The following program is a field hearing before the US Senate energy subcommittee. It was recorded in Carbondale, Illinois by wsiu radio on June 8th 1981 for broadcast at this time funds for distribution were provided by the national public radio satellite program Development Fund. Commentary throughout this hearing will be provided by wsiu news director Gail Simpson with opening background provided by Dwayne Thompson and energy policy analyst for the Congressional research service. In just a few moments testimony will begin in this hearing on high-sulfur coal exports being held in Carbondale by the United States Senate subcommittee of energy nuclear proliferation and government processes. The hearing chairperson is Illinois, Senator Charles Percy will be hearing testimony from experts from all over the world. Each witness will make a statement to be followed with questions from Senator Percy and from the hearings other panel member representative Paul Simon. The proceedings have been broken down topically into 6 sessions each will deal with a varying viewpoint on the issue of exportation of high-sulfur coal. Senator Percy will precede the testimony with a few remarks. We anticipate that the senator will address the problems with Illinois Basin coal answering the needs of a new era in energy history major issues. We expect the chairman to introduce include the economical and ecological factors influencing marketability of Illinois coal the transportation considerations, which hindered the movement of coal from the Midwest foreign markets the dependability of American Coal Company still in contract and the promotion of Illinois Basin high-sulfur coal in foreign markets after that the first session of the morning we'll get under way that will deal with the emergency utilization of coal. Both Lawns go who is the executive director of the International Energy agency in Paris since 1974 will be the only witness for the session while we've not seen a copy of down for lawns cuz testimony we expect it to touch up on issues of dissemination of information about coal potential steps. The government may take to encourage use of Illinois bass & Co And alteration safely possible in the area of environmental standards. The second session features testimony from foreign governmental officials on high-sulfur coal exports testimony will be made by the minister of economic affairs from the Republic of China history KS chang'an from Amanda miguez of the Spanish Embassy as well as from representatives of Corea, Spain and France as well as Japan, the mornings third session is slated to deal with the topic of high-sulfur coal exports will hear testimony from the president of the national coal Association Karl baggie and from John banovic the president-elect of Illinois United Mine Workers of America representatives of several coal companies will address the subcommittee including speakers from Freeman United from Peabody Coal from Old Ben from a Max from Ziegler consolidation and also for March minerals dependability of supplies of Illinois coal is expected to be a part of the issue involved in the session. Spell fourth session the morning deals with Transportation factors affecting exportation of Illinois Colt Henry Jay Bruce. Who is the senior vice president of marketing for Illinois? Central Gulf will be addressing some of the problems arising from Shipping by rail of Illinois coal. He'll be founded by Colonel Herbert hard Junior. He's the associate for director of the board of communications of the port of New Orleans. He'll discuss a very major exportation block the port size and quality along the Mississippi River which of course is a major transportation route carrying, Illinois Basin coal abroad the 5th and 6th sessions of the day deal with the marketing of Illinois Basin high-sulfur coal Session, 5 consists of national specialist set testimony and session 6 includes testimony from International specialist. Testifying In Session 5 will be dr. Donald Earnshaw. He's the deputy assistant secretary for export development with United States Department of Commerce. Also, mr. William Mason of the coal export Association Rodger Lagasse acting assistant secretary for fossil energy of the United States Department of energy and also Arthur F Nicholson. He's the commissioner of the Bureau of production and utilization of the Kentucky Department of energy the final session of the day, which incidentally will be chaired by representative. Simon will be highlighted with testimony from Project assistant International and from the international Affairs division of the United States Department of energy. We are now waiting for the subcommittee hearing to get underway. Mr. Thompson. What do they mean? The first session is to deal with the emergency utilization of cold? What do they mean by emergency utilization? I'm not sure how they have this particular term there two things. If Bob would be utilization and perhaps any type of Supply interruptions of my her from their Source countries, and I think it said probably is is a contact the United States is one of the reasons why that I think these proceedings are extremely important is because the United States can become a very reliable supplier of full world live. The World Market has seen to supply interruptions here. Very recently one in Australia and also one in Poland and Cole is the type of fuel that has to be applied in volume and it has to be supplied reliably, otherwise and you have situations or cold as being burned where the consumers of cold really don't have an opportunity to stockpile call tremendous amount of it and they have to have a an uninterrupted flow of coal from the mine to the power plant or to the heating this or whatever. It might be. How much is reliability a problem with Illinois car? Are there a couple of reasons for the salt? First of all, you will find that the Illinois mines are