Chairman Markey, Ranking Member Sensenbrenner, and Members of the Committee, thank you for inviting me to testify today at this very important hearing on the Role of Coal in the New Energy Age. My name is Mike Carey and I am President of the Ohio Coal Association. In addition, I also serve on the National Coal Council, an advisory Committee for the Secretary of Energy on coal issues.

I'd like to take a moment to thank my fellow witnesses from Arch Coal and Peabody Energy for their continued commitment to coal. Working with these two organizations through various initiatives and trade groups is always a pleasure.

Rio Tinto, on the other hand, has been divesting themselves of their domestic coal operations for years now and I don't believe they represent the future of our coal industry, although they probably represent the desired outcome of the Obama Administration's coal policies.

Given high levels of recoverable coal reserves and an increasing demand for energy, especially in developing nations where low-cost electricity is essential, coal's future global success is assured. However, coal mining and use in the United States is severely jeopardized by a war on coal waged through the legislative process and unprecedented regulatory actions. Our nation has been a leader in coal production, cleanliness and safety – all of which is threatened by actions in the name of climate change.

I. Coal Reserves

With 826 billion tons of proven, recoverable coal reserves worldwide, humanity has enough coal to last the world over 130 years at current rates of production and consumption.¹ Seventy countries have access to recoverable coal reserves, and many of these are emerging market economies desperate for cheap, consistent baseload energy.

In the United States, Energy Information Administration (EIA) data shows at least 261.5 billion tons of reserves recoverable using existing mining techniques and an additional of 226.1 billion tons in our demonstrated reserve base. Our recoverable reserves are almost 1/3 of the world's total supply – we have more coal than Saudi has oil and gas.²

Source: World Coal Institute

II. Increasing Energy Demand

According to the EIA and International Energy Agency, global energy demand is expected to rise 44% over the next twenty years, most of which will be in developing nations.

• In 2006, the Organization for Economic Co-operation and Development (OECD) countries accounted for 51% of global energy consumption.
• OECD countries' energy consumption will drop to 41% of total global energy consumption by 2030.

The five largest users of coal – China, USA, India, Japan and Russia – account for 72% of global coal use.³ I'd like to focus on two of these countries for a brief minute, as they have both summarily rejected the idea of binding carbon emissions reductions and the phasing-out of coal use.

Instead, both China and India have called for reductions in per capita carbon intensity, an admission that their carbon dioxide emissions will undoubtedly increase as their population rapidly expands. U.S. domestic climate legislation attempting to mitigate the global atmospheric concentrations of carbon dioxide will undoubtedly fail as a result.

Here are some select statistics on projected energy demand in relation to coal:

• China has 115 billion tons of recoverable coal reserves, less than 14% of the world's total.
o Chinese coal production increased 10% in 2008 to 1.414 billion tons.
o Chinese coal consumption increased 6.8% in 2008 to 1.406 billion tons.
• India has 59 billion tons of recoverable coal reserves, about 7% of the world's total.
o Indian coal production increased 7% in 2008 to 194.3 million tons.
o Indian coal consumption increased 8.4% in 2008 to 231.4 million tons.
• China and India accounted for 10% of the world’s total energy consumption in 1990, but in 2006 their combined share grew to 19%.
o Their energy demands are expected to grow to 28% of the total world energy consumption in 2030.
• The U.S. consumed 21% of the world's energy in 2006.
o By 2030, U.S. energy demand will only comprise 17% of the world's total.
• Coal has been the fastest-growing fuel source for the past 6 years.
o From 2007 to 2008, coal consumption increased 3.1%.
o Coal use is expected to increase by an average 1.7% per year until 2030, accounting for 28% of the total world energy consumption in 2030.

China and India have neither enough domestic oil nor natural gas to power their nations for more than a few months. With no other domestic resource able to provide substantial baseload generation, coal figures prominently into these highly-populated nations' strategic energy plans. They have the opportunity to prevent a reliance on foreign energy sources, and they are seizing the moment by investing in coal. China is constructing a new coal-fired power plant every week, fueled by coal produced in an increasing number of domestic mines. In 2008, China produced more coal than it consumed for the first time. While India's expansion isn't nearly as pronounced, it still dwarfs the U.S. investment rate in coal.

