03/03/2014 03:30 PM Senate RESOURCES

          SCR 16-REQ GOV TO INVESTIGATE COAL RESOURCES                                                                      
                                                                                                                                
3:31:44 PM                                                                                                                    
CHAIR GIESSEL announced SCR 16 to be up for consideration.                                                                      
                                                                                                                                
BRUCE CAMPBELL, staff for Senator  Pete Kelly, sponsor of SCR 16,                                                               
explained that the resolution requests  the Governor to keep coal                                                               
in the dialogue.                                                                                                                
                                                                                                                                
3:33:05 PM                                                                                                                    
SENATOR FAIRCLOUGH joined the committee.                                                                                        
                                                                                                                                
MR. CAMPBELL said that Alaska  is blessed with vast quantities of                                                               
coal: trillions of  tons on the North Slope, billions  of tons in                                                               
the Interior, and  tens of billions of tons in  Cook Inlet. It is                                                               
some  of the  cleanest coal  on  the planet  and a  cheap way  to                                                               
create electricity.                                                                                                             
                                                                                                                                
3:33:50 PM                                                                                                                    
LORILEI SIMON,  Vice President,  External Affairs,  Usibelli Coal                                                               
Mine, said  Usibelli is  the only operating  coal mine  in Alaska                                                               
and supplies six  coal burning power plants.  They appreciate the                                                               
continued dialogue  of coal being part  of the energy mix  in the                                                               
state.                                                                                                                          
                                                                                                                                
She said legislators are considering  major policy initiatives on                                                               
energy  and  potential solutions  for  the  energy problems  that                                                               
Alaskans  face,  and coal  remains  one  of the  cheapest  energy                                                               
sources  in the  Interior. There  is an  opportunity for  coal to                                                               
expand  and have  a greater  presence  on the  Railbelt grid  and                                                               
other areas of Alaska, as well.                                                                                                 
                                                                                                                                
MS.  SIMON said  the  McDowell  Report that  came  out last  year                                                               
analyzes  the  energy  and  economic   impacts  of  coal  to  the                                                               
Interior. It focuses on the  Interior, because that is where coal                                                               
is used  in Alaska. Coal  is half the  cost of natural  gas, one-                                                               
third the cost  of naphtha and one-sixth the cost  of diesel. So,                                                               
without coal on  the grid the Interior ratepayers  would see more                                                               
than a $200 million annual increase in their energy rates.                                                                      
                                                                                                                                
SENATOR  MICCICHE  asked  what  that   increase  would  be  on  a                                                               
percentage basis.                                                                                                               
                                                                                                                                
MS.  SIMON  answered  about  20  percent. She  said  it  is  also                                                               
important to  understand how coal  impacts the  region's economy.                                                               
For  example,  in  2012  Usibelli  spent  $72  million  with  400                                                               
different  Alaskan businesses.  That's  577 Interior  jobs and  a                                                               
payroll of  about $44  million a year.  The McDowell  Report said                                                               
that would mean 692 jobs and $52 million in payroll statewide.                                                                  
                                                                                                                                
3:37:40 PM                                                                                                                    
SENATOR FRENCH asked how much coal is mined every year.                                                                         
                                                                                                                                
MS. SIMON replied  about 2 million tons per year;  this year they                                                               
will produce about 1.8 million. Half  stays in state for the coal                                                               
burning power  plants and  the other half  is exported  to Chili,                                                               
South Korea, and Japan.                                                                                                         
                                                                                                                                
SENATOR FRENCH asked how much coal is in the ground at Usibelli.                                                                
                                                                                                                                
MS. SIMON answered  hundreds of years of mining;  there are about                                                               
700 million tons of known reserves in Healy.                                                                                    
                                                                                                                                
SENATOR FRENCH asked  how much could be produced  there if Alaska                                                               
suddenly  tripled the  amount of  coal  it was  using. Could  the                                                               
Healy mine provide that coal?                                                                                                   
                                                                                                                                
MS. SIMON answered yes.                                                                                                         
                                                                                                                                
SENATOR FAIRCLOUGH asked if additives have  to be put in the coal                                                               
before  selling to  different folks.  She did  a tour  of a  coal                                                               
plant at  Eielson Air Force  Base and  was told that  the federal                                                               
government  was   requiring  treatment  of  coal   and  that  the                                                               
additives were actually driving the fuel costs up significantly.                                                                
                                                                                                                                