mostly surface mines surface mines can be opened up much more quickly than underground lines and they can adjust their output relatively faster in terms of demand then underground monkeys can secondly I think you will see that as you move farther west in producing districts that you will find that over the past when there has been supplying eruptions that are related to labor that many of the midwestern and western states aren't is prone to lose? A high percentage of their production as many of the Eastern State. This also could be raised related to the fact that the supply or the production in Illinois is primarily service. Now we here are two different uses of coal basically steam coal and Metallurgy. What is the difference between those two terms, which is one of the ingredients in steel-making you have three different ingredients. You have the iron ore or taconite. You have Limestone or some type of fluxing material to remove Schlage and you have Coke which produces energy and also no access a source of carbon for the steel steam coal on the other hand is an entirely different animal is the finely ground old rise to the consistency of talcum powder. Let's say and in large steam electric lances blown into the boilers and burns almost with the same properties as if it's a liquid fuel produces electricity, and the other one is used by the steel industry. What about the option of using the high-sulfur coal for concrete in foreign markets one of the outcomes of the proceedings today is to try and determine the magnitude of that market the cement industry can use coal which is relatively higher in Sulphur then steam electric because here there is a slight chemical reactions take place between the sulfur in the coal and the Limestone which is being Cal send or burned if you will to produce Portland cement the sum of the chemical properties of the lines don't have a tendency to neutralize sulfur which is in the cold and it can be used for that purpose the magnitude of that market. I don't think it's been determined yet. And I think that that is one of the crucial questions will be asked for the witnesses here today. I believe we're now ready to begin the United States Senate hearing on the utilization of high-sulfur coal and the export market for the hot tub for cold. beautiful morning ordinarily United States Senate hearings begin at 10 and they're ordinary 25 to 30 minutes late getting started accept Foreign Relations Committee where we have a new policy and the government Affairs Committee of starting recently on time this morning the United States Senate government Affairs subcommittee on energy and nuclear proliferation and government processes conducts a field hearing here in Carbondale, Illinois to examine the potential for exporting high-sulfur coal from the Illinois Basin two Nations throughout the world. Today is hearing is to be followed this afternoon and all day tomorrow buy a conference which will explore this issue and even more to tell right at the start. I want to extend my sincere thanks to the flying people of Southern Illinois University and throughout the state for work for nearly a half a year to make this event a success. I especially like to thank dr. Lai Lai Le send line Michael Crowe Timothy Crawford and Charles Plaza of the Southern illinoisan. Just call extraction and utilization Research Center and to thank all the members of the conference planning committee for their help. And of course the Fresno University who's been so gracious and thoughtful as well as his wife feel hearings of this kind or a bit unusual for the United States Senate, but I find them to be an effective way of ensuring that the major issues of the day are discussed in the presence of the people were ultimately affected by the decisions. We make back in Washington. This is the third field hearing I've held him when I over the past year and a variety of topics and I've scheduled two more on regulatory reform issues in Quincy and Peoria on July 1st and 2nd. Today's hearing is well-timed to say the least officials of the United Mine Workers and the bituminous coal operators recently reached agreement on a new contract on Saturday the rank-and-file ratify this contract coal miners Across the Nation are back at work this morning producing energy for the nation and the world there is no better time than now to make high-sulfur coal exports one of the coal Industries highest priorities, and I would like to draw attention on the table right here to a lump of Illinois. And I also have been presented this morning with a symbolic statue of piece of artwork, Illinois call a coal miner and operating and I intend to put this right on my Senate desk in Washington DC for the rest of my term in office as a reminder of the Day, we have had together here in Carbondale in developing the basis for what we considered to be one of the most exciting and promising opportunities. We have in the future to create a vast New Market or an expectant world for export sales of Illinois coal. It is said repeatedly and it is true. The world is completed an era in its energy history no longer satisfied with relying on oil for most of their energy supplies Nation throughout the world and how aggressively pursuing new energy strategies to carry themselves through the 1980s and Beyond Any Nation and I should add any company with abundance coal reserves available for long-term contract commitments will find I am sure an immediate and serious interest among foreign buyers with 437 billion tons of demonstrated coal reserves nearly one. Of the world's total the United States should be expected to profit mightily from the Newfound International interest in Steam coil and certainly in the area of coal. This is the Saudi Arabia of corn. Storage terminals go to accommodate smaller shipments of metallurgical coal or unable to accept steam coal delivery is in the amount required