The market for coal and low-cost electricity is there; the question is whether Congress and this Administration allow the United States to be the leader within the global coal market.

III. Regulatory Assault on Coal

Despite then-Senator Obama's commitment to coal on the campaign trail and his pledge on no middle class tax increases, his Administration's actions are greatly hurting the coal industry and he is imposing the Obama Energy Tax by administrative fiat. The Role for Coal in the New Energy Age is greatly hampered by the regulatory assault waged by the Obama Administration and in particular, the Environmental Protection Agency. Through a diverse set of new rules improperly promulgated using the Clean Air Act and other statutes, the domestic coal industry is facing challenges that make it nearly impossible to see a successful domestic future. While President Obama may not directly raise taxes, his Administration is implementing policies designed to increase the energy costs for all American families. This is the Obama Energy Tax, and we are in the process of calculating how much President Obama is costing American families each month in higher energy costs. The following is a list of the current Administration's recent regulations assaulting coal, some of which I will discuss further:

• Endangerment Finding
• Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule under the Clean Air Act
• Reconsideration of “EPA’s Interpretation of Regulations that Determine Pollutants Covered by Federal Prevention of Significant Deterioration (PSD) Permit Program”
• Mandatory Greenhouse Gas Reporting Rule
• Proposed rule for Federal Requirements Under the Underground Injection Control (UIC) Program for Carbon Dioxide (CO2) Geologic Sequestration (GS) Wells
• Memorandum: Improving EPA Review of Appalachian Surface Coal Mining Operations Under the Clean Water Act, National Environmental Policy Act, and the Environmental Justice Executive Order

a) Endangerment Finding

First, I'd like to talk about the Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act, more commonly known as the "Endangerment Finding." This document permits the regulation of greenhouse gases under the Clean Air Act as they endanger both public health and public welfare. The Ohio Coal Association is challenging this Endangerment Finding in court, and we will win. We believe that the science underpinning the Endangerment Finding is questionable. In addition, EPA neglected required parts of the economic analysis that make the Findings substantially incomplete.

This document explicitly says, "The Administrator has determined that the body of scientific evidence compellingly supports this finding. The major assessments by the U.S. Global Climate Research Program (USGCRP), the [United Nations] Intergovernmental Panel on Climate Change (IPCC), and the National Research Council (NRC) serve as the primary scientific basis supporting the Administrator’s endangerment finding."⁴ These three sources all have corrupted data as a result of calculated political decisions what to include in public reports, but I'd like to focus on what we have learned about the UN IPCC since November. This is particularly important, as the IPCC's Fourth Assessment Report (AR4) is referenced 48 times in the Endangerment Finding and 395 times in the accompanying Technical Support Document.

Global warming alarmists say that Climategate does not alter the science behind global warming. I disagree. They have revealed a systematic breakdown of the scientific process, leading to the conclusion that the work done by the UN IPCC, the Hadley CRU and the British MET office should not be considered as true, unbiased science. Climategate has revealed a calculated suppression and discrediting of dissenting viewpoints, the conscious decision to selectively use non peer-reviewed science in support of a predetermined argument, political oppression interfering with science, corrupt data sets used for climate projections which cannot be replicated, and deliberate intent to profit off of international climate accord and other restrictions on fossil energy.

But this academic bias isn't just limited to the involved Climategate scientists; we in the coal industry see it on a daily basis from environmentalists who seize every opportunity to challenge our operations and other facets of coal use. We maintain the right to not accept the scientific theory of anthropogenic global warming because real world observations don't match up to climate models. Since James Hansen first raised the climate change alarm in 1988, climate models have been consistently wrong in their projections.

Only 52 scientists signed the UN IPCC Fourth Assessment Report. With my testimony, I have attached multiple petitions from scientists refuting the theory of anthropogenic global warming.