3:39:32 PM                                                                                                                    
MS. SIMON said  nothing is added at the mine;  probably the power                                                               
plants would be a better source of the information.                                                                             
                                                                                                                                
SENATOR BISHOP asked  if coal ash was being  trucked to Fairbanks                                                               
and used in blocks and concrete.                                                                                                
                                                                                                                                
MS.  SIMON answered  yes; coal  ash  is considered  a usable  by-                                                               
product and  a quality fill material.  Coal ash is used  in a lot                                                               
of the roads and parking lots in Fairbanks.                                                                                     
                                                                                                                                
3:40:29 PM                                                                                                                    
GENE  THERRIAULT,  Alaska   Energy  Authority  (AEA),  Fairbanks,                                                               
Alaska, explained that AEA prepared  the fiscal note on behalf of                                                               
the administration with  the thought that if  the resolution were                                                               
to  pass that  the direction  would  probably come  to AEA.  They                                                               
anticipate $75,000 at  a high level view, but the  wording in the                                                               
resolution  is  fairly  broad  and   that  could  be  updated  as                                                               
decisions are made.                                                                                                             
                                                                                                                                
Regarding  Senator Fairclough's  question  about additives,  it's                                                               
very  likely  she  remembered  that when  the  coal  is  actually                                                               
pulverized and combusted, in order  to meet federal air emissions                                                               
selected  catalytic reduction  (SCR)  or  selected non  catalytic                                                               
reduction (SNCR) agents  are injected into the flu  stream so the                                                               
particles that may impact PM2.5 or  whatnot could be taken out of                                                               
the exhaust stream.                                                                                                             
                                                                                                                                
CHAIR GIESSEL  asked if adding  the catalyst could be  termed the                                                               
"clean coal process."                                                                                                           
                                                                                                                                
MR. THERRIAULT  answered that he was  at the edge of  not knowing                                                               
what he  was talking about. With  the Healy Clean Coal  Plant the                                                               
method  of   combustion  and  the   temperatures  at   which  the                                                               
combustion took  place were  different. Some  of the  older power                                                               
plants have just the injection of  urea to help with reduction of                                                               
"socks and knocks."                                                                                                             
                                                                                                                                
SENATOR  FAIRCLOUGH asked  if a  Finance  Committee referral  had                                                               
been added to this bill.                                                                                                        
                                                                                                                                
CHAIR GIESSEL answered not that she knew of.                                                                                    
                                                                                                                                
SENATOR  BISHOP asked  if AEA  had the  in-house expertise  to do                                                               
this or would they have to go to a third party.                                                                                 
                                                                                                                                
MR. THERRIAULT replied that it would  be a combination of some of                                                               
the regional planning  work they are doing in-house,  but with an                                                               
economic consultant doing some additional  work to "really crunch                                                               
the numbers" to be able to do some comparisons.                                                                                 
                                                                                                                                
SENATOR BISHOP asked if he had those people at his fingertips.                                                                  
                                                                                                                                
3:44:59 PM                                                                                                                    
MR.  THERRIAULT  replied  that   they  had  contracted  with  UAA                                                               
Institute of Social and Economic  Research (ISER) in the past and                                                               
are now  contracting with the UAA  Automotive Service Educational                                                               
Program (ASEP). Because  they are a state entity,  that is easier                                                               
than going out through a competitive process.                                                                                   
                                                                                                                                
3:45:45 PM                                                                                                                    
ALAN  PARKS, representing  himself,  Homer, Alaska,  said he  had                                                               
been  a commercial  fisherman since  1975  and there  is no  such                                                               
thing  as  clean  coal.  He  opposed SCR  16.  Healthy  fish  are                                                               
important to  him as a fisherman  and a father; he  hopes to pass                                                               
his  fishing business  on to  his children.  Spending $75,000  on                                                               
studies for  more coal-fired plants  is going  backwards. Science                                                               
has settled  it that climate  change is happening and  humans are                                                               
causing a significant part of it.                                                                                               
                                                                                                                                
