Texas Railroad Commissioner Michael Williams presented "The Promise of Coal and its Role in Texas' Energy Future" for the Texas Politics Speaker Series on April 20, 2006.

Dr. James Henson: I am enormously pleased to be able to welcome Texas Railroad Commissioner Michael Williams to the College of Liberal Arts today.

Commissioner Williams earned a bachelor's, a master's, and a law degree from the University of Southern California, not far from where I was born, as we were discussing, and not far from where we had a family member playing football. And though this has perhaps led to some degree of conflict during recent weeks but we'll leave that alone.

He was initially appointed to the Texas Railroad Commission by then-Governor George W. Bush in December 1988 and subsequently chaired that body for four years between 1999 and 2003. He has been twice elected to the Commission by the voters of Texas, and he is, frankly, a historic figure.

He is the first African-American in Texas history to hold an executive statewide post and at this moment is the highest ranking African-American in the Texas state government.

I really leapt at the opportunity to invite Commissioner Williams to campus, you know, in part, I confess, because I've seen him give rousing political addresses on a couple of occasions. I'm happy and very interested to have him here to talk primarily about policies, specifically, the role of coal and other forms of energy in Texas' future.

But in our chat right now, he also graciously agreed to take questions afterwards in any and all topics, and having chatted with him a little bit, I hope you'll take him up on that because if you won't, I will.

So please join me in giving a warm welcome to Railroad Commissioner Michael Williams.

Welcome. Thank you.

Commissioner Williams: Thank you. Thank you.

Thanks. Thanks a lot. It's my pleasure to have an opportunity to visit with you, and I thank you for the introduction. And Dana, it's good to be with you, Professor Roberts, and we thank you. Thanks for not only the invitation but also for all the work you've been doing with us on a very, very important project that I'm engaged in right now.

You've already seen I'm a little bit different. You know, I tell people I wouldn't stand behind something like this unless I thought you were going to shoot at me, and we ought to be fairly safe right now. I'm an old litigator, so I like to get close to my jury, and so that's what I'm going to attempt to do.

Look, you know, I've been asked to sort of talk about energy issues. But if you don't mind, let me just spend a fair amount of time talking about energy. And as I mentioned to Jim, I hope you will take me up on the invitation to ask me whatever about politics or policy that may sort of cross your mind.

Now, one of the things I do, though, that is sort of customary, and I've done it in the seven years that I've been a commissioner, is not only sort of thank folks for the invitation, but sort of thank you, because the people of Texas worked hard enough in 2000 and then in 2002 to elect a bald-head guy to wear his bowties and cowboy boots and send me to the Railroad Commission of Texas, and so I thank you.

And if you weren't part of that group, don't worry about it. In about 2008 you'll get another chance, so, you know but the other thing is that there is a person who made it possible, as was mentioned, for me to be a member of the commission in the first place, and that's the person who appointed me. He used to be our Governor who's now our President. That's President Bush, and the interesting thing is that the President and I have known each other for a fairly long time. It goes back to when we were members of the United Way of Midland together back in 1980.

And even though I have now run for statewide office twice, the first time I ran for political office was in 1984. I ran for County Attorney in my hometown of Midland, Texas. And I had a good campaign manager whose name was George W. Bush. And we got absolutely clobbered in the Republican primary.

So then I went off and worked for President Reagan and then the first President Bush, and so I continue to thank my good friend for giving me the opportunity to serve you and be on that strangely named thing called the Railroad Commission of Texas.

I know somebody going to ask me, so let me get it ought of the way. What where'd you guys what do you do and why is it called the Railroad Commission? First of all, I had nothing to do with railroads. We have 800 no, really; we have 800 employees at the Railroad Commission of Texas, and at the last legislative session, we had 24 that dealt with railroads. They dealt with safety where there's a crossing guard and an electronic warning device.

And so we asked the Legislature, because we want to create and expand and enhance upon what we believe is a premier State energy policy agency in the country, we wanted to enhance upon that. So we said, Look, move the Rail Division from the Texas Railroad Commission to Texas Department of Transportation. There's some other energy-related activities elsewhere in State Government. Move that to the Railroad Commission of Texas and, oh, by the way, change the name. And the Legislature did a lot of what we asked.