• 31,486 American scientists, including 9,029 with PhDs, have signed onto a petition that states, "There is no convincing scientific evidence that human release of carbon dioxide, methane, or other greenhouse gasses is causing or will, in the foreseeable future, cause catastrophic heating of the Earth's atmosphere and disruption of the Earth's climate."⁵
• Over 1,100 scientists in 40 countries have signed the Manhattan Declaration on Climate Change, which explicitly states that, "current plans to restrict anthropogenic CO2 emissions are a dangerous misallocation of intellectual capital and resources that should be dedicated to solving humanity’s real and serious problems. That there is no convincing evidence that CO2 emissions from modern industrial activity has in the past, is now, or will in the future cause catastrophic climate change."⁶

I realize that many Members of Congress and the Administration continue to say that nothing was wrong with the IPCC report, but it is important to note what we have learned since November:

• The underlying data sets cannot be replicated;
• There was a systematic attempt to keep climate skeptics out of peer-reviewed journals; and.
• The authors and reviewers of the IPCC come from the same incestuous pool of researchers.

Furthermore, we have learned that there is no "scientific consensus" behind the theory of anthropogenic global warming.

b) Clean Air Act

The Clean Air Act is an unsuitable mechanism for regulating greenhouse gases and will greatly jeopardize our nation's supply of low-cost electricity and our manufacturing base. It allows for a plethora of dangerous regulations despite statements from the Clean Air Act Amendments of 1990's authors, such as Dean of the House John Dingell, who said they intended for greenhouse gases not to be covered. The Obama White House is encouraging EPA to use the laws in unintended ways that will accomplish nothing by way of reducing atmospheric concentrations of GHGs.

The additional permitting process proposed for New Sources and existing sources requiring upgrades is incredibly expensive and delays construction and development for years. It is just another permit for environmentalists to challenge in the courts, amounting to years of time wasted and hundreds of millions of dollars used for legal expenses that should instead be allocated for wages and economic development. Required installation of Maximum Available Control Technology (MACT) without cost-benefit analysis could force power plants to halt construction or even shut down, leaving millions of Americans without access to low-cost electricity in a time of economic downturn. National Ambient Air Quality Standards (NAAQS) set for greenhouse gases, which unlike criteria pollutants can travel across the globe, will be impossible to meet and could result in nonattainment areas losing their Federal highway dollars as the law states. Other provisions of the Clean Air Act are equally unsuitable for GHG regulation and don't allow for market mechanisms to reduce cost and increase efficiency.

c) Clean Water Act

Another assault on the domestic coal industry is coming through new interpretations of, and regulations through, the Clean Water Act. On March 22, 2010, EPA published a Federal Register notice with a November deadline to solicit input on "what considerations EPA should take into account when deciding how to address listing of waters as threatened or impaired for ocean acidification under the 303(d) program. . . . If waters were determined to be threatened or impaired for ocean acidification under 303(d), what issues should EPA and states take into account when considering how to address TMDL development for such waters?” The Center for Biological Diversity, along with other environmentalists, are pushing for to find waters "impaired" by acidification specifically caused by GHG emissions and require first-time total maximum daily load ("TMDL") regulations that could include harsh carbon dioxide curbs. This will result in a roundabout way to further regulate coal in an attempt to change the pH of the Atlantic Ocean. A fool's errand.

In addition, I heard Rep. Nick Rahall defending the Administration after another Member had accused the Administration of waging a regulatory war on coal.⁷ The very next day, EPA announced a veto of a surface coal mine permit which had already received approval from the Army Corps of Engineers. While the Clean Water Act gives agency officials the ability to veto proposed permits for surface coal mining, this is the first time in history they have used this authority to block an existing permit. This comes after the Administration announced a temporary moratorium on surface coal mining when they took office.
Last week, EPA released Clean Water Act surface mining guidance for Appalachia. While the Administrator's public comments and the Agency's press releases tout significant environmental benefits, this guidance that goes into effect immediately does not rely on peer-reviewed science, applies retroactively to permits under consideration and ignores significant amount of field work showing additional factors affecting water conductivity levels. In short, this egregious mis-use of science to promulgate regulations effective immediately opens the floodgate to new lawsuits halting surface mining. The accompanying non-peer-reviewed "science" documents even links negative environmental effects to slurries and deep mining, a foreshadowing of a potential attempt to extend unfounded restrictions on surface coal mining to underground coal and minerals mining.