Aside from the climate issue, mercury  is a big problem with coal                                                               
combustion.  Governor  Palin   put  fish  consumption  advisories                                                               
around  certain  large halibut  and  other  fish due  to  mercury                                                               
contamination.  Now the  state has  a point  system for  how much                                                               
halibut kids  and pregnant  women should  eat. While  Alaska coal                                                               
may  have  relatively  lower mercury  levels  compared  to  other                                                               
places, it also has  low BTU value, so you need  to burn more. He                                                               
concluded that  coal is an  energy of the  past and Alaska  has a                                                               
lot  of  opportunity for  alternative  and  renewable energy.  It                                                               
should  be  a leader  in  clean  energy  that protects  our  wild                                                               
fisheries and the people in communities who rely on them.                                                                       
                                                                                                                                
3:48:06 PM                                                                                                                    
SENATOR DYSON  asked if it's fair  to assume that no  matter what                                                               
information came  forward about using coal  in an environmentally                                                               
sensitive way that he wouldn't change his mind.                                                                                 
                                                                                                                                
MR.  PARKS said  it's really  the technology  and the  process of                                                               
extracting coal  [safely] that is  a long  way out and  we should                                                               
spend  our  energy  and  be a  leader  into  renewable  resources                                                               
technologies.                                                                                                                   
                                                                                                                                
3:48:45 PM                                                                                                                    
SENATOR MCGUIRE joined the meeting.                                                                                             
                                                                                                                                
3:49:27 PM                                                                                                                    
SENATOR  FAIRCLOUGH said  she serves  on  the Alaska's  Renewable                                                               
Energy Advisory Board  and asked with five  active volcanoes, did                                                               
he have  any idea how  much particulate  matter is ejected  in an                                                               
eruption.                                                                                                                       
                                                                                                                                
MR. PARKS  answered that he  is not  a scientist, but  humans are                                                               
the main  cause of CO  in  the atmosphere. The  natural eruptions                                                               
                     2                                                                                                          
that occur from volcanoes is really not the issue on the table.                                                                 
                                                                                                                                
SENATOR MICCICHE  said he is  a big renewable fan  going forward.                                                               
He said  that part of  the study would likely  identify scrubbing                                                               
coal to  compete with other  hydrocarbons (natural gas  and other                                                               
cleaner forms of  energy) that they both use every  day. Would he                                                               
be  more likely  to support  the resolution  if the  technologies                                                               
were otherwise environmentally equal?                                                                                           
                                                                                                                                
MR. PARKS said  that was an interesting question,  but he thought                                                               
efforts should  be geared toward  transitioning with  natural gas                                                               
to  other fuels  (wind, geothermal  and tidal  energy). Coal  has                                                               
emission problems as  well that destroys habitat  that fish need.                                                               
It's not just what  gets into the air; it's how  it gets into the                                                               
plants.                                                                                                                         
                                                                                                                                
SENATOR MICCICHE  said he agreed  with many of his  thoughts, but                                                               
he was truly  interested in understanding what it  would take for                                                               
coal  to  be  environmentally  neutral   with  other  sources  of                                                               
hydrocarbon as the renewable technologies get further developed.                                                                
                                                                                                                                
3:54:06 PM                                                                                                                    
CHAIR  GIESSEL   said  renewable   energies  are   wonderful  and                                                               
certainly winds  seem so great; there  are 3-5 tons of  copper in                                                               
every wind turbine.                                                                                                             
                                                                                                                                
3:54:24 PM                                                                                                                    
SUE MAUGER,  Science Director, Cook Inlet  Keeper, Homer, Alaska,                                                               
opposed  SCR 16.  Her focus  had  been on  salmon streams  around                                                               
Southcentral Alaska for the last  14 years and recently on stream                                                               
temperatures,   specifically  how   current  stream   temperature                                                               
patterns in Cook  Inlet might change in the future  and how these                                                               
changes might impact salmon.                                                                                                    
                                                                                                                                
