some direct grants, where the govern-
ment does not manage them and control what's done, might be of great benefit.
DR. REZNEK: Dr. Lang, I would like to make some observations. First, this air
storage technology does not really reduce the energy input for electricity
generation. What it really does is substitute either nuclear fuel or coal
for the more expensive fuels.
DR. LANG: Not correct. We're talking about peak power.
DR. REZNEK: No. We're talking about the daily cycle. For the same amount of
electricity generation over a twenty-four hour cycle, the energy input re-
mains essentially the same, does it not?
DR. LANG: No. No, it's reduced. Because normally during the day, you have a
total heat rate of about 16,000 Btu/kilowatt hour. In this system, even with
the energy losses, you have a combined heat rate going into this of 11,000.
So you've saved the 5,000. Your total energy is reduced, and the first EPA
study of this, back in 1971, said "This is of interest to us because by this
means they can phase out old coal-fired peaking systems that operate very
inefficiently and it replaces other systems." It does lower the total energy
input.
DR. REZNEK: Over the twenty-four hours of the heat rate?
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energy conservation and solar programs
DR. LANG: Yes.
DR. REZNEK: The second question is: Won't this air storage technology tend to
prolong the life of old power plants? If the future pattern of usage is one
where the peak is growing less quickly than the base, and certainly the
institution of this air storage technology would accomplish that, the load
curve would flatten generally across the nation. This would tend to encour-
age the use of older plants. In other words, the life of older plants, which
are now being used 30 percent of the time, would be prolonged. With this
technology, you would be able to get usage rates up to 70 percent. Is that
not so?
DR. LANG: Whatever plant it's used for -- a brand new nuclear coming off the line
or the oldest plant you've got -- it will improve the capacity and the effi-
ciency of each and every one no matter how bad it was. This can be sub-
stantial.
DR. REZNEK: But the nuclear plant is used now to the maximum extent possible --
the brand new one. It's the older one that's less efficient.
DR. LANG: No, no.
MR. CUTWATER: Taking away the peaking units.
DR. LANG: About 54 percent or 59 percent is typical for all the nuclear plants.
In our area, in Chicago, they must bank them through the night. They have a
tremendous surplus of nuclear energy that they don't know what to do with.
They only use them to about 60 percent capacity.
DR. REZNEK: If the load curves were less steep, older plants would be used more.
Most of these plants have less stringent pollutant emission standards applied
to them. In other words, they are grandfathered under the state implemen-
tation plans. Therefore, the amount of air pollution associated with coal
plants would actually go up with this technology. Is that not so?
DR. LANG: No, that's not so, and for several reasons. But one is that there's
nothing inherent in this technology that says you have to keep the old high
pollutant-emitting plant. But the thing of it is, by operating these old
plants very inefficiently, like at 30 percent load factor, you're still
operating the plant twenty-four hours a day.
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Statement of Dr William Lang
Some of the plants that I know of in Iowa -- they bank them all night
long. Everybody goes home, but they burn coal, run the plant, and it pol-
lutes all night long. It's not making one kilowatt hour; it's just sitting
there keeping warmed up, burning coal automatically until the daytime comes
and the workers come in at 8:00 in the morning, fire the plant up to full
capacity, and then shut it off at about 3:00 o'clock and put it on
automatic.
You still have to pay for that plant and the pollution emissions
twenty-four hours a day. You can't shut that thing off, although it's a
peaking system. Now, it doesn't make any difference to me if they close it
down or not -- that would be fine by me. But air storage does not lead to
keeping old fossil plants. This was not the first conclusion of the Environ-
mental Protection Agency; it was just the opposite of that: that the
environment would benefit by putting some of these out of business.
I have a letter on that if you'd be interested in seeing this.
DR. REZNEK: If you'd like to submit that for the Record --
DR. LANG: It's from Sheldon Meyers.
DR. REZNEK: Would you like to submit that for the Record?
DR. LANG: As a matter of act, the Environmental Protection Agency, in 1971, said
this was good and it could have impact on the air quality in the following
ways: One, compressed air storage could be combined with nuclear power
plants; two, by the replacement of older fossil plants not controlled by air
pollution control devices with new incremental base load plus air storage.
This is just the opposite of the hypothesis you made. Three, it could
be used as a partial substitute for spinning reserves, only not making any
pollution during the time it's spinning. And four, time shift of generation
patterns, such as generation powered by air storage during time intervals
when pollution levels are high.
DR. REZNEK: Any further questions?
Thank you very much.
DR. LANG: Thank you.
DR. REZNEK: Our last witness for the day, if there are no other witnesses who are
not on the program who wish to speak, is Dr. Ronald Doctor. He's Com-
missioner of Energy Resources in the Conservation Development Commission for
the State of California.
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energy conservation and solar programs
STATEMENT OF DR. RONALD DOCTOR
COMMISSIONER OF ENERGY RESOURCES
CALIFORNIA CONSERVATION DEVELOPMENT COMMISSION
DR. DOCTOR: Good afternoon. There's just one correction — I'm one of five Com-
missioners on the California Energy Commission.
I'd like to just do this informally if I may.
DR. REZNEK: Certainly.
DR. DOCTOR: I don't know how much you know about the California Energy Commission.
We were created in 1974 by legislation that came into being in 1975, so we're
about three years old now. We have four major functions.
One is forecasting and planning for electric utility resources in the
state, and more recently, for gas systems — that is, estimating future
demand for natural gas. Second, on conservation: we have responsibility and
authority for developing and implementing mandatory conservation actions in
the state and a variety of non-mandatory actions as well. Third, we've got
the responsibility for trying to speed up the implementation of alternative
sources of energy, particularly solar, geothermal, and biomass. And fourth,
we are what used to be called a one-stop shopping agency, and it isn't quite
that in California, but we have basic power plant siting responsibility.
All of these functions and a host of subsidiary functions are inte-
grated into a single package -- or we try to integrate them into a single
package. Of course, everything tends to focus on our regulatory activities,
which are the conservation and the power plant siting activities.
I understand your focus today is on solar and on conservation, and I'd
like to outline for you what we've done and what we're doing on those two
subjects. On conservation, we have in effect mandatory insulation, weather
stripping, and glazing standards for all new buildings in California. For
residential buildings, these are what are called "prescriptive" standards --
that is, they deal with the individual components of the building like the
shell, glazing, heating systems.
For non-residential buildings, our mandatory standards come in two
forms. One is the prescriptive or component performance standards; the other
is an energy budget standard. That is, we have set Btu per square foot per
year standards for all new commerical buildings by class of commercial
building and by climate zone within the state.
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Statement of Dr Ronald Doctor
We have restricted the use of electric resistance heating and electric
resistance water heating, which are particularly inefficient and wasteful
uses of energy, and we are encouraging the use of solar energy, both active
and passive solar, for those purposes.
We've set minimum efficiency standards for new refrigerators, freezers,
air conditioners, space heaters, water heaters, and a variety of additional
appliances. We have prohibited standing gas pilot lights on selected new
appliances, and in their place are requiring the use of automatic spark
devices or intermittent ignition devices. We estimate that will reduce each
participating household's gas use by between 10 and 20 percent.
We have set mandatory energy conservation standards for new commercial
buildings, as I mentioned — for non-residential buildings. Those standards,
we believe, are going to reduce commercial building energy use by 30 to 60
percent.
Those conservation actions alone, we estimate, will reduce utility
expenditures for new power plants in California by about $20 billion, and
will reduce California's direct consumer cost for electricity and gas by
between $1.2 and $1.5 billion per year. That means direct savings, now, of
about $150.00 per year for every household in California. Indirect expend-
itures for goods and services would be reduced by several times that amount.
It's difficult to calculate, but we know it's several times.
Now that's on conservation. We have additional conservation initia-
tives coming. We are in the process of developing performance standards for
residential buildings -- we think we'll set a Btu/square foot per year
standard for new residential construction that will be optional to the pres-
criptive standards or maybe in addition to them. We're not sure what form
that will take yet.
On solar, we have a massive program going that we believe will lead to
the use of solar energy in one-and-a-half million households by 1985 in
California. The heart of the solar program is the state's solar tax credit,
which is a 55 percent tax credit with carry-forward provisions different from
the federal credit, in that you can carry forward any unused portion of the
credit to future years until the entire credit is used up. That credit
provides a rather powerful economic incentive for the installation of solar.
It's hard to say what the effect of the credit is.
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energy conservation and solar programs
It was enacted in September of last year and was made retroactive to
the beginning of 1977. We expect the first tax returns showing the use of
the credit to be analyzed to get statistical data sometime within the next
few months. We have conducted a couple of surveys that indicate that, at the
beginning of 1977, there were something less than two or three hundred solar
water heating systems installed in California residences. By the end of
1977, there were 5,000 to 10,000 solar water heating systems installed, and
an additional 5,000 to 10,000 solar swimming pool heating systems, and be-
tween 500 and 1,000 space heating systems.
If our goal of one-and-a-half million solar homes is reached, we expect
savings, mostly in natural gas, to amount to approximately $450 million worth
of natural gas by 1985 -- $450 million per year savings by 1985.
DR. REZNEK: At present prices?
DR. DOCTOR: Well, yes, that is in 1978 dollars, but it's escalated and discounted.
In conjunction with the tax credit, we are requiring that certain
conservation things be implemented. If you install solar heating and claim
the tax credit for it, then you must also insulate your attic and weather
strip your house, and we're giving the tax credit for that insulation and
weather stripping.
We have a three-year warranty requirement on parts and labor: the
first year a full warranty from the installer—that may include pass-throughs
from the manufacturers; the second and third years, from the manufacturer.
Of course, the warranty is not worth very much if the company that provides
the warranty goes out of business six months later, and the solar business,
unfortunately, is a very transient one at the moment. So we have proposed
legislation that I believe stands a good chance of passage this year, that
would create a solar warranty assurance association that would be a quasi-
government association consisting of members of government, industry, and
consumer groups -- consumer representatives.
There's a host of other legislation that we've introduced to move
solar. One in particular that I'd like to mention to you is a passive solar
design competition. We perceive a need to introduce passive solar design
techniques to builders. The techniques are reasonably well known among
energy literati, but are not well known among builders, and builders, by the
nature of their industry, are reluctant to adopt what they consider to be new
things.
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Statement of Dr Ronald Doctor
We have tried design competitions in the past and they've been quite
successful. This one would be tied to building designers, who must show a
linkage to mass marketing builders. There would have to be -- according to
the bill that's being proposed that provides money for this -- a commitment
on the part of the builder to install some number of passive solar homes, if
they were among the winning designs.
That kind of thing could be done on the national level, it seems to me,
and it seems to me we're missing a bet if we don't start pushing passive
solar a little bit more. Passive solar, unlike active, has the capability of
reducing both heating and air conditioning requirements in one strike, and
the information that our staff has been able to develop so far indicates that
passive solar design features, for the most part, will not raise the cost of
housing. In fact, the indications that we have are that housing costs could
well be reduced by using passive solar design techniques.
The basic reason for this is that, although you have increased costs in
walls and overhangs and maybe glazing, you've got reduced costs in heating
and cooling systems, so you can go for smaller systems or, in some cases,
none at all, especially in marginal areas where you can get away without
artificial cooling by going to passive design techniques.
There's a need for much greater cooperation between the federal govern-
ment and the states. I think the emphasis in these various conservation and
solar programs should be on state implementation and on initiatives coming
from the state. People within the states tend to know their areas best; they
know the territory. There's less resistance when the states and local gov-
ernments are involved in the implementation of some of these new programs.
That means, for the most part, that the feds ought to supply a good
part of the money — not all of it, certainly, but a good part of it -- for
some of these innovative programs. I don't see that in the federal budget.
Whenever the federal govenment sets standards, I think those standards
should have provisions for the states setting more stringent standards. The
states should not be pre-empted, except where it's overwhelmingly in the
national interest to have a uniform federal standard.
We could use help in California — and I'm sure other states could use
help -- in the development of computer models for modeling new buildings or
existing buildings even, in helping us to develop analytic design tools, in
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energy conservation and solar programs
helping us to develop climatic resource data. Inevitably, when you get into
this kind of thing, you find out that you've got massive data, but none of it
is the stuff you need. Data collection on this kind of scale, and in the
short time periods that we're talking about to get rapid implementation of
these ideas -- these ideas that are already available -- that kind of short-
term data collection requires money.
If you stretch it out over time, you need less money, but to compress
the time scale on it, you need more, and that means federal assistance.
We have been exploring the various possibilities of biomass use in
California. As a short anecdote, we picked up on a Swedish design for a
gasifier of organic materials that are fed into the machine and you get a
methane and some other gases out. The stuff burns cleanly with air quality
control equipment on it. It's inexpensive. It's an existing technology --
it was an existing technology outside of this country.
We tried to interest, at that time, ERDA in a project; they turned it
down, so we went ahead and funded it on our own. It turned out to be a
booming success -- just a tremendous success, so much so that the industrial
participant in the project, Diamond Match Company, has taken bids and is
installing larger gasifiers -- I believe it's seven of them, although I'm not
sure of that -- to meet all of their energy requirements. And we have other
industries in California beginning to pick up on this small-scale technology
using indigenous resources, resources that would otherwise be wasted. We've
made a success of it where the federal government wasn't interested at all.
Now, that kind of technology could be transferred from California to
other states, and it could be done relatively easily. I don't see the kind
of effort in the federal DOE R&D budget to do that, and I don't see the kind
of effort in the DOE budget that would put enough money into the encourage-
ment of the development of these kinds of devices and these kinds of ideas.
Another one in biomass is the production of methane gas from products
grown on energy farms of various kinds -- energy farms that might be marginal
lands growing crops that require minimal use of water, crops that could be
converted to methane, or energy farms that use the ocean to grow kelp that
could then be converted not only to methane but to a variety of products.
What we seem to be missing is the effort that ties together, that
integrates, all of the different products that could come out of a system
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Statement of Dr Ronald Doctor
like this and that could give proper economic credit to each of the products.
The result would be, we believe, a reduced energy cost -- an energy cost that
would be lower than conventional energy costs today.
Kelp in particular seems to be quite attractive for this kind of
project. The Naval Undersea Lab is trying an experiment in Southern
California off San Diego. There are small-scale efforts on this, but the
program, I believe, needs to be expanded and some greater sense of urgency
needs to be attached to it.
I think there's potential for the use of small-scale solar electric
systems, probably photo-voltaic, operating in remote areas where power is not
readily available. But in those kinds of areas, even the high prices that we
see for photo-voltaics now could be economically competitive with
electricity, which would have to be brought in specially for this.
Wind, the same way -- the same remote applications. Some of these
applications, by the way, are not dependent on storage, because it doesn't
matter if the system is turned off for a day if the wind doesn't blow or if
it gets cloudy for a day or two days or three days. It's a cyclical thing,
and you pump water when the sun is out or when the wind is available.
I think we need a wholesale inventory of possible applications for
these small-scale technologies. At the same time, if we pursue that, and if
we also pursue the possibility of introducing a market pull kind of
operation, that will help to bring the price down.
I think federal buildings could and should be showcases for conserva-
tion, for solar, and for the use of alternative technologies. I don't see
that happening quickly enough today.
There's one more thing: fuel cells. There is a fuel cell demonstra-
tion project at ConEd in New York. We have an investor-owned utility in
California that's interested in pursuing a demonstration project. The
project seems to be lagging, and I have been in contact with the California
Municipal Utilities Association, and they have expressed interest in putting
together a consortium of municipal utilities to get hands-on experience with
fuel cells. We've experienced the difficulty in getting concrete expressions
of interest on the part of the federal government and the fuel cell manu-
facturer in this case.
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energy conservation and solar programs
I think, from the contacts I've made so far in Washington on this trip,
there's a good possibiility of getting that going, but I think there needs to
be more emphasis in the federal DOE budget on fuel cells. Whatever it is
that's inhibiting the introduction of that technology, I think could be
overcome and should be overcome, but I don't see the effort in the federal
budget to do it.
Let me leave it at that and just open it to questions.
DR. REZNEK: Thank you. I enjoyed your remarks.
QUESTIONS AND REMARKS
DR. REZNEK: In the realm of energy conservation, California is certainly a leader,
setting the pace for the rest of the country. But the progress that the
Europeans seem to be making is far outstripping even California. We are
talking in terms of reducing energy consumption growth rates from 8 percent
to 2 or 4 percent. Something like that. The Belgians are committed to an
absolute reduction, not a reduction in growth rate but an absolute reduction,
of 18 percent in their energy consumption. Sweden is committed to no-growth.
I did have a few questions about some of your suggestions. For exam-
ple, regarding kelp, doesn't the dewatering process associated with kelp
enormously bias the efficiency of the process?
DR. DOCTOR: I don't know, but my response would be that if it does, is it a bias
towards inefficiency that we can still live with? The briefings I've heard
on kelp from our staff and from DOE contractors who have come in to tell us
about their efforts indicate that, sure, there are problems. There are
problems with CO,, upwelling, and we don't know what the net effect of that
will be.
But let's get on with exploring these problems a little more rapidly
than we are now. I don't know that kelp is going to be THE answer, or even a
viable answer, but I don't even see the programs that are going to provide us
with answers to the questions we have about viability, and that's what
bothers me.
DR. REZNEK: I also have the same feelings about fuel cells. Wasn't there a long
history of disappointment with fuel cells?
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Statement of Dr Ronald Doctor
DR. DOCTOR: There is a long history of research -- basic research on fuel cells.
I wouldn't say that there is a long history of disappointment. United Tech-
nologies Corporation has, of course, dominated the scene with fuel cell
operations, and they are reluctant to make guarantees or commitments as to
the performance of the systems that they would put out. That makes the area
ripe for government demonstration projects. I think we ought to have more
than one demonstration project going on in this country on something that has
the potential of fuel cells.
MR. CUTWATER: I'm reasonably familiar with ConEd's problems, as well as the fact
that they keep pushing it as something that they have great faith in for the
future; in fact, they're looking at that as a great energy alternative.
There's a lot of community pressure to move fuel cell research somewhere
else, as you know, and a lot of concern that the thing's going to blow up.
DR. DOCTOR: That the fuel cells themselves will blow up?
MR. OUTWATER: Yes.
DR. DOCTOR: Are those concerns founded?
MR. OUTWATER: I think not.
DR. DOCTOR: Then there's an institutional selling job that's got to be done;
there's a public information campaign that's got to be undertaken in conjunc-
tion with the technology demonstration.
DR. REZNEK: Are you finding interest expressed by the other states in California's
solar and conservation programs? Are they coming to you?
DR. DOCTOR: We have been making our information available to other states, and
wherever I go where representatives from other states are present, they ask
for whatever information we have. We're glad to cooperate with them.
I find that there's an enormous lack of communication across the coun-
try, despite established institutions that are supposed to communicate re-
sults from state to state or from state to federal government and back. The
communication links don't seem to work effectively. I don't know why that
is, but I'd pinpoint that as an area that needs some significant improvement.
Maybe the thing to do is just to have people from states with success-
ful programs funded to travel from one state to another and put on dog-and-
pony shows and have state people helping state people.
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energy conservation and solar programs
DR. REZNEK: Thank you very much. Any questions from the audience?
Thank you.
DR. DOCTOR: Thank you.
DR. REZNEK: We'll close today's session, and we'll meet tomorrow on advanced coal
processes.
(Whereupon, at 5:40 p.m. the session was concluded.)
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synthetic fuels and oil shale
FRIDAY 31 MARCH 1978
PANEL:
DR STEVEN REZNEK, Acting Deputy Assistant Administrator
for Energy, Minerals and Industry,
Environmental Protection Agency
DR JOHN DAVIDSON, Council on Environmental Quality
MR ROBERT SIEK, Deputy Commissioner, Department of
Natural Resources, State of Colorado
MR ALAN MERSON, Regional Administrator, Environmental
Protection Agency
MR JEFF HERHOLDT, Assistant Director, West Virginia
Fuel and Energy Office
MS REBECCA HANMER, Deputy Regional Administrator,
Environmental Protection Agency
Federal
non-nuclear
energy
R&D Program
351
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contents
MORNING SESSION
PAGE
PAGE
355 Opening remarks, DR STEVEN REZNEK
355 Statement of MR RICHARD JORTBERG
Commonwealth Research Corporation
Questions and remarks
358 MRHERHOLDT
358 DR REZNEK
359 MRMERSON
361 DR DAVIDSON
362 MRSIEK
362 MSHANMER
363 Statement of DR BENJAMIN SCHLESINGER
Director, Policy and Economic Analysis
American Gas Association
Questions and remarks
367 MRHERHOLDT
369 DR REZNEK
370 MRSIEK
371 MRMERSON
374 DR DAVIDSON
376 MSHANMER
377 Statement of MR WILLIAM ROGERS
Manager, Environmental Affairs,
Gulf Mineral Resources Company
Questions and remarks
380 MRHERHOLDT
381 MRMERSON
381 DR DAVIDSON
382 DR REZNEK
383 Statement of MR ROBERT HUMPHRIES
Environmental Information Manager,
Georgia Power Company
Questions and remarks
388 MRMERSON
390 DR REZNEK
391 MR HERHOLDT
392 MSHANMER
392 DR DAVIDSON
394 Statement of DR CHESTER RICHMOND
Oak Ridge National Laboratory
Questions and remarks
402 MSHANMER
403 DR REZNEK
403 MRMERSON
405 MRHERHOLDT
405 DR DAVIDSON
406 Statement of MR KEVIN MARKEY
Colorado Representative
Friends of the Earth
Questions and remarks
415 DR REZNEK
416 MRMERSON
416 DR DAVIDSON
352
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AFTERNOON SESSION
PAGE
PAGE
420 Statement of MR JOHN McCORMICK
Environmental Policy Center
Questions and remarks
426 DRREZNEK
426 MRMERSON
428 MSHANMER
430 Statement of MR GEORGE BOLTON
Director of Supply Technology
Columbia LNG Corporation
Questions and remarks
432 MRHERHOLDT
434 MRSIEK
435 DRREZNEK
436 MRMERSON
437 Statement of MR JOHN RIGG
Consultant
Questions and remarks
440 MRSIEK
441 MRMERSON
443 DRREZNEK
444 Statement of DR ELIAHU SALMON
Senior Research Associate
Resources for the Future, Inc.
Questions and remarks
450 MRHERHOLDT
451 MSHANMER
452 DRREZNEK
453 MR MERSON
454 Statement of DR THOMAS SLADEK
Senior Project Engineer, Energy Division
Colorado School of Mines Research Institute
Questions and remarks
459 DRREZNEK
459 MRHERHOLDT
460 MRMERSON
461 Statement of DR DAVID STRICOS
Principal Utility Research Analyst
New York State Public Service Commission
Questions and remarks
473 DRREZNEK
474 MRHERHOLDT
475 Statement of MR JACKSON BROWNING
Corporate Director
Health, Safety and Environmental Affairs
Union Carbide Corporation
Questions and remarks
480 DRREZNEK
481 MRSIEK
ADJOURNMENT
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synthetic fuels and oil shale
31 MARCH 1978
The hearing convened, pursuant to Notice, at 9 am
Or Steven Reznek, presiding:
opening remarks
DR. REZNEK: Good morning. This is the third of the three days of hearings on the
environmental and energy conservation portions of the Federal Non-nuclear
Energy R&D Program.
The panel members with us today are Alan Merson, on my far left, Re-
gional Administrator for Region 8. EPA Region 8 is our western Rocky Moun-
tain Region. Next to me is John Davidson from the Council on Environmental
Quality. On my right is Becky Hanmer. She is Deputy Regional Administrator
for Region 1. Region 1 is New England. Next to her is Robert Siek. He is
Deputy Commissioner of Natural Resources for Colorado. And, finally, -- I
see we reciprocated off our State Representatives -- is Jeff Herholdt and he
is Assistant Director of the West Virginia Fuel and Energy Office.
The record will remain open beginning next week for three weeks. Any
written comments that any witness would like to submit or any member of the
public would like to submit will be accepted up to that time.
Our first witness this morning is Mr. Richard Jortberg from the Com-
monwealth Research Corporation.
STATEMENT OF RICHARD JORTBERG
COMMONWEALTH RESEARCH CORPORATION
MR. JORTBERG: Good morning. I am glad to be with you this morning. I am Richard
Jortberg with the Commonwealth Research Corporation, General Manager thereof.
It is a subsidiary of the Commonwealth Edison Company, the electrical utility
in northern Illinois.
One of our projects is to design, construct and operate a coal gasifi-
cation and demonstration plant in Illinois. This is a jointly sponsored
plant with the Department of Energy, Electric Power Research Institute, the
355
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synthetic fuels and oil shale
State of Illinois, and the Commonwealth Edison Company providing the funds
for the project.
The coal gasification plant that we will build will utilize two Lurgi
gasifiers which have been designed and built for us in Germany. The gas will
then go through a sulfur removal and a sulfur recovery unit and then to a gas
turbine designed to operate on a low-Btu gas.
Part of our design effort is to develop a combustor for a low-Btu gas.
In a full scale plant the exhaust from this gas turbine would go to a steam
boiler to provide steam for a steam turbine generator. However, because of
the capital costs, we are leaving that part out of this plant.
We were going to break ground to start this project this coming summer,
but we have been advised by EPA, Region 5 that we must submit a PSD applica-
tion for a construction permit and that no way would an exemption be con-
sidered regardless of the R&D nature of the plant, its small size or its
limited testing period of three years.
We are assemblying material now for this request, but in view of the
time required for assemblage and review, we are probably going to have to
delay construction until next year. It does seem a shame when the objective
is to develop means to use Illinois high sulfur coal in an environmentally
acceptable manner.
In listening to the witnesses yesterday, I am beginning to wonder if we
are taking a very narrow view of the energy problem in general. We really
should step back and look at the needs in the energy field.
We want energy available when we want it, in a form we can use, and in
adequate quantity. When we flip that switch, we want those lights to go on.
Having it when we want it leads to energy storage, truly one of the real
needs of the energy field, particularly for solar and wind power. There is
also a very real need for a utility which has to have rotating machinery for
the peak load. All sorts of benefits would result from the ability to level
out peaks and draw from storage when it is needed.
In the usable form requires the right match of the source and the use.
For example, coal cannot be used directly for automobiles or aircraft. Solar
in many ways provides unusable Btu's because of low temperature differen-
tials, but when you couple that with the input of a heat pump, high temper-
ature can result and can be utilized.
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Statement of Mr Richard Jortberg
In the quantity necessary is self-explanatory, but this leads to the
question of whether there really is an energy shortage. In a world-wide
sense, no, there is not. In fact in the near terra, there is a glut of oil,
but in the United States there is a shortage; hence, to massive imports of
oil.
We have traded an energy problem for dollar exports, and every day you
read and hear about the dropping of the value of the dollar. Our national
economy is in many ways like a massive fly wheel. It has taken 200 years to
get it up to steam. We better stop draining from it to buy foreign oil. We
are going to have to stop solving the energy problem by ruining the future of
our economy.
We should recognize that we do have an energy problem and accept the
facts. We should do something about it. One of our national assets is our
supply of coal. We should make a massive effort toward making coal more
widely useful, such as in liquification and gasification.
I would like to address the specific issues you indicated in the
announcement of this hearing. Perhaps you now have an idea that the answer
to the first one is that it is too late now. When do we need gasification?
We need to do it and early.
Next, you wanted to know about environmental issues. Can you ade-
quately anticipate and solve them? Yes, only by taking an adequate size
demonstration plant to provide a good basis for modeling large and multi-
plant installations.
Predictions from empirical data are not adequate enough to provide
assurance for major capital outlays. Will the potential effects of short-
duration events, such as catastrophic accidents, transients, and control
system failures, be included in environmental assessments? Yes, I cannot
promise they will be included in the other ones, but failure modes and ef-
fects analysis was made of our test facility prior to the final location of
components on the site.
A sensitivity analysis of variable parameters should be undertaken in
the assessment of any new installation.
How can we include the assessment of socioeconomic, health, and other
factors, both in the production and use of these fuels? Systems analysis
theory provides for the measuring and quantification of all the elements of a
problem and the inter-relationships of the benefits and the costs.
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synthetic fuels and oil shale
In a problem such as the production and use of synthetic fuels, systems
analysis can be employed. The only caution is to employ it for the whole
problem, from obtaining, from the mining and so forth, basic fuel stock,
converting to synthetic fuel, and use of the fuel. In this manner, the true
cost may be measured against the benefit.
Can chronic health problems be detected before the general population
is exposed? In the operation of demonstration plants of an adequate volume,
parameter averaging is provided to determine what difference in ambient con-
dition is caused by the operating plant.
The difference can be quantified, it can be examined in context with
ambient history. Once having determined the effect on the ambient, you would
have to turn to the medical profession for advice as to what the resulting
meaning would be.
Theory can provide predictions, but only in confirmation by observation
can progress be made.
How can the development of synthetic fuel technologies best be managed
to assure that the costs of pollutant control devices are fully explored and
demonstrated? It would appear to me that a catalog of pollutants combined
with the various available treatments of facilities with capital costs,
operating costs and effectiveness should be developed and maintained.
When a process is initiated at the demonstration plant level, the
amount of pollutants can be categorized so that any scale-up can be made with
confidence in the cost of the installation and the cost of the operating in
order to achieve an acceptable initial risk.
That concludes my prepared testimony. Any questions?
DR. REZNEK: Thank you. Does the panel have any questions?
QUESTIONS AND REMARKS
MR. HERHOLDT: Yes.
DR. REZNEK: Mr. Herholdt.
MR. HERHOLDT: How are you avoiding the agglomeration problem associated with the
Illinois coals with the Lurgi gasifier?
MR. JORTBERG: That is one of the problems we are facing. We designed the gasifier
with Lurgi with Illinois No. 6 coal. That is what they are designed for, and
how we are going to operate with it, we are going to have to find out when we
work. We don't have a real good answer for you yet.
358
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Statement of Mr Richard Jortberg
MR. HERHOLDT: Are you thinking about a stirred bed type process?
MR. JORTBERG: Yes.
DR. REZNEK: I would like to ask a question. What percentage of the cost of your
facility or of a full-scale facility would be associated with the
desulfurization?
MR. JORTBERG: I can't give you a good answer for that today. That is one of the
things we have to do in a developmental plant of this size. That is, we are
going to break down the cost of each element of it to determine the operating
costs, to determine the benefits of it.
We are going to use a stretford process and a hot potassium process for
the sulfur removal. We don't know the economies of each individual part of
the plant yet.
DR. REZNEK: Thank you.
MR. MERSON: I detected in your opening remarks certain dissatisfaction with having
to proceed to meet PSD requirements at this point. It is going to slow you
down somewhat in getting your modules started. Are you advocating that some-
how for R&D work for testing out new processes that somehow we waive the PSD
process?
MR. JORTBERG: I think the door should be open to that, to examine each one on its
own merit, to determine the significance of the thing rather than going
through the lengthy process to show that we don't really count that much.
MR. MERSON: What "about using sort of the test module that you are discussing
really for an exploration of various pollution control techniques?
MR. JORTBERG: This plant that we are going to build is more than just building a
plant to test it. It is providing almost a national test site for coal
gasification, various treatments for different gasifiers and things like
that.