d) Endangered Species Act

While Interior Secretary Ken Salazar announced that his Agency would not invoke the Endangered Species Act (ESA) to restrict greenhouse gases threatening the polar bear and its habitat, he acknowledged that the greatest threat to the polar bear "is the melting of Arctic sea ice due to climate change." In fact, data from the U.S. National Snow and Ice Data Center in Colorado shows that Arctic ice is approaching long-term average levels for the first time in years.⁸ In addition, the annual summer Arctic ice melt has started later in the calendar year than any time in the NSICD's 31 year history. The UN IPCC models, which predict an ice-free Arctic summer in 2013, cannot account for these real-world empirical observations.

Furthermore, Harry Flaherty, Chair of the Nunavut Wildlife Management Board in Canada, says the bear population in the region has doubled in the past 10 years. Dr. Mitchell Taylor, a biologist who has been researching polar bear populations in Canada’s Nunavut Territory for 35 years, agrees. ⁹

The Interior Department has not given up trying to use ESA to limit coal use: in response to a lawsuit by environmentalists, they announced a study to assess whether the American pika should be listed as threatened because of climate change. In addition, the National Oceanic and Atmospheric Administration (NOAA) is examining whether ringed and bearded seals are endangered by human-caused climate change. In Ohio, mines have faced significant delays and rejected permits due to the declining population of the Indiana bat, a ¼ oz chestnut-colored bat that has been listed as an Endangered Species since 1967. Not once has an Ohio mine in operation discovered any Indiana bats.

Using the Endangered Species Act for climate change action would make the ill-equipped Fish and Wildlife Service (FWS) responsible for policing emissions. I am uncertain as to how FWS could use the ESA to limit greenhouse gases and coal use, but I caution against blaming something as vague as natural variations in climate or evolution for the degradation of a species' habitat. Using the ESA, which requires no analysis of economic consequences, is an improper way to force additional restrictions on the coal and fossil fuel industries.

e) Mandatory Reporting of Greenhouse Gases Rule

To highlight the complexity of regulations going into effect January 2, 2011, less than 9 months away, we should look at the Mandatory GHG Reporting Rule. It has been well over two years since this rule was mandated by law, but EPA still has not finalized the rule for Underground Coal Mines and Suppliers of Coal. While other sources of greenhouse gases must start reporting their emissions, EPA could not adequately respond to the coal industry's concerns over a simple reporting requirement.
EPA's proposed rule wanted coal mining operations to account for their product's carbon content, yet actual emitters are also required to report. This is a blatant attempt to overinflate statistics by double-counting. EPA also proposed a "once-in, always-in" provision that would require even closed coal mines to report on an annual basis, penalizing the coal industry for no action or operation.

Furthermore, EPA adds the significant burden of continual greenhouse gas reporting when this information is already available to the Agency. The Energy Information Agency receives coal data from every power plant in the country generating more than 1 megawatt of electricity. This data includes Btu value, sulfur content and ash content. With heating value conversion to carbon content already established by EPA, this data is already calculable. There is absolutely no reason to add the significant costs already upon the coal industry by forcing expensive monitoring equipment and the creation of non-safety and non-mining personnel, yet EPA chooses to continue with their regulatory assault on every aspect of coal production.

IV. Legislative War on Coal

a) American Clean Energy and Security Act

This Congress is also pursuing policies that endanger the future of coal, low-cost electricity and our nation's economic livelihood. Climate change legislation such as the Waxman-Markey bill destroys the coal industry. It is a misguided attempt to micromanage our country's energy supply. During the floor debate last year, we heard about the legislation's vast wealth transfers, backroom deals with special interests, economic disparities based on regional differences, inability to actually reduce global atmospheric concentrations according to EPA Administrator Jackson and DOE Secretary Chu, jobs lost and lack of provisions that help with long-term adaptation to climate change.

In an attempt to buy off the coal industry, the legislation allocates $10 billion dollars towards carbon capture and sequestration (CCS), but misses the mark in two regards. First, the legislation ignores the realistic timeline of technological development. The legislation requires emissions reductions starting in 2012 and further incorporates restrictive performance standards on coal-fired power plants starting in 2020, completely ignoring what developers of CCS technology are saying: that CCS is at least 15-20 years away from true commercial deployment. The United States Congress simply cannot dictate the timeline of technological development.