Based on  compelling evidence from the  climate scientists around                                                               
the  world and  from Alaskan  researchers, future  climate change                                                               
will   result  in   not  just   warmer  summer   temperatures  in                                                               
Southcentral Alaska,  but warmer winter temperatures,  which will                                                               
result in more rain on snow  events and a reduced snow pack. With                                                               
less  water stored  in our  hills  during the  winter our  summer                                                               
water  levels will  be lower,  and since  a little  bit of  water                                                               
warms  up a  lot faster  than a  lot of  water, our  summer water                                                               
temperatures in non-glacial streams  will raise that much faster.                                                               
Based on  five years  of research in  Cook Inlet  salmon streams,                                                               
many  of the  Kenai Peninsula  and Matsu  streams are  already at                                                               
temperatures known to be stressful to salmon.                                                                                   
                                                                                                                                
When she  has talked about  these climate change outcomes  in the                                                               
past they  seemed very  abstract, but we  are now  experiencing a                                                               
remarkably warm winter with high  winter temperatures, rain, lack                                                               
of  snow,  the  vagueness  of climate  change  impacts  are  more                                                               
tangible.  There  is  still  much  to  learn  about  basic  ocean                                                               
dynamics and fresh water habitat  requirements for salmon, and we                                                               
now must  add ocean  acidification and  changing ocean  and river                                                               
temperatures   into  the   challenge  of   obtaining  sustainable                                                               
fisheries.  One thing  is  certain, the  release  of more  carbon                                                               
dioxide, which  will occur from  new coal development  will fast-                                                               
forward  the  timeline  for  the most  drastic  and  dramatic  of                                                               
climate  change  impacts.  "For  Alaskans  living  in  the  state                                                               
disproportionately impacted by climate change, coal is a loser."                                                                
                                                                                                                                
MS.  MAUGER said  she  had  sent some  documents  as evidence  of                                                               
climate change  across the world,  some information about  how to                                                               
understand  the patterns  expected for  Alaska, and  an executive                                                               
summary   of  their   five-year  statistics   report  of   stream                                                               
temperatures in Cook Inlet from last fall.                                                                                      
                                                                                                                                
3:57:26 PM                                                                                                                    
SENATOR MICCICHE asked if she sent her studies to the committee.                                                                
                                                                                                                                
MS. MAUGER said they were faxed.                                                                                                
                                                                                                                                
3:57:48 PM                                                                                                                    
MARGO REVEIL, Jakolof Bay Oyster  Co., Homer, Alaska, opposed SCR
. She  and her husband own  an oyster farm in  Kachemak Bay and                                                               
are deeply  concerned about changes  due to  ocean acidification,                                                               
which is  directly linked  to increased  carbon pollution  in our                                                               
atmosphere. And as more carbon  enters the atmosphere, our oceans                                                               
absorb more, which  then forms acids that eat  away at shellfish.                                                               
Their  spats  are  especially  vulnerable  to  increased  acidity                                                               
levels.                                                                                                                         
                                                                                                                                
Spending money to  study more coal-fired plants strikes  her as a                                                               
very  bad  idea, because  coal  is  a  leading source  of  carbon                                                               
pollution.   The greatest  threat to  her and  her family  is not                                                               
energy costs;  shaving a few  dollars off their energy  bill will                                                               
not   vastly   improve  their   quality   of   life,  but   ocean                                                               
acidification  directly  threatens  their livelihood.  She  cited                                                               
where  ocean acidification  was  implicated in  a  die-off of  90                                                               
percent  of the  mature stock  of  scallops at  a B.C.  shellfish                                                               
farm.                                                                                                                           
                                                                                                                                
4:00:22 PM                                                                                                                    
CHAIR  GIESSEL,  finding  no  further  questions,  closed  public                                                               
testimony.                                                                                                                      
                                                                                                                                
MR. CAMPBELL concluded  that coal has had a  long and bi-partisan                                                               
support  in the  state and  two weeks  ago he  met with  Governor                                                               
Cowper in  Fairbanks and discussed  alternative methods  for coal                                                               
plants  that would  have no  CO  emissions.  They would  actually                                                               
                               2                                                                                                
bottle  it up  and sell  it to  Hilcorp for  enhanced hydrocarbon                                                               
removal in Cook Inlet.                                                                                                          
                                                                                                                                
CHAIR  GIESSEL  thanked  him  and said  they  looked  forward  to                                                               
hearing from  Senator Kelly  on Wednesday and  would hold  SCR 16                                                               
until then.