Our initial test program, the one we are installing, is for three
years. Past that, DOE has an option to lease the site, whether we are a part
of it or not, for another seven years. So, the installation here is far more
than just the one time thing.
It is to determine enough of the economies of it and the usefulness of
it so that a utility can go into it with a minimum risk, knowing darn well
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synthetic fuels and oil shale
that when they put their money into it, they are going to have some return on
their investment.
MR. MERSON: Well, if it gives you any comfort, we have some oil shale projects out
in our part of the country and we have required PSD permits for those as
well. I think part of the theory is that if you are going to have a small
scale experimental process and you are going to have trouble meeting PSD, you
are sure going to have a lot of trouble with the larger scale.
MR. JORTBERG: I don't think we're going to have trouble meeting it at all. It is
a fact that we have to go through that same time period for any size of a
plant regardless of whether it is large or small.
This project has been underway now -- really it started in about 1973
going in start and stop and start and stop and going full way now. All of a
sudden, now, we have come this far and now we have to go up the --
MR. MERSON: How long is the PSD process taking?
MR. JORTBERG: It allows up to a year.
MR. MERSON: I know it allows up to a year, but has Region 5 indicated that they
are going to take a full year to process it?
MR. JORTBERG: One of the problems they run into, of course, are the open hearings
and what develops there. No, they think they can do it in less than a year.
That is why I have to be realistic when I buy the equipment and get it on the
site. When am I really going to be able to use it?
MR. MERSON: Thank you.
DR. REZNEK: Would you recommend that the Agency develop a special test facility
PSD review policy which imposes on the Agency a definite time frame in which
to perform the review and beyond which, if the Agency has not made an adverse
finding, the construction of the facility is allowed?
MR. JORTBERG: Yes, I would.
DR. REZNEK: One other question. I realize that in complex processes like this, it
is nearly impossible to separate environmental control costs from actual
process costs, but can you say approximately what percentage of your invest-
ment or your research program will be spent on process variables and what
percent on environmental protection variables?
360
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Statement of Mr Richard Jortberg
MR. JORTBERG: I am afraid I can't give you a real good answer to that today be-
cause we are still only about 20 percent done in the design part of the pro-
ject. The actual operation of the project is to be guided by a Technical
Advisory Commission Committee which is made up of DOE representatives, State
of Illinois and the Electric Power Research Institute. I would think EPA
would get in here and see how we are doing and where do we go from here.
DR. REZNEK: That is an offer I would certainly like to explore. One of the things
we in EPA are trying to do is to impact the development of new energy devel-
opment technologies early enough to make sure that the environmental concerns
are designed in. I believe that to optimize a new facility design, one must
understand the relationship between cost curves for environmental pollution
reduction and the cost curves of the processes themselves. We would all like
to have a thorough understanding, since it would shed light on the role of
sulfur removal and hydrocarbon and particulate emissions reduction to the
economics of the process. These are some of my concerns. I certainly appre-
ciate your offer and I would like to explore the joint participation further.
Thank you.
MR. JORTBERG: Thank you.
DR. DAVIDSON: I just have a brief question that sort of follows up on what Steve
was discussing, I think. Simply, I wonder if you could comment briefly on
the difficulty of scaling up technical and environmental and economic data
from a facility such as a pilot plant scale operation to a commercial sized
plant.
As I understand it, one would see a considerable amount of difficulty
in trying to really estimate some of the pollutant levels and the economic
characteristics as well. Is that an overstatement of the situation, do you
feel?
MR. JORTBERG: It is not an overstatement. One of the things that we have learned
in the electric industry right now, the utility industry, is that if we scale
up factor three to four, we can do it with pretty good comfort and assurance.
If we would start going to a factor of ten we are way out on a limb and our
projections are just scary, the risk is too great.
As you will note in here, I am very strongly in favor of the demonstra-
tion plant of adequate size that you don't go from a pilot plant to a com-
mercial plant. You have to go in steps in order to really understand the
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synthetic fuels and oil shale
risks involved. I think you have to go to a large enough plant so that you
can measure the little things that escape you in a pilot plant that can
really hang you in a commercial plant.
DR. REZNEK: Any further questions?
MR. SIEK: You are talking about a modular approach. What do you consider to be a
reasonable modular site demonstration facility?
MR. JORTBERG: Ours is 20 tons per hour, and it is only a 25 megawatt generator. I
think what we learn from there will provide probably enough to go much
higher. I think if you go lower than that, then I don't know what you are
really going to do.
The gasifier, itself, is good for about 20 tons per hour. We are put-
ting in two gasifiers; one is installed spare, and we will actually run two
of them in parallel for test runs.
The modular base we have used here is one gasifier at full power. For
instance, there is a plant down in South Africa using Lurgi gasifiers that
has 36 of them. So we will find that with our basic modular unit, what can
we do and where do we go. Then we can scale up from there.
MS. HANMER: You mentioned, I think, about the concern of the public hearing phase
of the PSD permit application. I would be interested to know what public
objection you would anticipate getting.
MR. JORTBERG: I don't know. I don't anticipate getting any at all, but I'm afraid
after living in this environment a while, you know, you get a lot of sur-
prises .
DR. REZNEK: One final question for the record -- at the present time there is no
federal money in this facility. Is that right?
MR. JORTBERG: Yes, there is federal money in it. It is jointly funded with the
Department of Energy and these other activities.
DR. REZNEK: The federal percentage at this point?
MR. JORTBERG: The federal percentage right along about 60 or 70 percent.
DR. REZNEK: Thank you. Any other questions?
Thank you.
MR. JORTBERG: Thank you.
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Statement of Dr Benjamin Schlesinger
DR. REZNEK: Our next witness is Dr. Benjamin Schlesinger, Director of Policy and
Economic Analysis of the American Gas Association.
STATEMENT OF DR. BENJAMIN SCHLESINGER
DIRECTOR, POLICY AND ECONOMIC ANALYSIS
AMERICAN GAS ASSOCIATION
DR. SCHLESINGER: Good morning. I am Ben Schlesinger, Director for Policy and Eco-
nomic Analysis, American Gas Association. The A.G.A. is a national trade
association representing 300 member natural gas transmission and distribution
companies, which provide gas service to 160 million consumers and 200,000
industries in all 50 states.
The purpose of my testimony this morning is to address the environ-
mental implications of federal priorities in the area of synthetic fuels
research, development, and demonstration within the context of overall na-
tional energy policy.
The peaking and decline of U.S. oil and gas production in recent years
as a result of artificially low regulated prices has led our nation to the
point where nearly 50 percent of our oil consumption is imported, chiefly
from price-controlled sources such as the OPEC cartel.
Nevertheless, all of the recent authoritative estimates of remaining
recoverable conventional gas resources in the United States are in the range
of 700 to 1200 trillion cubic feet or approximately 700 to 1200 quads of re-
maining gas that could be produced.
These include estimates of the U.S. Geological Survey, the National
Academy of Sciences, and the Potential Gas Committee. I have several attach-
ments today and I urge you to look at these for comparison of the various
estimates.
Thus, at the current U.S. consumption rate of about 20 Tcf per year of
natural gas, there are between 35 and 60 years of conventional U.S. gas sup-
plies remaining to be produced.
All of the numerous federal energy plans that have been developed dur-
ing the past four years since the 1973-74 oil embargo have shared one central
feature: each placed a substantial reliance on aggressive development and
combustion of our nation's largest single proved energy resource -- coal.
One of the most aggressive plans in this regard was President Carter's
proposed National Energy Plan (NEP), announced last year.
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synthetic fuels and oil shale
Specifically, the President's NEP projects a 25 percent growth in total
U.S. energy consumption over the next nine years, that is from 74 quads per
year to 93 quads per year of fuel use. Of the additional 19 quads, the Pres-
ident's NEP relies on coal for 13.
Of this energy, 6.8 quads, or a little over half, would be used to gen-
erate electricity with the remainder used directly under large boilers in
industry. The 6.8 quads would translate into approximately 130,000 megawatts
of additional electric coal-fired capacity by 1985 or about 260 new coal-
fired units over the next eight years.
Last year, the A.G.A. undertook an analysis of the constraints to this
massive conversion of gas-fired industrial and utility boiler fuel use to
coal.
Our purpose in conducting this analysis was to determine whether, in-
deed, the 3 to 4 quads of natural gas now burned in large boilers for steam
and electric generation could be supplanted by coal between now and 1985 so
that this gas could then supply higher priority residential, commercial and
industrial demands.
The A.G.A. generally supports this large boiler backout. The intent of
our analysis was to determine how quickly the 3 to 4 quad backout can real-
istically occur.
Accordingly, we examined coal production, mining constraints, trans-
portation, and end-use burning constraints posed by the 1977 amendments to
the Clean Air Act. While no major constraint could be discerned to massive
increases in coal mining, production and transportation, our analysis which
is attached hereto, indicates that the proposed near-doubling of U.S. coal
burning by 1985, even using Best Available Control Technology, is not likely
to be achieved with strict implementation of the provisions of the new Clean
Air Act.
The major reason for this impending NEP failure is that the new non-
attainment rules which are designed to enable growth of new pollutant sources
by tightening up pollution controls on existing sources, might backfire in
many locations to the extent that compliance of existing sources is not
achieved.
The result of the Clean Air Act, we believe, therefore, may be to leave
our industry with a substantially greater demand for gas than is envisioned
in the President's National Energy Plan.
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Statement of Dr Benjamin Schlesinger
While the precision of our estimates can be discussed at length, there
is little question in our minds that massive increases in coal burning in the
United States cannot occur if we are able to maintain our nation's envir-
onmental quality goals.
Parenthetically, I would add that the jist of that is that somewhere
coal burning has a limit with respect to our national environmental quality
goals under current technology and the kind of cleanup technology we foresee
over the next several years.
Our industry, therefore, which supplies the cleanest fuel in widespread
use in the U.S., as well documented in your Energy/Environment Fact Book, has
focused major attention on coal gasification, Alaskan gas, and LNG, as a
means to continue supplying our customers, present and future, with clean
fuel.
In sharp contrast with the uncertainties involved in coal burning —
even with flue gas desulfurization or atmospheric fluidized bed
technology --we believe that numerous studies conducted by ourselves and
others clearly have shown that coal gasification is the most economic, most
efficient, least capital intensive, and most environmentally desirable way of
substantially increasing coal use on a national scale.
Detailed comparisons of coal use for making gas versus making electric-
ity reveal that a coal gasification plant such as a Lurgi coal gasification
plant producing high-Btu coal gas would result in 6 to 10 times less air pol-
lution of the various criteria substances and one-ninth the water consumption
of the equivalent conventional coal-fired electric power plant equipped with
the Best Available Control Technology.
High-Btu gas from coal is feasible using current, proven technology. A
number of commercial plants are proposed and construction of the first few
plants can proceed with federal loan guarantees. With such support, two
plants producing a total of approximately 0.2 of a quad could be operational
by 1985.
The potential for subsequent capacity is projected at 13 plants by the
year 1990, 24 such plants by 1995, and about 44 plants by the year 2000.
This growth rate is consistent with the rate of growth experienced by the
nuclear power industry between the late 1950's and the early 1970's.
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synthetic fuels and oil shale
The benefits to the environment of this emphasis are clear. The bene-
fits to labor of realizing this potential for coal gasification is also sub-
stantial because construction and operation of a coal gasification plant is
labor intensive.
Indeed, the significant environmental advantage for coal gasification
should place such facilities high in priority for Western coal development
because of their relative ease in siting compared to coal combustion.
Similarly, major environmental benefits could be realized with other
kinds of synthetic fuel facilities as well. I think the gentleman's testi-
mony that preceded mine amply underscored that.
Medium-Btu coal gasification plants for industrial fuel use would make
substantially cleaner neighbors than coal-fired power plants. Again, the
application of non-attainment rules in some of our nation's heavily indus-
trial regions may make medium and low-Btu coal gasification a more viable
option than ever.
Several A.G.A. member companies have been in the forefront of medium-
Btu coal gas development, although efforts to market medium-Btu coal gas have
been constrained by proper industrial classification -- that is an iden-
tification of those industries that would actually be interested in medium-
Btu coal gas -- by geography, and by scale of users. These three constraints
would not be present in the case of high-Btu coal gas markets.
From both the gas supply and the environmental quality perspectives --
and we believe they are highly coincident — the A.G.A. would strongly recom-
mend a continuation and strengthening of programs to commercialize synthetic
fuels from non-fossil, renewable resources as well as from coal, including
agricultural products, biomass, and urban solid wastes.
Although today's agenda is focused on synthetic fuels, I would like to
turn briefly to the issue of imbalance in the federal RD&D program budget.
We believe that inadequate federal expenditures for energy research and
development to tap new gas energy resources have left virtually ignored the
vast potential of such unconventioanal gas energy sources as methane from
geo-pressured reservoirs, coal seams and tight sands, as well as from peat,
biomass, and other sources.
While these estimated in-place domestic resources are uncertain, fed-
eral R&D expenditures continue to be quite small. I think you will find our
attachment particularly enlightening in that regard. Total federal support
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Statement of Dr Benjamin Schlesinger
for technologies to utilize these resources represents less than 2 percent of
total federal energy R&D expenditures.
By contrast, the Department of Energy's fiscal year '77 budget calls
for spending several billion dollars on no fewer than 16 different ways to
make electricity. Considering this, we suggest that the very small commit-
ment to new gas-related technologies does not reflect a wise allocation of
national resources.
In summary, the A.G.A. strongly advises that current federal energy
RD&D priorities, which are heavily tilted toward electricity rather than
direct fuel use, are environmentally inferior to a balanced approach using
gaseous and other fuels.
Natural and synthetic gas are by far the most environmentally desirable
of all our domestic fuel options. This is because methane, the principal
component of natural and synthetic gas, is clean burning since it emits very
small quantities, comparatively small quantities of sulphur oxides and par-
ticulates when burned. Again, this is documented in your own handout today.
During production of synthetic gas from coal, we've seen how comparatively
small quantities of sulphur oxides, particulates, and other criteria sub-
stances are released.
Enclosed herewith are several items of information related to the
future of natural gas and benefits of developing new sources of gas from a
perspective of labor and employment. Thank you very much.
DR. REZNEK: Thank you. Does the panel have questions?
QUESTIONS AND REMARKS
MR. HERHOLDT: Yes.
DR. REZNEK: Mr. Herholdt.
MR. HERHOLDT: I have a couple of questions. The first one -- you stated a coal
gasification plant would result in 6 to 10 times less air pollution and
one-ninth the water consumption of a typical coal-fired plant. I would
assume you are not --
DR. SCHLESINGER: Excuse me, I did not say typical plant. I said equivalent.
MR. HERHOLDT: Excuse me.
DR. SCHLESINGER: Typical, but equivalently scaled.
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synthetic fuels and oil shale
MR. HERHOLDT: Okay, but I would assume you are talking about low-Btu gas as op-
posed to hydrogenation stages which use a good deal of water.
DR. SCHLESINGER: It might be helpful to turn to Attachment 3 in this regard. A
full-scale, which is 250 million cubic feet per day, high-Btu coal gasifica-
tion plant utilizing a Lurgi process with methanation has been estimated to
produce the environmental residuals that are shown in Attachment 3.
It is right after that 23-page Energy Analysis. The cost of such a
facility in 1976 dollars has been estimated at 1.3 billion. Five such plants
have been proposed for construction by various of our member companies and
the environmental estimates come from the Council on Environmental Quality.
If this energy is carried through the end user, using residential space
heating as the basis for comparison — excuse me, using a composite res-
idential end use of space heating, hot water heating, and all efficiencies
are taken into account through to and including the point of end use, the
similar quantities of Btu can then be moved back through the electricity
chain.
The comparable coal-fired power plant would be approximately 3,000
megawatt peak rated capacity or equivalent to the proposed and demised
Kapairowits project. Again, that is a fair comparison since it would utilize
the same kind of coal.
MR. HERHOLDT: What are you saying, that the comparable end use cost would be as-
suming that there are environmental protection devices on the coal-fired
plant?
DR. SCHLESINGER: The comparable facility costs approximately 2.7 billion dollars
or approximately twice as much as the coal gas plant.
MR. HERHOLDT: I was referring to the end use cost of the electricity to the con-
sumer.
DR. SCHLESINGER: The end use cost of electricity to the consumer is about $14.00
on an incremental basis, about $14.00 per million Btu as opposed to the coal
gas which, if fully incrementally priced to the end user, would cost $4.45.
MR. HERHOLDT: That is a substantial difference there.
DR. SCHLESINGER: Yes, it is. It is primarily due to the inefficiencies of pro-
ducing electricity from coal.
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Statement of Dr Benjamin Schlesinger
MR. HERHOLDT: How would you get from your gas to electricity? You still have to
burn the gas in a turbine crypt.
DR. SCHLESINGER: No, we're not comparing use of gas production to electricity. We
are comparing the direct use of gas in the home.
MR. HERHOLDT: Okay, so you are still talking about augmenting our declining re-
serves in natural gas with synthetic natural gas rather than replacing the
electric generation plants that are currently on line or scheduled to go on
line.
DR. SCHLESINGER: This kind of comparison is focused on the issue of what is to be
done with our coal resources. A large part of my testimony was devoted to
that issue: that we do have a massive coal resource, and it occurs to us
that one of the major energy issues is what do we do with that coal. Do we
just burn it and proceed kind of slowly on a gasification program or do we
intensify our R&D efforts on gasification. The purpose of this chart is to
furnish information which I think astoundingly shows the efficiency, capital
stock benefits, and of course environmental benefits in gasifying the coal
and utilizing gas in the home as opposed to utilizing electricity in the
home, or in addition to that.
We are not suggesting that all this coal be gasified. None of it is
being gasified at the present time. Many transcontinental pipelines cross
right through major coal fields. It occurs to us that that kind of siting is
ideal for coal gasification. Does that answer your question?
MR. HERHOLDT: Yes.
DR. REZNEK: For the record, did these typical electrically heated homes employ
heat pumps?
DR. SCHLESINGER: They did not use the heat pumps.
DR. REZNEK: Did the gas heating use the heat pump?
DR. SCHLESINGER: No. This is based on conventional end use technologies. Our
chart shows the same kind of comparison with advanced equipment comparing gas
heat pumps and electric heat pumps.
DR. REZNEK: Regarding the water consumption, that was a wet cooling tower, not a
wet-dry cooling tower, right?
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synthetic fuels and oil shale
DR. SCHLESINGER: In the case of gasification, the estimates which were furnished
by the Council of Environmental Quality were for dry cooling.
DR. REZNEK: But the electricity did not assume dry cooling.
DR. SCHLESINGER: The electricity is based on the Kapairowits project which was not
a dry cooling project. I think there ought to be -- there are several rea-
sons why the water efficiency advantage of gasification exists and one of the
major reasons is not so much the wet/dry cooling issue. The major reason is
the fact that the coal gasification plants utilize the moisture in the coal.
DR. REZNEK: That is clear. The question is whether or not a 9 to 1 water use
ratio reflects an efficiency in electricity generation.
DR. SCHLESINGER: Attachment 3 compares the water requirements stated in the En-
vironmental Impact Statement for the nearest coal-fired power plant to the
proposed coal gasification plants in New Mexico.
DR. REZNEK: Mr. Siek.
MR. SIEK: I am interested -- you refer to western coal in your comparison. What
are you basing it on -- low sulfur or high-Btu? I guess my question is if
all of your projections are based on the use of Western coal, obviously you
are thinking about siting these gasification plants in the west to take
advantage of the coal deposits.
DR. SCHLESINGER: The five large scaled coal gas plants that have been proposed by
various groups of our member companies have all been proposed for location in
the west as a result of not only a coal availability decision and a cost
decision, but also a technological decision based on tests conducted in
Scotland and Germany using the Lurgi process.
It is clear that Lurgi would not encounter difficulties. In fact,
Lurgi has been shown to work successfully with non-caking western coals. So,
this kind of a location is a technologically feasible one with respect to a
kind of plant that could start up within the next year.
MR. SIEK: Another question that always concerns me is the water consumption,
number one, that will be required in the west, and number two, the environ-
mental impact which may be biased toward the west over the east with electric
generation, this taking the place of electrical generation.
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Statement of Dr Benjamin Schlesinger
Right now, we import our coal or export our coal. Here, we will burn
our own coal and export our gas so we have the generation facility located in
the west instead of the fuel located in the west for exporting and the gen-
eration of the power --
DR. SCHLESINGER: I understand that there are a number of coal-fired power plants
proposed for location in the Western coal regions. My understanding is that
they have encountered substantial difficulties in siting not the least of
which factors are related to prevention of significant deterioration
regulations.
EPA completed a study jointly with FEA last year that demonstrated --
in fact, out and out stated -- that a coal gasification plant at the proposed
locations of our five projects could be co-located with itself. That is, you
could have approximately eight full scale coal gasification plants at the
proposed locations, not only one, and still meet the requirements of PSD,
whereas at some of these locations you could put probably one or no coal-
fired power plant. Again, this is because of the difference of residuals
expected.
MR. MERSON: If the advantages of coal gasification are as impressively documented
as you indicate in Attachment 3, why is it that utilities generally are not
investing in coal gasification, but are going ahead with conventional fossil
fuel electrical plants?
DR. SCHLESINGER: That is a very good question. Our member companies are very
interested in investing in these projects and have been attempting to obtain
financing for a number of full scale coal gasification plants. There is no
full scale commercial coal gas plant operating in this country. There are a
number of pilot plants that are 1/100 and 1/200 commercial scale.
There are a number of proposed projects that would increase that to
maybe one-tenth proposed in the Department of Energy, but lenders have been
reluctant to assume risks of first of a kind full-scaled coal gas plants, in
spite of the fact that the technology is demonstrated. I think that is the
reason.
MR. MERSON: You have indicated also that you felt governmental policies at this
point tend to tilt toward electrical generation rather than gas generation.
DR. SCHLESINGER: The National Energy Plans have been massively weighted toward
burning of coal.
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DR. REZNEK: If there were a commitment today to go ahead with the first full sized
plant, how long would it take before it would be operational?
DR. SCHLESINGER: It depends on which project. One of them could be — I would say
between four and six years.
DR. REZNEK: For high-Btu?
DR. SCHLESINGER: That is correct. Five projects are fully designed and environ-
mental impact statements on several of them have been finalized and filed
with the Council on Environmental Quality sometime ago.
DR. REZNEK: Let me explore another topic. You have laid out the environmental
impact in terms of the conventional --
DR. SCHLESINGER: Excuse me, Dr. Reznek, I really have to come back to one point
and that is the water report. I am really troubled that perhaps the wrong
impression might be left by our table. One of our projects, which is the
Wesco Coal Gasification project, proposed for location in New Mexico, is
filed with the FPC now, FERC, and in their plans — their engineering plans
call for, and their request for water rights is based on, a water requirement
of 7,900 acre-feet per year. That is 7,900 acre-feet per year.
The proposed Kapairowits power project which would have produced an
identical amount of energy at a location 50 miles away similarly filed and
their filing requested 5,400 acre-feet. Excuse me, 54,000 acre-feet of
water. That is 54,000 as opposed to 7,900.
Another one of our projects, American Natural Gas, has proposed to use
approximately 5,000 acre-feet per 1/2 scale plant. Another one proposed to
use 4,900 acre-feet, proposed for location in New Mexico. I think the water
advantage of gasifying coal rather than burning it in Western locations is
amply documented.
DR. REZNEK: I agree it is amply documented. At a minimum, the water use rate of
electricity generation via coal gasification is l/3rd that of direct coal
combustion systems, and at a maximum, it would be the l/9th value you cited
earlier.
Let me ask some questions on a slightly different subject area. You
have laid out your environmental impacts in terms of conventional air pollu-
tion parameters, namely, total particulates, S0~, and oxides of nitrogen.
DR. SCHLESINGER: Right.
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Statement of Dr Benjamin Schlesinger
DR. REZNEK: One great fear inspired by coal gasification and liquifaction is that
those parameters are not an exhaustive list. Nor are they necessarily the
most applicable ones. Evidence from the coal gasification industry as it
existed in the 30's -- not very far from this location as a matter of fact --
indicated that the gasification workers in the population had high incidence
of cancer. The particular type of cancer was one associated with certain
types of organic emissions. This sort of data has created in everyone's mind
a fear that this technology would produce a new dimension in environmental
pollution.
That fear is a real public concern. What do you suggest can be done to
put an upper bound on emissions and on the associated public health hazard of
coal gasification and liquifaction, and to communicate that upper bound to
the public?
DR. SCHLESINGER: That is a good point and a widely misunderstood one. The kinds
of plants that you are referring to are primarily facilities to produce town
gas, low-Btu gas, or other coal products called tar products and so forth,
coking plants.
There is a considerable body of knowledge that suggests that there is a
substantial worker hazard in these plants and possibly an environmental
hazard.
The kinds of facilities that are proposed now in the late 1970's for
construction and operation in the 1980's are vastly different facilities.
They are facilities that are to be constructed in a completely different
manner from these plants, drawing upon the work exposure experience from
them. They would be more resembling a refinery than a low-Btu coal gas plant
of the kind that you are referring to.
I remind you that NIOSH, National Institute of Occupational Safety and
Health, is presently preparing a criteria document that would govern occupa-
tional safety and health standards for a coal gasification plant -- high and
medium and low-Btu. They have based the study on their tours of all three
kinds of facilities, are quite concerned with the deployment of this tech-
nology on an informal or user location basis, or anything other than a very
strictly controlled environment.
The results of their criteria document as well as our own studies on
the subject, and of ERDA's and now DOE's studies on this topic, strongly
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synthetic fuels and oil shale
indicate that a high-Btu coal gasification plant would have significant
advantages from a health and safety point of view over a low-Btu coal gas
plant or a low-Btu installation at a user location.
I am not sure that this is widely understood. In fact, I know it is
not and I think this is something that we are going to be discussing in the
future.
DR. REZNEK: Let me agree with you that the relative safety of centralized high Btu
plants is not widely understood. I think there are two tasks: One is to
establish, to the extent that science can, the degree of risk; and the other
is to deal with the public perception of that risk. The fact that public
perceptions of these risks are more important, perhaps, than the scientific
criteria documents is a problem in the energy crisis.
Are there any further questions?
DR. DAVIDSON: I just have one question. Given the view that the AGA has that the
research program within the Department of Energy is very likely out of bal-
ance between the various coal technologies, I wonder what response you have
had when you have explored this with the Department.
DR. SCHLESINGER: First of all, we testified to this effect before Congress about a
month ago and received a very positive response to our comments on imbalance
in Federal R&D programs in the energy area. We are increasingly getting a
positive response, I think, from the Department of Energy.
Their original impression was that they had developed a very cost-
effective national energy plan and a very environmentally sound one. I think
that misimpression is being corrected all around, but I can't say that we are
getting awfully far. There is still a very major tilt in the Department of
Energy toward the production of electricity.
Our concerns have been echoed. They have been echoed by environmental
groups, who have expressed parallel concerns about the lack of emphasis on
the direct fuel use. So, we will just keep hanging in there.
MR. MERSON: I have a question, just one further point. You indicated that we have
a pipeline network that essentially can handle a good share of this newly
generated gas. I assume, however, that that network would have to be aug-
mented to some extent if we are going to have this infusion of new gas. Or,
are you essentially saying that our transmission and delivery problems have
been essentially met by what we have?
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Statement of Dr Benjamin Schlesinger
DR. SCHLESINGER: We have an estimate of the total capital needs of the gas utility
industry after the year 2000 based on ongoing maintenance programs and new
pipeline construction at our historic pace, and based on an infusion of
supplemental gas of the sort that we believe is possible with the right
Federal emphasis and regulatory climate.
We don't see the need to go out and construct brand new inter-
continental pipelines. I think it is widely accepted, by us included, that
our natural gas resources -- whether it is 35 or 60 years -- in the Texas,
Louisiana area are finite.
I guess the point that I made about the transcontinental pipelines that
happen to cross major coal areas is a relative one in this regard. It
strikes us as common sense from a national energy point of view to gasify
coal along the line or in locations near the line, which happens to be the
situation of the proposed coal gasification plants.
I don't think it will require new transcontinental pipelines or new
distribution systems to carry the supplemental gas to the end user. I think
the system is in place. The total estimated capital value of our gas trans-
mission distribution system in the entire country consisting of about a mil-
lion miles of pipeline is about 52 billion dollars.
To reconstruct that system today would cost a lot more than 52 billion
dollars. That is for sure.
DR. DAVIDSON: Considering the importance of the resource problem within the gas
area, I am wondering, what do you see as the opportunities and likelihood of
a widely deployed gas actuated heat pump system by the next decade or some-
where in the nineties?
DR. SCHLESINGER: As you know, we have a lot of research in that area going on now
in the Gas Research Institute. Our engineering and research activities have
been transferred to that in Chicago.
We think that is an essential item, and again, I draw your attention to
the Federal budgetary comment in my statement. That is another way of con-
serving the gas resource and lengthening it.
DR. REZNEK: One final question. The environmental performance of any facility in
this day and age is determined as much by regulations as by basic chemistry
and physics. Would you favor interim guidance which sets the environmental
performance for a gasification plant at a more stringent level than current
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synthetic fuels and oil shale
standards for conventional electric power plants? Such guidance would make
clear the environmental benefits of gasification plants. It would state
emission limits for specific air pollution parameters and express them in
terms of quantity of pollutant emitted per unit of useful energy generated
for some market basket of uses.
DR. SCHLESINGER: I think we are on record as welcoming that.
DR. REZNEK: Thank you.
MS. HANMER: I have one further question. Have you done a similar kind of analysis
for the east for a potential, for example, using eastern coal?
DR. SCHLESINGER: We haven't. We're doing it right now. Are you talking about
environmental comparison?
MS. HANMER: Your Attachment 3, something like your Attachment 3 in terms of coal
requirements, key environmental parameters.
DR. SCHLESINGER: I think it should be recognized that the focus of Attachment 3 is
on existing planned projects
MS. HANMER: Yes, I understand.
DR. SCHLESINGER: ...projects that could come off the shelf and into construction
within the next year. There are no such full scaled coal-gas proposals for
eastern location.
The kind of comparison that we are going to do and are in the process
of doing is one that compares direct fuel combustion with medium-Btu gas for
use in industry. It would talk to the unit capital requirements and environ-
mental comparisons and efficiency comparisons as well.
We are due to complete that study in very short order and I will be
very happy to send it to you because I believe it shows substantial advan-
tages as well to be documented.
MS. HANMER: Okay.
DR. SCHLESINGER: Incidentally, this Attachment 3 has not been refuted by any
authority that we are aware of.
DR. REZNEK: Thank you. Any other questions?
Thank you.
DR. SCHLESINGER: Thank you.
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Statement of Mr William Rogers
DR. REZNEK: Our next witness is Mr. William L. Rogers who is Manager of the Envir-
onmental Affairs for Gulf Mineral Resources Company.
STATEMENT OF MR. WILLIAM L. ROGERS, MANAGER
ENVIRONMENTAL AFFAIRS
GULF MINERAL RESOURCES COMPANY
MR. ROGERS: I am Bill Rogers, Manager of Environmental Affairs with the Gulf
Mineral Resources Company, a division of Gulf Oil Corporation, headquarters
in Denver, Colorado.