and last year form call Colliers, which contractor did receive American steam coal were forced to wait as long as 100 days for delivery Antiquated rail links and shallow ports for equally ill-prepared for the challenge real dog began to emerge among foreign buyers about what to the United States despite. Our ample coal reserves could be trusted as a reliable energy supplier. Ironically the Soviet the Soviets with its large reserves of natural gas is now seeing buy some Western Nations as a more reliable supplier of energy than the United States unless we send a strong signal now before Nicole Byers telling them we have Goods to sell and can be counted on to honor long-term contracts. We're going to lose international business to the Soviet Union. Other exporting Nations that have the resolve to act and I should note for the record also that in an informal session last night that just grew like Topsy where we had all of the presence of our coal companies and the chief Executives as well as the management of those companies and the representatives of five foreign Nations pure for this conference specifically at come for this purpose and informal discussion, we heard directly from them and directly from the coal companies as to how we can come together for our mutual benefit. I'd like to quote from a congressional research service study prepared especially for this hearing at my request by Dwayne Thompson and and the environmental natural resources policy division staff and this entire report as well as the printed record of this conference and all the testimony in full will be made available to anyone that leaves their name and address with our staff. Let me quote from that report. It is just been released today the cheapest quickest and most fundamental approach to increasing the production of high-sulfur coal is through promotion. This is the Congressional research service study came to that conclusion. That was the conclusion. We reach last night. What we have is the product now, we need to promote it now. We need to get out the word as to its availability promotion. And that's the word. We're going to hear a great deal today as a farmer businessman. I could not agree with this recommendation more let's tell the world that are call is immediately accessible to the Mississippi River as in network of rail lengths with good road beds and can be shipped through with far less waiting time those along the east coast certainly Illinois coal Basin cannot meet the needs of all coal importers. It's sulfur content place has some limitations on its uses but these restraints should be seen as extra marketing challenges not as barriers to success, Illinois Basin called producers may have to work harder to develop markets for their product. But these markets can be found before I turned over distinguish list of witnesses. Let me offer a few words to some of those were present today to the Mine Workers of our region. I heard you to keep your best in the world reputation for on-the-job reliability and work as hard as you always have to do school at competitive prices for worldwide sales certainly with the increased wages and benefits of just began with the workers in this new contract and certainly the coal operators at work intensively in hard to find a fare basis for compensation for the years ahead. Now it is our job to work together to increase productivity wages do not do not have to be passed on in a competitive World Market Today where we have so many other sources of energy in the form of higher costs and higher phrase prices. If we just find ways to increase productivity improves efficiency work smarter rather than just hard and the certainly no industry could have a greater and Center for stability now for studying us become a reliable supplier and to find ways to reduce unnecessary and wasteful cost then this industry when we have demonstrated through this contract the willingness of operators and worker is to work together to share the fruits in the benefits of this great industry. The coal company Executives, I urge you to Market your product as aggressively as you can helping potential buyers find maximum use for the high-sulfur coal. You have to sell and I say it to my friends in the coal industry. You have available to you now. number one salesman in Illinois in cooperation with the governor and he just delegated this particular responsibility to me through agreement to be the export sales manager for coal corn beans and manufactured goods and services in the United States Senator that says before you I love the role. I enjoy being back promoting. We have the greatest product in the world to promote that the world needs put me to work. I'm not going to take the initiative other than things like this, but certainly every single form guests coming here from around the world Kings Prime Ministers presidents Chiefs of State Foreign ministers. Not one single one that comes to see President Reagan does not come before the Foreign Relations Committee did not have I have an opportunity to have a private meeting with every one of them and not one of them has come to Washington left without a full story on this fact that Run political friendships many times follow the tradelands and let's form that basis for increasing and expanding our trade between our two countries and it's my job but took me to see what is expanded between Illinois and that particular country in five countries that are represented here today or hear all as a result of those contacts that I've had with her chief executive officers of their respective countries to see that they can reach out to us. Just as we want to reach out to them. Those ships can't go over full and come back empty. It got to go. Both ways trade is a two-way street and that's what we're aiming for in this conference and why I think it's going to be such a standout success as I left the meeting