They moved the 24 employees to the Texas Department of Transportation. They moved some of the energy-related activities that we had identified to the Railroad Commission of Texas, and they said, Oh, by the way, we're not changing the name. That's your government at work, and so today, I have absolutely nothing to do with railroads, but we're still called the Railroad Commission of Texas.

You know, I would say it's a name that goes back 100-plus years, and when back to the point when crude was actually transported by rail, but that's not the case today. And as you know, today what we do primarily is we're engaged in the regulation of oil and gas production, mining, predominantly coal, some uranium mining, pipelines.

We have the largest smorgasbord of pipelines of any state in the country 280,000 miles of pipe run underneath Texas. And in addition to that, the fossil fuel-directed alternative fuels, such as LPG, CNG, and LNG. So that's basically the jurisdiction.

What I want to do is spend some time talking about what I think is sort of the big energy challenges that we have in the country, and I think they relate to electricity on the one side, transportation on the other. Most of the time when people think about sort of energy, everybody gets focused on oil and particularly, I guess, today.

Well, oil is $72 a barrel, which is kind of strange. When I was sworn in seven years ago, oil was $12.42 a barrel. And I remember I had a conversation shortly it had to have been two months after I had been a commissioner I had a conversation with at that time he was Sir John Brown, CEO and chairman of the board of BP; he's now Lord John Brown. And I asked Sir John Brown, I said, What can you tell me about what I should expect for my career as a Railroad Commissioner, however long it will be?

He said, Constant and volatile change. You know, you think about seven years ago. Crude was at $12.40-some odd cents a barrel. You think about at that period of time nobody thought about China as a large consumer of crude oil. We actually every year have something in the Railroad Commission of Texas that we call the state of industry. We invite all of the players in the oil and gas industry and other energy-related activities around the state to come to the Commission, talk to us about what they think is important.

And at that time, crude oil prices were enormously low, and the room was packed. And we had operators one after the other come up in front of the three commissioners and just lambaste commissioners about why prices were so low and they want us to go out and sue the Venezuelans and sue the Saudis for dumping crude on the market all kinds of things.

And former Railroad Commissioner and former Congressman Kent Hance came up and he said, Why don't you guys leave these commissioners alone. What you really need to do, quit fussing at them, go to China and see if you can urge the Chinese to quit riding bicycles and buy cars.

Well, it didn't happen exactly like that, but that's exactly what happened. Just last, you know, Chinese were using about 3 million barrels of crude a day. Today, they consume about 6 million barrels of crude, and just in '04 alone, they increase a million barrels of crude in one year. That was a 19 percent increase in Chinese consumption in '04. That's 40 percent of the global increase in consumption of the new increase in consumption of crude, driven by one country that has enormous opportunity because of its population for increased demand.

But in terms of the challenge that we have, I think it really comes down to what we're doing in electricity and what happens in transportation fuels. So the electricity side, most of us simply don't think about the energy demand for electricity. But if you think about it across the realm there, 40 percent of our energy demand goes to the generation of electricity.

Only 30 percent of U.S. demand of energy goes for the consumption of transportation fuels, and another 30 percent for heat. And when you look at that 40 percent that's electricity, the interesting thing that we see, it's within demand's going to increase, because what do we do.

We've got you got a DVD? And you know you got a DVD. You got a DVD and a CD and microwave and BVDs well, that's something else. Yes, that's something else, but that doesn't plug up. But anyway, you got all that stuff that we plug up that's burning up electricity. And now, today, when we look at across the country, 50 percent of the electricity we generate in the country comes from coal. About 30-some odd percent comes from well, nationally, about 20- some, 25 percent, comes from natural gas. Nukes take up another anywhere from 8 to 10, and then fuel oil and then the renewable sustainables do the balance.

In Texas, we've got it somewhat flipped, because for us, about 50-plus percent of our electricity is generated from natural gas and about 38 percent of it is coal. So we've got it flipped from what is happening nationally.

But you know what the challenges are if you think about 50 percent of electricity nationally comes from coal. What's the big challenge? Folks think it's dirty -- all that junk that goes up, all the emissions. And so we've got to figure out a way, quite frankly, to continue to use coal, because coal can we can make electricity cheaper using coal than we can with natural gas and fuel, and right now it's a whole lot more efficient than wind and solar.

So we've got to use coal for another reason. We in the U.S., we're the Saudi Arabia of coal. We've got a 200, 250-year supply of coal at today's levels of consumption. We got a bunch of coal, so we need to figure out a way to use it.