Gulf and its subsidiary, the Pittsburg and Midway Coal Mining Company,
have been developing the solvent refined coal process over the past 15 years,
primarily under the sponsorship of the Department of Energy and its predeces-
sor agencies.
Recent experience in large pilot plant operations with the SRC liquid
process on a variety of high sulfur bituminous coals has demonstrated a tech-
nical feasibility of the process for producing a clean coal derived fuel oil
and by-product synthetic natural gas.
Product characterization and testing of the SRC liquid product indi-
cates potential for displacement of petroleum fuel oil in industrial and
utility boilers. Large scale combustion testing is now scheduled in 1978.
Low-ash and low-trace element levels suggest further application as gas tur-
bine fuel.
Our work on SRC began in laboratory research in 1962. Much of the
earlier development work was carried out on a version of the process now
known as SRC-I.
In the SRC-I process, coal is dissolved in a distillate recycle sol-
vent, in the presence of hydrogen, at elevated temperature and pressure. The
undissolved portion of the coal, primarily ash, is then filtered from the
solution. The filtrate is vacuum distilled to recover the solvent for re-
cycle. The product from vacuum distillation is a solid low-ash fuel known as
Solvent Refined Coal.
The experimental work at the various pilot facilities has pointed out
three technical problems in commercialization of the SRC-I process:
First, solid/liquids separation, particularly with filters, will be
difficult and costly to scale up to a practical commercial operation.
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synthetic fuels and oil shale
Second, in the SRC-I process, the solvent balance is marginal. That
is, the solvent recovered at steady rate is barely sufficient to satisfy the
requirements of the process.
Third, dusting of Solvent Refined Coal presents an environmental prob-
lem in handling and transportation.
Further research work has led to the development of variations in the
original process which overcome these problems. The modified process, now
known as SRC-II involves use of a portion of the product slurry as a solvent
in place of the distillate used in the SRC-I process.
Such use of the slurry makes it possible to further react the dissolved
coal to produce a distillate liquid product. Since the quantity of unreacted
coal remaining is then relatively low, it becomes practical to feed this
material to a gasifier, together with the undissolved mineral residue. This
eliminates the requirement for filtration or other de-ashing procedures and
means that the primary product from the process is a distillate liquid.
SRC-II facilitates the use of coal in conformance with the standards we
understand the EPA is proposing to satisfy the Clean Air Act Amendments of
1977:
SRC-II will meet the proposed standard of 90 percent sulfur removal.
SRC-II will meet proposed NOx coal limits.
SRC-II will meet proposed particulate standards with the use of control
devices such as bag-houses.
We understand that consideration is being given to designation of SRC
products as "emerging technologies," deferring the establishment of specific
standards until a later time. Establishment of standards now would encourage
and speed the application of the fuel, as potential users could plan with
assurance. Since SRC-II can meet the proposed coal standards, we see no
benefit from delay. We recommend, therefore, that standards for SRC-II be
established now.
Throughout our SRC development, we have directed special attention to
understanding and mitigating environmental impact of the process.
Of particular importance, of course, are potential health effects.
Since SRC products and intermediate streams are new materials, information on
their carcinogenic potential has to be developed.
To be on the safe side, a continuing education program, a medical sur-
veillance program, and an extensive industrial hygiene monitoring program
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Statement of Mr William Rogers
were instituted at the SRC pilot plant to limit employee exposure to a low
level.
These programs also are providing basic information for the process
control design and the industrial hygiene program in the demonstration plant.
At the same time, a toxicology program was undertaken to determine the
short and long term effects of SRC materials through dermal and inhalation
exposures on animals. Studies on teratogenic effects are included. When
this program is completed, we will have a basis for validating design cri-
teria which adequately protect those who might be exposed to these materials.
Another concern from a health effects standpoint is that of trace
metals contained in the coal and the fate of these metals during subsequent
processing of the coal. Several sets of samples representing all of the pro-
cess streams have been analyzed for about 40 different elements. The trace
metals appear to concentrate in the mineral residue which, in the demonstra-
tion plant, will be contained in the vacuum tower bottoms and fed to the gas-
ifier. Thus, most of the metals will concentrate in the slag from the gas-
ifier, which can be disposed of as fill near the plant site.
Health effects studies will continue and results will be utilized to
insure proper and safe demonstration plant design. Data obtained thus far
indicate the hazard to be small and that it can be contained through proper
design, training and hygiene.
Socioeconomic impacts from the SRC-II demonstration plant will be
basically three: the temporary impact on the local area during construction,
the long-term impact on the local area during operation of the plant, and the
long-term impact on the mining area that would supply coal to the plant.
Since the SRC-II demonstration plant will be located near an eastern
source of high sulfur coal, the population base of nearby communities and the
availability of labor will ameliorate the temporary impact on the local area
during the construction and the long-term impact on the local area during
operation of the plant. The impact on the mining area that supplies coal to
the plant may be positive as the SRC-II process will create a demand for high
sulfur coal to replace markets lost from the trend toward non-polluting
fuels.
Environmental issues in the water area include water supply and impacts
of plant discharges on surface and ground water. Again, location of the
plant in the east where water is relatively plentiful will minimize the water
supply problem.
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synthetic fuels and oil shale
No discharge of process water is planned. In the event discharge is
later required, a waste water treatment system has been demonstrated on pilot
plant scale and will be applied to produce an effluent of acceptable quality.
Solid waste will consist mostly of slag and fly-ash from the gasifier
and its disposal will utilize modern techniques of placement and surface
reclamation as required to achieve an environmentally acceptable result.
The above discussion touches briefly on some of the important environ-
mental considerations pertinent to the synthetic fuel from coal with which my
company has experience -- SRC-II liquid. An aggressive research and devel-
opment program during the pilot plant phase to gather necessary information
on environmental issues enables feedback to the demonstration plant design,
which is insuring incorporation of necessary environmental controls.
Much remains to be done, of course. We have in place quite adequate
and comprehensive environmental laws, the implementation of which will pro-
vide assurance to all that everything humanly possible will be done to anti-
cipate, evaluate and mitigate the environmental effects from the application
of synthetic fuel technologies.
The experience we have all had in the development and refinement of
NEPA procedures enables us to address in a systematic way all environmental
concerns as we develop new synthetic fuels technologies.
The EPA is to be congratulated on the careful way it is going about the
formulation of regulations to implement the many pieces of environmental
legislation which govern these activities. The effort to obtain comment from
all concerned at each step along the way should be continued and when conclu-
sive data is available, specific standards should be established.
I will be happy to try to answer your questions.
DR. REZNEK: Thank you. Any questions?
QUESTIONS AND REMARKS
MR. HERHOLDT: This process seems to be rather unique in the aspect that it focuses
on eastern bituminous coals.
MR. ROGERS: Yes.
MR. HERHOLDT: How much federal support has been obtained or do you anticipate
obtaining for this project?
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Statement of Mr William Rogers
MR. ROGERS: The pilot plant effort over the past several years at Fort Lewis,
Washington has been supported practically 100 percent by the Department of
Energy or its predecessor agencies.
There is consideration now being given by the Department of Energy and
Gulf to a demonstration plant program which has not been finalized. It is a
joint program with joint participation.
DR. REZNEK: Any other questions?
MR. MERSON: Yes. Is there any type of comparison that you have as to the relative
quantities of slag that would be produced in this process and obviously would
have to be disposed of in one way or another and the fly-ash that has to be
disposed of in a coal electrical generating plant?
MR. ROGERS: I don't have that fact at hand, Mr. Merson, but I would be happy to
submit that for the record.
MR. MERSON: You would have, I suppose, the same kinds of problems in disposing of
the slag in terms of trying to line, I suppose, whatever beds you have for
it, that they are confronted with in the fly-ash disposal situation.
MR. ROGERS: That is right. Certainly one of the considerations in slag disposal
would be the potential impact on ground and surface waters and that would
have to be carefully thought out, worked out, analyzed and appropriate meas-
ures taken to see that the ground water quality in the area was not degraded
or that the surface runoff did not adversely affect the nearby area.
MR. MERSON: You haven't looked upon the disposal process as an unusually serious
one in this case, no more so in your eyes than the fly-ash disposal.
MR. ROGERS: That is correct. The leaching test which EPA is working on now to
determine whether a solid material is toxic or not, certainly would be appli-
cable here. At the moment, we don't think that the material we are talking
about would turn out to be toxic, but certainly all of these things would
have to be investigated.
MR. MERSON: Thank you.
DR. DAVIDSON: In your testimony you mentioned that you understand that now no
process water or discharge of process water is planned. I am wondering in
that regard, what technical concerns still need to be resolved to determine
if in fact you can avoid any discharge of the process water?
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synthetic fuels and oil shale
MR. ROGERS: We do not now anticipate that any water will be required to be dis-
charged. Results in the pilot plant scale indicate that this can be main-
tained in design of the SRC-II demonstration plant.
I think it would be only an unanticipated development, something that
didn't work out as we planned, that would cause a discharge to be required.
We feel pretty confident at the moment that we can design and operate the
plant without a discharge.
MR. HERHOLDT: Do you think that the product of a -- once a plant of this type, an
SRC-II plant, has been commercialized, do you think that the final product
can be competitive with other sources of oil?
MR. ROGERS: Yes, I think it can. I must hasten to add that that is a very crucial
and primary part of the reason for the need for a demonstration plant to
really tie down and determine what the cost will be.
Obviously, neither Gulf nor the Department of Energy would be as inter-
ested as we are in examining future possibilities here if we did not think
that it can turn out to be competitive.
DR. REZNEK: Do you see that market for SRC-II as essentially a substitution for
oil across the board or is it more selective? For example, would it be
limited to power plants located in urban areas which can't retrofit scrubbers
or even install a coal handling capacity?
MR. ROGERS: We see the market as selective and not a wholesale replacement of all
applications. As you said, Dr. Reznek, the area that SRC-II might be par-
ticularly attractive to would be, for example, such applications as power
plants in the east which are now in urban areas and locked in and would have
considerable difficulty in finding the additional space in which to store
coal if they convert to coal. They might be attracted to liquid fuel which
could in effect use the same storage tank, the same handling facilities that
they now have.
DR. REZNEK: And your fuel will be compliant in the sense that it will meet the
proposed NSPS, New Source Performance Sandards.
MR. ROGERS: Yes.
DR. DAVIDSON: How does the overall energy efficiency of the process compare with
some of the other synthetic fuel technologies?
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Statement of Mr Robert Humphries
MR. ROGERS: You are speaking of Btu's in the pound of a product compared to the
Btu's at the outset. I don't have numbers at hand to give you a clear com-
parison between SRC-II and other versions. I know that the SRC-II fuel has
about 17,300 Btu per pound versus the 11,000 Btu per pound of coal which is
used at the outset.
DR. REZNEK: Any further questions?
Thank you.
MR. ROGERS: Thank you.
DR. REZNEK: There are three-by-five cards available for questions from the audi-
ence either to the panel or if the witnesses are still available, maybe I can
transfer them back to the witnesses. If anyone wants to be sure they receive
copies of the hearing, they can leave their name with either myself or David
Graham of my address.
Our next witness is Mr. Bob Humphries. He is Environmental Information
Manager of Georgia Power Company.
STATEMENT OF BOB HUMPHRIES
ENVIRONMENTAL INFORMATION MANAGER,
GEORGIA POWER COMPANY
MR. HUMPHRIES: Thank you, Dr. Reznek and distinguished panel members. I come here
today representing a major electric utility, although I suspect that my
invitation was due as much to my local reputation as an environmentalist who
has been deeply involved in air, water and energy issues.
I would like to speak, as Mr. Rogers did, to a non-nuclear technology
which has not received much attention or publicity, yet one which appears to
offer a real hope in helping to solve some of the energy-environmental prob-
lems facing the nation.
This technology is solvent refined coal and on this technology some
$100 million in federal research and development funds have been spent since
1966. In addition, several millions in private funds have been spent by
industry separately and in cooperation with the government.
Because of this effort, solvent refined coal or SRC -- and T should add
here, I speak to SRC-I, the solid version of SRC -- has been carried through
the pilot plant stage to combustion tests in a utility boiler and is years
ahead of other synthetic fuels from coal.
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synthetic fuels and oil shale
In spite of this great amount of successful work, in reviewing the
recent coal technology literature of various federal agencies, including the
Department of Energy, the EPA, and the Department of Interior, I was struck
by the almost total absence of reference to SRC.
This is all the more surprising in view of the many benefits beyond air
quality offered by SRC, not the least of which is its ability to fit into our
present systems of electric generation with a minimum of disruption.
I will not bother you here with details of the process which I can make
available in writing, and we have heard already some of the details. I would
like to use my time to speak briefly of the test burn of SRC, touch on the
economics, and make some general comments about SRC and other methods of
using coal to help us out of our energy situation, all of which seem germane
to federal non-nuclear R&D activities.
Our associated Company, Southern Company Services, has for some years
operated a six-ton per day SRC pilot plant in conjunction with the Electric
Power Research Institute and, more recently, ERDA. A 50-ton per day plant at
Fort Lewis, Washington, has been operated by Pittsburg and Midway and we have
heard of this plant already.
The Fort Lewis facility produced 3000 tons of SRC I which was used
last year in a series of test burns in a Georgia Power Company 22.5 megawatt
coal-fired electric utility boiler. Only minor modifications to the system
were required.
We had to change the pulverizer spring pressure slightly, use cold air
feed, and had to install water-cooled burners into existing boilers.
Emission tests during the burns showed that SRC easily met present EPA
standards for S0_ and NO . Particulate loadings into the primary precipi-
tator were seven to ten times less than when using coal.
Perhaps even more important were the boiler operating characteristics
in terms of maintenance. Soot blowing, normally required 6-12 times a day,
was not required at all during the 18 day test. Bottom ash was virtually
non-existent.
Based on these tests, the low ash-loading, easy pulverization, excep-
tional boiler cleanliness, and non-abrasive characteristics of SRC should
improve boiler and auxiliary equipment availability and reduce maintenance
significantly.
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Statement of Mr Robert Humphries
Lest it be said that we in the Southern Electric System have put all
our eggs in one basket, let me say that we have also extensively tested three
scrubber systems, the Foster Wheeler Dry Absorption, the CEA Dual Alkali, and
the Chioda Dilute Acid, and are looking at continuing this type of testing.
Since we rely heavily on coal as a basic energy resource and expect to
continue to do so in the foreseeable future, as some 87 percent of electric
production last year was from coal using about 16 million tons, we have taken
a leadership position in developing both flue gas processing and fuel pro-
cessing as techniques to enable compliance with required air quality regula-
tions while using coal.
Most of this work has been done with the Department of Energy or its
predecessor agencies. With this experience, of the choices available, we
believe that solvent refined coal uniquely meets the needs of the electric
utility industry and within the meaning of Section 111(a) of the Clean Air
Act as amended.
In our efforts to assess the merits of solvent refined coal, we have
performed a number of economic studies, and comparisons with coal-derived
liquids, gases and flue gas desulfurization systems. We sincerely believe we
have made credible and objective comparisons in view of our experiences as
outlined above.
Our economic studies indicate that SRC offers an economically attrac-
tive alternative to flue gas scrubbing. This conclusion is at variance with
some federal analyses we have seen which, at best, were incomplete in regard
to SRC. I have copies of our economic analysis here for you so that you will
be able to see in detail how this conclusion was reached.
Based on these studies and experiences noted above, we are in a posi-
tion to make several positive statements in support of SRC and continuation
of major developmental efforts towards its use.
One, SRC provides a way to use coal to make electricity in an environ-
mentally acceptable manner at less cost and with greater overall efficiency
than coal-derived liquids or gases at the present time.
Two, since SRC technology is further advanced than technology for
producing these other coal-derived fuel oils, it can be commercialized and
introduced on a large scale at an earlier date, probably just a few years,
which could be critical in resolving the current energy supply dilemma.
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synthetic fuels and oil shale
Three, SRC, and only SRC, provides significantly increased productivity
of the existing bulk transportation system, since each ton of SRC has 30 to
50 percent higher heating value than a ton of new coal, bringing savings to
the public and perhaps avoiding a severe shortage of transportation facili-
ties which might otherwise occur in the future.
Four, SRC provides a way to standardize plant design and operation to a
degree not possible with flue gas desulfurization, so as to facilitate the
shift from oil and gas to coal-based electricity for many applications, and
to create savings to the public associated with shortening design and con-
struction time for new facilities while using the least expensive coal-
derived fuel.
Five, SRC provides a way to generate electricity while meeting legiti-
mate health-related environmental goals with lower capital costs and greater
reliability than with flue gas desulfurization.
It is even possible that the greater reliability could result in re-
duced emissions over other methods since there would be less use of older
plants not governed by new source standards when the newer plants have forced
outages.
Six, SRC technology completely avoids the unproductive costs, land use,
and energy use associated with production, delivery, and utilization of
reactants and disposal of wastes required for flue gas desulfurization.
Seven, SRC, if commercially available, offers the potential for even
more benefits to existing plants faced with uncertain fuel supplies or emis-
sion offsets as well as new peaking plants.
For existing oil-fired plants with fuel availability problems or facing
conversion orders, SRC could be substituted directly for oil with relatively
minor retrofitting, primarily for fuel storage and fuel burners. New com-
bustion turbines can be designed to burn either molten or pulverized SRC.
This would also help to realize the advantages of future, larger combined
cycle generation with greater efficiencies than today's systems.
I have taken this time to give you this quick and elemental overview of
SRC potential. I would be remiss, however, if I did not let my ecological
background come out and speak to the systems involved in the energy/environ-
ment situation we find ourselves in.
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Statement of Mr Robert Humphries
Obviously I don't think I need to tell you that energy research, devel-
opment, and use are interrelated to our environmental quality, goals, and
regulation. Economics, a small part of the science of ecology, is also a
part of this matrix.
Yet, when I see the projects being done, the regulations being written,
the compartmentalization of efforts, I wonder if the personnel or agencies
involved fully appreciate or understand these interrelationships. I must
quickly add that there have been recent signs of progress in this direction.
Congress has shown recognition of these relationships as recently as
the Clean Air Act Amendments of 1977. I would quote in part from Section
lll(a)(C) of the Amended Act, "... which reflects the degree of emission
reduction achievable through the best system of emission reduction which
(taking into consideration the cost of achieving such emission reduction, and
any non-air quality health and environmental impact and energy requirements)
the Administrator determines has been adequately demonstrated for that cate-
gory of sources."
During my discussion of SRC, the subject of flue gas desulfurizaton was
inescapably brought in. In any analysis of present and future coal-based
synthetic fuel development the effects of the presently proposed New Source
Performance Standards must be considered.
The present draft proposals quite honestly appear to force the use of
flue gas desulfurization. This has been called a demonstrated technology yet
in my view, and I think that of the industry, this is far from the case.
I cannot go into great detail here but there is serious doubt that
scrubber technology meets the above quoted "non-air quality health and en-
vironmental impact" proviso. Possibly even scrubbers could be the most
energy intensive of the presently available options.
The crux of this forcing regulation is, of course, the 90 percent
reduction in potential emission. This number appears to have come from
alleged scrubber efficiencies but at a time when EPA is saying they cannot
revise sulfur or particulate criteria documents because of a lack of data.
It is strange to us that a decision involving billions of dollars, new
environmental insults, and with a lasting effect on our energy future can be
made on the evidence available.
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synthetic fuels and oil shale
I do not wish to dwell on the air quality regulation aspects of non-
nuclear research and development but do wish to emphasize their importance as
either an incentive or a disincentive to future projects. Only through wise,
cooperative decisions with a holistic view using the best, most complete data
available can we solve the problems facing us.
As an example, we have seen great interest and expenditures on the
so-called nuclear fuel cycle. Our knowledge in this area is orders of mag-
nitude greater than that we have of the coal or fossil fuel cycle.
We must proceed with all dispatch to correct this deficiency. At the
same time we must avoid making disastrous decisions based on this lack of
data. We must look at the side effects, the fringe benefits, social and
economic shifts, as well as the primary goal of any decision.
I must point out one potential effect of the current draft New Source
Performance Standards that may or may not have been recognized by those who
will promulgate the regulations.
For the foreseeable future, our electric power needs can be met by only
two basic energy sources, coal and nuclear. The capital costs for a new
plant using either fuel today are quite similar. However, a 90 percent
reduction of sulfur emission standard will provide a decided impetus to
choosing nuclear for many new plants. This would appear in conflict with
some of the present Administration's goals.
To close, we have heard often and frequently that process changes, new
techniques, and so forth, are the real way to control pollution. I'd like to
use a term my former major professor, Eugene Odum, is fond of. He calls it
the "tail-end Charlie" approach and he simply says that this is not going to
get it. Simply hanging another device on the end of the pipe has got to be a
last resort solution.
Give us an opportunity to pursue the development and commercialization
of new or synthetic fuels like SRC with all their advantages. Thank you.
DR. REZNEK: Thank you. Are there questions? Al?
QUESTIONS AND REMARKS
MR. MERSON: I would like to ask you the same questions that I asked Dr.
Schlesinger earlier about coal gasification. That is, if there really are
the advantages --and I'm not suggesting that there are not -- to SRC that you
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Statement of Mr Robert Humphries
discussed, what is it right now that is holding it back, as you see it? What
are the constraints right now to having this as a viable alternative? Is it
primarily the new regulations -- the statute plus the regulations -- that are
being proposed that you see as the main obstacle?
MR. HUMPHRIES: Let me answer it this way. Not quite a year ago there was a con-
siderable amount of interest on several large commercial -- well, as least
one large commercial firm to go into a much larger production module of
2-6,000 tons per day SRC.
Along about last August, it began to wane in interest and in December
the interest died completely. I think that relates to the presently proposed
standards and the act, of course, which created those. It is the regulation
aspect which is slowing it.
MR. MERSON: I guess I am moved to ask why didn't we see this any sooner, if there
were real advantages here. Is it because we didn't have the pollution con-
trol framework that provided the impetus for the development of this process?
We're talking about some relatively recent developments. You are
saying that this process is economically competitive with other ways of using
coal. It has certainly a pollution control benefit that other processes
don't have. I am just wondering why we are sort of "tail-end Charlie" in
terms of talking about it within the context of the past year.
I am interested in knowing why somehow we didn't get into these things
somewhat earlier than the last few years.
MR. HUMPHRIES: May I be blunt and state a personal opinion? This isn't a company
opinion, although they may well share it. I think I used the word "holistic"
in this statement. I think we have been guilty in the past; I think we have
been guilty since 1970, with the great advent of environmental concern, of
having a degree of tunnel vision when we look at air pollution or we look at
water pollution or we look at solid waste, and there has not been enough
concern with of the interrelationships between these.
There has been some; don't misunderstand me. I don't think we have
really looked at this. I think in the case at hand, solvent refined coal,
the analyses of it have not really taken into consideration the advantages it
has to the increased reliability of the system so that you perhaps need fewer
plants or those plants operate more frequently and so on and so forth.
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synthetic fuels and oil shale
There may well be less consumption of fuel totally and therefore less
emission even though the percentage may not be as good as some people would
like to see.
MR. MERSON: Just to conclude on this point, it seems to me that if private enter-
prise is working the way it is supposed to, that those advantages should
become obvious to companies such as yours probably at some earlier point and
some investment made in them.
Now, I understand your point about your regulations impeding this
progress, but I am concerned that somehow the market place does not seem to
work very well in producing these technologies within the private sector.
MR. HUMPHRIES: That may be a valid point. This, of course, with us is a very
recent -- we've been in it since about 1972. Of course, we have been doing
it -- trying to develop the technology, and we haven't done, I suppose, a
good job of broadcasting the benefits of that technology, not as well as we
perhaps should have.
Of course, the developments like the 1977 amendments force us into
trying to make these things work at this point which may be too late.
DR. REZNEK: I would like to ask one question. One of the problems that is inher-
ent in improving environmental performance of our technologies is a lack of
market incentive to do so. Everyone would like a more efficient energy
system. The discoverers of ways to reduce costs can realize a profit for
themselves. I know of no profit motive for producing a cleaner technology.
Cleaner technologies come about, not through market action, but through
federal action, especially federal regulatory actions. Would you comment on
both private industry's role and the Department of Energy's role in fostering
improved performance of environmental controls?
MR. HUMPHRIES: This is a difficult question for me to answer, if I do indeed
understand the question. We have problems and we all know that. My company
has been aware of them for quite sometime. We have done things before there
were environmental regulations.
At the same time, particularly in this area of air quality, I have
heard quite often -- you know people say -- well, before 1968 or 1969 nobody
had heard of sulfur dioxide. We have come a long way since then.
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Statement of Mr Robert Humphries
Private industry, like a large government agency, moves slowly its
wonders to perform. Quite honestly, I don't know that we can really encour-
age this except with what has been called a technology forcing type regula-
tion or something like this which sometimes works and sometimes doesn't.
DOE, of course, has the responsibility perhaps for providing financial
incentives to prospective or likely technologies. I don't think I have
answered your question, but I am not sure I can.
DR. REZNEK: Thank you.
MR. HERHOLDT: A previous witness indicated that there were some problems with
solvent refined coal, SRC-I process. Are you implying here for use as an
electrical generation source that the SRC-I process essentially does not have
these problems?
MR. HUMPHRIES: During the test-burn that we made at the 22 megawatt plant, which
was chosen simply because it was the smallest one in the system and they only
had 3,000 tons to burn so it gave us the most efficient use of the available
supply, we were very much encouraged that it came out much better than we
thought it would.
We are not aware of any great problems or impediments that we think
can't be overcome as a utility fuel. As a matter of fact, we see many more
benefits as I have suggested; greater reliability, and utilization of the
existing water or rail transportation systems when we are not transporting
coal, but transporting cleaner coal, more Btu's and less mass.
DR. REZNEK: What type of testing did you do on your burning?
MR. HUMPHRIES: I can leave you a complete series of test results and I think this
has been available to EPA. I think EPA was there as an observer. There were
a number of series of tests run under different operating parameters to see
what did happen, but basically complete emissions data were kept.
DR. REZNEK: Your company did emission testing?
MR. HUMPHRIES: It was done by a consultant for us and the Department of Energy was
also involved. I can't quote you the specific figures right at the moment,
although the SCL emissions as I remember, and I could be slightly wrong, on
the various burns ran between .7 and 1 pound per million Btu's. Yes?
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synthetic fuels and oil shale
MS. HAMMER: Did I understand you to say that there was a net energy benefit over
conventional technology with flue gas desulfurization?
MR. HUMPHRIES: A net energy benefit --
MS. HANMER: You said there was less cost and possibly flue gas desulfurization was
more energy intensive.
MR. HUMPHRIES: I said there was a possibility that there might be. We have not
been able to determine that any real net energy analyses have been done on
flue gas desulfurization taking the entire picture of going back to the
limestone mine or whatever it might be -- transportation disposal, the whole
cycle of it if you will.
Certainly, there is an energy penalty in the operation of the device at
the electric plant. Our impression, and we can't quantify this as yet, but
we are also working on this, but that energy penalty might be equalled by the
energy penalty of solvent refined coal. In other words, these might be can-
celled with the energy losses there.
DR. REZNEK: What is the efficiency in the SRC-I process? The energy efficiency?
MR. HUMPHRIES: The energy efficiency itself -- that is a variable figure depending
on the time and temperature the coal is in and a number of things. I can't
really give you a definite answer. The SRC, of course, comes out with your
through put as solid fuel. It can be varied and this is where the differ-
ences with the SRC-II come in.
Also, in the production of SRC-I you do get a light oil similar to
Number Two, you get some SNG and LPG which are also marketable and usable.
DR. REZNEK: Can the energy recovery be as high as 75 percent?
MR. HUMPHRIES: I believe it could be. Now, I'm taking the process energy into
effect here, but of course in doing the work itself.
DR. DAVIDSON: I am wondering if you might comment on the role of DOE in your per-
spective in developing these technologies. What recommendations might you
have on improving the performance of the Department in this respect?
MR. HUMPHRIES: That, again, is a difficult one for me to address. I am beset at
home from all sides from people who tell me that DOE is not spending enough
money in this area or they are spending too much in that area and all of
that.
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Statement of Mr Robert Humphries
Quite honestly I hear so much of this that I am at a loss sometimes to
know what to think. They are still in an organizational posture, I gather,
and I certainly believe that they need to at least establish some method of
establishing better priorities.
In other words, let's do put emphasis and money on the most promising
technologies and tend to go away from the less promising technologies. I'm
not going to comment on which ones are more promising or not right now. That
would be open to question.
DR. DAVIDSON: Maybe just a comment I think on the overall energy efficiency of FGD
versus SRC I or II. I am not completely sure of the SRC efficiency, but I
believe it must be in the order of 60 or 70 percent, comparing the energy of
the coal going into the process versus the products coming out.
MR. HUMPHRIES: Yes.
DR. DAVIDSON: Roughly in that ball park. However, with the FGD system the penalty
due to the scrubber added is in the order of five percent. So the numbers
that I would see there would be a comparison between roughly, you know, a 95
percent value versus a 70 percent value. Of course, you have to take into
account the efficiency if you are going to put it through an electrical
facility which is roughly a third, you know, electrical energy coming out of
that system.
MR. HUMPHRIES: That would be the same, no matter how you control it by the system.
DR. DAVIDSON: Yes.
MR. HUMPHRIES: That would be an applicable figure at the plant itself. Our con-
cerns would be the energy involvement, or as I choose to call it, the care
and feeding of the beast when you do it there, of course. This is the area
that we have not been able to determine that anyone has really examined in
any great detail.
This is certainly a function that DOE should perhaps look at.
DR. REZNEK: Any further questions?
Thank you very much.
MR. HUMPHRIES: Thank you for your attention.
DR. REZNEK: Our next witness is Dr. Chester R. Richmond from the Oak Ridge
National Laboratory.
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synthetic fuels and oil shale
STATEMENT OF DR. CHESTER R. RICHMOND
OAK RIDGE NATIONAL LABORATORY
DR. RICHMOND: Mr. Chairman, Panel Members, Ladies and Gentlemen. My name is
Chester R. Richmond. I am Associate Director for Biomedical and Environ-
mental Sciences at the Oak Ridge National Laboratory which, as you know, is
one of the major multipurpose scientific research and development institu-
tions operated by various private contractors for the Department of Energy.
As Director of a large biomedical and environmental program, I have had
the opportunity to personally participate in both the planning and imple-
mentation of health, safety, and environmental research related to both
nuclear and non-nuclear energy technology.
I have also participated, during the past several years, in the plan-
ning, organization, and implementation of a life sciences program in support
of synthetic fossil fuels which can be considered to be a major national
research effort.
My comments today will address the planning and implementation of
energy-related research and development activities that deal specifically
with the environmental health and safety aspects of developing technology for
converting coal to gases and liquid products.
To begin with, I believe the Congress displayed much wisdom by embody-
ing this important Public Hearing and review process into PL 92-577. I be-
lieve that the Congress was reflecting public concern that energy development
and other scientific and technological endeavors should proceed with proper
attention directed towards the health, safety, and environmental considera-
tions.