Second, the Bill calls merely for a study to report back to Congress with recommendations on issues such as CCS liability, permitting and other environmental considerations. We've seen these mandated studies before in previous laws. Congress will neither examine the report nor act on it. Despite CRS and GAO reports outlining the necessary steps to take, environmentalists have successfully prevented their inclusion into legislative proposals in order to ensure coal's demise. The way the CCS program in the Waxman-Markey bill is structured actually encourages massive fuel-switching to the more expensive natural gas before CCS can be deployed on coal-fired power plants. But even then, the lack of regulatory, legal and liability frameworks will prevent commercial deployment of the technology.

b) Cap-and-dividend

Proposals such as the Cantwell-Collins CLEAR Act are as much a death knell for the coal industry as the ACES bill. Instead of forcing polluters to pay for emissions, this legislative draft makes the coal producer pay for the carbon content of their product without considering the end-use of the coal.

As Members may not be aware, coal is used in far more than just electricity generation. Users of coal include metallurgical refineries, paper manufacturers, the chemical industry and the pharmaceutical industry. Coal byproducts are used to manufacture chemicals such as creosote oil, naphthalene, phenol and benzene. Coal byproducts are also found in aspirin, soaps, solvents, dyes and plastics. Specialized, high-tech products that use coal as an essential ingredient include silicon metal, carbon fiber and activated carbon used in air and water purification as well as kidney dialysis machines. Cap-and-dividend will undoubtedly make these products significantly more expensive.

The CLEAR Act's concept of returning revenues generated to ratepayers is novel; however, in its current form we see the same regional disparities that penalizing Midwestern states such as Ohio, Indiana, West Virginia, Missouri and Kentucky. The legislation states that only ¾ of generated revenues is returned on a per-capita basis, meaning those who purchase coal-fired electricity will indirectly be subsidizing the electricity bills of states like Oregon or Massachusetts that use little coal for electricity. We cannot accept this sort of proposal due to the huge burden borne by the coal mining industry without being able to reimburse our customers and consumers of our products in fair value. I'd caution Senators Kerry, Graham and Lieberman from using such a mechanism in their forthcoming proposal.

V. Industry Perspective on the Role For Coal

Domestic coal production needs the support of Congress and the Administration. We must increase our utilization of coal to encourage low-cost electricity, alleviating problems associated with our current recession and aiding in the rebuilding of our nation's manufacturing base. Coal mining provides well-above-average salaries, provides countless billions in revenues for local governments and gives towns based around the coal industry a sense of community. In Ohio, our coal workers make just over $64,000 on average¹⁰, approximately $25,000 more than the State average annual income. It is estimated that Ohio coal companies spend $300 million annually for taxes and fees to local and state agencies, providing crucial revenue for schools and other public works projects.

Furthermore, during the debate over Waxman-Markey, much attention has been given to "American leadership." Our nation's proud history of coal use has given us unparalleled mining efficiency, safety mechanisms, environmental management, transportation systems and technological processes to use coal for a wide variety of purposes. We are the world leaders in the coal industry. However, many people are willing to sacrifice this in order to lead the world in renewable energy technologies. There is absolutely no reason we cannot lead in both coal and renewables. It is time to lead the world and export our knowledge and coal to developing foreign nations. We can help them prevent significant loss of life and minimize environmental impact by helping them develop the environmental permitting processes surrounding coal production. No legislative proposals are helping our domestic industry do so.

Climate change legislation supporters claim the mantle of "moral authority," touting the benefits of "saving the world for future generations." I encourage these people to stand back and take a broad view of where we are today. Over 1.6 billion people lack access to electricity and potable water. Opponents of coal use are the single largest detriment to developing nations and the billions of humans living in poverty.

International agreements, such as ones developed in Kyoto and Copenhagen, encourage the "civilized" world to pay poor nations not to develop in the same way that has made our nation the world's superpower.