One of the things that I've been doing and been engaged in since 2003, when Governor Perry named me the chairman of the state's Clean Coal Technology Council, is to try to figure out ways that we can use coal and use it cheap use it not only cheap but clean. And we're engaged now in a competitive process to win a grant called FutureGen. It's a federal grant. It's $1 billion 750 million comes from the federal government, 250 million coming from a consortium of private companies -- to build the first near-zero emissions power plant in the world, using coal.

Now, I realize when I say clean and coal, you probably say those two words don't collide in the same sentence, but they do. And what it is, it's a different way of using coal to make electricity. Currently, what we do is we take the coal and, you know, you've seen little bricks of coal, and we polarize them and beat them up, then burn it, and what happens? You get nitrous oxide, sulfurs, particulates, maybe mercury, CO2, other stuff emitting into the air.

Then we try to capture it in some kind of way with scrubbers and other technology so that in Dallas and Fort Worth, nonattainment areas, or even near-nonattainment areas like this, we don't continue emitting emissions.

This process that we'll be using in the future, and it's called gasification, it's a chemical process. And it takes the nitrous oxide and the sulfur and the mercury out of the coal before it's burned. And that process then creates a synthetic gas that's rich in hydrogen. And it's that synthetic gas, with all the other stuff already pulled from it, that will be burned to make the electricity.

Now, some folks are also concerned about CO2. Right? Because we've been told, whether we believe it or not, some of us believe it and some of us don't. I'm not sure, I'll tell you right now I'm not sure about global warming, but, you know, some of us are concerned. Well, what's going to happen if the CO2 gets continues to go into the air?

And so one of the things that this project is going to test is not just simply can you take out the sulfur and the nitrous oxides and the particulates out of the coal before you burn it, can you take the CO2 and store it? Put it underground and permanently store it. And so that's the other big feature of FutureGen is to take that CO2 and put it in the ground and store it.

I'm happy to say, Glen, that we've identified two sites in Texas where we're going to propose that the FutureGen alliance builds that plant in Texas. One of them's out in West Texas near Odessa. One of them is in East Texas I'm calling it central East Texas near the Jewett it's Leon County, but it's at the mouth of one of our lignite mines in Jewett.

But in the Odessa site we had to figure out where to inject that CO2, and the University of Texas you know, you own all that land out there that's to benefit the PUF, and we're in the middle of negotiations that look very, very well right now for us to partner with the University so that we can inject that CO2 that's required in this project on University land. And so I thank you again for all of your help in arranging for those conversations.

But that's part of it. The other thing that's interesting about FutureGen is that we've got aging oil fields in the state, and you can use CO2 to bring new life to aging oil fields, oil reserves. Today, in the country, in West Texas, in the Permian Basin, we lead North America in enhanced oil recovery using CO2. And so this CO2 now can also provide new life so we can bring up new barrels of crude.

Now, that's on the electricity side, but what about the transportation side? I think all of us are probably getting a little nervous about where gasoline prices are going. I know I am. I have to drive my wife and I maintain a home in Arlington, but by law, I have to live here. So I vote here. Let me look in the camera. I vote here. My driver's license says here, and I have an apartment here, but the wife is in Arlington.

So I make that drive every week, so I know how much gasoline is, you know, and I recognize the increase in gasoline prices, and what's interesting is about 66 percent of the crude we consume in the country right now goes for transportation fuels. Another 25 percent goes to industrial purposes, and, you know, we've got about 6 about 8-1/2 about 6-1/2 percent of the next goes for generation of heat for residential and commercial customers, and then only about 2 percent is used for electricity.

So what do we do about crude, because we've got some challenges. We've got some challenges because some people believe that let's say, the threats are some people believe that we are either there or approaching sort of the peak production of inexpensive conventional crude. We also know that there are crude is susceptible to international political challenges, whether they be what's happening in Iran/Iraq, Sudan, or Venezuela, since Chavez says if we attack him he just said this was recently we attack him, he'll blow up the oil fields. Same thing Saddam Hussein said, but still, there are those political issues that international political issues that can impact crude.

We just learned through Hurricane Katrina and Rita that, obviously, crude oil production and our gasoline is subject to natural issues as well hurricanes and things of that nature. And then we've got sort of what I mentioned earlier: the competition that we in the U.S. today have with emerging economic priorities, such as China and India, and their consumption of crude and their prospect for increased sort of consumption.