Research and development conducted towards the important goal of energy
independence must be undertaken with proper regard for health, safety, and
environmental factors. We must not compromise or mortgage the future health
of our citizens and their environment while we strive to achieve energy
independence.
These goals are not mutually exclusive as some would prefer to believe.
Neither is the problem simple. However, I believe that virtually everyone
benefits if we can satisfy both goals such that energy independence can be
gained by developing the technologies in a way that is socially and environ-
mentally acceptable; that is, with minimum societal and environmental costs.
I should point out, however, that no energy producing technology will be
environmentally benign.
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Statement of Dr Chester Richmond
The nation must learn how to use its collective wisdom to decide what
level of potential harm or detriment is socially acceptable in exchange for
the energy produced to sustain the needs of our industry, our cities, and all
our numerous institutions. This need, incidentally, applies to all other
human activities that can result in harm or detriment to mankind or his
environment.
Earlier this morning, I believe it was Dr. Reznek who pointed out the
need for us to worry about acceptable risks. I would like this panel to
consider something even further. We need to pursue the question of accept-
able risk from a broad national level which transcends the interest of the
regulatory agencies and other agencies. Because there are risks from many
areas it is becoming, I think, a national problem on how the nation grapples
with this question of acceptable risk or de minimis risk, if you will.
In addition, and I will emphasize this, we cannot afford to be wasteful
of energy because each wasted unit adds an unnecessary increment to the
societal costs, health and environmental, we pay for obtaining energy.
The DOE enabling legislation also states that the DOE Assistant Sec-
retary for Environment is responsible for assuring that all DOE programs are
consistent with environmental and safety laws, regulations, and policies.
The Assistant Secretary also provides guidance for the DOE Secretary to
assure compliance with environmental protection laws and is responsible for
review and approval of environmental impact statements prepared by the DOE.
Also, the Assistant Secretary must monitor DOE programs to make sure
that the health and safety of both workers and the general public is pro-
tected.
In May 1977, President Carter presented an Environmental Message to the
Congress in which he called for a variety of efforts relating to the environ-
ment including those related to the effects of pollution, toxic chemicals,
and damage caused by the demand for energy. He addressed five major areas,
one of which was Energy and the Environment.
In this, the President called for the Administrators of ERDA — now the
Department of Energy -- EPA, and the Secretary of HEW to establish a joint
program to identify the health and environmental effects of each advanced
technology that is the subject of R&D.
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synthetic fuels and oil shale
President Carter also directed ERDA, now DOE, and EPA in May 1977 to
jointly develop procedures for establishing environmental protection stand-
ards for all new energy technologies and further he asked that the procedures
be agreed upon within one year, which is about two months away and I assume
the panel might want to comment on this later.
I believe the mandates and intents are clear. However, it takes people
to make things happen and we all share the responsibility of seeing that
these joint goals are realized.
I would like to now address some of the issues that were sent out to
individuals. One asks about decision strategies — how to satisfy both
goals — that is energy production and environmental protection.
I believe a decision strategy in which the environmental issues play an
equal role with technology feasibility and economic costs would be most
useful. This necessitates that the Assistant Secretary for Environment or
whoever is responsible for that function in DOE be fully and meaningfully
incorporated into the management team to ensure that the environmental issues
are identified and that the necessary research is initiated to ensure their
resolution at all stages of process development.
I also believe that there is an increased need for interagency cooper-
ation and coordination. This has been improving and I think it is the rate I
would quibble with. I would like to see an increased rate of interagency
collaboration and cooperation.
I think this is obvious because we do have the need to development
environmental protection guidance, regulation, and standards for pollutants
that are associated with these developing technological processes.
Another question related to the Federal resource constraints on tech-
nology development, and I think in this case implementing a management stra-
tegy that ensures the early identification of potential issues and problems
and provides sufficient resource base to allow the R&D necessary to resolve
the problem is in order.
Assigning the technologists the sole responsibility to conduct this
research probably will not work.
By encouraging strict implementation of the spirit, and I emphasize
spirit of NEPA, following the adoption of the strategy which would ensure the
development of necessary environmental research within the time constraints
of technology decision making process.
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Statement of Dr Chester Richmond
I would also encourage more intermixing of private and federally-
supported research involvement whenever possible at specific sites so that a
combined approach can be adopted early on and more views and needs con-
sidered.
The development and demonstration of new energy technologies must
proceed in concert with research supporting process design. An earlier
speaker alluded to this point.
Research to ensure protection of environment and human health must be
initiated during the early stages, and I emphasize early stages, of process
conception and continued through operation of demonstration facilities.
A serious concern is that in the haste of developing new demonstration
units, the technologies may not consider environmental issues to be of sig-
nificance until the licensing procedures have to be initiated.
Environment is sometimes viewed as an obstacle to be overcome, rather
than a partner in the design of new facilities. Environmental research
should not be left solely to the technologist for either the identification
of the needs or as a source of resources to conduct the work.
Close coordination between technology development and demonstration and
environmental research must be effected at the appropriate management level
to ensure that they are both complementary and mutually reinforcing.
The Federal government should assume a primary role in not only the
development, but also the siting of advanced technology facilities. Guide-
lines for operation and environmental surveillance need to be developed and
uniformly applied. Working closely with the state and municipal organizations
is axiomatic and must be done.
Identification and solution of potential environmental issues sur-
rounding developing energy technologies I believe can be accomplished only if
environmental research is conducted in parallel and in concert with the
developing technology.
Over the past years various agencies including DOE have produced many
documents such as the Balanced Program Plan and the Environmental Development
Plans for the various technologies. The purpose of these documents was to
identify the environmental issues.
Recently an interagency committee comprised of DOE, EPA, and HEW has
initiated a plan whereby the specific research needs -- that is at the pro-
ject level — for the various environmental issues will be identified.
Hence, the planning for the necessary work is well underway.
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synthetic fuels and oil shale
Undertaking, however, this research to provide solutions to the poten-
tial problems is not proceeding, I believe, in as timely a fashion as it
should. Perhaps, because the R&D is not progressing in concert with the
technology development.
A mechanism must be initiated which ensures that the environmental
activities receive equal consideration in the process of technology develop-
ment.
The development of coal conversion technology should include the fol-
lowing three components: one needs to determine the technical feasibility;
one needs to determine economic viability; and one needs to determine en-
vironmental acceptability.
The determination of environmental acceptability must be given equal
emphasis with respect to the other components at the earliest stage of eval-
uating this technology. The anticipation of environmental issues can be
achieved at one level by providing interaction of environmental scientists
and process design engineers at the onset of technology development planning.
Environmental scientists can identify generic environmental issues
based on appropriate design specifications and effluent source term charac-
terization utilizing existing environmental data.
The second phase of anticipation of environmental issues necessitates a
well thought out environmental research effort that keeps pace with the
characterization of effluent source terms. This research effort should not
only anticipate new issues, but should work toward solving well understood
issues and provide feedback to the environmental control technologist in the
process development.
The demonstration phase of coal conversion technology development will
offer the first real opportunity, I believe, for determining environmental
acceptability of the specific process being tested.
All of the above efforts that I have mentioned, working toward antici-
pation and solution of environmental issues regarding coal conversion tech-
nology development, will come to focus during the preparation of a site
specific environmental impact statement for a demonstration scale coal con-
version facility.
I believe at that time that the environmental issues will be antici-
pated to the degree that technology development and the most up-to-date
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Statement of Dr Chester Richmond
environmental research will allow. If well planned environmental monitoring
programs and plant-specific environmental research programs are implemented
at demonstration scale facilities, the data generated should be of sufficient
quality and kind to evaluate the environmental issues.
The environmental monitoring programs should attempt to evaluate the
predicted impacts; however the plant-specific environmental research should
address the causes and effects of those relationships that can determine, on
a plant-specific basis, what additional control technology is needed to
ensure environmental acceptability.
Research on the environmental programs needs to be tied closely to-
gether with the developing of synthetic fuel process technology, as I men-
tioned earlier. Alterations in process and pollution abatement technology
will modify anticipated contaminant release levels and possibly shift en-
vironmental and health research priorities.
Environmental research must incorporate both laboratory studies utili-
zing identified contaminant compounds and field studies at small-scale con-
version facilities or similar industrial processes to ensure development of
an environmentally acceptable synthetic fuel industry. It is important that
a holistic approach to solving this problem be adopted.
The inclusion of socioeconomic and environmental, and here I include
the human health factor, factors in the assessment of various energy tech-
nologies is assured by the NEPA. What is somewhat unfortunate is the fact
that the data necessary to produce an accurate estimate of potential rami-
fications are not being developed as rapidly or completely as necessary.
This problem goes back to the second specific issue I discussed
earlier. The environmental issues must be addressed concurrently with the
process development, and I can't emphasize this too strongly. There has to
be an equal partnership between those responsible for environmental protec-
tion and the process development within the DOE.
The various synthetic fuel processes tend to produce reasonably large
size quantities of gaseous, aqueous, and solid effluents. The toxic and
carcinogenic nature of some of these is currently being tested and it becomes
imperative that the various process configurations and pollution control
devices be investigated fully in parallel with the development of the coal
conversion process under consideration.
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synthetic fuels and oil shale
In a discussion of the chronic health problems which was another issue
we were asked to address, I will point out that I do believe that there is no
"fail safe" approach to this question. What can, and must, be done is to
incorporate the integration of chemical and biological screening of process,
produce, and effluents at the earliest stages of process development, even
though the validity of the samples may be in question.
This necessitates that human studies -- I am sorry, health studies --
be developed parallel and concurrent with the process development time sched-
ule.
Longer term studies designed to validate screening procedures, deter-
mine mechanisms of effects for effluent types and to determine form, source,
and critical pathways to man then can be also incorporated in the studies.
I believe that the key to the early detection of potential chronic
health problems from synthetic fuels is in the integrated holistic approach
of chemical and biological screening. "State-of-the-art" chemical method-
ology can be coupled with short-term tests such as microbial and mammalian
cell mutagenesis along with cellular assays for toxicity.
With the proper validating experiments available now in higher orga-
nisms, these cellular assays can be useful predictors of potential health
effects.
I would like to close on one point and that is the need for consensus-
building. At a recent Congressional hearing Lewis Branscomb suggested that
the biggest single challenge to science and technology policymaking in the
U.S. is that our consensus-building machinery has broken down.
Facing national decisions on the use of new technologies that require
far more than majority support before a strategy can be implemented, we find
that we only know how to relate to each other as adversaries, sharpening our
disagreements rather than arriving at a consensus view.
Consequently, the movement of our non-nuclear energy research and de-
velopment toward decisions on commercialization, either pro or con, is de-
layed. Very often, the focus of the controversy is the environmental accept
ability of energy technologies.
I believe that a conscious aim of the Federal energy research and
development program should be to help create a broad national agreement on an
energy supply strategy, recognizing that our energy policy system is plural-
istic, and we believe that there are some concrete ways to do this.
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Statement of Dr Chester Richmond
For example, technology demonstrations near or close to commercial
scale can be made the cornerstone of utilization decisions.
Confidence in data about the environmental impacts of a technology is
highest when they come from an actual commercial scale facility, where the
interested parties can verify information for themselves and resolve disputes
about impacts by observing them together. By together, I mean states that
are involved, the commercial enterprises and those who have the Federal
responsibilities for regulatory functions, and those who supply money, ob-
viously.
In order to make full use of demonstrations as consensus-building
activities, it is essential to anticipate the diversity of possible interests
in both phenomena and processes that need baseline information for evalua-
tion, and it is important that the operator of the demonstration plant dev-
elop and use a plan for broad participation by parties-at-interest in veri-
fying the resulting impact information.
In environmental research programs, more emphasis can be given to
anticipating future information needs. Because large scale research on the
environmental and health impacts of coal utilization was not begun until
quite recently, we find it necessary to make coal policy decisions without an
adequate knowledge of the hazards.
For instance, research on possible genetic effects of coal compounds
probably cannot be completed rapidly enough to make decisions about coal use
by 1985. We are catching up as quickly as we can for coal, but what about
the other energy options? They may look better to us partly because we know
so little about them.
In general, the further any technology is away from development or
demonstration, the more benign it appears from the health, safety, and en-
vironmental standpoint. As we learn more about a system, we become more
aware of its potential impact or, as I prefer, societal cost, relative to
human health impacts and environmental deterioration. Thank you.
DR. REZNEK: Thank you. Are there questions?
QUESTIONS AND REMARKS
MR. MERSON: I have one.
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synthetic fuels and oil shale
MS. HANMER: Yes, I have one. It is striking that both you and Mr. Humphries
before talked about a holistic approach. What would you say are the major
constraints at this point for adopting such an approach and towards getting
the R&D?
DR. RICHMOND: I guess I need to congratulate the agencies that are involved. I
mentioned earlier and I stand by my comment that we need more integration in
working among agencies, for example, EPA, DOE, and HEW. But in the interest
of conserving paper, I brought but two copies of my testimony; one for the
Chairman and one for my presentation. I have attached to these a schematic
diagram showing a holistic approach, if you will, specifically, for synthetic
fuel.
If I may, I'll just read you some of the areas that are involved. We
are concentrating as a goal to try to get an environmentally acceptable
fossil energy system. Now, that involves societal decisions not only ad-
dressing the technical R&D aspects.
This involves the characterization and analysis of the process and the
product and the effluents, both chemical and biological. It involves the
study of the transport mechanisms through various media in the environment,
and it involves the study of the ecological effects, the health effects, and
finally an integrated assessment.
It involves teams of analytical chemists; it involves the chemical
engineer and the chemical technologist. Again, we are speaking of a research
phase. It involves the environmental scientist and the many sub-disciplines.
It involves biologists, physicians, the occupational medicine types, instru-
mentation design engineers, and information specialists.
I'll give you one example. There is a need, I think, for increasing
efforts in control technology using biological systems. Very often you can
produce a product which is merely CO- and water. When I say merely CO-,
let's put aside the potential global problem from CO,,.
There are many indications we see already where we can use a biological
system to change a pollutant from one chemical form into another. We've
already had some very successful experience with this, in fact, using re-
actors containing biological organisms to convert organic phenols to CO. and
water.
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Statement of Dr Chester Richmond
So the point I am getting at is that it is a very complex and involved
team effort. What we lump under a life sciences approach to match the tech-
nological approach during the development of the technology.
DR. REZNEK: I would like to ask one question regarding your reference to Federal
involvement in siting decisions. Are you implying that the ultimate decision
on the siting of these new technologies should be made by a Federal entity?
DR. RICHMOND: I realize I'm treading on soft ground in this area, but I think
there has to be some involvement of Federal interests that are broad and can
see the many problems whether they are municipal, state, or regional. Ob-
viously, what is done in one area affects the other; witness acid rain even
on an international scale.
The west has made it very clear that they are not going to lose their
environmental integrity easily, let's say, in this race to get energy. It is
a very complicated problem, but I am told by people who are very expert in
this area in our laboratory that very often demonstration site facilities are
put in an area that might already be degraded environmentally, so it is ex-
tremely difficult to see the potential impact of the site, since you are
putting it on an area that is already quite involved in terms of pollutants
and other sources.
I mention this issue more as one that I think needs more discussion.
MR. MERSON: I caught a statement earlier that suggested that we demonstrate these
technologies on a commercial scale as much as possible. You are not sug-
gesting that we somehow skip over this smaller prototype stage and immedi-
ately go to commercial scale?
DR. RICHMOND: By no means. My point, and I again want to emphasize this since I
apparently did not make it clear, and I apologize for it. Even though the
laboratory R&D work is accomplished and the pilot stage is accomplished, I
think it is imperative that the R&D -- the life sciences supporting work —
continue into the large commercial size demonstration plants.
Again, this is underway now. There are developing programs within DOE
to actually have a team-like approach, and I do sincerely hope this works, at
low Btu gasifiers where the technological demonstration is proceeding jointly
with the demonstration of environmental acceptability.
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synthetic fuels and oil shale
MR. MERSON: Are you suggesting a greater Federal role in participating, then, in
commercial scale projects perhaps than is now present? It seems to me if we
are viewing the commercial scale operation as a demonstration essentially, we
can't expect private industry, I assume, to bear that burden by itself. That
if you are trying to demonstrate a technology, I think it implies that we are
talking about pretty significant Federal participation.
DR. RICHMOND: I'm not an economist and I am not astute about the problems of
industry and government, although I've heard arguments pro and con. I think
the nation has a very serious problem in getting the energy. If, indeed, it
requires changing our thinking in having more interaction between industry
and the Federal government to make this happen in terms of environmental
acceptability, then I am all for it.
DR. REZNEK: Earlier witnesses have expressed concern over the credibility of the
technical data. By technical data I mean the engineering data on energy
systems. The user community for this data includes mostly engineers. You
have raised questions about the risks of new technologies. I am very con-
cerned with the question of the public credibility of the health data and the
environmental assessment data generated by a Federal establishment.
Did you say that we are facing a crisis of consensus? I have a feeling
that we are facing a crisis of credibility, particularly in federally gen-
erated environmental assessments and in federal determination of acceptable
levels of environmental risk.
Would you share your feelings on the credibility of data generated
either by DOE alone or by projects with multi-agency (HEW, DOE, EPA) par-
ticipation? Can data from these sources be used effectively to allay un-
founded public suspicions of dangers from a carcinogenic or toxic material
generated by new and strange technology?
DR. RICHMOND: I'm not sure we will ever solve that problem. Frankly, I think the
latest stage is that the National Academy of Science is no longer looked on
by some as being an open body, which I think is ridiculous, personally.
Our approach to this is to publish information as it becomes available
in the open literature and through that mechanism it will be reviewed by the
peer scientific review body as is the case for any technical information. I
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Statement of Dr Chester Richmond
urge all people working in this area to do so and do it rapidly so that the
information becomes available for review and consideration.
I want to emphasize one thing. There are many aspects of this problem,
only one of which is health and environmental. Society has to make that
decision, collectively, of what is acceptable in terms of what you pay in
health, safety and environmental costs for a process. I don't make that
decision. The life sciences doesn't, and I'm not sure who does. I'm not
sure who will ever make it, frankly.
MR. HERHOLDT: You had stated and rather realistically that there could be some
incorporation of all the various disciplines together to come out with one
decision. Would you assign veto power to any body group of technicians or
whatever in arriving at this ultimate decision?
DR. RICHMOND: I can't answer that intelligently because I really haven't thought
about it.
DR. DAVIDSON: I want to see if you would have any comments concerning a very
practical and troubling problem that we at CEQ see on a fairly regular basis
and one that concerns us a great deal. It is simply that we have several
mechanisms to do the job of integrating the environmental concerns with the
technology development process. The first thing we sense from overviewing
this effort is that the mechanisms are carefully thought out and put together
in a way which should work in a reasonable fashion.
But, when we look closer at this situation we see that from a practical
standpoint it may not be working too efficiently. Let me give you an ex-
ample. I think that the tension between the technology development people --
the engineering staff, who are developing technology "X" in the fossil fuel
program -- and the views of the environmental part of the department is such
that quite often a cooperative effort is basically an impossible task because
there are some very defensive positions taken by one part of the department
versus another part.
I'm wondering if there would be some way that you might see where a
more cooperative situation could be fostered.
Presently, we see a great deal of tension between those two groups.
DR. RICHMOND: Again, that is a very difficult but good question. In my testimony,
perhaps in the written portion, I indicated that I think it is important that
the decisions related to pilot and demonstration stage facilities be mutually
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synthetic fuels and oil shale
signed off on -- mutual responsibility, if you will -- by the technologists
and whoever's responsible for the life sciences or environmental sciences.
I think there has to be some provision for a meaningful, what I call,
corporate approach to the problem within not only DOE but other agencies who
are involved. Again, I often tend to be somewhat critical at some of the
rates of progress of agencies, but I think I should compliment again the
recent at least apparent renewed interest in a very active interaction with
EPA, DOE, and HEW.
DR. REZNEK: Any further questions?
Thank you.
DR. RICHMOND: Thank you.
DR. REZNEK: Our next witness is Mr. Kevin Markey from Friends of the Earth.
STATEMENT OF KEVIN MARKEY
FRIENDS OF THE EARTH
MR. MARKEY: I am Colorado Representative for Friends of the Earth. FOE has com-
mented in previous hearings on Federal Non-nuclear Energy Research and Dev-
elopment before the Council on Environmental Quality. We welcome the oppor-
tunity to comment again.
This year we wish to pay particular attention to synthetic fuels and
biofuel alternatives due to the pending announcement of National Energy
Supply Strategy (NESS) options which may emphasize the commercialization of
liquid and gas synthetic fuels from fossil fuels despite considerable un-
certainty concerning the mitigation of environmental problems associated with
synthetic fuels. We will review these problems and uncertainties and will
try to correct popular misunderstandings of advanced oil shale technologies.
We will evaluate the environmental research needs related to synthetic fuels.
Then we will discuss an alternative to massive synthetic fuel development,
energy conversion of biomass resources. We will evaluate the inadequacies of
the Department of Energy's current Fuels from Biomass (FFB) program and
recommend changes.
ENVIRONMENTAL IMPACT OF FOSSIL-BASED SYNTHETIC FUELS AND UNCERTAINTIES
EPA and DOE are certainly aware of the impacts of oil shale and coal
based synthetic fuel production (synfuels). They include air and water
406
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Statement of Mr Kevin Markey
pollution, considerable water consumption, salinity impacts in the Colorado
River Basin, effects on hydrology, subsidence or the effects of surface
mining and waste disposal, health and safety aspects, socio-economic effects,
impacts on fish and wildlife, parklands and others. We will not reiterate
these in detail here. (See also, FOE's recent testimony on Senator Haskell's
S.419)
Below we summarize the most important environmental uncertainties from
recent ERDA environmental statements on synthetic fuels and from our experi-
ence with synthetic fuel research efforts in the west.
It is currently unclear what trace elements volatize in each of the
synfuel processes, what compounds they form and to what extent they are
emitted into the environment. Ecological pathways of toxic elements are not
well known, and mitigation measures are untried. This is an important issue
since flourine and mercury are the two toxic elements most likely to vola-
tize. Carcinogenic production is also unknown, as is the fate of carcinogens
in synfuel processing, sources of emission, and potential controls.
The extent to which water can be recycled in western synfuel plants is
unknown, as is the water needed for reclamation, especially in oil shale
mining and disposal and for shale oil upgrading. Surface water consumption
for shale development may be reduced by use of ground water, including that
removed during mining operations. However, the interaction between ground
and surface waters is not well understood. On the two Colorado prototype
lease tracts dewatering operations will reduce flows into the already fully
appropriated Piceance Creek. Augmentation of surface waters will be required
by the State of Colorado. Water use in the west will be a limiting factor in
synfuel conversion plans.
Means for controlling pollutants in coal plant effluents are uncertain.
For zero discharge designs an effluent is traded for a solid waste problem.
Potentially much more difficult to control are the effluents which result
from contamination of ground water by leaching from spent modified in-situ
oil shale retorts or in-situ coal gasification. Control technologies for
these are only conceptual.
DOE (ERDA) analysis of compliance with clean air standards which ap-
peared in the Alternative Fuels Final EIS was minimal and its assumptions
optimistic. Meeting air standards in fact requires more detailed modelling,
better knowledge of plant siting, cumulative assessments, and comparison with
new PSD and visibility standards. Air pollution may be a severe limiting
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synthetic fuels and oil shale
factor to mine-mouth synfuel plant siting. Additionally, current air pol-
lution control technologies must be adapted to oil shale and new technologies
may be required. Greater electric power requirements may add cumulative air
pollution effects and further limit development.
Finally, mitigation of socioeconomic impacts is still uncertain.
Impacts of existing boom towns are still waiting to be solved. Solutions
should be demonstrated in existing boom towns before creating new populations
of guinea pigs.
In addition to these uncertainties, it is unfortunate that developers
and other promoters of advanced shale technologies have not been entirely
accurate in their descriptions of environmental impacts. Use of modified
in-situ processing does not guarantee reduction of air pollutants. According
to company plans on prototype tracts, certain critical pollutants may ac-
tually increase compared to surface retorting technologies. It has been
reported that EPA had enough confidence in the two Colorado prototype opera-
tions in December to grant them PSD permits, but it is not generally known
that those permits do not cover planned commercial scale operations.
Most serious will be potential leaching of spent retorts by ground
water. A report by Colder Associates to the Bureau of Mines estimated that
impacts substantially greater than those from surface retorting and disposal
are likely. Complete mitigation by backfilling and grouting may at least
double production costs and are unproven.
Occidental's public confidence in the technical feasibility of its
unique retorting technique may not be an entirely accurate reflection of its
true status"''. Success of the MIS process requires precise rubbling of shale
in the MIS retort. Oxy has admitted problems with its f >urth retort but
claims success with its two subsequent experimental retorts in rubblization
tests on its D.A. Shale property. However, it has obtained DOE aid in test-
ing additional retort rubbling on its private property and has requested
funds for similar testing on tract C-b. Material supplemental to its de-
tailed development plan also indicates uncertainty on this subject. It
clearly does not have confidence in its technique to transfer results di-
rectly from D.A. Shale property without an extensive testing period on tract
C-b.
"See: R.D. Ridley, "Status of Occidental's Shale Oil Efforts," llth Annual
Oil Shale Symposium, which indicates significant technical uncertainties
and problems.
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Statement of Mr Kevin Markey
PROBLEMS WITH RESPECT TO SYNFUEL R&D EFFORTS
The greatest problem with synfuel R&D efforts is an emphasis on pre-
mature commercialization. Congress is considering an increased tax credit
for all energy production capital investments and a $3 per barrel credit for
oil shale production. The White House is considering an extensive program of
incentives and regulatory measures to commercialize all forms of synthetics.
Senator Haskell's S.419 proposes a modular commercial scale test of several
retort technologies. Another rumored plan anticipates DOD participation in a
massive oil shale commercialization scheme.
It is our position that these efforts are premature. The uncertainties
with respect to synfuel impacts are serious enough to warrant a more cautious
approach. Most of the uncertainties identified above do not require the
construction of full scale facilities for their resolution. The Department
of Interior admits that it will have little information on many impacts until
more extensive information has been collected by the prototype program. We
would propose that existing and planned DOE and private research and develop-
ment precede any serious commercialization effort. These efforts should be
subject to conditions discussed below.
Thus far most DOE and private research has placed emphasis on deter-
mining technical feasibility with little truly integrated environmental
assessment efforts. Environmental researchers have typically had access only
to simulated retort conditions. Research on processes has not been geared to
minimization of impacts or the designing of mitigation measures into the
processes. Any environmental improvements have been fortuitous.
Public dissemination of existing environmental research has been poor.
Citizens and independent scientists have not had access to company environ-
mental data, even after such data are submitted as part of a federal program
requirement. Company discretion in setting confidentiality criteria have
excluded full public access to potentially important data, such as pollution
emissions and spent retort shale. Finally, there is no routine public parti-
cipation in DOE's research policy decisions, discussions or formulation of
research goals.
SYNFUEL R&D PROGRAM RECOMMENDATIONS
Aside from commercialization and research priority questions, we would
make several recommendations limited to the conduct of synthetic fuel re-
search:
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synthetic fuels and oil shale
(1) Federal participation in the research, development and demon-
stration of new energy technologies and concomitant environmental research is
proper.
(2) Federally sponsored research should not be exclusively devoted to
questions of technical feasibility. Environmental assessment should be made
a fundamental part of any major energy R&D effort. Such research need not be
conducted by the promoter of a technology, but mechanisms should exist for
environmental research in conjunction with basic process development.
(3) Greater public participation should be sought in formulating
research policy and goals and in identifying environmental concerns which
should be evaluated in R&D programs. Data developed by federal programs
should be publicly available. All environmental data submitted to a federal
program by a private developer should likewise be available. Moreover, NEPA
is currently our only institutionalized mechanism for public participation in
decisionmaking and access to environmental information. It should be pro-
perly applied.
ADVANTAGES OF BIOFUELS
The Carter administration has determined that our most critical energy
need is liquid and gaseous fuels. Even if fossil based synthetics can be
developed in an environmentally sound manner, we must recognize they are
finite. We will ultimately require liquid and gas renewable fuels. This can
be provided by the conversion of biomass. We believe that biomass provides
environmental and economic advantages over fossil synthetics today, not just
in the distant future.
Biofuel conversion results in few environmental residuals. By-product
benefits include eliminating or recycling waste streams. Microbial con-
version systems retain nutrient values, can provide animal feed supplements,
and with proper water management and use of residues, can cut considerably
net water requirements.
Its dispersed and benign nature is economically beneficial to the
agricultural community, offering jobs and local self-reliance. Several
processes are competitive with marginal costs of traditional energy supplies,
especially those such as propane which have impacted agricultural communities
most severely.
Finally, lead times for development of biofuel resources are a fraction
of that required for large synfuel facilities. This may give biofuels a more
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significant early contribution to U.S. liquid and gas fuels deficits than
fossil synthetics, if DOE will be more aggressive in its approach to bio-
fuels .
DOE BIOFUELS PROGRAM INADEQUATE
We now wish to evaluate the biofuels program based on discussions with
industry personnel, other state and federal agencies, discussions with DOE
and analysis of its materials. We find that the biofuels program's extreme
caution is in marked contrast to the premature DOE commercialization of
environmentally questionable fossil technologies.
(1) There is a general complaint that DOE is not responsive to public,
agency and industry requests or suggestions. Many informants complained of
DOE's lack of imagination, lack of urgency, lack of aggressiveness in devel-
oping a budget, identifying industry needs and promoting biofuels.
(2) DOE is overly concerned with technically exotic research projects
and tinkering with economically marginal efficiency or process improvements.
Many such activities are important for long term biofuel productivity, but
some such activities will only delay commercialization by prolonging research
unnecessarily. For example, methane from feedlots has long been approved by
the FPC, and several large scale anaerobic digestion operations are planned
or existing, but DOE is expending considerable sums to speed up digester
reaction times or evaluating dirt feedlot economics. This also duplicates
the work of several private investigators.
(3) We believe DOE is not seriously interested in commercialization of
biofuels technologies. Roscoe Ward, Bureau Chief of DOE's Fuels from Biomass
(FFB) program, told FOE that his bureau is not more active in commercial-
ization activities because biofuel prices are still undercut by low energy
prices. He said, "Commercialization must take place on a natural basis" in
the marketplace. We agree with this judgment, but this is clearly distinct
from historic ERDA and prospective DOE emphasis on market intervention to
encourage fossil synfuels commercialization and places biofuels at a definite
disadvantage. Ward's office does not encourage multiple-resource recovery
efforts, which also places biofuels at a disadvantage since most biofuels
processes involve multiple resource efforts. The exclusive use of grants by
the office also discourages demonstration of large facilities which may be
economically feasible but cannot obtain capital because of typical conserva-
tive lender uncertainty about novel technologies. One staff official of a
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synthetic fuels and oil shale
state energy agency has told FOE of numerous suggestions made to DOE for
funding which his agency believed were economically feasible. DOE consis-
tently refused to budge from its own predetermined schedule and program and
consistently rejected the proposals. One of two reasons were given: either
the process was commercial already and therefore did not need DOE help; or it
was not commercial yet and DOE financial help would be premature. Finally,
Ward told FOE that commercialization is not his responsibility. Rather he
said it was the responsibility of the Assistant Secretary for Resource Appli-
cations. A March 16, 1978 DOE memo establishes "commercial activities" for
"renewable resources" as one responsibility of the Division of Resource
Applications; however, this function appears nowhere in the organizational
chart, which emphasizes coal and oil shale commercialization.