last night at young lady came up to me and said how about the environmentalist? When are they going to have a chance to speak but obviously this is export. So we're not talking about environmental standards in all other countries. That's Sovereign right to set their environmental standards, but we certainly that work intermittently and closely I have for 15 years with environmentalist and I asked if they continue to make us aware of the need to mine and ship are called in an ecologically sound manner, but we wish them to join with us in our effort to increase a specially International Cole trade from Illinois for the benefit of the world and finally to our foreign guests. Perhaps our most important. Yes. We are honored by your presence here today. Let me say is trying to find Relations Committee. I'll do everything I can to see that the United States is a consistent and reliable exporter of call you have every reason to expect this from us. I ask only that you give Illinois coal produces a fair opportunity to meet your needs. I expect that you will find that they can My mother Express deep appreciation to the heads of government for each of your presence here today and I intend to either call or write each one of them to express our appreciation for your participation in this forum. We all look forward now to hearing what are witnesses have to stay as my staff is informed of all of you. We are operating under a rather tight schedule this morning. I'd appreciate your keeping your oil statements as brief as possible. So there is adequate time for questions. I sure didn't you full written statement will appear in the fall final hearing record, which will be printed at the Senate and made available for distribution. I'm happy to acknowledge the presence of our distinguished member of Congress who is District. We are today Paul Simon has been a strong supporter of coal Coal exports coal production and Harmony in the colon does For many many years. He's a brilliant man colleague, but you might have been proud indeed to work and he is going to chair the hearing beginning at 11:45 because at that time I leave to officially open a my own United States Senate Office in Carbondale, it were establishing. I think the first United States Senate Office it's ever been in Carbondale on this is a very good way as to do that, but I would very much appreciate the kindness and Simon just coming up and joining me here. He will begin his questioning at 11:45 when I leave and he will chair the fan with that time and Paul if you wouldn't mind you sitting there, I'd appreciate it very much indeed. Let's give this man Paul Simon. If I met Senator just let me express my appreciation on behalf of people of Southern Illinois and not only people Southern Illinois, but cool people everywhere for your a leadership in putting this meeting together and we appreciate your being here. Thank you very much. And this is a man. Our first witness for a session 1 and session one is entitled emergency utilization of coal is Doctor off lamps key the executive director of the International Energy agency in Paris. He has had that position since 1974. He received his Doctorate in law from the University of Munster IN germinate, dr. Lansky enter the energy policy and raw materials section of the German Ministry of economics in 1957. He directed The subsection of mining for 1966 to 68 and therefore has long had an interest in coil in addition to other energy issues for 1968 to 1974. Dr. Lansky was director of energy policy and raw materials in the ministry of economics. And that's what the Key West German representative to International meetings in the energy field. It became special energy advisor to the Secretary General of the organization for economic cooperation. Mission and development in May 74 and in November 74 was named executive director of the International Energy agency after it was set up by the oecd 1979. Dr. Lansky was named coordinator of energy policies for oecd while retaining his responsibilities in the International Energy agency are indeed pleased to welcome. Dolansky who has made a special trip from Paris in order to be with us. Polansky. We look forward to hearing your testimony at this time. Thank you. Mr. Chairman. I have filed my written statement that and I'll just summarize it this morning in order to leave time for questions. The first point I want to make is that the International Energy agency and its 21 members have recognized early stage. That probably is the most important. Single option to change the energy stock show self energy economy is overtime. we published in 1978 a report called steam card prospects to mm or Estates at we should encourage as governments and as he is a doubling more than doubling of Code by the year 2000. We've also agreed was in the agency was in the 21 governments appoint. You already referred to as a confidence-building measure. IAA principles for action on Kodi Bae outlining all the elements of production transportation and use might meet was difficulties also lays the ground for March trade conditions in the code. You finally have established as an operational instrument the coal industry Advisory board at the I wear. industry is advising governments on the all elements of the cold chain on where we hope we will develop a and operational instrument. Second point I'd like to make is that we believe. That code is indeed the most promising option. And that nearly two-thirds of additional energy balls of the world up to the year 2000 could be covered by code. If that would happen by the end of the century even might have code as a single most important energy source a game contributing to choose Ana G balance. We see possibilities is not the forecast of all energy needs. Whereas oil might fall back to from 50% today to somewhere between 25 and 35% This will not happen unless I very active. policy by governments