Now, then there's sort of three things that we can. Obviously, there's a couple of things we can do. First of all, we got to produce more crude here domestically. And the second is going to be a question of using, you know, advanced technology and doing some research and development. But we can move from that thing called coal again, not just from coal to make heat or coal to make clean electricity, but coal to make transportation fuels.

And you think about it. Well, how in the world are you going to get coal into a liquid form that I can put into my car? And one of the things that we can do is just follow the lead us out of Africa, and at the point of several decades ago when many countries around the world were not trading with and not dealing with the country of South Africa because of apartheid, and people would not countries would not sell crude to the South Africa government, South Africa said, Well, what is it that we have that we can use that we can make fuel? It was coal.

And they developed the coal to liquids technology. And right now, about 25 percent of their transportation fuels in South Africa come from coal. And so that is one of the things that obviously I think is helpful for us, and it just happens to be that coal to liquid fuels is a whole lot cleaner than the gasoline that we are burning today.

The coal to liquid fuel that South Africa's burning today is cleaner than the gasoline that we burn. In addition to just producing more crude here, moving from to coal to liquids technologies, I think it would also be helpful for us obviously to look at what we can do in terms of production of crude and oil shales, and then, of course, move to the biomasses you know, those corns and switch grasses and wood chips. That's going to require an enormous amount of technological development for us to be in a position to do that.

So those are some of what I think the energy challenges are for us and what some of those answers might be, and we'll continue to see what we can do to move the country down the road to get there. I'm excited about what we now have on the plate in terms of FutureGen. And while we intend to win FutureGen, I also think it's important that even if we don't, I'm promoting things that we call FutureGen-like.

There are any number we went through a competition in the state to try to find the best site in Texas, and we had 14 possible sites. And we whittled it down to just two. But even those other 12 sites, you could have smaller FutureGen-like facilities at on those locations. One may just have a gasifier and produce that hydrogen-rich natural gas that can be used to make electricity, so another one may decide to have the gasifier and so they can produce the CO2 that can be used for enhanced oil recovery, because it's located near aging oil fields. But there are a lot of different ways that I think we can use sort of the FutureGen-like opportunities around the state to enhance our energy opportunities.

Let me stop there and let you ask whatever you may desire to, as it relates to energy, politics, or policy.

And let me get this out of the way first. Okay, you mentioned it. I should have, and it is belatedly, it's now okay 25 minutes. Let me congratulate the Longhorns on winning a national championship. [laughs] It was painful. That's all right. And if you ask me was I conflicted, I was not conflicted. Not at all. I was born in Texas, raised in Texas, but I spent seven years at Southern Cal, three degrees. I'm a Trojan. I understand you got to forgive me, okay?

Yes, ma'am. Go ahead.

Woman 1: In Gasification, what happens to the emissions formerly produced when using coal?

Commissioner Williams: Well, it's a chemical process, and so what ends up happening and, you know, I'm not the chemist but I could let me give you the nonchemist lawyer explanation. What happens through gasification is a process is the combination of fluids, mostly water, temperature and pressure.

And what it does is make different combinations, and so what's there combines to make synthetic gas, combines to make CO2. And the only thing that really is left is a slag of sort of small amounts of basically sulfur. And that sulfur we can then treat as we other sulfur and waste. You can sell it.

But what ends up happening through this chemical process, you create other kinds of chemicals; namely, this hydrogen-rich gas, and the CO2, which you now have to have stored and sequestered. But that's what happens with it.

Woman 2: Does injecting CO2 into the ground effect the environment?

Commissioner Williams: Well, I mean, that's part of the test. I mean, that's part of the test. Now, we would argue with you that, no, think about what we do. Every year in the Permian Basin we inject 20 million tons of CO2 in the Permian Basin every year for enhanced oil recovery. This project in FutureGen is to inject a million tons, so what we do right now is a magnitude of 20 to 1 more what we do right now.

Now, admittedly, in the CO2 ER that we do in West Texas, we put the CO2 in the ground. Crude oil comes up. You separate the crude and the CO2. You put the CO2 back in the ground, so it's not designed to stay there. This is designed to stay there permanently.