(4) FOE received several comments about DOE biases in awarding con-
tract grants. We were at first skeptical, but an evaluation of current FFB
program grants indicates that 8 of 39 (20%) grantees have received 38% of the
contracts and 55% of the funds. They are:
Thousands of $s
Hamilton Standard $1114.4
Bechtel 973.0
Battelle 730.5
USDA 643.0
California Institute of
Technology 577.9
Dynatech 534.0
University of Illinois 462.6
Lawrence Berkeley Laboratory 437.0
subtotal 5472.4
31 other grantees 4566.6
(5) DOE has also been criticized both in and out of government for its
lack of cooperation with other agencies, critical for multi-resource pro-
grams .
(6) Finally, DOE has no effective means for marketing, technology
transfer, or public dissemination of information or technologies it helps
develop. Its activities seem to be limited to academic conferences and NTIS
publications. Commercialization will require a more active approach, even if
lending, loan guarantees or other subsidies are not used. In comparison, the
California Energy Commission has held workshops at which it deliberately
brought together firms and individuals with specific complementary biomass
resources, energy needs, and conversion technology, some of which resulted in
biofuels projects.
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CASE STUDY - BIO GAS OF COLORADO
Bio Gas of Colorado is a small research firm in Denver which has de-
signed a major anaerobic digestion unit to provide methane for the natural
gas fired steam electric generator owned by the City of Lamar, Colorado.
Construction of the facility will cost $9.8 million, $14.2 million including
interest during construction. Manure will come from 50,000 head of cattle in
feedlots near Lamar. The digesters will produce 1040 MCF per day and 516
tons per day (129 tons dry) of cattle feed including centrifuged digester
residue and algae. The algae is produced in a water treatment system which
will allow 100% water recycle, necessary in the arid west. Heat for CO.
removal and heating the digesters to reaction temperature came from the Lamar-
Power Plant.
Bio Gas has requested aid in the form of loans or loan guarantees for
this facility on behalf of the city of Lamar, which is currently bonded to
its limit in other obligations. DOE has been unwilling to aid. A briefing
by the FFB program for O'Leary and Myers (1-17-78) and our discussion with
Ward indicate several inaccuracies or misrepresentations by the FFB project.
FFB is unwilling to help directly because 82% of the plant's revenue
comes from the residues to be sold as cattle feed. Ward says it is "not an
energy project." Lamar desires the project specifically because of the
natural gas. Its alternative is to rebuild the boiler and import coal. It
prefers to use the "coal" in its own community -- its manure!
Paradoxically, Ward also questions the feed value of the residue
claimed by Bio Gas. He told FOE that the cattle do not fatten as quickly,
thus the feed will not attract a market. However, if an animal does not
fatten as quickly, it must stay in the lot for a longer period. This dif-
ference is reflected by the value of the feed. The value has been estimated
in feeding experiments by the respected E.S. Erwin and Company to be
$38.5/ton compared to $60/ton for dried alfalfa.
Ward's presentation to O'Leary and Myers also claims that the Food and
Drug Administration prohibits refeed with digester residue. This is not
true.
FFB claims that no new technology developments are represented in the
Bio Gas proposal. This is not at issue. All the components have been devel-
oped elsewhere. The issue is whether DOE should provide aid for commer-
cialization. The proposal is the first commercial application of this set
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synthetic fuels and oil shale
of technologies. In fact, this is the first integrated application of algae
treatment of digester effluent to achieve complete effluent recycle and the
first commercial use of centrifuged residue for refeed. Thermonetics, for
example, in Oklahoma, refeeds confetti, not digested sludge. (Confetti is
the undigested food present in manure.)
FFB also claims that Bio Gas capital costs "appear high." It compares
Bio Gas to a DOE funded demonstration project in Florida and to Thermonetics'
Oklahoma project.
The DOE project does not experience interest during construction since
it is a direct grant. It also does not have an algae recycle process. Its
construction cost per head of cattle is $230. Lamar's total capital cost
including interest during construction is $300 per head. However, construc-
tion cost per head is $196, consistent with the DOE cost.
How anyone can compare costs with Thermonetics is uncertain, since it
refuses to release capital cost figures. FFB claims the cost is $3 million
for 100,000 head of cattle, or $30/head. However, the capacity is overstated
by FFB. FFB's figure comes from a brochure describing capacity of nearby
feedlots. The size of the digesters, assuming the same loading rate as Bio
Gas, can only support 20,000 head. This results in a $150/head cost, not
inconsistent with Bio Gas, considering the greater sophistication of the Bio
Gas project.
RECOMMENDATIONS
We do not argue that biofuels require massive subsidies. In fact,
several industry people suggested that they are entirely unnecessary. We do
believe the apparently substantial differences in attitude and treatment
between biofuels and synfuels must be rectified immediately. Commercializa-
tion responsibilities must be clearly defined. A more aggressive approach
must be developed by the Biomass program. Considering the economic and
environmental advantages, it should actually receive much greater priority by
the administration. The faults identified above must be corrected.
Commercialization of synthetic fuels should not proceed until its
consequences are better understood. There is no need for subsidies. Sub-
sidies for any commercialization effort -- synfuel or biofuel -- will only
underprice energy supply and encourage wasteful use and unnecessary produc-
tion. But the capitalization problems of biofuels and synfuels are dif-
ferent. For the latter, energy companies have capital but are unwilling to
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Statement of Mr Kevin Markey
invest in marginal resources at the expense of their other activities. For
biofuels, however, capital is usually not readily available to its typical
promoters such as municipalities and farmers. Conservative financiers are
unwilling to risk a venture into a new technology. Thus, risk capital is
necessary. That risk capital need not be subsidized.
Finally, an adequate transportation policy emphasizing conservation
should precede synfuels commercialization.
DR. REZNEK: Thank you. Are there any questions?
QUESTIONS AND REMARKS
DR. REZNEK: One of the concerns that I have always had about biomass is that the
program is designed specifically and exclusively to produce energy from
biomass such as agricultural byproducts. The net energy balance of such
systems are not very good and the adverse impact on soil fertility and soil
condition is significant. Poor soil condition results if these agricultural
byproduct materials are removed. Have you looked into either of those ques-
tions?
MR. MARKEY: The second question was the fertility question and the first question
was the net energy. I haven't seen many net energy studies of biofuels
production. There is a net energy study which is part of the Bio Gas pro-
posal and it indicates that there is a net gain of energy.
Whenever you are dealing with any solar proposals, especially in the
initial phases of commercializing a solar process, there are going to be
substantial questions concerning the net energy of that process.
I think it is important to recognize that there is cause for concern
that we use our existing fossil energy capital to help subsidize, as it were,
the energy necessary to build a renewable energy economy.
The second question with respect to fertility, I think, is a very valid
question. In another longer paper specifically on biofuels, I have discussed
that as one of many uncertainties with respect to biofuels.
I think the main place where the fertility question crops up is in
various destructive biofuel conversion processes. Processes such as bio gas,
anaerobic digestion, various fermentation processes do not have that problem
if the residues or a portion of the residues are returned to the field.
Unfortunately, a lot of current questions and a lot of current research is
being devoted to destructive types of processes such as biofuel burning in
power generation and destructive distillation for methanol.
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synthetic fuels and oil shale
There are potential microbial processes which can do the same job. I
think that the initial emphasis on the destructive processes might be helpful
insofar that it can commercialize a biomass gathering and collection network,
but in the future I would hope that research and commercialization will be
devoted to biological types of conversion processes.
DR. REZNEK: Thank you. Any other questions?
MR. MERSON: Yes. Kevin, Friends of the Earth obviously opposes subsidies for com-
mercialization of synthetic fuels such as oil shale or coal gasification. Do
you have a position on Federal participation in funding prototype operations
in those areas?
MR. MARKEY: It depends on how one defines prototype. If one defines it as the
Department of Interior in a prototype oil shale leasing program -- definitely
not. However, in terms of funding pilot type research programs or bench
scale research programs up to commercialization, I think there very def-
initely is a Federal role and that Federal role in funding can aid in ob-
taining publicly available environmental information.
We are not opposed to reasonable Federal subsidization of research in
other fossil fuels or in biofuels. The big question is what happens at the
point of commercialization. The biofuels program or the specific project,
Bio Gas from Colorado -- they are requesting essentially Federal loans, not
subsidized Federal loans or one form of loan guarantee or another, mainly
because it is a municipal project which does not have the capitalization and
whose bonding obligations are at its bonding limit.
The institutional barrier that they have run across is the inability to
attract risk capital from traditionally conservative financial institutions.
Most of the people in biofuels research and the industry that I have talked
to say that they feel that once some sort of indication is given which would
help in establishing credibility of those efforts, and financial confidence
or investor confidence, then the sky is the limit.
DR. DAVIDSON: The problems associated with the Department of Energy's biomass R&D
program I think have been commented on by several groups over the last sev-
eral months. I am wondering if in fact you have some more specific sug-
gestions on precisely how best to proceed if one were to attempt to improve
the R&D strategy and program effort.
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Statement of Mr Kevin Markey
MR. MARKEY: The first thing is to reverse some of the faults that I have identi-
fied here. The second thing is a fundamental policy realization on the part
of the administration of the necessity to make biomass an important research
and development priority. That is clearly not there. Roscoe Ward is some-
what conflicting in some of the things that he said publicly.
On the one hand he tells us that their job is not commercialization and
things like that and that they only have limited resources. On the other
hand, he has told people that it has just been recently that his program has
convinced the administration of the importance of biofuels.
I tend to think that it is not his organization that has convinced the
administration. Rather, it is the public and the public pressure. His
organization made a request of about $52.1 million this year to OMB. OMB
chopped it down to somewhere under $30 million and then the House Committee
on Science and Technology boosted it back up to its original request.
That is one story I hear. I hear about 20 other different stories.
DR. REZNEK: I can think of two possible reasons or conditions for not going for-
ward with the commercialization program. First, there seem to be serious
questions about net energy return from mature biomass industry. By this I
mean there is concern about the amount of energy which must be invested in
the form of fertilizers and soil conditioners. In other words, will it be
possible to operate the whole process so that its net energy return is high?
Second, it may be that a biomass system can already be operated with a high
energy return and in a commercially viable way. If either of these two
conditions match the reality of the current situation reasonably well, why go
ahead with the technology commercialization program?
MR. MARKEY: Okay. You can go ahead with commercialization programs where those
questions are answered. I think that one of those commercialization programs
is very definitely a program in anaerobic digestion. I think that can pro-
ceed. There are other technologies which are not as well advanced and which
do require more basic research.
We are not saying that the commercialization should precede the re-
search that has to be done, but where it has been done and where I think
there has been demonstration of net energy returns and that residues can
provide the sort of soil fertilization that you are going to need, where
those questions are answered, commercialization can proceed.
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DR. REZNEK: Are there any other questions?
MR. MERSON: I want to ask you a question.
DR. REZNEK: Fine.
MR. MERSON: Then maybe Kevin can comment. I am trying to learn a little bit today
myself. Excuse me. Does it matter if there is not a high net energy return?
Suppose the net energy return from this process is negligible, but that the
biomass that is used for energy conversion is essentially wasted today.
Suppose if you count in everything that goes into this process to produce the
biomass — the manure in this case -- you get a very low net energy return,
but that the material itself isn't really used in a productive way.
Do you need a high net energy return in order to justify the commer-
cialization process? I guess that is my question.
DR. REZNEK: As you phrase it, no, a high energy return is not needed to justify
the commercialization when true waste materials, which is to say, materials
that can be used for nothing else, are used to produce the energy. But if
plowing the biomass back into the field is found to be a better use for that
material, and if this is not being done today, then the probability that this
better use will ever be achieved goes down if high technology pyrolysis is
commercialized.
MR. MERSON: Okay, so you really have to look at the alternatives, then decide
which is the better use.
MR. MARKEY: Right. I agree with that and it also depends upon where you draw your
boundaries in the net energy analysis. If you are looking, for example, at
the current energy system versus the current energy system plus the addition,
for example, of anaerobic digestion, you have to draw one boundary. If you
are looking at the total energy system in comparison to alternative types of
cattle production, you are going to draw another boundary.
It is a question almost of whether it is a conservation technique or an
application of solar energy.
DR. REZNEK: You will admit that if energy from biomass is an application of solar
energy, it is one with perhaps the most serious unsolved environmental
problems.
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Statement of Mr Kevin Markey
MR. MARKEY: In terms of several technologies, yes. Again, I would emphasize the
need for development not of destructive types of conversion processes, but
rather bioconversion processes in the true sense of the word.
DR. DAVIDSON: One very brief question -- I am wondering in terms of the overall
biomass potential for the country, would you have a feeling for what it might
contribute, say at the turn of the century or the 2025 timeframe.
MR. MARKEY: The Department says that by the turn of the century it will contribute
3 quads, by 2020 it will contribute 10 quads. I have seen biomass resource
estimates ranging an incredible gamut based on existing resources. Based
upon net energy efficiencies ranging from 25 to 50 percent, I calculated the
collectible residues resources at 5.4 quads. Now, those residues might be
likely to proceed upward proportionately to population. You add to that
potential plantation biomass resources and you might bring that up to about
10.8 quads in today's economy.
In terms of what that means per capita -- let me find the stuff here —
on this basis the per capita net energy available from all organic sources
for 2000 would be about 41 million Btu's. Compare this to the vehicular
transport demand of today's population which is about 17.1 quads — I'm doing
an end use analysis look at the end use which requires liquid resource for
example and that in order to assume that biomass is going to do anything, you
are going to have to do some conservation measures -- some effective con-
servation measures.
That is why the last statement in my testimony mentioned the transpor-
tation conservation policy. According to Williams -- I can't remember the
other guy -- Ross and Williams. According to Ross and Williams that could be
further reduced to about 8.7 quads by technical fixed measures alone. That
on a million Btu per capita basis is 41. That was entirely fortuitous coming
out with those two numbers being equal. There are a lot of uncertainties in
both.
One of the problems I think -- one of the questions earlier was what we
have to do. There has been a lot of literature search type of evaluation of
biomass resources, and those literature searches all go back to essentially
the same person, Larry Anderson.
There have been a few very site specific and intensive inventories of
biomass resources. One, for example, has been done by Bio Gas of Colorado.
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I don't know the extent to which they are compatible with Larry Anderson's
original study. Those have to be extended.
In addition to that, most national studies have ignored indigenous
biomass resources which might be best found by state agencies. For example,
the University of Minnesota is finding that they can use 25 percent of their
wetlands in the state of Minnesota to produce biomass which will yield them
10 percent of their entire state's energy production or energy use.
DR. REZNEK: Thank you. Any further questions?
Thank you.
MR. MARKEY: Thank you.
DR. REZNEK: We will break and reconvene at 1:30.
AFTERNOON SESSION
DR. REZNEK: We are ready to start the afternoon session. The next witness is Mr.
John McCormick from the Environmental Policy Center.
STATEMENT OF MR. JOHN McCORMICK
ENVIRONMENTAL POLICY CENTER
MR. McCORMICK: Members of the panel, my name is John McCormick and I speak as a
representative of the Environmental Policy Center. The Environmental Policy
Center is a lobby organization based in Washington. It represents organi-
zations, individuals, labor groups, farm groups, and citizen groups through-
out the nation on national legislation pending before the Congress.
It is a pleasure to be here this afternoon, particularly to be testi-
fying before a dear old friend, Alan Merson. Our relationship goes back
several years and it has been a very important one for me.
I am also delighted to see that the Environmental Protection Agency is
hosting this hearing which traditionally has been hosted by the CEQ. I
testified before the CEQ on this issue several times and I always found it to
be very beneficial.
The analytical review that goes into reviewing the hearings and recom-
mendations coming from these hearings, I hope will find a welcome ear within
the DOE.
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Statement of Mr John McCormick
Before I begin reading a short written statement, I would like to say
that we are pleased to see that this administration and the Department of
Energy's budget do not reflect the continued obsession that the previous
administration had for Congressional action on a loan guarantee program for
synthetic fuels commercialization.
That was a bitter struggle over several years and, while there was a
compromise of sorts in that the Congress did give generic authority to DOE to
negotiate guaranteed loans, we are pleased to see that the valuable time of
the Congress is not being taken up with debating the rationale for multi-
billion dollar guaranteed loan programs for synthetic fuels development.
While I have several comments on DOE's fossil R&D program related to
synthetic fuels production, there are general comments which should be
brought to your attention. As the Congress debated the amendments to the
Clean Air Act during the first session of this Congress, other committees
within the Congress were shaping up the DOE R&D budget for fiscal year 1978.
Since the Clean Air Act amendments were not signed into law and regu-
lations pertaining to that statute were not published, it was impossible for
the Congress to synchronize the two bills. Consequently, passage of the
much-needed improvements in the Clean Air Act posed serious problems for the
future of certain coal utilization technologies because new sulfur dioxide
and nitrogen oxide effluent levels may be too restrictive for the processes
to meet.
This is not to infer that changes should be made in the Clean Air Act
or in the regulations. Rather, this situation calls for a close working
relationship between DOE and EPA in order that pending regulations and those
which are being contemplated -- such as trace element guidelines and sulfate
standards -- can become a part of the thinking within DOE as it designs new
programs to be included in future budgets.
The anxiety created by press stories regarding the possible unaccept-
ability of fluidized-bed boiler SO- emissions in light of the new source
pollution standards expresses the critical need for closer cooperation in a
graphic way!
The public will become more disenchanted with federal participation in
energy research programs if it becomes aware of expensive technologies being
abandoned in midstream as new pollution standards require emissions the
technology cannot meet.
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In light of this concern, it is fortunate that EPA has become the host
for these hearings. With the careful analysis they may foster, this agency
will be in a better position to advise the Executive branch of possible
incompatabilities which might arise as decisions and actions pertaining to
pollution abatement are made.
Hopefully, the Congress will benefit from a synchronized approach to
passing laws and authorizing research programs. There has to be a greater
appreciation for the lead times that are a part of bringing new technologies
on line.
If technologies such as liquefaction of coal will not come on line
before 1985 or 1990, regardless of increased funding of ongoing research, the
public and the Congress should be made aware of this. Therefore, public
policy will not be debated in an atmosphere of misunderstandings and false
promises.
Another benefit of a closer relationship between EPA and DOE is the
greater concern for worker health and safety which must take a higher prior-
ity within the federal government's synthetic fuels R&D program. Not enough
is known of the health effects upon workers exposed to the escaping toxic
gases during the operation of coal gasification or oil shale plants.
Russia became aware of the presence of carcinogens in the work areas
around oil shale conversion facilities many years ago. ERDA did not show any
real willingness to increase its understanding of this potentially serious
situation.
Continued reluctance to attack worker health and safety dangers while
researching synthetic fuels technologies is a gross irresponsibility. While
more emphasis is being placed in this area by DOE, the EPA should become the
conscience of DOE by doing independent analyses of potential dangers to
workers.
With the new Administration and the personnel changes that have taken
place within DOE, there has come a new regard for the commercialization of
technologies that have proven themselves successful. That concept has been
long awaited and was, in the past, overshadowed by ERDA's continued interest
in Congressional authorization of a synthetic fuels guaranteed loan program.
That appeared to be the summation of its commercialization plans.
However, that legislation was intended to benefit billion dollar coal gasi-
fication and oil shale plants rather than low-Btu coal gasifiers and small
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Statement of Mr John McCormick
fluidized-bed boilers. The Federal government has made bold claims about
commercialization efforts but little has been accomplished to date.
Under the direction of DOE's Assistant Secretary for Resource Appli-
cation, George S. Mclsaac, there may be some important changes made in en-
couraging industry acceptance of proven technologies and tailoring future
programs more closely to market needs.
In his words, Mclsaac stated that in the future., "There should be a
very serious market planning kind of analysis for every technology...".
Presently, this is not procedure within DOE. Using this kind of policy
and devoting more staff time to working through a research project from
conception to marketing, that long lead-time for new technologies may be
diminished significantly as potential problems are dealt with and solutions
derived before they occur.
Two coal utilization processes which should benefit from an increased
emphasis on commercial application are fluidized-bed coal combustion and low
and medium Btu coal gasification. These processes are very close to com-
mercialization and every effort should be expended to hasten their use
throughout industry.
They also are best suited to small decentralized facilities but they
could become most valuable as the federal government continues to pursue
mandatory coal conversion of oil and gas-fired industrial boilers.
Without fluidized-bed coal boilers available to potential conversion
candidates, it is difficult to perceive any positive gains in replacing oil
and gas with coal in the industrial sector.
Plant managers will be reluctant to opt for coal and, instead, will
turn to greater reliance upon electricity as the substitute energy source or
will fight conversion orders thereby defeating the purpose of the program.
Stoker boiler manufacturers will not have the capacity to fabricate
cast iron boilers and pollution control equipment necessary for their opera-
tion in accord with environmental laws and may rule out such boilers for eco-
nomic reasons.
Recent successes with the 30 MW fluidized-bed boiler in the Rivesville,
West Virginia research project give encouragement to boiler manufacturers
that a market for small boilers is at hand.
Several companies are ready to give warranties for such boilers and
with a longer track record for successful operation of the West Virginia
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facility, the reliability concerns that potential customers will have are
likely to be appeased. There is considerable interest among the Rivesville
participants to scale-up the 30 MW boiler to 200 MW.
This should be resisted by the Congress and DOE until a solution to
recycling of the spent bed material has been proven. Failure to accomplish
this will trade one pollution problem for another; stack gas effluent cleanup
will be a positive benefit but disposal of the ash and waste will become a
detractant as the amounts of waste continue to grow and more land is com-
mitted to their disposal.
Low Btu coal gasifiers can also play an important role in the substi-
tution of coal for oil and gas in industrial boilers. The Center is satis-
fied that the initial approach toward commercializing these gasifiers is
proceeding in a responsible manner.
However, more demonstration plants should be encouraged with the help
of DOE. There should not be as much concern for avoiding redundancy as there
appears to be. That, perhaps, is a concern that is voiced most often by the
Office of Management and Budget.
If several more gasifiers were constructed and operated in the west and
southwestern regions of the nation, their successful demonstration might
hasten their acceptability in a region where the market potential is not as
obvious. Therefore, the low-Btu gasifier program should be increased in
funding significantly and the RFP's should go out as soon as possible.
The coal extraction R&D program appears to be adequate from our per-
spective but it would be an unfortunate outcome if DOE did not work closely
with the Department of the Interior or the coal labor unions as this part of
the R&D program proceeds.
The new Office of Surface Mining within DOI, charged with enforcing the
coal strip mining law, should be a participant in any decisions to fund a
strip mining or reclamation project designed to create innovations in removal
and replacement of overburden in the reclamation process.
The Center will follow activities in this program closely as it works
to assure that the strip mining law is enforced.
Coal liquefaction, particularly SRC-II liquefaction process, should
replace high Btu coal gasification as a priority program within DOE. The
benefits from that technology are more varied and its ability to accept all
coal types adds to this attraction.
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Statement of Mr John McCormick
That program is moving ahead in a responsible manner and we hope that a
commercialized plant can be in operation by the early 1980's.
I would like to interject something at that point. We have not taken a
position against high-Btu coal gasification as a viable technology. That
ought to be pursued by the Federal government.
We have seen in the past that there is an imbalanced appreciation for
that technology over others. While there is certainly a crying need for
additional methane in the distribution systems of the gas transmission com-
panies, we also see some possibilities for conservation of that natural gas
without the expenditure of much money.
For instance, electric start mechanisms in gas ranges and gas water
heaters replacing gas pilot lights would have a significant savings in the
amount of natural gas we use daily. While that isn't as attractive as some
people would like it to be, there is probably more gas being used in pilot
lights than in the annual output of a single gasification plant.
The gasification plant's capital cost might be in excess of a billion
dollars. To convert pilot lights from gas to some non-gas means of starting
the fire would be virtually inexpensive when you compare it to the capital
costs of a gasification plant.
In summary, the Carter administration has shown constraint and wisdom
in its approach to synthetic fuels technology research. Gone is the earlier
administration's obsession with guaranteed loans for synthetic fuels com-
mercialization.
That has been replaced with a visible appreciation for a more careful
and better selection process before it recommends the type of high Btu coal
gasification process to be scaled up from pilot plant size.
This is a healthy change and one that speaks well of the new management
within this program. We hope that this thinking will become a part of the
remainder of DOE's synthetic fuels research program.
I haven't mentioned anything about oil shale. I realize that the part
of the DOE budget pertaining to oil shale amounts to something like $30
million. The Environmental Policy Center continues to hold the premise that
this nation does not need to look toward oil shale as a potential source of
new energy.
I think that is probably the last place on this earth we have to begin
looking for new energy because the amount of land disturbed to supply a very
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synthetic fuels and oil shale
limited amount of synthetic oil from shale tells us that it is just not
practical. While continued research ought to proceed on the in situ oil
shale recovery process, we feel that the surface retort process that requires
either underground mining or surface mining should be abandoned.
That summarizes my statement and I will be glad to answer any ques-
tions.
DR. REZNEK: Thank you.
QUESTIONS AND REMARKS
DR. REZNEK: Do you have a view of the relative emphasis for SRC-I and SRC-II?
MR. McCORMICK: Yes, my understanding of the characteristics of the SRC-I product
tells me that it isn't likely to comply with the New Source Performance
Standards as far as sulfur dioxide removal.
I am told that the SRC-II product is considerably more beneficial in
that regard, and for that reason I hope that the SRC-II process will get the
greatest emphasis in the future.
DR. REZNEK: Thank you. Are there any other questions?
MR. MERSON: I just want to ask an informational question of John, and perhaps any
member of the panel who might care t.o comment. That is the fluidized-bed
coal combustion process — I'm not familiar with it and I would really appre-
ciate it if someone could just give me a thumb-nail sketch of what we are
talking about.
MR. McCORMICK: I'll try to. Conventional coal-fire boilers inject powdered coal--
pulverized coal in powder form. That combustion results in stack gas having
to be treated at another part in the plant.
The fluidized-bed coal combustion boiler is a boiler box constructed
with a grated floor -- with holes of one to two inches in diameter perfora-
ting the steel grate on the floor.
A bed material of crushed limestone is placed upon that grated bed in
thickness of about eight to twelve inches. Air is forced up through the
holes in the bottom giving these particles of limestone a buoyant property as
they float up and down carried by this air pressure.
Nuggets of coal less than a quarter of an inch in size are then in-
jected on top of the bed material as the bed material is heated from external
sources using gas or oil-fired jets. When the material is hot enough and the
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Statement of Mr John McCormick
coal begins to combust, the calcium oxide in the limestone becomes an ab-
sorbent for SO and calcium sulfate, CASO , is the property that the bed
material takes on.
The bed material is able to be drained off and the unburned coal por-
tion recaptured and reinjected. Evidently the combustion efficiency is
exceedingly high.
The configuration of the water pipes inside the boiler is such that
they are completely enveloped by this molten bed material. Therefore, the
heat transfer co-efficiency is about six times greater than a conventional
steam boiler with the water pipes affixed to the sides of the boiler.
That would allow for a more compact unit and perhaps one that could be
constructed in a shop and delivered on site ready to be put together.
The heat range of a fluidized-bed boiler is between 1500 and 1800
degrees which is less than that heat required to develop nitrogen oxide.
That might be another benefit. A further benefit in fluidized-bed boilers is
that the spent bed material is in a dry form and lends itself to road-bed
construction or light construction materials.
While I didn't mention it, I am glad I had this opportunity to mention
it here. We've continued to request the Department of Energy, or ERDA, to
increase its emphasis on reinjection of this spent bed material by stripping
the sulfur dioxide from the calcium sulfate, thereby reinjecting the calcium
oxide.
The ratio of limestone to coal where the coal has a sulfur content of
about four percent — maybe five pounds of limestone to eight pounds of
coal — so you see the solid waste problem that we have if we didn't have
some reinjection potential in this system.
DR. REZNEK: Have you examined the relevant properties of the solid waste from a
fluidized-bed and from a forced oxidation limestone scrubber?
MR. McCORMICK: The characteristic of the spent bed material in the fluidized-bed
boiler is more stable because it is a dry material. It can be more easily
handled, whereas the sludge from a limestone slurry scrubber represents
problems of instability in landfill disposal.
DR. REZNEK: Including forced oxidation?
MR. McCORMICK: I'm afraid I can't make an opinion on that on the limestone
scrubber.
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synthetic fuels and oil shale
MR. MERSON: I'll ask my usual question. What are the constraints, John, to the
proceeding as you see it with this process? What is holding it back at this
point?
MR. McCORMICK: My understanding is one of the constraints is the feeding mecha-
nisms supplying the right amount of coal so that you don't have an overload
of coal, and thereby an ineffective sulfur dioxide removal because most of
the limestone has absorbed the sulfur dioxide.
That control procedure is one that has been demonstrated successfully
on a limited basis, but on a base load boiler operating perhaps 80 percent of
the time for several years, that hasn't been demonstrated yet. I think there
lies one of the constraints in that the overall reliability of fluidized-bed
boilers in this country has not been proven to the satisfaction of customers
and boiler manufacturers.
However, in Europe, fluidized-bed boilers have been used for a number
of years. I don't know if they have the same concern for sulfur dioxide
removal at the levels that the Clean Air Act would require. So I don't have
an opinion as to whether European experiences could translate to U.S. experi-
ences .
MR. MERSON: Then do our regulations pose a difficulty in terms of enabling this
process to meet the standards of our proposed regulations?
MR. McCORMICK: I think it might be too early for me or for EPA for that matter to
answer that question because the reconsiderations are still going on as to
whether fluidized-bed coal combustion boilers will meet that ninety percent
removal standard.
The early indications from the trade association press were that
fluidized-bed boilers are now in trouble because of this new regulation.
However, I think a closer analysis of the problem seems to have diminished
some of that anxiety and perhaps that isn't quite as serious a problem as we
earlier anticipated.
MR. MERSON: Thanks.
MS. HANMER: Do you foresee -- you seemed to suggest it at one point -- a case
where various environmental values would have to be traded off against each
other in some of these new technologies?
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Statement of Mr John McCormick
MR. McCORMICK: I was afraid that was the way that statement would come out and in
rewriting it I wished I had spent some more time on that. I am not saying
that tradeoffs ought to be made and that environmental standards ought to be
weakened. We have made some real gains in the public's appreciation of what
a cleaner environment can do for them.
I don't think we should start backtracking on that. At the same time,
we have to become more realistic about the standards that we do set and the
amount of lead time that goes into developing techologies that can attain
those standards.
I certainly wouldn't be doing the environmental movement any good if I
said therefore we should build new lead times into the Clean Air Act or
perhaps lengthen exemptions, but certainly we have to give more appreciation
to these lead times.