as is pursued and unless industry is taking up the challenge. the role of the US in this context we see as one of the most important because was out a major commitment of the United States to expand steam card Aziz possibilities confit realized We estimate that us and your car production would have to go to around 1.2 billion tons by the year 1990 and 150 million tons of Xbox. Included in that figure and that by the year 2008 predictions could be about 2 billion tons and exports could increase to as much as 300 million tons, which would be about 50% offset exports of the code trade. We would see see necessary to develop. It is obvious that there are quite a number of obstacles to overcome in order to realize that in particular and the infrastructural area to build the necessary loading facility. I don't think that's a receiving and Europe is a real difficulty because their plans and action is underway. The benefits received for the US economic political and strategic color can provide the US and the other Western Economist with economies was an alternative to continue imports from uncertain sources called experts would improve the u.s. Balance-of-payments and for local communities color with mean U jobs and increased tax revenues. Ends is General picture. We believe that also highest traffic code. As is produced in this area. Can make a major contribution of research center in London suggest that sell Foxy the missions can be kept to environmentally acceptable standards was known technology and we also believe that it cost doing that will still deliver still Aviv Cohen as a competitive energy source. You do not know too much at present about cold as an emergency. Now I know I'm looking at we have to expand the room the size of the crowd is too large for this room. So we just expanding it so that all of those who are standing if you could just take a seat over here. Thank you very much doctor Greta head. That's not too much known about the emergency room and play in general. I would say to develop large-scale trade on a short-term basis will be difficult and we don't have to lie lie, basically Eiza unavailable stocks on local production to do show however In individual countries does is a possibility and we see clearly that I need to develop further at the studies which would show to what extent to what extent short-term shifts from oil to code possible in a in an emergency. Let me conclude. Frost code which one's fueled the Industrial Revolution is gathering momentum again, and probably will be the most important single source to change our energy structures second the chance of the next 20 years for increased International utilisation off code is to mine transport and trade in a vehicle to meet iea curly months equivalent to around forty million barrels of oil a day does a large increase compared to the present level of a 1/4 requirements which is equal to about 15 million barrels a day. Turn political support at the highest level is already behind the option for General commencement still need to be supported by specific measures of consistent long-term care policies for Success close cooperation between industry and government will be essential because why government provides a framework in which internet in which national economies and energy systems develop responsibility for getting the job done rest was industry economics has received them today are favorable the technology including the technology for using pie server is available. Major environmental problems in production and use do exist. But in my view soloable. Thank you. Very much. I cannot tell you how appreciative we are at your thinking this flight to be here. This is the most important single statement that I have seen from the sort of authoritative voice. This is just exactly the kind of a message at the someone should have given to American agriculture 30 years ago and pointed up the potential that they had to be a supplier of food to the entire world. And we consider we've only had six nations that exporting food all the others are importing it and we export more than all the others combined that huge potential for food was exactly the same as we face today for cold at the survival of the Free World really depends upon it in the figures that you've given the challenge you laid out for us and in the obstacles we face it just brilliantly Done Yet full text of your statement will be incorporated in the record and going black over a speech that you gay. Dr. Lansky last month, you did mention that governments and Industry. There's never been a greater a greater need for governments and Industry to work in concert to establish a constructive an active coal utilization strategy. Would you also include labor in that category? Because in many respects labor in this industry in in the United States at least at work side-by-side once they've settled their collective bargaining matters, they have worked side-by-side in many areas on the same side of the table not opposite sides to achieve goals and objectives with labor also figure very prominently in your judgment in in developing. This strategy is needed for these kind of goals that you've laid out. Last time I saw them they would include labor. Because was out the support of the unions, I think that could option in international business would remain and answer option. We would have to convince unions and minus that they are contributing to a more balanced Energy Future Would shouldn't exclude necessarily that shouldn't exclude. That's a also cuz she was there specific. goes and but they should also gives the feeling that they are where after need to give up stable conditions for college, right? From my own country and my own country code industry is one of those branches which I could that be terminated. I Was Myself nude from an owner at supervisory board at one time and from that background. I know that it is