When wind and solar power become cost-effective without massive taxpayer-funded subsidies in 15 or 20 years, these technologies will still be unable to meet the developing world's baseload energy demands. It is time to act now to help these people. We must encourage developing nations to use our low-cost coal to improve the quality of life of their citizens. It is a win-win situation for the U.S. and developing world: we make great strides in eliminating global poverty while simultaneously improving our own economic growth.

Despite recent events in West Virginia, the U.S. coal mining industry has the best safety record in the world. Mine Safety & Health Administration data shows 18 coal mining fatalities last year amongst 133,000 miners, an improvement of 63% from just three years earlier.¹¹ By contrast, the BBC estimates that 13 Chinese coal miners die every day.¹² Our safety record is largely due to combined national and state efforts to encourage innovative safety practices. The Ohio Coal Association recently collaborated with the Ohio state legislature to pass a new mine safety bill despite no fatalities in 5 years. Please see our attached summary of the legislation at the end of this testimony.

The industry is truly committed to improving mining safety and the lives of all our employees, and we will continue to invest in new safety equipment and explore new safety techniques. As we continue to improve our safety here in the U.S., we believe it is imperative to export our mining safety mechanisms and equipment to the 70 coal-producing nations that lack such advanced safeguards.

The coal industry knows what Congress and the Administration is doing. Every day our miners and support industry workers ask what we are doing to ensure their economic livelihood. These workers and communities won't soon forget the increased taxes and restrictions forced upon us.

Congressional and Administration support for clean coal can be a valuable export that will improve the safety and environmental impact of coal worldwide.

I thank you for this opportunity to testify. The coal industry will continue to oppose misguided climate change legislation and costly regulations that hurt not just our own nation, but the rest of the world as well. We stand by our principles and our country, as we always have and as we always will.

1. Energy Information Administration: http://www.eia.doe.gov/fuelcoal.html
2. "BP Statistical Review of World Energy: June 2009." BP Statistical Review of World Energy. BP, June 2009. <http://www.bp.com/statisticalreview>. The United States has 28.9% of the world's proved coal reserves. By contrast, Saudi Arabia has 21% of the total oil and 4.1% of natural gas. Coal is more abundant; the energy produced by our share of coal is significantly greater than Saudi Arabia's oil and gas.
3. http://www.worldcoal.org/coal/uses-of-coal/
4. Endangerment Finding, p.8-9
5. Global Warming Petition Project http://www.petitionproject.org/. The Petition Project was organized by a group of physicists and physical chemists who conduct scientific research at several American scientific institutions and is financed by non-tax deductible donations to the Petition Project from private individuals, many of whom are signers of the petition. The project has no financing whatever from industrial sources. Please see attached materials for the 12-page scientific assessment and accompanying petition that 31,486 American scientists have signed.
6. http://www.climatescienceinternational.org/index.php?option=com_content&task=view&id=37&Itemid=54
7. Subcommittee on Energy and Mineral Resources: Oversight Hearing on “The President's Fiscal Year 2011 budget requests for the Minerals Management Service, the Bureau of Land Management, the Office of Surface Mining Reclamation and Enforcement, the United States Geological Survey (excluding the water resources program), and the USDA Forest Service.” March 25, 2010. See archived video at http://resourcescommittee.house.gov/index.php?option=com_jcalpro&Itemid=27&extmode=view&extid=329
8. http://www.dailymail.co.uk/sciencetech/article-1263207/Increase-Arctic-ice-confounds-doomsayers.html
9. http://www.examiner.com/x-32936-Seminole-County-Environmental-News-Examiner~y2010m1d8-Canadas-growing-polar-bear-population-becoming-a-problem-locals-say
10. According to the National Mining Association. The average Ohio coal miner earns $64,479.
    http://www.nma.org/pdf/c_wages_state_industries.pdf. By contrast, the Bureau of Labor Statistics estimates that
    each nonsupervisory coal miner makes $56,836. However, this does not include shift managers and is a nation-wide estimate. http://www.bls.gov/oco/cg/cgs004.htm
11. http://www.msha.gov/MSHAINFO/FactSheets/MSHAFCT10.HTM
12. http://news.bbc.co.uk/2/hi/asia-pacific/7132017.stm