Then, if that dictates that more money be put into a research program
or that -- I guess it might heighten the pressure that DOE should feel to
come up with solutions rather than continue. As in the fluidized-bed boiler
case, the decision on the part of the researchers was to go from 30 megawatts
to 200 megawatt size, when what industry really needs is five and ten mega-
watt size boilers.
In the mandatory coal conversion program, if an industry burning oil or
gas is required to go to coal there are very few choices on how to burn that
1 coal and to burn it in an acceptable way.
* DOE should be aware of this and instead of scaling up that fluidized-
bed boiler technology to 200 megawatts, should look for the solutions that
the industrialists will need to convert to coal. Fluidized-bed boilers at
that range could comply with new source standards if there were improvements
made on that Rivesville plant.
I know I haven't answered all of your question, but I guess I am trying
to make the point that DOE has got to respond to provisions in the Clean Air
Act more than I think they have in the past.
DR. REZNEK: Are there any further questions?
< DR. REZNEK: Thank you.
MR. McCORMICK: Thank you.
DR. REZNEK: Our next witness is Mr. George Bolton, Director of Technology Supply
for the Columbia LNG Corporation.
t
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synthetic fuels and oil shale
STATEMENT OF MR. GEORGE H. BOLTON, DIRECTOR SUPPLY TECHNOLOGY
COLUMBIA LNG CORPORATION
MR. BOLTON: Mr. Chairman, I am George Bolton, Director of Supply Technology of
Columbia LNG which is a subsidiary of Columbia Gas, which supplies natural
gas to about 10 percent of the nation's natural gas customers.
Columbia LNG is engaged, not only in LNG, but in other non-historic gas
supplies. I have with me Dr. Atherton from our Environmental Affairs group.
He is an environmental engineer and he may assist in answering some of your
questions.
Thanks for the opportunity to present views examining the adequacy of
emphasis on environmental implications of the Federal energy RD&D program. I
would like to underscore the last D — the demonstration.
These remarks will be confined to coal gasification which I have been
heavily involved in since 1964, and I'll only focus on one item here; getting
the needed environmental data by putting more emphasis on demonstration
programs of available technology.
Coal gasification appears to be the most effective way to turn high
sulfur coal into an environmentally acceptable fuel. We can debate that
later. To me, it would seem to be inevitable. Yet EPA, in one of their
Decision Series reports, points out, and I agree completely, that there is an
"uncertain future of the synthetic fuels industry".
At the top of the list of environmental uncertainties is lack of quan-
titative data. We seem to be missing the boat because we don't have the
answers, and the fundamental problem appears to be that our national energy
activities continue to aim at a moving target.
We are always preoccupied with advancing technology and we fail to
establish an environmental benchmark, and that is certainly the key to a
sound coal conversion program.
The need is for a gasification demonstration plant using the environ-
mentally best available technology to provide the quantitative data that we
don't have. A process is available that produces essentially clean fuel gas,
inert slag, and elemental sulfur. This seems to be as close to environ-
mentally ideal as possible.
Any possible pollutants appear to be minor and manageable. I think we
ought to have the quantitative data to confirm these opinions, and I say
430
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Statement of Mr George Boltori
opinions because I became convinced, as I sat in the audience today, that
what we do in this country is sit around and debate opinions rather than get
facts.
Now, some associate gasification with alleged carcinogens such as tar,
and the process is free from tar. Over four years ago in January of 1974,
EPA put out a report on a process. I will paraphrase the conclusions here:
"More complete information is available than on some other processes". There
are a number of plants in operation. These plants are overseas.
Another EPA report pointed out that monitoring non-U.S. operations
might not be applicable. The reason is that they are not built to our stan-
dards; they are not operated the way we would operate them — not only envir-
onmental standards but also construction standards. It is a different ball
game.
To draw an analogy with a car built for the European market, it has to
get a "fix" before it can enter the U.S. import market. It is apples and
oranges.
Going back to the EPA report, "It is a simple and relatively clean
process in that it does not produce tar, oil, or phenols." Minor amounts of
other items which I think any coal conversion process is going to produce,
are produced; but it does not produce tars, oil, or phenols, and many people
feel that gasification equals tars, oil, and phenols; and EPA themselves over
four years ago said it wasn't true.
This sounds like the starting point to overcome the "lack of quantita-
tive data". If we had a demonstration plant with a commercial size module,
we would get data directly comparable to a commercial facility, and this
would establish an environmental framework for coal gasification.
Let me say that our problem of energy supply is not an "either-or". It
is not we do coal gasification and we don't do everything else. We need
almost everything. Let's pin down coal gasification. It looks like an easy
one.
The process produces a medium Btu, a 300 Btu gas. Columbia has ana-
lyzed over 2,000 industrial customers, and this gas is a widely applicable
industrial fuel. Low Btu gas is not a widely applicable fuel and I am dis-
tressed to hear that there is continuing confusion about that point.
Industry has the need for this medium Btu fuel and the process has
feedstock flexibility. It can utilize any coal directly, including the fines
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synthetic fuels and oil shale
which are a problem with some processes, and the high caking, high sulfur
bituminous coal which is that great energy resource we want to use in this
country.
Furthermore, the gas cost is estimated to be about a quarter less than
that for high Btu; and this kind of savings is more than projected for the
currently identified advanced gasification processes. We may wish to fight
about that a little too.
While research certainly has to continue in the quest for superior
performance, it seems we still reach for the birds in the bush.
We should not continue to ignore the bird that could be in hand. Our
national energy activities can provide the necessary coal gasification bench-
mark quantitative environmental data if it includes a Koppers demonstration
plant, and I urge that we work that into our national program. Thank you.
DR. REZNEK: Thank you. Are there any questions?
QUESTIONS AND REMARKS
MR. HERHOLDT: Mr. Bolton, I would assume that the process you are talking about --
this gasification process — is Koppers Totzek?
MR. BOLTON: That is correct.
MR. HERHOLDT: That produces hydrogen as to its natural gas or methane.
MR. BOLTON: It produces primarily hydrogen and carbon monoxide, which is a supe-
rior industrial fuel to natural gas. It is about one percent more efficient
due to about a 150 degree higher flame temperature, combined with less hydro-
gen than is in natural gas. Even though the hydrogen is separate in 300 Btu
gas, the total amount of hydrogen is less than the hydrogen that you get in
methane, which is CH,.
MR. HERHOLDT: Right.
MR. BOLTON: That reduces the stack gas losses and that is where the efficiency
improvement comes from.
MR. HERHOLDT: Then, what you are talking about here is like the development of a
fuel complex where one gasification plant would provide this hydrogen for
plants right in the area as opposed to --
MR. BOLTON: We're not providing hydrogen.
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Statement of Mr George Bolton
MR. HERHOLDT: Okay. We're providing fuel gas.
MR. BOLTON: Fuel gas.
MR. HERHOLDT: As opposed to introducing this gas within, let's say Columbia's
network.
MR. BOLTON: That is correct, but maybe I should add that medium Btu gas is a pre-
cursor to most high Btu gases.
MR. HERHOLDT: Right. I understand that.
MR. BOLTON: It is the classic route, and again I come back to not so much what we
are going to do with it down the road, but let's gather this environmental
data and quit having to argue about whether it is this or that, and know what
it is.
MR. HERHOLDT: The Columbia Gas made an announcement, I think a year ago or a year
and a half ago that they intended to build a coal gasification plant in
Steubenville, Ohio. Is that correct?
MR. BOLTON: That is not completely correct. What the announcement said was that
we were in an ERDA procurement.
MR. HERHOLDT: Okay.
MR. BOLTON: That might lead to such a plant.
MR. HERHOLDT: Was that going to use the Koppers process?
MR. BOLTON: Yes. We've been at this most recent activity going back to the late
sixties, and in the early seventies we started to try to interest industrial
users in coal gasification, which led to an analysis of the whole gasifi-
cation picture. The conclusion at this point in time is that the Koppers
technology will be the best deal from all angles.
At that time when the ERDA procurement came along it looked appropriate
and we tried and lost.
MR. HERHOLDT: And, again, you say that Koppers Totzek would use all kinds of
coals.
MR. BOLTON: Yes, that is one of its great advantages. It is insensitive to feed-
stock. Take the worse coal you can think of and it should work.
MR. HERHOLDT: Thank you.
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synthetic fuels and oil shale
MR. SIEK: What is the logical size for a demonstration plant? You mention build-
ing a demonstration plant and then what do you project as a full size plant?
MR. BOLTON: Philosophically, to me the demonstration plant is the smallest com-
mercial module that you can build, so that you have full confidence that your
commercial project has been adequately demonstrated; and the smallest to keep
costs down.
MR. SIEK: Do you have any idea what that would be?
MR. BOLTON: Sure. In numbers, for the Koppers process the demonstration plant
would be something like 4 billion Btu per day, which is 4 million standard
cubic feet a day of energy equivalent c natural gas. If you think in tons
of coal, it is in the order of 300 tons of coal per day. I'd have to stop to
think if you wanted to hear it in electricity.
MR. SIEK: No, that is fine.
MR. BOLTON: A commercial plant would be anything from five times that size. That
is the order of 20 million cubic feet per day of natural gas equivalent, up
to 150 to 250.
MR. SIEK: How would you site a facility like this? Would you locate it in an
industrial area to serve a complex?
MR. BOLTON: If there were a large industrial user, it could be a one user facil-
ity. Otherwise, it would be in the center of gravity of the user require-
ments from an economic standpoint, absent some environmental aspects which
would shift it depending upon whether or not you can get a site there for
environmental reasons.
MR. SIEK: I guess the next logical question — what is the water usage required of
this? Is this water intensive?
MR. BOLTON: No, the coal gasification plant fundamentally uses much less water
than an electric generation plant for the same amount of net energy because
of the greater efficiency. Most of the water associated with coal gasifica-
tion has to do with the heat losses -- the efficiency, not the source of
hydrogen. You need some for hydrogen, but that is not the major water use.
MR. SIEK: This would be regardless of the quality of the feedstock?
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Statement of Mr George Bolton
MR. BOLTON: Fundamentally, yes. If you had a wet feedstock, but not too wet, it
would cut down on your water use; but it is not a large amount in the total
picture.
DR. REZNEK: I assume by your commitment to this process that when your company
reviewed the availability of technical information on it, they found that
some reasonable amount of information on the performance of the process was
available.
MR. BOLTON: Yes. There are, I believe, 16 commercial plants, two of which are
under construction and one that started in the last year and a half, I would
say.
DR. REZNEK: Are these the South Africa and Yugoslavia plants?
MR. BOLTON: The Yugoslavian plant is not a Koppers plant. There is a Koppers
plant in South Africa. That is the one that started up most recently.
The two under construction are, I believe, in India.
DR. REZNEK: Would you compare the technical data, the performance data, the pro-
cess data to the environmental data available.
MR. BOLTON: We looked at all the data we could get our hands on.
DR. REZNEK: Was there good environmental data available from these?
MR. BOLTON: We placed a lot of weight on the EPA report, including that it didn't
have tars, oils or phenols. It was a clean and simple process. That gave us
cause for great enthusiasm.
DR. REZNEK: That is one of mine.
[Audience Laughter]
MR. BOLTON: You did a good job.
DR. REZNEK: We have looked at water use in these processes. One of our conclu-
sions is that, particularly for cooling, you can trade dollars for water.
Whether or not it makes economic sense depends on how much you are willing to
pay for water, but you certainly can reduce consumption. For gasification
plants, it is possible to make process water, the water used as the source of
hydrogen in the gasification process, by far the dominant component of water
usage. But you have to be willing to spend the money for other types of
cooling.
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synthetic fuels and oil shale
MR. BOLTON: I'm sorry. I have to flatly disagree. I have in my head the high Btu
plant figures and this would be analogous. A fully water cooled 250 million
a day high Btu plant uses something on the order of 20,000 GPM total water
consumption of which -- 2,000 GPM or so is process water. Maximum prac-
ticable air cooling will cut the total to something around 6,000 GPM, leaving
cooling water as still the dominant amount.
Maybe if you pushed it real hard you could get it to be equal. I have
to disagree that the cooling water is not the dominant amount.
DR. REZNEK: Thank you.
MR. MERSON: In the discussion I've heard so far about coal gasification there
seems to be an emphasis on the eastern part of the United States as being the
place where we would try to demonstrate this initially.
Do you see a future for this in the Rocky Mountain region -- the
western United States as well?
MR. BOLTON: Since our marketing area is in the east, I have only casually thought
about the Rockies. The problem is in the east because industry is in the
east and it is industry that needs the fuel that turned out to be oil im-
ports. I would say offhandedly that the Rockies would not present an area of
great application. Of course, they don't have the industry there.
MR. MERSON; I see, even though they have the coal.
MR. BOLTON: It goes with industry.
MR. MERSON: It would be not as feasible to try to ship the gas, essentially.
MR. BOLTON: No, that is an application probably for high Btu.
MR. MERSON: Yes.
MR. BOLTON: This is not to say that you can't ship medium Btu gas, but I think the
answer will come out in terms of hundreds of miles, whereas from the Rockies
you would probably want an answer of thousands of miles.
DR. REZNEK: Any further questions?
Thank you.
MR. BOLTON: Thank you.
DR. REZNEK: Our next witness is Mr. John B. Rigg, a private consultant.
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Statement of Mr John Rigg
STATEMENT OF JOHN B. RIGG, CONSULTANT
MR. RIGG: Good afternoon. My name is Jack Rigg and I am from Denver, Colorado and
I have been associated in the oil shale industry for a number of years.
I want to thank you for the opportunity to appear today and discuss
energy conservation and environmental implications of the Federal Energy
Research, Development and Demonstration Program as it relates to oil shale.
In order to assess the adequacy of both the public and private endea-
vors, two of your publications were reviewed. The Office of Research and
Development report "Oil Shale and the Environment", October 1977, indicates
over $35 million have been earmarked for research on oil shale during the
next five years.
The basic federal endeavors -- The Process and Effects Program and the
Control Technology Program -- offer factual answers to basic research which
government should perform.
The private endeavors, covering air and water pollution and broad
environmental research, plus projects by federal agencies and private com-
panies on a host of environment economic issues are covered rather thoroughly
and should answer a number of questions concerning oil shale development.
The Decision Services Document of DOE/EPA entitled "Energy/Environment
Fact Book" of December in 1977, has some excellent data concerning oil shale
and its environmental issues in the immediate and near future.
General pollution information on oil shale is quite good and is put in
today's perspective by the somewhat overwhelming information concerning coal
and other current energy sources.
To update the status of oil shale beyond both the above mentioned
reports, each of you have before you a packet containing information of
recent data concerning oil shale. These items will be referred to in this
paper under three categories.
The middle of the packet is Current Status Report by the Cameron
Engineers, Inc., "Oil Shale Status Report" of March 1978 prepared for the
RMOGA Oil Shale Committee. It will be helpful because it relates directly to
the eight current pilot and prototype commercial stages of development and to
programs now underway which will allow adequacy of basic research in environ-
mental, sociologic, health and safety and economic factors to be tested.
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synthetic fuels and oil shale
It affirms that without increased larger sized projects, the rewards,
challenges and effects of oil shale production will never be known.
Current Department of Energy oil shale programs show about $31 million
programmed for the year 1979. These activities appear adequate. This is
about a 30 percent increase over 1978 and should give some needed answers.
The Federal Prototype Oil Shale Leasing Program of the Department of
Interior, with the sale of four leases for $449 million dollars in 1974, is
the cornerstone for domestic oil shale development. Energy development and
environmental improvement are co-equal objectives under this endeavor.
Cameron describes it as "...the most ambitious major resource manage-
ment program ever undertaken in the world." If socio-environmental and
economic policy questions are not adequately answered here, serious delays in
the evolution of a full scale mature oil shale industry could result.
Two specific concerns arise. The first is why the Charter for the Oil
Shale Environmental Advisory Panel has not been renewed. EPA was represented
on this panel, as were other Federal Agencies, the affected states and the
citizens where shale is located.
Continuation of citizen input to this oil shale program is a proper
responsibility of government.
The second is why ancillary aspects languishing include title clear-
ances, land exchanges, off-site disposal of spent shale and sodium lease
issuances. These should be pursued so that access to mineable units and
tenure to stimulate development by the private sector are encouraged. I
thank Mr. Merson for being here.
Environmental Uncertainty — the copies of the interchange between EPA
and TOSCO of January and February 1978, concerning "reasonable certainty as
to Government policy", i.e., whether environmental requirements in effect at
time of permit issuance will most likely remain in effect throughout the
lifetime of the facility -- strikes at the very heart of the oil shale devel-
opment/ environmental constraints problem.
The enclosed Federal Register notice of March 3, 1978 and Rocky
Mountain News article of March 20, 1978 indicate that EPA is not following
its own policy concerning ambient air standards in rural areas.
There is no industrial development in either the Piceance Basin of
Colorado or the Uintah Basin of Utah that can be corrected to mitigate the
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Statement of Mr John Rigg
non-compliance edict on ozone emissions. EPA should review this attainment
status of the oil shale region and seriously consider revising the designa-
tion.
Mr. Thoem describes industry's dilemma most properly in his memo to Mr.
Merson when he says ..."EPA is obliged to eliminate the number of yellow
lights and present either a red or green light industrial development (per
Costle's remarks in the latest EPA journal)."
Economic Incentives: Two of the four program goals of the Federal
Prototype Oil Shale Leasing Program of 1974 are: to provide a new source of
energy to the nation by stimulating the development of commercial oil shale
technology by private industry; and to permit an equitable return to all
parties in the development of this public resource.
It appears four years later that private industry is having difficulty
justifying massive capital investments because of inability to assure equi-
table return.
Perhaps a new Prototype Oil Shale Commercial Production Program, in
parallel with the Prototype Oil Shale Leasing Program, is in order. Various
options could be presented and it is recommended that the Departments of
Energy, Interior and Defense join EPA and selected others in a review of
policy options.
The enclosed New York Times, February 26, 1978 article, "Herman Kahn
Revisited", discusses a report by the Hudson Institute titled "Suggestions
for a Phase II Energy Policy" that has been circulating at the Department of
Energy.
The report favorably discusses shale oil recovery on a rather larger
scale with conventional technology. Mr. Kahn concedes that under his pro-
gram, environmental problems would have to be dealt with on a grand scale.
But he also points out "...nevertheless, the nation would be more secure than
it is today."
Instead of a federally funded program, there are other options -- and
this is one: the enclosed "Questions and Answers on Oil Shale Status
Development and Tax Treatment" examines the Senate passed $3.00 per barrel
tax credit plan.
This proposal involves no Federal funding for oil shale development and
has no tax consequence until and unless shale oil production actually takes
place. It will stimulate a variety of recovery and reclamation projects on
private lands and the federal leases.
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synthetic fuels and oil shale
These may range from in situ and modified in situ to gas combustion,
direct or indirect heated surface retorts. Private companies will assume the
technological risks and financing alternatives.
The specific language of this proposal is shown in the enclosed pages
from H.R. 5263, Section 1044, "Tax Credit for Production of Oil and Gas from
Nonconventional Sources". Support for passage from the Administration to the
House and Senate Conference Committee is recommended.
The Federal Non-nuclear Energy Research and Development Program could
promote energy conservation and environmental improvement in the oil shale
areas of the west. Besides already approved programs underway, three pro-
jects are recommended:
One, re-charter the Oil Shale Environmental Advisory Panel to assure
the Federal Prototype Oil Shale Leasing Program is conducted with proper
interagency, state and citizen monitoring.
Two, remove environmental uncertainties that seem to continually alter
investment climate and production criteria.
Three, provide a non-Federal funded incentive for private development
of oil shale through a $3.00 per barrel tax incentive.
Other complex environmental, socio-economic, technical, health and
safety and general challenges affecting oil shale development are being
addressed today by both the public and private sectors.
These will be with us until solved and the solving will bring on new
challenges. However, the need today to aggressively pursue early modular
commercial shale oil production should not be impeded by such research and
demonstration programs. Thank you very much.
DR. REZNEK: Thank you.
QUESTIONS AND REMARKS
MR. SIEK: Jack, I heard last week that the Oil Shale Environmental Advisory Panel
is funded.
MR. RIGG: It is?
MR. SIEK: One of your concerns evidently is answered. I don't think that is
official but I was assured that it was funded. One other point that you
didn't, mention on the last page of your suggestions, and one that con-
cerns us is that we all know the problems that we have been going through in
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Statement of Mr John Rigg
evaluating and getting on line the modular phase of the various projects.
One thing we are looking at now is the development of criteria to judge the
success or failure of those modular phases.
I'm afraid if we don't start now to develop that kind of criteria that
by the time these modular phases are completed we won't know whether it has
been successful or not. So I think the development of such criteria are
really necessary at this time for an orderly process.
MR. RIGG: Bob, how is that criteria? Is that above and beyond your --
MR. SIEK: Yes, I think someone is going to have to judge at the end of the modular
phase exactly if the modular phase was successful or not successful, environ-
mentally as well as economically.
MR. RIGG: Yes.
MR. SIEK: Those criteria I think are going to have to be available at that time.
I think it is not too early to start that development.
MR. RIGG: Aren't they pretty well available now?
MR. SIEK: We don't think so. There may be some that we don't know of, but we
really don't think those kinds of criteria are available at this time.
MR. RIGG: That is a good thought.
MR. MERSON: I suppose I ought to say something.
MR. RIGG: Yes, of course. I didn't know you were going to be here, but I'm de-
lighted.
MR. MERSON: We don't have to debate some of these issues. We'll have a chance to
talk about them, I am sure, over the next few months.
Of course, one of the problems, as you well know, is probably in the
legislation itself, not necessarily in EPA policy with respect ^o non-
attainment areas, both with fugitive dust as it affects particulate standards
as well as with oxidants. Naturally with occurring oxidants, there is a
requirement for EPA to designate these areas where the standards are exceeded
as non-attainment areas.
I think we have tried to make clear, I hope to you -- we certainly have
tried as much as we could to make clear that it doesn't make much sense to
have an offset policy where you have naturally occurring pollutants as in
these instances.
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synthetic fuels and oil shale
We are certainly trying to work with your industry, I think, to come up
with a reasonable approach to oil shale development. I think you will recog-
nize that we certainly haven't been hostile in dealing with the oil shale
industry or at least since I've been in this office.
We've tried to process PSD permits and act in an expeditious manner.
The thing that you are asking for in the final analysis though, in addition
to a few fixes here and there dealing with tnings like oxidant standards, is
some guarantee of long-range consistency on the part of EPA in dealing with
the industry, and quite honestly I don't know whether that is possible.
We have a Congress; we have an agency; and I think as with everything
else in government, it is hard to provide that assurance over a very long
period of time. I think we can strive for it. I am just not sure that we
can promise you that Congress isn't going to change the law next year or that
there may not be compelling considerations on the part of the agency perhaps
to adopt a different approach at some future time.
Maybe I have misunderstood you, but I am not sure there is any way that
a Federal agency can provide that kind of long-term assurance. I think we
try to minimize the yellow lights. I would agree --
MR. RIGG: I love that statement on the yellow lights because that is where so many
of these things are. They are neither go nor stop.
MR. MERSON: Right.
MR. RIGG: So then somebody makes a decision to stop and then they find out --
well, that the environmental problems are such that they could have been go.
So then they go to go and then -- well, the environmental constraints are
such that we have to go to stop.
MR. MERSON: That is assuming a certain arbitrariness, I think, that while it may
be present or appear to be present, I think, hopefully it doesn't char-
acterize EPA's approach as I see it. I hope we are ready to deal with you in
addressing particular problems as they arise. I am not sure, though, that we
can ever offer you assurance of long-term consistency.
MR. RIGG: Well, the trouble with it is, of course, that you do have a certain "X"
number of dollars to take to build one of these plants over a long period of
time and you do your financing and everybody is satisfied that it will work
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Statement of Mr John Rigg
and you get half-way through and then the rules change. It is difficult,
needless to say.
MR. MERSON: We have some prototype projects going forward now, as you well know,
in Colorado. Do you see on the horizon, other than the specific issue of
perhaps the violation of the Ambient Air Quality Standards in terms of ox-
idants or particulates, do you see other clouds now that you think pose
serious obstacles for the oil shale industry?
MR. RIGG: I don't because the obstacles, of course, are some that are mentioned in
there, but when you step back and look at the program and you look at the
size of the area, you have say 32 square miles out of 17,000 square miles you
are playing with.
That acreage was selected a number of years ago so, in case a monu-
mental and environmental disaster were to evolve over this program, you were
subjecting yourself to such a small area that you would be able to control
it.
Now, if I would say — well, we'll go out and we will build 300 plants
out there, then that is a whole new ballgame. Under the current situation, I
think it is under satisfactory control. I think the Office of the Oil Shale
Coordinator has good communications, from what I can find, with other agen-
cies, with the State, and with the people involved.
One of the problems, four years ago, that I felt was a concern was the
social problem — the boomtown, the people problem. Whether that has been
satisfactorily addressed yet or not, I do not know. I am still not satisfied
in my own mind. I don't know whether it is the Federal agencies or the state
or the local communities.
You get to stepping on a whole lot of toes when you get into that
socio-economic place, because George has his little zoned area by a town
there that he wants to do something with and it gets a little sensitive. You
run into that, I know.
That is the only one that could be of some concern.
MR. MERSON: Yes.
DR. REZNEK: Regarding the earlier comment on interim steps, I would say that the
policy of establishing pre-determined criteria for judging success of dem-
onstration projects makes a lot of sense. Such a policy should be applied in
all energy technologies, not just oil shale. A plant of a certain size can
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synthetic fuels and oil shale
then be built to meet certain pre-stated, agreed-upon criteria. If the plant
doesn't meet those, the environmental interests are not under pressure to
justify requiring the expenditure of some large sum of money since the cri-
teria were known from the beginning and not changed halfway through the
construction period.
MR. RIGG: I am confident that the technology is there to satisfy these require-
ments. I think we have our basic criteria in many of these fields that are
in water pollution and some of that field work on reclamation of spent shale
over at the Paraho project has been quite good, quite excellent.
It confirms some of the theoretical desire of the original program, its
theoretical objective. They have been already confirmed on spent shale
disposal. It is a good idea.
DR. REZNEK: Any further questions? Thank you.
MR. RIGG: Thank you.
DR. REZNEK: Our next witness is Dr. Eli Salmon of Resources for the Future.
STATEMENT OF DR. ELIAHU J. SALMON
SENIOR RESEARCH ASSOCIATE
RESOURCES FOR THE FUTURES, INC.
DR. SALMON: It is a pleasure to be here. My name is Eli J. Salmon and I work for
Resources for the Future, which is an organization specializing in research
on the development, conservation, and use of natural resources and the im-
provement of the quality of the environment.
I am presently participating in a study of U.S. energy strategy for the
future which is a comparative technical, economic, and environmental analysis
of energy options. The study is funded by the Andrew W. Mellon Foundation
and the Ford Foundation. The object is to formulate and evaluate alternative
potential strategies for energy supply and use.
Within this study I have just completed a preliminary report on health
and environmental impacts from various energy technologies. They included
direct electricity generation from coal gasification and liquefaction in-
cluding low Btu mine mouth electricity generation by combined cycles, and the
production of liquid fuels by surface and in situ oil shale retorting.
The major health and environmental impacts were evaluated for the
various energy technologies within the framework of complete energy systems.
444
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Statement of Dr Eliahu Salmon
Each phase was considered, namely coal or oil shale mining, cleaning
and processing, transportation, electricity generation or production of
gaseous and liquid fuels from coal or oil shale, distribution of the elec-
tricity or fuels, and their utilization.
The health and environmental impacts from the various technologies were
evaluated on the basis of model unit plants. These chosen electrical gener-
ation, coal conversion, or oil shale retorting systems were such that they
produce the same quantities of useful energy to the final consumer.
Residential space heating was used to represent the utilization of the
electricity or fuels. Both design and operational characteristics of the
various unit plants were used to estimate the impacts.
The information was based on data from pilot plants and from other
technologies or processes expected to produce similar impacts. I will now
give you the major conclusions of the report.
A shift from crude petroleum and natural gas to greater utilization of
coal is presently taking palce. Production of gaseous and liquid fuels
derived from coal and oil shale may be viewed as a continuation of this trend
and may be projected from the National Energy Plan.
The shift is taking place largely because of economic considerations,
but also due to government policies.
The shift involves a potential for adverse impacts which may be largely
controlled and mitigated to acceptable levels by judicious siting and design
of the projected energy facilities, and strict compliance with environmental,
health, and safety standards during their operation.
The major potential adverse impacts expected from energy systems in-
volving electricity generation from coal, and production and utilization of
fuels from coal and oil shale are transportation and mining accidental deaths
and injuries; deaths and respiratory sicknesses of members of the general
public; property and crop damages; damages and disturbances to plants and
ecosystems from combustion products and their atmospheric transformation
products; social strains and reduced quality of services to residents of
small communities near energy facilities; and the possibility of far-future
global effects from changes in agricultural and marine productivities and
flooding of coastal areas as a result of C0_ emissions, which some special-
ists believe might result in a long-term warming trend.
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synthetic fuels and oil shale
Current standards may not provide adequate protection from all adverse
impacts. I want to go into this. This is particularly true in the areas of
trace contaminants and some transformation products produced during the
atmospheric transport of combustion products.
I've also mentioned a few and I'm going into more detail about the
uncertainties that impair the confidence in which potential impacts can be
assessed and where we need some more data and information. More extensive
and reliable knowledge should be developed concerning types, quantities, and
characteristics of potential emissions from coal conversion and oil shale
retorting plants; major sources of pollution with special emphasis given to
trace contaminants; the environmental behavior of combustion products and
trace contaminants including their interactions and transport; the health,
environmental, and socioeconomic effects of pollutants; improved containment
and controls of pollutants including the interdependence among them; and the
costs and tradeoffs likely to be involved in proposed standards and regula-
tions.
Preliminary findings suggest that the major potential health and envi-
ronmental impacts associated with the energy systems of producing gaseous and
liquid fuels from coal and oil shale may be significantly smaller than those
associated with the generation of electricity from coal.
The main reasons for the smaller impacts are greater overall energy
efficiencies of the systems, which would require smaller quantities of coal
to be mined and transported; shorter distances of transportation because of
the projected locations of the energy facilities relative to the mines, or
because of economic factors which limit the distances of transport; and
smaller emissions of combustion products because only about 10 percent of the
coal or oil shale undergoes combustion, and the fuels produced are cleaned of
sulfur prior to utilization.
Even though these fuel conversion technologies appear to produce
smaller health and environmental impacts, they will tend to be concentrated
in regions other than those typical for the electric power industry which is
geographically widely distributed.
It is therefore important to note that the characteristics of the site
of energy facilities may be expected to affect their potential health and
environmental impacts.
446
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Statement of Dr Eliahu Salmon
The important side characteristics to be considered are the density
distribution of population, background levels of environmental pollutants and
reactive chemical species, existence of fragile ecosystems which may be
easily damaged by pollutants and more difficult to reestablish, regional
precipitation patterns including annual amounts of rainfall and its spread
throughout the year, and the availability of water for irrigation.
Precipitation patterns may affect the relative susceptibility to
damages of the site ecosystems, while availability of irrigation water may
influence the reclamation potential of the site.