possible to develop a mutually satisfactory conditions product office. Thank you very much. You've laid out goals of doubling and tripling coal usage by i e a member nations that does materialize as we think it must not realize how important a role do you see for high sulfur for the high sulfur Illinois Basin coal and how important a role potentially can and should know that cool play in meeting these needs. There are sectors and Industry where high-sulfur coal can be utilized without further difficulties one sector only has a cement industry. where no environmental damage would have to be expected from using ice help a cover on the other hand that in general we Must develop Solutions, which meat Justified environmental concerns and these environmental concerns exist in all countries and perhaps even more so in the potential receivers receiver countries of hyssop occurred in Europe and in pain, so what is needed a new development of new technologies, they are in principle available as a concept, but we will have to press you further the demonstration that Cole can be Bond high-sulfur coal can be burned and environmental acceptable way also under the conditions of those countries. That is one of the times I had I'm familiar more with what we're doing in this country to cause conversion and idling mandating power plants to convert were offering incentives of all types what's being done in Europe to build a new power plants dredge new Harbors take other steps, which we should know about to commit themselves to increased use of cold. Wow could be very brief in the time in the transportation sector is and Euclid Park built being built in the Rotterdam in the Mediterranean area. They'll have to be at build receiving stations Plus plans on the way. on Utility is signed that practically in many countries in Europe exists. A Band-Aid efecto ban on the building of new oil pipe are stationed and given the difficulties some countries are going through and developing the nuclear option. They are bound to build. Colorplan power stations that's well under way and it is understood that this these color needs can only be only be met by import. I register over the last two years a very high activity of European potential investors looking for investment in the United States and looking for long-term contracts. One last question on how we reviewed at Broad do they just lump us all in with the states that have to export through the East Coast with all of the holdups and tie-ups there today fully understand the use of the Mississippi River and the much brighter situation. We Face Down the Mississippi and the gulf ports at which are susceptible to considerable expansion do they differentiate between ourselves and the problems that they're well aware of on those it or only relying upon East Coast it for its. I think that the potential you was also fully aware that in order to develop option two quantities as I've indicated that eastern and western cowboy will have to contribute Assessment is a priority West End, It would have to increase by a factor of 10 by the year 2000 and I'm convinced set at the potential user suddenly aware of that. Is there a feeling of the of the United States being a reliable supplier of coal or are other countries Australia South Africa Canada given a little higher Mark in this regard and do we have some work to overcome that impression? I believe that is some concern that in times of emergencies. United States might cut to not cut back on code exports rather than on domestic use and it's awfully what increase confidence of What essentially has been laid down and I'll principles for action on code could be confirmed at a very high level namely that in cases of shortage in cases of Emergency. The there will be no discrimination between imports and exports on a long-term basis. I just want you to know that I now have practically so it up the Reagan Administration support for a bill at I'll be calling out very soon removing from any president knighted states the right to unilaterally use his authority to embargo agricultural exports if you and bargo's anything to her country's got to embargo everything and that's a very severe Emoji without coming to Congress for approval. Certainly. I will directly ask the president for his assurance and we'll try to build into law that we will be Equitable. We can't build Expo. Markets, if if we don't one inch I am of any kind of an emergency. We don't treat our customers abroad the same as we would ourselves and I think that Assurance we can get and we will I thank you very much that alone is a very valuable contribution. Salansky. I have a few additional questions. I'd like to submit them to you so that they can be answered for the record and we'll keep the record humping for that a great appreciation for your appearance today. You ever just one question here. Dr. Lansky, you mentioned the infrastructure that the our government has to work on infrastructure. You did not mention research. Do you have any comments on that? Particularly as it relates to high-sulfur Coal. Yes, we do believe that some intensive for the Touchback still is necessary and all I want to utilize code through the extend Cent and I have indicated will have to further develop. The technology is for environmentally acceptable utilization of Coda. We have several projects Cooperative projects with enzymes as well as they all still quite the number of national project. We think that these projects of the cold option shouldn't fall into danger of being held up by environmental concerns at these projects will have to be pursued vigorously. That's a financial means for doing that already have the limited and that they work to date has reached the state versus which is promising and should be brought to an end. I thank you. Dr. Thank you very much. Thank you Doctor, very kindly Sherwood call pause for station identification.