But God has been real good to Texas. We have, obviously, formations in Texas not only where we took crude oil and natural gas out of that kept the CO2 to natural gas naturally from moving other places that you can put the CO2 back in.

And so the idea in this one is to take salt formations, where they have large I mean, large thick, and this is about 8,000 feet and so in the project, obviously, it's below usable quality water. So where you're injecting the CO2 there's no water down there. There's nothing that we're using down there.

And then there is a cap just so happens out in the Odessa site, there is a salt cap of several hundred feet above, and it just so happens the salt cap is several hundred feet below, and a large wall of several hundred feet on the sides, and this is going to be injected in there. There's no real likelihood it's going to come out, but one of the things that we're required to do is have measuring, monitoring, and verification equipment on the surface to make sure that none of this stuff comes out. That's part of the test.

Man 1: You said we needed to produce more fuel, what is your position on drilling in ANWAR?

Commissioner Williams: My favorite, and I think for a couple of reasons. I mean, we would have, if the bill had not been vetoed by former President Clinton in '97, you know, we'd be able to produce about a million and a half barrels of crude out of the ANWAR. And if we were producing a million and a half barrels of crude, obviously, that's a million and a half million barrels of new supply, and that new supply would be extremely helpful right now, as we recognize that the Saudis have been telling us for some period of time that if they needed to that they could produce more crude in Saudi fields. And now we realize that we're at the $72 a barrel that they can't turn the spigot back on.

They're at maximum capacity or very near maximum capacity right now. I know some people have been concerned about what's the impact environmentally production. We were producing in the last for some period of time without environmental questions. And the footprint of today's production is much smaller than the footprint some time before.

And in addition to that, the caribou don't mind. The caribou, you know, is doing just fine up in Alaska next to those oil field those wells and those pipes.

Man 2: How large a factor is the environment in the FutureGen project?

Commissioner Williams: It's an environmental project. The real purpose for FutureGen is twofold. [ holds up two fingers. ] It's to recognize that we have to continue to use coal to make electricity in the country because of the large dominance of utilization of coal, particularly nationwide, and even for us in Texas, because it's such a large part of our economy.

The reason that, irrespective of how expensive you think your electricity charges are, the reason that our electricity charges generally run much cheaper than our counterparts elsewhere is because we have two fuels natural gas and coal that we don't have to get from anybody else.

But beyond just using the coal to make electricity, as I said, there's a twin goal. And that other goal is environmental. We've got to make sure that we don't continue to use coal in a way that emits mercury into the air, that emits sulfur and nitrous oxides and rocks into the air. And so that's what this is.

And we know that you can remove those matters. Eastman has been Eastman Kodak, or now Eastman Chemicals, but when it was Eastman Kodak, they had been using gasification to remove mercury from coal through their gasifier, because they recognized that when they were making film, mercury had some way of ruining film. And so they learned 25, 30 years ago to remove the mercury through a gasifier.

We also know that we can remove the other matters through gasification. What we've never done before so, I mean, there's a the country has an experience in using coal gasification to remove those products. The country has an experience, as I mentioned earlier, in using CO2 for enhanced oil recovery. The country has some experience in burning synthetic gas to make electricity. We've never done all of them at the same time.

But the environmental piece is the large piece to the FutureGen sort of vision.

Man 3: Do you have any comments on the prospects of Hydrogen as a significant energy source?

Commissioner Williams: And I think in terms of the continuum, starting from where we are now, and looking on the transportation side as opposed to the electricity side looking on the transportation side, we have obviously gasoline for the most part. We have what I will call the fossil fuel directed alternatives, such as LPG and CNG.

And then as you look at, I think, you know, sort of coal to liquids, and I think hydrogen is probably out some time. I realize the President said that he'd like for us to be able to drive around in our jets and hydrogen fuel cars by 2025, and we may or may not get there. But we'll have to figure out some kind of way to commercially make the hydrogen.

Interesting thing. Coal gasification gives us a way to create the hydrogen that will be needed for that hydrogen economy. I think we'll eventually get there, but in the meantime, I think the transition, and part of that transition is going to be things sort of like coal liquids in the meantime.

Do you see the possibility for the private sector, legislature, and governor's office coming together to make a major push for industrial level alternative energy production?