The above site characteristics may involve two major tradeoffs among
potential adverse impacts from energy systems.
The tradeoffs which need to be evaluated and balanced by decision-
makers prior to siting are larger potential health impacts from energy
facilities but smaller deterioration in health conditions, versus smaller
potential health impacts but larger deterioration.
For example, the midwestern region of the United States is charac-
terized by higher population densities and higher background levels of pol-
lutants than the north central region where most of the high Btu and the oil
shale retorting are expected to take place.
The siting of energy facilities in the midwestern region may be ex-
pected to result in larger numbers of associated deaths and sickness than
those expected from facilities located in the north central region.
At the same time, adverse health impacts in the north central region
are expected to be more noticeable by the area population and to encounter
greater resistance because the rate of increase of the impacts is projected
to be greater. At present the region is largely free from health impacts
associated with energy facilities.
Larger potential adverse ecological and socioeconomic impacts but
smaller health impacts, versus smaller ecological and socioeconomic impacts
but greater health impacts.
For example, the north central region is characterized by desert eco-
systems which are more sensitive to pollutants. There is scarcity of water
for irrigation which inhibits potential reclamation of sites.
The existing communities are small in size and have little reserves of
services like schools or of infrastructure like roads or sewage systems to
accommodate sudden changes in population growth.
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synthetic fuels and oil shale
As a result, potential adverse ecological and socioeconomic impacts
associated with the new energy facilities in the north central region are
expected to be more serious than those projected for similar facilities in
the midwest. At the same time, the potential adverse health impacts in the
north central region are expected to be smaller.
Based wholly on environmental and human health considerations, and
without regard to economic and cost factors, it is my personal view that
present research on the most promising conversion and retorting processes
should be carried forward expeditiously.
A long-range research program of health and environmental evaluation
should be effectively integrated with the evolving technologies. Particular
emphasis should be placed on evaluation and mitigation of possible car-
cinogenic risks from trace contaminants such as trace elements, higher
polynuclear aromatic and organo-metallic compounds.
During the last three days we have been hearing again and again about
the poor data base, great uncertainties involved in evaluations of the im
pacts, and the many needs for research. I prefer to concentrate instead on
the two areas which are usually neglected, namely cost effectiveness of
controls and regulations, and better use of available information.
In each case I would propose to establish a review panel to consist of
members of government, industry, and the scientific community. The panels
should be responsible for overview evaluations and for making recommendations
to the federal energy research and development program.
In support of cost effectiveness of controls and regulations, I refer
to the report on Implications of Environmental Regulations for Energy Pro-
duction and Consumption by the National Academy of Sciences, 1977.
The Committee on Energy and the Environment found that except for local
situations, the economic and energy costs of environmental controls are small
relative to GNP, gross energy supplies, or other cost factors like taxes,
subsidies, and non-environmental regulations.
However, cost effectiveness of regulations surfaced as the real issue
relevant to energy/environment tradeoffs. To some extent this is similar to
the comprehensive approach that we have been hearing this morning, that we
should really approach health and environmental impacts.
Coal transportation accidents provide an example which is relevant to
these hearings on coal conversion, and which illustrates the lack of cost
448
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Statement of Dr Eliahu Salmon
effectiveness of controls and regulations in this area. Present estimates
and future projections expect coal transportation to cause quadruple the
deaths and injuries associated with mining.
The only other potential adverse health impact from energy systems
which may be of equal significance to transportation accidents is from pol-
lution by combustion products. Yet, the health implications of transporta-
tion seem to be ignored when it comes to health and environmental regula-
tions .
Another example is that of the emissions of benzo (a) pyrene and some
other volatile organic compounds. The major sources have been identified as
residential coal furnaces, coal refuse fires, and industrial processes. They
have been neglected in the past.
I don't know what the costs of providing protection against coal trans-
portation accidents of benzo (a) pyrene emissions would be. Consideration of
the potential magnitude of the impacts clearly indicates that they deserve
far more attention than they have received.
In respect to better use of potential sources of information on coal
conversion and oil shale retorting, I would like to refer to some of the
shortcomings.
Although several large-scale coal conversion facilities have been
operated abroad, and about 20 pilot plants have operated in this country, no
published data exist on measured emissions, their characterizations, and
occupational exposures.
With one exception, there are no follow-ups on health impacts. A
review panel may uncover, evaluate, and disseminate unpublished data. It may
also play a role in encouraging future publication of such health and safety
data.
A great deal of information regarding potential risks and adverse
impacts from coal conversion and oil shale retorting facilities may be ob-
tained by comparisons with processes or industries with similar pollutants
and risks. Yet very little has been done in this area.
A review panel devoted to this subject may go a long way to remedy the
situation. Thank you.
DR. REZNEK: Thank you. Are there any questions?
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synthetic fuels and oil shale
QUESTIONS AND REMARKS
MR. HERHOLDT: I have a question with something you raised on page 7. You talked
about illustrating coal transportation accidents. You said, "Present esti-
mates and future projections expect coal transportation to cause quadruple
the deaths and injuries associated with mining."
DR. SALMON: Right.
MR. HERHOLDT: Quadruple. You are talking about underground transportation.
DR. SALMON: No, I am talking now about transportation from the mine because coal
transportation is also important. It accounts for about 17 to 20 percent of
mining accidents. I am talking about the transportation of the coal from the
mine site to the consumer.
MR. HERHOLDT: Okay, are you assuming that the President's goal of a billion tons
by 1985 is going to lead to quadrupling?
DR. SALMON: Not in comparison to present figures, if that is what you mean.
Accidental deaths and injuries are expected to grow by about 50 percent in
the case of an annual increase of coal production to one billion tons by
1985.
I have looked during my study into coal mining and transportation
deaths for various coal energy systems producing equal amounts of useful
energy. Accidental deaths for the coal mining portions are expected to
remain about the same as at present, or even to decrease, depending mainly on
the assumptions concerning future mixes of surface to underground mining. It
is the accidental deaths from the transportation of the coal (combined occu-
pational and general public) that are expected to exceed those of mining
deaths by a factor of 3 to 4, depending on the energy technologies and the
coal mining mixes.
MR. HERHOLDT: You know that roof falls are the major accident causes in mining as
opposed to coal transportation. Right?
DR. SALMON: I am talking now about transportation from the mining site to the
consumer. This is what I am including in transportation here. I am saying
quadruple.
MR HERHOLDT: Sir, —
450
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Statement of Dr Eliahu Salmon
DR. SALMON: Mining is any accident surface or deep mining which have caused occu-
pational injuries and fatalities to miners.
MR. HERHOLDT: All right. I'm still a little shocked that you indicate that there
is a significant thrust on all levels, state and federal, to reduce the
accidents from mining or associated with mining, and to come up with the
statement that regardless of these efforts that there is going to be a quad-
ruple.
DR. SALMON: By the way, this is an estimate of MITRE which was done for the De-
partment of Energy in looking at the National Energy Plan, and there were
various other estimates that was a concern of the President's Commission on
the Utilization of Coal which looked into 1985. They didn't really comment
on this specific thing, but they partly looked into it.
I can give you references and literature to it, and as I said I have
tried to evaluate it based on present knowledge. This is what it looks like.
That was shocking to me, too.
MR. HERHOLDT: It is definitely shocking.
DR. SALMON: Right.
MS. HANMER: What is your analysis of the coal conversion technology based on
western projects that are proposed for the west.
DR. SALMON: My evaluations of the health and environmental implications of coal
conversion technologies are done in two ways. The main evaluation is on the
basis of unit energy systems that produce equal amounts of useful energy.
There is also an evaluation of national and regional impacts from anticipated
levels of coal conversion.
On the basis of unit energy systems I ended up with the fact that 3,390
megawatt coal electric or low Btu gas combined cycles power plants with FGD
producing 2,540 megawatts of electric power are equivalent on the basis of
useful energy to a high Btu gasification plant producing 250 million cubic
feet per day of gas, or to a coal liquefaction plant producing 52,000 barrels
of oil per day.
The health impacts from mining and transportation depend mainly on the
overall energy efficiencies of the various technologies, and also on the
location of the energy conversion plants relative to the mines. Lower over-
all efficiencies of energy systems mean greater requirements for coal that
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synthetic fuels and oil shale
needs to be mined, transported, and processed. Greater requirements of
resources will produce proportionately greater health and environmental
impacts from mining and distribution, which are very significant in the case
of coal conversion and coal electricity production.
Occupational hazards are greater during coal conversion than during
electricity production. I have looked at similar industries, particularly
coal coking where we have similar temperatures and similar pollutants to
those from coal conversion. In the case of coal liquefaction, I have also
looked into petroleum refining. The estimates of occupational health impacts
during coal conversion have turned out to be small relative to the mining and
transportation impacts.
On the basis of present knowledge, the major health impacts to the
general public (other than from coal transportation) and the major environ-
mental impacts, result mainly from the emissions of combustion products.
Because coal coversion involves significantly smaller emissions of combustion
products for a unit of useful energy relative to the generation of elec-
tricity from coke, and because the liquid and gaseous fuels from coal con-
version are cleaned from sulfur prior to utilization, we may expect that coal
conversion technologies will produce smaller health and environmental impacts
than the generation of electricity from coal.
Little information is available on effects of trace contaminants from
coal conversion on the health of the general public and on the environment.
Based on comparison with coking, the effects from trace contaminants are
estimated to be small, relative to those from the emissions of combustion and
transformation products. Also, coal conversion is expected to be responsible
for only a small portion of emissions of trace contaminants relative to
residential coal furnaces, industrial processing and vehicular exhausts.
DR. REZNEK: Could you compare briefly the overall efficiency of oxidation versus
the synthetic fuel?
DR. SALMON: Yes. I ended up with an overall efficiency. In the case of the
electrical power plant with FGD, I ended up with about 30 percent overall
efficiency. It was broken down and I can give you the numbers.
In the case of the mine mouth low Btu, I ended up with about 32 per-
cent. In the case of high Btu gasification, it was about 42.6 percent. The
coal liquifaction was about 39.4 percent.
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Statement of Dr Eliahu Salmon
DR. REZNEK: These are the unit processing percentages.
DR. SALMON: Pardon. This is all the way through, starting from the mining and
ending up with the utilization. If you want to I can bring you any one of
these plans if you want to see what this energy is made up of.
Well, let's take the high Btu gas for instance. I had 97.5 percent for
transportation, assumed about 2.5 percent is lost. This is partly lost and
partly expended for transporting the coal. Thermal conversion efficiency is
60 percent. Transmission and oil distribution efficiency is about 97.1
percent. Here, utilization efficiency is about 75 percent. I've used resi-
dential space heating for that and that gave me the overall efficiency. I
tried to explain why I've used —
MR. MERSON: Do you have oil shale in that too?
DR. SALMON: Yes.
MR. MERSON: What are your figures?
DR. SALMON: Which one would you like, the surface or the in situ?
MR. MERSON: How about both?
DR. SALMON: In the case of surface shale retorting the overall energy efficiency
of 40.4 percent is made up of 99.9 percent for transportation, 65 percent for
thermal conversion, 98.8 percent for oil distribution, and 63 percent for
utilization in residential space heating.
In the case of in situ retorting of shale, the corresponding effi-
ciencies are 34.2, 100, 55, 98.8 and 63 percent.
MR. MERSON: You say on page 7 that cost effectiveness of controls and regulations
surface as the real issue relevant to energy/environment. Do they surface as
the real issue because we don't know how cost effective they are or because
there really is a doubt that the environmental regulations are in fact cost
effective?
There is some strong evidence to believe that they are not cost
effective.
DR. SALMON: Cost effectiveness of regulations appears to be a really important
issue, and often, EPA's regulations are not cost effective. This is very
understandable and the reasons for it have come up during discussions of the
Committee on Energy and the Environment of the National Academy of Sciences.
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synthetic fuels and oil shale
The responsibility of regulating and controlling hazards is fractured among
several governmental and local organizations, and it is further fractured
within EPA itself. As a result, there is often lack of a comprehensive
evaluation and response to hazards.
For example, in reviewing occupational deaths and injuries from coal
energy systems, EPA cannot concentrate on the major source of health impacts
which is transportation accidents. Too many other organizations are involved
in this area. As a result, EPA is often forced to deal with less major
sources of impacts because the major sources are either outside the agency or
are much more difficult to deal with.
Just a short story demonstrating cost effectiveness--this is about an
Air Base Commander who was asked, "How successful were you in reducing
accidental fatalities among pilots?". His reply was that as long as the
pilots continue to arrive at the air base in cars, his expensive program of
making the airport and airplanes safer encountered only limited success.
Under these circumstances, it will make good sense to shift the major effort
of the air base safety program to road and automobile accident prevention,
including inducements of pilots to live at the base.
MR. MERSON: Thank you.
DR. REZNEK: Any further questions?
Thank you.
DR. SALMON: Thank you.
DR. REZNEK: Our next witness is Dr. Thomas Sladek from the School of Mines.
STATEMENT OF DR. THOMAS SLADEK
SENIOR PROJECT ENGINEER, ENERGY DIVISION
COLORADO SCHOOL OF MINES RESEARCH INSTITUTE
DR. SLADEK: Thank you, Dr. Reznek. I am going to keep my remarks very brief this
afternoon. Perhaps it will help you get back on schedule. It may help me
catch the airplane that is waiting for me at Dulles Airport.
Actually, a lot of what I intended to say has already been covered by
Jack Rigg, so rather than go over that ground again, I'll highlight something
that I think was touched on in his talk that I think deserves some emphasis.
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Statement of Dr Thomas Sladek
I talked yesterday for Dr. Reznek and of course some other panelists
about the concept of development of fuels from agricultural commodities by
fermentation -- the production of fuel to ethanol -- and my talk today is on
oil shale technology, which is quite a different subject, and there is a very
interesting contrast between these two potential sources of transportation
energy.
They are both very old technologies. People have been fermenting crops
to ethanol for at least 8,000 years and people have been trying to recover
oil from shale since the mid-fourteenth century.
The contrast comes in when you consider that the technology for pro-
ducing fuels from agricultural commodities is commercially available. You
can buy a fermentation plant off the shelf and have it on stream in about a
year and a half to three years, depending upon where it is going and how
large you want it to be.
In contrast, oil shale technology is not highly developed; it is not
ready for a commercial industry and the main point of my talk, I think, is
that some additional demonstration work does need to be carried out in a
specific area of oil shale development.
All oil shale processing technology now being considered for near term
commercialization involves recovering the hydrocarbons from the oil shale by
applying heat. There are other processing possibilities but these are not
nearly as advanced. I think DOE is taking some looks at these things and
some of them are simply alternative ways of getting heat into oil shale.
There are several ways of heating oil shale to recover the oil.
Heating may be done aboveground in processing units called retorts. This is
the most traditional approach to recovery oil from shale.
Several very modern retorts have been developed in the last 20 or 30
years and the leading candidates at this point in time are the Bureau of
Mines' gas combustion retort and its successor, the Paraho retort; several
retorts developed by Union Oil Company including the type A which is similar
to the gas combustion retort and the types B and SGR. The Tosco - II is a
retort which has probably received more attention than any of the others in
terms of field demonstrations.
Some limited amount of testing has been done with a retort somewhat
similar to the Tosco - II which is called a Lurgi-Ruhrgas.
455
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synthetic fuels and oil shale
The above ground retorts have the advantages of obtaining high yields
of oil from the oil shale. They have many disadvantages in that they require
massive mining operations, large surface facilities, a large labor force, and
voluminous quantities of water for processing the oil shale, for upgrading
the shale oil and for disposing of the spent shale generated in the retort.
The principle problem as far as I can tell is the disposal of the spent
shale. The retorts will create about 2 tons of burned rock for each barrel
of oil which is recovered from the raw material. The problems inherent from
aboveground retorting generated an interest in an alternative concept called
in situ retorting.
This interest began in the mid '60's and has continued to date. This
concept is similar to the aboveground processing except the oil shale is not
mined; it is broken underground and is retorted in situ or in place by
applying heat to the rubbled portion of the formation.
The advantages of in situ retorting are that minimal mining is re-
quired, that few surface facilities are needed, that the labor needs are
lower, and the water requirements are lower, and primarily that there is no
spent shale disposal problem because the spent shale stays underground where
it was in the first place.
The disadvantages of the pure in situ technique are the difficulty in
obtaining a reasonably fractured body of shale so that the heat can be
brought into contact with the shale material. It is also very difficult to
control the retorting process once it begins and the recovery of oil from the
shale under ground is very small, certainly much smaller than what one gets
from an aboveground retort.
A compromise position is being developed. It is called modified or
mine-assisted retorting. This process involves mining of perhaps 10 to 30
percent of the material in the underground volume that is destined to become
a retort. The remaining shale in the retort area is fractured by explosives
and the rubbled mass is ignited and retorted for recovery of oil and gas.
This concept is not particularly new either. It was tried by the
Germans during World War II and in the United States has been developed by
Garrett Research and its successor company, Occidental Petroleum.
Modified in situ processing is now a major budget item in the Depart-
ment of Energy. It is being developed in laboratory and field tests in
Wyoming by the Laramie Energy Research Center and commercially in Colorado by
Occidental Petroleum on tract CB and by Rio-Bianco on tract CA.
456
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Statement of Dr Thomas Sladek
Modified in situ has many apparent advantages but it also has many
disadvantages that are often overlooked. A key issue, and really the subject
of my presentation, is what happens to the oil shale that is mined to provide
the void volume that is needed to get the retort going.
The quantity of mined material can be anywhere from 10 percent of the
retort volume, which is a very optimistic and very low figure, up to 20
percent, which might represent the actual void volume in the retorted area,
and considerably higher if you consider the oil shale that has to be removed
to provide passageways for the mining operation and for creation of under-
ground facilities.
The shale is a very valuable resource. It should not be wasted by
simply dumping it on the surface. Although it is much more environmentally
stable than spent shale there are still some good opportunities for environ-
mental degradation if you just dump this stuff out on the ground.
A portion of the shale could be returned to the mined out area, but I
think that would be kind of foolish because if you have already mined it and
hauled it and broken it and taken it to the surface, you would be silly to
put it back underground without at least recovering some of the oil.
In all likelihood the shale removed from the mine and from the retort
volume will probably be retorted aboveground in retorts similar to those
mentioned earlier.
There has been the stated position of the Department of Energy that
aboveground retorting is adequately developed and is ready for commercial
operation. I think a lot of this opinion goes back to the days in which the
Bureau of Mines was developing gas combustion retort.
Their work was completed in the late 1960's. They developed the retort
to the point where it could process perhaps 300 tons of shale per day. The
government then said that the technology was ready and all we had to do was
to make larger units.
I cannot agree that aboveground retorting is ready to go into a full
sized commercial oil shale industry. The Lurgi retort has been tested with
oil shale at a rate of just a few tons of shale per day. The gas combustion,
Paraho, and Union B retorts have been tested at a few hundred tons per day,
and the Union Oil A and the Tosco - II retorts have been tested at up to
1,000 tons per day.
457
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synthetic fuels and oil shale
In contrast, commercial retorts -- these are single modules — will
have capacities of from 8,000 to 12,000 tons per day. This commercial size
is one to four orders of magnitude larger than the largest units tested to
date.
I doubt that the engineering, economic, and environmental data which
were obtained from the small pilot scale field tests of the retorts are
adequate for an assessment of industry which uses much larger processing
units.
I would suggest that the government needs to encourage additional
development and demonstration of aboveground retorting processes. I would
like to see this type of effort emphasized in the DOE program. How this
would be done, I don't know. I would think that a logical approach would
involve a cost-shared development and demonstration program which could be
conducted perhaps at one of the existing lease tract sites or at one of the
many points in Colorado.
It should feature single, full-sized modules of the more highly devel-
oped retorts. I would hate to see just one of them demonstrated at this
site. I think there are some advantages to considering a single mine which
would supply shale to a variety of oil shale retorts, and then perhaps a
single common refinery which would process the oil produced by those units.
I think that this is the only way that an oil shale industry and the
impacts of that industry can be evaluated without promulgating permanent
adverse effects on the environment of the Rocky Mountain states.
I think there is too much risk associated with going out and con-
structing a full going industry before 1985. I think that along with the
development and testing of the modified in situ concept, we should also be
testing the aboveground retort. Hopefully, if the oil shale industry, at
that point when the demonstration programs have been completed, does appear
to have some promise, then these two processing technologies can be brought
together and produce a high degree of resource recovery with a minimum impact
on the environment.
That is all I have to say. I'd be happy to answer any questions.
DR. REZNEK: Thank you.
458
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Statement of Dr Thomas Sladek
QUESTIONS AND REMARKS
DR. REZNEK: The cost of even those demos is not going to be insignificant.
DR. SLADEK: No.
DR. REZNEK: If it proves environmentally unacceptable, who takes the loss?
DR. SLADEK: Well, I think that is the function of the cost-sharing program. It
means we're sharing the risk between the private developers who have a great
deal to gain if the oil shale industry does get off the ground and the gov-
ernment which has a great deal to gain in terms of being able to evaluate an
industry before it is installed.
DR. REZNEK: Are there ground water supplies of potable quality above or below any
of the oil shale levels?
DR. SLADEK: There are potable aquifers within the oil shale regions, but they are
not extensive as far as I know. One of the problems associated with the in
situ retorting is the possibility of contaminating these potable aquifers
with unpotable aquifers which exist in surrounding strata.
Once you have created a retort which extends from a potable aquifer to
an unpotable one you have essentially created one aquifer at two levels. The
water quality is bound to suffer in the good one.
MR. HERHOLDT: One of the problems associated with in situ coal gasification is how
to terminate the reaction.
DR. SLADEK: Yes.
MR. HERHOLDT: So the heat is transferred to the surface.
DR. SLADEK: Yes.
MR. HERHOLDT: Okay. What kind of problems like this are associated with the in
situ retorting of oil shale?
DR SLADEK: The problem of mine fires, which are so common in the east. I guess
there are several hundred of these things burning in the Appalachian coal
regions at any time. It is something, I think, that deserves some attention.
I would expect it to be much less of a problem in oil shale development
because of oil shale being much less combustible than coal. It oxidizes
extremely slowly in the presence of air, whereas coal oxidizes very rapidly.
459
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synthetic fuels and oil shale
I don't see that as being a major problem, because oil shale is a quite
impermeable material. It is not widely fractured, and air does not readily
penetrate the formation. It would probably be difficult to maintain suf-
ficient oxygen flow to keep that underground retort fire going after the
artificial oxygen had been cut off.
MR. HERHOLDT: Is any of this heat transferred to the surface?
DR. SLADEK: There certainly would be. I'm sure there would be localized heating,
particularly over a large in situ retort. It would depend on how deeply the
retort was buried.
The oil shale interval in the Piceance Basin in Colorado runs up to
3,000 feet, so obviously if you set this whole thing on fire there would
definitely be some surface heating. If your retort was several hundred feet
underground, I wouldn't expect that the temperature rise at the surface would
be all that substantial.
MR. MERSON: I guess my question goes back to your feeling that we really need
further Federal participation in an aboveground retort demonstration project
here. I guess I am concerned about the degree of Federal involvement in the
oil shale industry.
We have the prototype pollution program now. You have CA and CB es-
sentially coming in with an attempt to prove some new technologies; admit-
tedly, both those could decide to go with modified in situ processes.
We have four other tracts that are available for lease. I don't know
whether any of them have been leased -- the ones in Utah and Wyoming -- at
this point. You have Union apparently saying that it's ready to go if the
$3.00 tax credit is approved by the Congress and the Administration.
They feel that they are willing to take that risk in terms of demon-
strating an aboveground retort process. I assume that Colony might well do
the same if the economics are similar for them.
I am just wondering at this point why you think it is necessary to have
some further subsidy for an aboveground process.
DR. SLADEK: I'm not sure of the actual magnitude of the Federal participation that
would be required. I have heard the statement made several times that the
aboveground retorting processes are ready for commercialization, and as an
engineer with some experience in process development, I get a little nervous
460
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Statement of Dr David Stricos
when we talk about order of magnitude scale-ups from essentially small pilot
plant scale-ups to full commercial size.
It is not good engineering practice and, in an environmentally sensi-
tive industry like oil shale development, I think it can be disastrous to do
so.
Your question about the oil companies or the retort developers being
ready to go with this -- with the next step — I think is very encouraging.
I don't know that the DOE needs to provide them with any additional financial
incentives to get that going.
It might be only a matter of cooperating with them on seeing that the
R&D that has to go on to support these programs are integrated into the DOE
effort. Alternatively, perhaps leasing a specific area in the basins for a
retort demonstration site is something that could be contemplated that
wouldn't involve direct capital outlay from the government, but might ac-
complish the same objective.
MR. MERSON: Thank you.
DR. REZNEK: Are there any further questions?
DR. REZNEK: Thank you.
DR. SLADEK: Thank you.
DR. REZNEK: Our next witness is Dr. David Stricos who is the Principal Utility
Research Analyst for the New York State Public Service Commission.
STATEMENT OF DR. DAVID STRICOS
PRINCIPAL UTILITY RESEARCH ANALYST
NEW YORK STATE PUBLIC SERVICE COMMISSION
DR. STRICOS: Thank you, Mr. Chairman. Good afternoon and good afternoon members
of the panel. My name is David Stricos and I am with the Office of Research
of the New York State Public Service Commission.
My duties with that agency include the monitoring of R&D that is sup-
ported or conducted by the State's electric utility companies. The R&D
spending plans of those companies indicate that a growing fraction of our
utility R&D budgets will be devoted to the development of advanced coal
conversion technologies, with particular interest having been shown in the
demonstration of one or more coal liquefaction processes.
461
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synthetic fuels and oil shale
In view of the contemplated increasing participation of New York State
utilities in these research efforts, I have looked at some of the pros and
cons of these utility research investments.
I am pleased to share my findings with you, through this hearing
process, with the understanding that the views expressed are my own and do
not necessarily reflect the policies of the New York State Public Service
Commission. I'll get that plug in there.
New York State, as you probably know, is heavily dependent on imported
oil to meet its energy needs. In 1977, about 60 percent of New York's elec-
tric generating capacity, and about 44 percent of its electric energy re-
quirements, was provided by oil-fired generating stations.
We are striving to reduce this dependence on oil in a number of ways,
one of which is the promotion of research on promising coal conversion tech-
nologies. It is important to note in this regard that, while each of our
electric utility companies contributes to national research programs such as
that of the Electric Power Research Institute, each company has the respon-
sibility also to define and develop its own research program.
Thus, an individual utility's decision to support a particular research
effort will, as it should, depend upon that company's perception of its own
research needs.
It is helpful then to look at a real case situation; and, for this
purpose, I will look at coal liquefaction research as it might be applicable
to New York City and the Consolidated Edison Company.
To do so, it is necessary to touch on (1) Con Edison's system planning
needs, (2) new technology developments and (3) the economics of power supply
for the Con Edison system.
SYSTEM PLANNING CONSIDERATION
Con Edison's existing generating capacity of about 10,000 MW consists
of 6900 MW of oil-fired steam electric capacity, 2,200 MW of combustion
turbine capacity and 870 MW of capacity from its Indian Point-2 nuclear
plant.
These figures show that the company depends on oil for more than 90
percent of its generating capacity. Each year, in fact, the company requires
462
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Statement of Dr David Stricos
about 35 million barrels of residual oil, 40 percent of utility use state-
wide to fuel its steam electric plants and 1.3 million barrels of distillate
oil, 60 percent of utility use statewide, for its combustion turbine
facilities.
Most of this oil is imported and, at an average cost of $2.40/mm Btu,
represents an annual investment by the company of about $525 million.
The company's long range plans indicate a continuing dependence on
imported oil. The retirement of some of the larger oil fired stations begins
in the late 1990's, but by the year 2000 there would still be 3800 MW of oil
fired capacity.
The company's current gas turbine units undoubtedly will have been
retired by 2000, but these units may be replaced before that time, perhaps by
units designed to burn fuels other than distillate oils.
In-City generation currently amounts to 7800 MW or 78 percent of Con
Edison's total capacity. The company's generation expansion plans, however,
point to a greater reliance on new out-of-City facilities — the PASNY Greene
County plant, Hydro Quebec, Prattsville and Cornwall pumped storage facil-
ities and another future nuclear unit.
The company's plans clearly call for a shift from predominately in-City
to predominately out-of-City generation over the next fifteen to twenty
years.
Opportunities to maintain or expand current levels of in-City gener-
ation or to burn fuels other than oil appear to pose severe environmental
problems. The company has an agreement with the City not to build new gener-
ating facilities within the City; but more to the point, space limitations
and environmental constraints make such a prospect unlikely.
The 1977 Amendments to the Clean Air Act, for example, call for the
"best available control technology" in reducing power plant emissions. The
EPA has proposed, consistent with those amendments, that sulfur oxide emis-
sions must be reduced by an amount equivalent to 90 percent removal of the
sulfur from coal.
City and State imposed limits for new plants would require scrubbers
and would limit emission to 0.2 Ibs/mm Btu or the equivalent of 0.25 percent
sulfur coal. The company, in compliance with these coal burning require-
ments, must of course have an acceptable plan for disposing of wastes such as
fly ash and sulfur bearing materials and must have available sufficient space
463
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synthetic fuels and oil shale
for its stack gas clean up systems as well as for its coal handling and
storage facilities.
These kinds of considerations all but preclude the direct burning of
large quantities of coal in utility boilers within much of the City and lead
inevitably to the company's current long range system plan calling for con-
tinued reliance on oil and a growing reliance on upstate generating facili-
ties.
Such a long range system plan may be the company's only available
response, given the constraints under which it must operate, but it is a plan
that runs counter to what would appear to be reasonable objectives for the
company — more in-City generation and lesser dependence on imported oil.
The planned increased reliance on upstate generating facilities is
going to place new strains on the company's transmission system and raises
new concerns about the cost and reliability of New York City's electric
supply.
It is hardly necessary to add that continued reliance on imported oil
puts the company and the City in a vulnerable position with regard to pos-
sible interruptions of fuel supply or rapid cost increases such as occurred
in 1973.
The dilemma clearly calls for an examination of other options that
might become available to the company such as those that might be presented
through the development of new technologies.
NEW TECHNOLOGY DEVELOPMENT
To address the question of reliable electrical supply in the face of
declining in-City generation, the company has entered into R&D projects to
provide new in-City generation capacity, to provide for greater transmission
capacity and to reduce peak load demands.
The company's most notable R&D effort on in-City generation is the fuel
cell. A 4.8 MW fuel cell is to be installed on the Con Edison system, 15th
Street, by this fall. The company plans to participate also in the demon-
stration of commercial sized, 26 MW, fuel cell plants to be built in the
early 1980*s.
However, even an optimistic schedule would result in only 260 MW of
fuel cell capacity in the City by 1990-1995. Another company R&D effort
directed towards in-City generation is the use of refuse as a fuel.
464
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Statement of Dr David Stricos
Refuse utilization projects must be pursued, but they are difficult to
implement and probably of limited impact. The company is also pursuing a gas
turbine exhaust heat reingestion study that might add several hundred mega-
watts of in-City capacity by increasing the output of existing barge mounted
gas turbines.