Not only see but have urged. We are, I mean, Texas, we're the energy capital of the country. And when you think about the resources that we have, not only do we have natural resources, whether they be crude or natural gas and coal, but we also have sort of the brainpower. Of course, we need a whole lot more of that scientific and technologically based brainpower in the state.

But it seems to me that while many of us would have urged the administration to sort of follow the lead of a New York Times writer and sort of, you know, declare that we were going to sort of set out and try our best to, you know, sort of solve the energy issue, particularly as it relates to transportation fuels, by some period of time and sort of set the entire country on that course, that has not happened yet. Perhaps the leading energy-producing state in the country can do that, and one of the things I think several of us have thought about in light of the fact that the state now seems to be in the position where it enjoys an $8 billion surplus, which does mean we the government took more of your money than it needed but there's an $8 billion surplus.

If it were to spend some of that on something and to invest some of that into something and may be, I think, extremely helpful to invest it in terms of energy research and development so that we can because we, as a country and as a state, we cannot continue, particularly on the transportation side, to allow ourselves to stay tied to crude oil for transportation. That is not going to be healthy for our national economic interests in the future.

And we're going to have to, I think, in a hurried way get prepared to sort of move to the next whether it's hydrogen or whether it is those fuels that I will call bridges, if you will, to that hydrogen economy we need to move in a hurried way to that next level.

Woman 3: Is the legislature's current focus on finance and education an unmovable obstacle to pursuing a broad energy initiative?

Commissioner Williams: Well, you know, when I was I've had the occasion to sort of teach on three or four different occasions and adjunct teaching a graduate level public policy course, and, you know, we always try to talk about sort of policy agenda streams. I don't think there's an agenda stream right now that allows one to have this conversation in a way that is going to sort of end in the result of doing this.

So I think because right now, everything is focused on, What are we going to do about property tax; on narrower issues, not this sort of large, new kind of issue. It's, What are we going to do about property taxes; and if so, what are we going to later, then what if anything are we going to do about new money to the schools?

But it is an opportunity for us to have the conversation, and I think most new issues, you have to have the conversation with the Legislature on several occasions before they actually win. And so that's why in presentations before energy committees, natural resource committees, it's important for me to continue to urge the fact that we need to be putting energy in the research and development demonstration. That we need to not only try to win FutureGen, but win other kinds of large energy-related competitive projects, such as FutureGen.

But we're not going to win it in January '07. Hopefully, we can win it in January '09 or maybe January '11, but the optimist that I am even recognizes that I don't think that I can win that one in January '07.

Man 4: Does the fact that Texas, unlike other states, submitted two FutureGen proposals reflect competition among energy interests in the state?

Commissioner Williams: As it relates there was a all of the states who were interested in putting forth responses were asked to give a their notice of intent to submit several weeks ago, and nine states raised their hand and said, Look, we think that we want to participate in this FutureGen project. But of those nine states there were combining 22 different sites, and we have yet to submit our responses, and we'll submit it on May 4, and we've already made a determination we're going to submit two.

But I would imagine there are going to be several states that will submit two, and that's because the RFP allows states to make more than two submissions. Now, why two and why not just one? What I did is that, as I said, we had a competition basically sort of like what we're having at the federal level among the state and asking various councils of governments around the state to help us identify where they thought would be the best site, recognizing what was sort of the major pieces of the RPF. Where there might where's coal. Do they have rail lines to rail it in, a pipeline to get the hydrogen and the CO2 out.

You know, is it in a hurricane environment. Does it have seismic conditions such that if we had an earthquake, then maybe you might end up having a release of that CO2 that was in those in that formation that I thought would be, obviously, enormously safe.

So there's a whole range of obviously criteria that come that we have to sort of attend to. And as we went through it in using the technical expertise of the University of Texas and the Bureau of Economic Geology and looking at a range of other kinds of criteria, that's how we ended up with two. And I think what we have were the two are two very, very interesting possibilities.

In West Texas, we have an area that is sort of really created where you can truly store the CO2, and there are a lot of salt formations in West Texas; exactly what's called for in the RFP. And you've got this piece for CO2 EOR where we can actually generate dollars for the use of the CO2.

But that coal that's going to be used in that project out there, if it wins out there, that coal's going to have to be railed in. There is no coal in West Texas, so it's going to have to get on rail.