The company's transmission R&D effort was also developed in response to
precisely the questions raised here. Because of the retirement of existing
plants and the inability to site new capacity within the City, the company
indicates that transmission requirements might increase by about 12 percent
per year over the next several years.
Bulk power transmission over a high voltage DC system offers the pros-
pect of satisfying this need reliably and in an environmentally acceptable
way. The company is, therefore, engaged in a major R&D effort aimed at
developing a DC link which is essential for bringing the DC power into the
City.
The company's need for new generation or transmission capacity is, of
course, related to the company's peak loads. A growing portion of the
Company's R&D dollar is therefore going into load management efforts intended
to reverse the trend of recent years that saw increasing peak loads and
deteriorating load factors.
Most of the incentive for customers to manage loads is expected to be
provided through rate design, and the development and field testing of time-
of-use, interruptible and demand rates will be supported, in part, through
the R&D program.
Research is being directed also towards the development and testing of
related "hardware" items such as load limiting devices, energy storage sys-
tems and remote metering and control devices.
Coal gasification and liquefaction research has, in the past, been a
relatively small component of the company's research program, but the com-
pany is considering much larger investments in the future, especially for the
demonstration of a coal liquefaction process.
The company's incentive for such research, to help provide an addi-
tional future alternative to the burning of imported oil, obviously coincides
with national objectives of reducing our vulnerability to foreign suppliers
of a critical commodity and of making fuller use of a more abundant domestic
energy resource.
465
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synthetic fuels and oil shale
If a commercial coal conversion industry is established, these ob-
jectives will have been realized. The company, thereby, will have helped
develop a more reliable fuel source (I look upon coal derived domestic fuel
as more reliable a supply than imported oil -- in spite of the rather serious
disruptions being experienced by the domestic coal industry) and will have
helped provide an environmentally acceptable approach to the expansion of
in-City generation.
I would now look briefly at specific coal liquefaction technologies
that are being considered for relatively near term scale up; the H-Coal
process, the Exxon Donor Solvent process and Solvent Refined Coal.
The H-Coal process is expected to produce a fuel containing about 0.3
percent sulfur, the maximum allowable for oil fired facilities in New York
City, at a cost of about $4.00 to $5.00/mm Btu in 1977 dollars as compared to
current coal costs of about $1.40/mm Btu and current oil costs of $2.40/mm
Btu.
Commercialization of the process is not expected before the late
1980's, probably in the early 1990*s. If successfully pursued, utility fuel
produced by a number of commercial plants serving Con Edison might have a
significant impact on the City's electric supply by the year 2000.
The projected fuel cost and commercialization dates for the Exxon Donor
Solvent process are about the same as for the H-Coal process.
Solvent Refined Coal produced at the Tacoma, Washington facility
originally contained about 0.9 percent sulfur. Recently, however, the re-
fining process was modified so as to produce a liquid fuel, SRC-II, con-
taining about 0.3 percent sulfur and potentially suitable for use as a util-
ity fuel in New York City.
Once again, the fuel is projected to cost $4.00 to $5.00/mm Btu. Con
Edison, as part of its R&D program, is considering the test burning of the
liquid fuel. If this can be done, Con Edison will have gained useful first-
hand experience with this coal derived oil substitute.
Coal gasification offers yet another coal derived fuel that might be
competitive with liquefied products and could become available in about the
same time frame. There are a large number of "first generation" gasification
technologies that have operated on a small scale for many years, but only a
few, such as the Winkler, and Koppers-Totzek and the Lurgi processes are
considered reasonable candidates for large scale operation.
466
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Statement of Dr David Stricos
The pressing need to obtain clean fuels from coal, and perceived de-
ficiences in the older processes, has spawned a flurry of activity on "second
generation" gasification technologies including the Hygas, Synthane, Carbon
Dioxide Acceptor Bi-gas and Molten Solt processes.
The Lurgi process is still the front running candidate for scale up of
a coal gasification facility, and the product cost is again expected to be in
the range of $4.00 to $5.00/mm Btu.
The electric utility companies have a stake in the development of these
coal gasification technologies, and the industry should and will continue to
support coal gasification R&D.
I believe, however, that the electric companies' principal interest is
in the development of low Btu gasifiers to be coupled with high efficiency
combined cycle units and in the production of a hydrogen rich gasification
product for eventual use with fuel cells.
Much of the research support for coal gasification is being mobilized
by the gas industry. This is to be expected since the prime use of the
product is likely to be the augmentation of pipeline gas supplies to meet
such needs as home heating and the fueling of critical industries.
I should point out also that the potential market for coal liquefaction
products is similarly diverse. While the electric utility industry sees
these products as possible alternatives to imported oil, the petrochemical
industry may see them as potentially valuable feedstocks for the preparation
of a wide variety of organic materials from gasoline to nylon.
The petrochemical industry might, therefore, be expected to pick up a
share of coal liquefaction R&D costs and to compete with electric utilities
for the liquefaction products.
ECONOMICS OF POWER SUPPLY FOR THE CON EDISON SYSTEM
An evaluation of potential coal gasification or liquefaction tech-
nologies must consider the cost of the fuel produced relative to the cost of
alternative fuels.
We are told that clean gaseous or liquid fuels derived from coal will
have similar costs in a range from $4.00 to $5.00/mm Btu in 1977 dollars, a
range that equates to oil costing $24.00 to $30.00 a barrel. Projections of
this type have a habit of being optimistic, but they are at least a starting
point.
467
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synthetic fuels and oil shale
In looking at Con Edison's needs, these costs are to be compared with
the cost of oil to the company. During 1977, the company paid an average of
about $2.40/mm Btu or about $14.50 a barrel.
Given today's prices, therefore, synthetic fuels, if they were avail-
able at the estimated prices, would cost the company twice what they are now
paying for oil.
It is interesting to note, in conjecturing on future oil prices, that
the prices paid by utilities for residual oil have changed very little since
1974. Considering that the posted price of Arabian light crude increased 17
percent from January, 1974, to December, 1977, while the Wholesale Price
Index for Industrial Commodities increased 43 percent, we might well expect
substantial price increases in the near future.
The New York utilities have projected an average annual increase of 7.6
percent in the price of residual oil between now and 1985. Our staff expects
the larger increases to occur between 1982 and 1985 but believes the average
increase projected by the utilities is reasonable.
If we assume a regular 7.6 percent annual increase in the price of oil
from today's $14.50 a barrel and a regular 5 percent (i.e. tracking infla-
tion) increase in the price of coal derived fuels from today's hypothetical
$25.00 a barrel, oil would be priced at $24 a barrel in 1985 while coal
derived fuels would be priced at $35 a barrel.
By 1990, the figures would be $35 and $45 a barrel respectively and, by
the year 2000, both oil and the coal derived fuels would cost $73 a barrel.
We need not take these numbers seriously, but the exercise suggests
that, over time, with oil price increases modestly outstripping those for
synthetic oil, we could find oil and its synthetic alternatives approximately
competitive by the year 2000.
Another factor to be considered is the magnitude of the company's
energy sales over the next ten to twenty years. Con Edison's total electric
sales amounted to 32,630 GWH in 1976; with the loss of about 5,500 GWH of
government sales to the Power Authority of the State of New York, the com-
pany's sales were around 28,500 GWH in 1977.
The company forecasts a sales decline to 27,650 GWH in 1980 and then
sales increases to about 35,000 GWH in 1990 and 40,000 in 1995. Without
faulting those forecasts, it is perhaps helpful to note that an extension of
468
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Statement of Dr David Stricos
short term energy sale trends (1974-1977) among the various service classi-
fications leads to energy sales forecasts of 31,000 GWH in 1990 and 32,500 in
1995.
Imposing the further constraint of constant per capita electric energy
usage leads to projected energy sales of about 25,000 GWH throughout this
forecast period.
The important point is that Con Edison forcasts its energy sales to
grow from 28,500 GWH in 1977 to about 40,000 GWH by 1995, a modest average
annual increase of about 1.5 percent and that there is considerable uncer-
tainty associated with that forecast.
The company, in accordance with its energy sales forecasts, has not put
forth a particularly aggressive generation expansion plan; and, at least over
the next ten years, will lean more heavily on purchased power to meet in-
creased energy requirements.
It is well to note that the company must devote much of its attention,
during this period of essentially stable energy sales, to the important
relatively near term objectives of reducing its peak loads, improving the
system load factor, maintaining a dated underground distribution system and
upgrading a heavily strained transmission system.
These efforts will continue to compete for the corporate dollar in
general and the R&D dollar in particular.
Finally, we might consider a possible future situation where Con Edison
must choose between (1) continuing the operation of in-City generating facil-
ities using only solvent refined coal as a fuel and (2) constructing new
out-of-City coal fired facilities.
The economic choice in 1985 (assuming the liquefaction technology had
been demonstrated) could look something like the following:
Electric Energy Costs - 1985
New Out-of-City
Coal Facility (Mills/kWh)
Capital Costs 29
O&M 8
Fuel 23
60
Continued In-City Generation
Using Liquefied Coal (Mills/kWh)
5
59
64
469
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synthetic fuels and oil shale
These figures (my own guesses) indicate that the company, in 1985,
would find it more economical to rely on a new out-of-City coal-fired facil-
ity than to burn liquefied coal in existing in-City plants -- even if there
were no capital costs involved in modifying or modernizing the existing
facility.
If we now escalate coal costs at 7.6 percent per year and all other
costs, including liquefied coal, at 5 percent per year, we would have the
following cost picture in the year 2000:
Electric Energy Costs - 2000
New Out-of-City Continued In-City Generation
Coal Facility (Mills/kWh) Using Liquefied Coal (Mills/kWh)
Capital Costs 60
O&M 17 10
Fuel 69 123
146 133
These figures suggest that, by the year 2000, the use of liquefied coal
for continued in-City generation would be the economic choice, but only if
the capital costs required to upgrade the in-City facility are less than
about 20 percent of the capital cost of a new facility.
In-City generation might have a larger edge if much higher transmission
costs, perhaps for a DC system, were associated with a new increment of
out-of-City generation. The important conclusion, however, is that, given
presumably reasonable fuel cost trends, a coal liquefaction technology, if
successfully pursued, could eventually provide Con Edison with an economic
option to out-of-City generation.
These overviews show us that Con Edison relies on imported oil to fuel
90 percent of its capacity and that three-fourths of that capacity is located
within the city.
The company, as evidenced by its long range plans, is headed towards a
continued heavy reliance on oil and on an increasing dependence on out-of-
City generation. Conventional technologies offer little or no hope of
diminishing the company's dependence on oil, nor do they offer a reasonable
prospect for locating very much new capacity in the City.
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Statement of Dr David Stricos
New technologies, including the fuel cell and coal conversion techno-
logies, can only begin to alter these trends in the 1990's and will have no
major impact on the Con Edison system much before the year 2000.
Among the coal converison technologies, coal liquefaction appears to be
at least as promising as coal gasification, and is a logical choice for
electric utility support. Among the coal liquefaction processes being devel-
oped, the H-Coal, Exxon Donor Solvent and Solvent Refined Coal processes are
at roughly comparable stages of development.
At this point, there are compelling reasons for the company to support
each of these advanced technologies.
Con Edison's interest in coal liquefaction is based not on expected
sales growth but on the need to provide for itself possible options to the
continued dependence on oil and to the growing reliance on out-of-City gen-
eration.
The purpose of the coal liquefaction research now under consideration
is to demonstrate the technology at commercial scale by the 1990's. If the
economics are then favorable, that is if the cost of liquefied coal is about
equal to that of imported oil, a coal liquefaction industry would be expected
to develop, and Con Edison would be expected to avail itself of the product.
If, on the other hand, liquefied coal continues to cost more than
imported oil, there would appear to be no way short of a federal subsidy, or
some novel cost sharing plan, by which a coal liquefaction industry could
ever develop.
Since we cannot now reliably predict that oil and liquefied coal will
be competitive, we cannot now be certain that Con Edison will benefit sub-
stantially from the successful demonstration of a coal liquefaction tech-
nology.
The corollar , of course, is that if the technology is not pursued, we
would lose a option that might have proven extremely valuable.
Another item that must be considered is the final use to which the end
products of coal conversion will be put. It is conceivable that the oil or
gas produced from coal might find higher market priorities than the boiling
of water to produce electricity.
A critical need for gas as a home heating fuel or the ability of the
petrochemical industry to make use of higher cost feedstocks in a particular
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synthetic fuels and oil shale
process might induce the federal government to redirect commercial utili-
zation of the products -- after the electric utility companies have financed
much of the research.
The ultimate fate of coal conversion processes, particularly as they
relate to Con Edison, could be affected also be developments in other unre-
lated technologies. The development of floating nuclear power plants, the
exploitation of offshore oil and gas reserves, changes in environmental
requirements or improvements in pollution abatement equipment could eliminate
or at least diminish the need for a coal conversion technology. Again,
however, developments in these areas can not be assured.
It seems to me that the key word in this or any other assessment of
coal liquefaction R&D has to be "uncertainty". We cannot be certain that a
given liquefaction process will operate successfully at full scale, and there
is considerable uncertainty associated with any of today's predictions of
product cost or date of commercial availability.
The same uncertainties, of course, apply to potential alternative
technologies to coal liquefaction. There is much uncertainty in our longer
range forecasts of energy sales, oil costs and the like, and we can only
feebly predict future environmental requirements.
One lesson here, I think, is that we ought to continue our efforts to
obtain the best possible long range forecasts, in spite of the difficulties
involved, because those forecasts have an important influence on decisions
that must be made now.
Overall, I conclude that coal liquefaction R&D is a sound area for
future research by New York State's utilities, and I endorse their ongoing
preliminary efforts to identify processes suitable for support during the
demonstration phase.
Coal liquefaction may never be commercially implemented since the cost
of imported oil is and may well continue to be too low to make coal lique-
faction commercially viable.
However, the successful demonstration of a coal liquefaction process
would provide the nation and our electric utility companies with what might
prove to be a most important and valuable option for the future.
That concludes my presentation.
DR. REZNEK: Thank you.
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Statement of Dr David Stricos
QUESTIONS AND REMARKS
DR. REZNEK: We heard testimony yesterday that New York, with the highest priced
electricity in the country, is the area where it pays to do solar heating
right now. Also, if there is an archetypical city where there is an in-town
power plant and a source of trash, it's New York. Is Con Ed investing in
either solar heating or the use of municipal waste?
DR. STRICOS: Yes, they are in both, but aren't very active. We have about 350
different research projects supplied by our companies and Con Edison does
have a rather vigorous R&D program that amounts to about $20 million
annually.
They have begun a number of efforts in the use of solid waste, but of
course New York City does have about 20,000 tons of solid waste per day. I
personnally have become a little disenchanted with it because of the frus-
tration I have felt.
I worked with the company and with others in trying to plan for a
sizable use of refuse within the city. It is a frustrating problem, very
difficult to implement because of all the different parties that must be
brought together to make it happen -- from the environmental requirements
within the city, from the city planners themselves, the citizens who don't
want garbage trucks running down the streets -- so I think it is difficult
and frustrating to try to make it happen.
Also, as I look at it I see it as limited in scope to this extent.
Just the numbers themselves when you take all the waste and convert it all to
energy, you end up with something in the neighborhood of 5 to 10 percent of
the city's needs.
I don't scoff at that and I do think it is important, but it is limited
to that extent; whereas, these other technologies of liquefaction at least
have the potential for meeting a significant part of their needs. But
solar -- I won't go into too deeply — you must have heard of the abortive
Wind System of New York City. It was just a fiasco from the word go. It was
not a good system and there were all sorts of problems with it, but the
company has begun some serious work in installing solar heaters -- solar hot
water heaters. There are a number of installations around the city. They
are active.
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synthetic fuels and oil shale
Statewide, I think as far as our Commission is concerned, we find our
particular role, an important role for us, only partly to promote the techno-
logy, but rather to see that if and when solar energy technologies grow in
disperse fashion, that they grow in a manner that is compatible with the
existing system and that the existing system promotes responsible growth for
the solar facilities.
We are trying to encourage individual use of solar in residences
through the election of rates which tend to encourage the individual cus-
tomers to provide their own -- supplement their own needs and also to the
point of allowing the customers to sell either the solar or wind energy back
to the utility company.
There is one point I may mention briefly of the solar is that we have
simultaneously put in place these rate tariffs, we try to promote the storage
systems in conjunction with the solar facilities for all the obvious reasons
regarding the utility's peak loads and trying to avoid future problems when
large numbers of solar installations come on line and draw power only at the
peak period so we try to foresee that problem.
DR. REZNEK: Are there further questions?
MR. HERHOLDT: Yes, I would like to ask this. Is the involvement of the New York
State Public Utility Commission -- did that come about through New York
State's investment in Con Ed? This is kind of off the subject, granted.
DR. STRICOS: No, not at all. Con Ed did recently sell two of its largest
plants — Indian Point-3 and Astoria-6 -- to the Power Authority of the State
of New York so that they are now state-owned facilities rather than being
owned by Con Edison.
MR. HERHOLDT: Right.
DR. STRICOS: The Public Service Commission has for a long time been the official
state body which regulates the electric utility companies in the state and
this has continued in spite of that sale of those plants to the state. The
plants that were sold to the state are no longer under our jurisdiction
because that is a state authority and we don't set rates for the state
authorities.
Our involvement with Con Ed, of course as a regulatory body we are
involved, but in the case of R&D beginning back in the early 70's we did very
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Statement of Mr Jackson Browning
aggressively get the companies involved in R&D setting targets of about 1
percent of revenues for R&D by the companies in ecouraging their partici-
pation in Federal programs and the state programs and insisting that they
each establish in the house their own R&D capabilities. It is part of our
job to monitor the several R&D efforts of the company.
DR. REZNEK: Do the utilities also obtain Federal R&D money?
DR. STRICOS: There are some federal funds. Whether this goes to utilities -- I
guess you could say that it goes to utilities. I can give you one predom-
inant example of our cooperation with the EPA. We are in the midst of a flue
gas desulfurization demonstration project, the scrubber process, and sup-
ported by the EPA. It was an EPA proposal and there are substantial funds
coming into the state in support of that demonstration project.
DR. REZNEK: I am only too aware of our project. Any other questions?
Thank you very much.
DR. STRICOS: Thank you.
DR. REZNEK: Our next witness is Mr. Jackson Browning. He is the Corporate
Director of Health, Safety and Environmental Affairs, Union Carbide Corpor-
ation.
STATEMENT OF MR. JACKSON BROWNING, CORPORATE DIRECTOR HEALTH, SAFETY AND
ENVIRONMENTAL AFFAIRS, UNION CARBIDE CORPORATION
MR. BROWNING: Good afternoon, I was not aware until I arrived here the extent of
the involvement of Union Carbide in the proceedings. As I have not checked
my points of view with others who have appeared before you, I'm not sure that
they are even consistent, but I hope the discussion will be helpful.
I am Jackson B. Browning, Corporate Director of Health, Safety and
Environment, Union Carbide Corporation. I welcome the opportunity to parti-
cipate in today's dialogue and commend you for undertaking an overview of the
role of government and its interface with those interested in environmental
protection and the development of non-nuclear technologies.
First I would like to comment on the role of government in these
matters, what it presently is and what it should be in the matter of envi-
ronmental and energy research. The Federal government today seems to be
addressing both energy and environment on the kind of either-or-basis that
promotes conflicts, instead of solutions.
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synthetic fuels and oil shale
We haven't solved our differences or even established the processes
needed to do so. We have institutionalized them by setting up separate
jurisdictions to handle each of what in the real world are interrelated
problems.
Not unnaturally, each of these institutions tries to bolster its posi-
tion — to get the edge for either environment or energy -- by cultivating
constituencies, Administration, Congress or electorate, to support its posi-
tion.
We seem, therefore, to have established mechanisms in government that
create and perpetuate environmental and energy differences, but no real
mechanism for resolving them.
As a result, we often see conflict instead of progress and gain of one
goal at the expense of another. Under these circumstances, conflicts between
the Department of Energy (DOE) and the Environmental Protection Agency (EPA)
seem inevitable as each tries in good conscience to carry out. separate man-
dates .
Although energy and environmental goals are strongly interrelated, the
government mechanisms we have set up to achieve them are not.
For example, conversion to our major non-nuclear energy resource, coal,
an essential energy goal, could be delayed or stopped in its tracks by cur-
rent Clean Air Act considerations.
I'm sure that both EPA and DOE agree that coal conversion is an es-
sential ingredient in a national energy plan and that the new no-signifi-
cant-deterioration and best-available-control-technology legislation can,
under current interpretations, determine how far and how fast we can move to
convert to coal.
But the agreement stops there. We have environmental specialists
pushing for the environmental goals; energy specialists pushing for energy
goals; and no apparent mechanism for taking the broader view that might pro-
ductively resolve these differences.
Obviously, the fault, if there is one, lies not with EPA or DOE but
with a legislative approach that departmentalizes and thus isolates the
achievement of twin goals of energy and environment. If Congress passes
energy legislation that doesn't give full consideration to environmental
impact or environmental legislation that doesn't fully consider energy im-
pact, progress in one area will inevitably come at the expense of the other.
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Statement of Mr Jackson Browning
The result will be continued conflicts of the kind that stifle needed
progress.
With a problem-solving mechanism in place, much of this conflict can be
resolved and the nation can get on with its business of producing and devel-
oping needed energy supplies and a clean environment, too.
We believe that a National Overview Commission on Energy and Environ-
ment could be a useful starting point for establishment of such a mechanism.
To get away from present institutionalized differences and to take a balanced
view of the twin problems, it would seem most productive to have that com-
mission composed of outstanding people who have neither environmental nor
energy axes to grind.
The recent National Coal Policy Project (NCPP) is evidence that we can
productively resolve energy and environmental conflicts, instead of perpet-
uating them.
As a first step in breaking down the adversary relationship between
those pursuing separate goals of energy and environment, it suggests an
approach that legislators and regulators might well consider. It's an ap-
proach that allows us to work toward solving problems — not enshrining
differences.
The second issue I would like to address is the need for government to
foster development and use of new energy and pollution-control technologies.
At Union Carbide, we support development of all alternatives to the use of
oil and gas, whether "hard" technologies, such as coal and nuclear, or "soft"
ones, such as wind and solar.
But we believe that the common thread in the development of any of
these and in concurrent protection of the environment is technological in-
novation.
We also have good reason to believe that today's legislation and regu-
lation tend to discourage needed innovation. The Clean Air Act of 1970 and
last year's amendments are a case in point.
They are based on forcing technology — not encouraging it. It was a
hold-their-feet-to-the-fire approach based on the non-sequitur that if the
nation can put a man on the moon, a company can control all types of emis-
sions whether technology exists or not.
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synthetic fuels and oil shale
Obviously, this approach ignores the fact that it took the resources of
an entire nation, not those of private industry, to put that man on the moon
and that it took complete suspension of cost-benefit considerations -- a
luxury that only tax-supported institutions can afford.
The Clean Air Act forces technology but does little or nothing to
encourage development of new technology, as a look at (k) (1) (A) of Section
III demonstrates. This section outlines provisions designed to "encourage
the use of an innovative technological system ...of continuous emission
reduction," which seem to do more road-blocking than encouraging.
The process is complicated and time-consuming and the decision highly
discretionary. The EPA Administrator may, not shall, grant a waiver of New
Source Performance Standards during tryout of a new technology.
He may do so only with consent of the governor of the state involved.
And he may do it if after notice and opportunity for public hearing, he
determines a number of things.
You have to prove to him that the proposed system has not been ade-
quately demonstrated; that it will operate effectively; that it will achieve
greater continuous emission reduction than required under standards that
would otherwise apply or that it would achieve at least equivalent reduction
at lower cost. And that's only a small part of what the applicant has to
demonstrate or prove.
Instead of incentives for technological innovation, (k) (1) (A) is
actually a long list of hurdles with no assurance that you will actually be
able to try your new technology when you reach the end of the obstacle
course. Remember, the Administrator doesn't have to grant the variance if
you meet all these conditions. He may grant it if he wants to.
It's no wonder that the Air Pollution Task Force of the National Coal
Policy Project concluded that "industry does not have sufficient incentive
under present legislation to attempt the implementation of new pollution
control technologies which may be more effective or less costly than proven
technologies."
As the task force points out, under current legislation, the company is
required to retrofit if the new technology fails to achieve NSPS. "As a
result," it concludes, "the company is likely to pay more because it tried
new technology than if it had simply used proven technology to meet NSPS."
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Statement of Mr Jackson Browning
For industries interested in achieving required pollution control at
lower cost and for environmentalists interested in achieving improved pollu-
tion control, the Clean Air Act seems to offer little help.
Obviously, a change is needed and the National Coal Policy task force
suggests one possibility: promote development of better and less costly
control technologies by granting EPA authority to allow a limited number of
exceptions from NSPS and Best Available Control Technology requirement of the
Act, but not from compliance with National Ambient Air Quality Standards. It
further suggests that only technologies with "a reasonable chance of success"
qualify for this variance.
Just as we have made a national commitment to cleaning up our environ-
ment and are about to make one to developing non-nuclear fuel resources, we
now need a firm commitment to encouraging development and use of new tech-
nologies that will do both jobs as well, if not better, than today's "proven"
technologies, and that will do so at the lowest possible cost to consumers
and taxpayers.
What we seem to have at the present time is a regulatory approach to
energy and environment that seeks to force new technologies, but fails to
encourage them; that acknowledges the relationship between energy and en-
vironmental goals, but fails to address it; and that gives each piece of the
interrelated action to separate and independent agencies, but provides no
real mechanism to resolve differences between them.
The result for corporations, like Union Carbide, with a serious com-
mitment to both energy and environment, is conflicting signals from Washing-
ton that make it more difficult and more costly to get on with the job.
When it comes to energy and environment, the nation can't afford con-
fusing directions or the present policy of institutionalizing our differ-
ences. Both legislation and regulation need to be written and administered
with the realization that energy and environment are part of the same organic
system. What you do to one element affects the other.
Thank you.
DR. REZNEK: Thank you.
Are there questions or comments?
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synthetic fuels and oil shale
QUESTIONS AND REMARKS
DR. REZNEK: Your theme was one that I have thought about and spent a great deal of
time working on. One fact that you forgot to mention is that, the waiver is
for a maximum of 7 years, after which time you must retrofit. You did men-
tion retrofit, however.
The question of how to bring about a structure, be it Federal or non-
Federal, which actually produces an on-going improvement of pollution con-
trols in an energy system is a subject that has bothered me for quite some
time. The regulatory approach of the Clean Air Act is one way to do it.
I am glad to hear a representative of industry suggest that perhaps the
nature of that Federal or non-Federal structure is a true industry concern as
is the development of public policy on how to advance pollution controls
simultaneously with energy development. I would just like to add my en-
dorsement of your effort and encourage you to continue it in whatever public
arena you can and to work to establish a public policy which will recognize
industry's legitimate role and support, foster and reward the legitimate
improvements in that area.
MR. BROWNING: I might just respond briefly to that. The thing that we have most
difficulty with, and this is not a critisim -- I'm partly public, too -- but
in the public arena it is dealing with this matter of risk and we do it in
corporate research when we set out to design a process for making product A,
we usually find that we have to make some compromise or trade-off in the raw
materials that we use and the side products that we make and energy consump-
tion and the like.
We're used to trading these things off — one against the other. When
we get into the arena of energy and environment it is hard for the public
bodies to assume the risk or run some of the risks that the process might in
the initial stages have more detrimental environmental effects than one would
like.
Obviously, we can't afford to accept the continuing increase in envi-
ronmental risks. We have to go the other way, turn the corner at some point,
but to get there, I would suggest to you that there needs to be some mecha-
nism for permitting acceptable risks in these early developmental stages.
That is really the burden of my message.
DR. REZNEK: Yes. Mr. Siek.
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Statement of Mr Jackson Browning
MR. SIEK: What you are suggesting I think most of us have thought of, and have
sympathy with industry, but it reminds me of the old Atomic Energy Commission
where regulatory and promotion were in the same agency.
MR. BROWNING: Yes.
MR. SIEK: With the Atomic Energy Commission, the JCAE which tried to look at both
sides of regulation and promotion failed miserably. I'm not too sure how you
accomplish the goals that you are proposing. I understand them, but the
system is such that it is difficult to find a method of how to separate the
regulatory from the promotion or at least temper the two and bring them
together, but it is an excellent point.
MR. BROWNING: If it were an easy solution, I would have written that paper. I do
think that an understanding of this in all arenas is necessary from the
legislative side, the regulatory side, industry and then the various consti-
tuencies the environmentalists, the energy people who want energy at any
price. They start from there and then begin to compromise. All of these
people have to understand the problems involved in reaching that solution.
Some of the mechanisms we've had might have worked better had we under-
stood how to make them work. We're not going to get to it, I don't believe,
by coming up with a magic organizational solution. It is going to have to
come through an understanding of the goals we want to achieve and a dedica-
tion on the part of people on both sides of the regulatory table towards
moving us in that direction.
DR.REZNEK: In the current system, risk is assumed entirely by industry. If a
company initiates development of a new process with the hope that this new
process would represent an environmental advancement, but, at the end of its
waiver, the new process fails utterly, which is to say, even conventional
end-of-the-pipe retrofit systems can't be made to work, the company would
have to take the loss. The possiblity of such a loss has a chilling effect
on innovation of whole processes.
Perhaps there should be some system where the risk is shared or the
consequences of failure are mitigated in some way. For example, the facility
could be allowed to continue operating on the condition that it pay a fine
representing the total operating expenses, including prorated capital costs,
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synthetic fuels and oil shale
for a pollution system equavalent to BAT. This would eliminate any compet-
itive advantage in failure. And, of course, there would have to be some
provision for eventually achieving the desired pollution reduction.
If a proposal for this sort of system were presented by an industry
spokesman, perhaps it would serve to unblock the current situation.
MR. BROWNING: Well, to carry this in just a little more detail with the suggestion
of the National Coal Policy Council, and I didn't outline the whole proposal
here, it was very much along that line.
What we were saying in effect was that the industry would have to
demonstrate to the EPA administrator the reasonableness of the proposition
and the fact that it might very well have a chance for success. It would
have to achieve 80 percent of the NSPS before qualifying for any kind of
forgiveness.
Once it got to that level and also met in the Ambient Air Quality
Standards — you always have to be within that -- there was a schedule of
fines to be paid so that you wouldn't get off any cheaper than you would have
if you hadn't gone with the regular approving technology, but. you could use
such things as high stacks for example, or cleaner coal, things of this
nature to make up for your deficiency, but you're assuming you are in good
faith and someone who has really tried to advance technology with the admin-
istrator's agreement who has a good shot at it, then under those circum-
stances you don't penalize this industry by having them go back and retrofit
and you might end up with an improvement in environmental control.
DR. REZNEK: Are there any other questions?
DR. REZNEK: Thank you very much.
MR. BROWNING: Thank you.
DR. REZNEK: That concludes the hearings for the day unless there is any other
witness.
DR. REZNEK: Thank you very much. As I said, the record is open for three weeks.
(Whereupon, at 4:20 p.m. the hearings were concluded.)
482
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