The East Texas site gives us a very, very different opportunity. That's at the mouth of a Texas lignite mine. That is Texas coal. Most of us don't, unless we're in the energy business, didn't even know Texas had coal. It doesn't look like traditional coal. It looks more like dirt than it does coal. It's not a brick. It's kind of it looks like a bucket of dirt.

But it burns, and it's coal. But it's at the mouth of a Texas lignite mine, and so it gives us the opportunity to put forth lignite. And across the southern part of the country, much of the coal is across from here to Florida is lignite. It's Gulf Coast lignite. And so that may be attractive to them, so they have two very, very different kinds of proposals that they'll have an opportunity to look at that and they'll make a decision as to which one, hopefully, which one of those two as opposed to which one of the other 22 will get elected.

In terms of competing interests between crude and natural gas or producers, and what do you mean?

Woman 4: Are there divisions in the energy sector?

Commissioner Williams: I was truly surprised at how almost uniformly supportive Texans were about the prospect of FutureGen. Now, we spent a whole lot of time going back to a year, year and a half ago, going around the state and sort of doing workshops. But in our Texas proposal, environmental defense fund is part of our Texas proposal.

Environmental defense fund sits on my advisory board that helped us figure out where to locate FutureGen. Now, we spent a whole lot of time. They supported our FutureGen legislation that the Legislature passed in the last session. But uniformly, I mean, obviously, coal is thought of, I think, by many folks as sort of the redheaded stepchild in Texas energy business. It ought not be in the future, but that's probably the way it's thought of by many people.

And oil and gas producers supported FutureGen. I think, in large part, the ones out in the Permian Basin really like it because of the prospect it's going to have to provide more supply for CO2. And natural gas producers recognize that technology is being enhanced for CO2 natural gas enhancement recovery.

And so they're on board, even though it's not really, you know, battle and about crude. It's about the environmental issues that you raise.

Woman 5: What is the future of nuclear and renewable energy in Texas? What is the role of the Railroad Comission in making big picture energy policy?

Commissioner Williams: Well, let me first try to deal with the question with regards to alternative fuels. My own sort of research and analysis tells me that obviously, nuclears have to be part of our energy mix, particularly, obviously, it's once the facilities are built and once they've been permitted, then obviously, we can make electricity a whole lot cheaper with nukes than we can with anything else. Unfortunately, we haven't built one in since the 1970s.

And I think in large part because nuclear power has sort of lost the PR game, and it is probably the responsibility of policy-makers, like myself, as well as citizens, like yourself, to continue to make the argument about the necessity for nukes.

Now, as it relates to the traditional renewables and sustainables, whether they be wind and solar, I have to admit I'm not sold yet. I mean, I admit that, much to the chagrin of the Dallas Morning News. I am not sold at the moment. But I do think that in terms of our energy mix, whether it's electricity or transportation, you know, we need to sort of have a cafeteria line where we're going to have a little of everything.

And in that way, I think, wind and solar at some point in time might make sense. But today they're awfully expensive. I mean, the capital cost of building the capital costs to build and provide us with electricity from wind and solar right now is more expensive than any of the others. And the only reason we're building them in the state is because power generators are required to do so, and other folks are subsidizing those costs.

So I you know, right now, I haven't gotten there. But even as it relates to biomass, which I did mention was a possibility in terms of transportation fields, biomass right now is not the most efficient way to make transportation fuels, and so just as we're going to have to develop new technology for wind and solar, we'll have to develop new technology for biomass.

As it relates to the question in terms of the role of the Commission as a policy-making shop, that's what I think we see as, while the Constitution basically just sort of drafts us as a regulatory body, I think all three of us recognize sort of the responsibility and role that we have as policy-makers. That's part of why I'm here.

And that's part of what FutureGen is. I mean, that's trying to sort of tell us about the direction, the new direction, or what we perceive to be the direction about where we think we ought to take the state and the country. And I think all three of us spend a fair amount of time not only talking about our regulatory responsibilities at this legislature but talking to members of the Congress about what we see as sort of the policy needs of the country, the policy cuts that we think that we as a country ought to be making.

But the role has changed traditionally. I tell folks, you know, my good friend former Commissioner Hance, when he was the commissioner, all he had to worry about was production, production, production. And I've got to worry about production, production, production, environmental concerns, safety concerns, as well as tomorrow.

And they didn't have to worry about tomorrow as much, because when they were commissioners, you know, right there a couple of blocks away at 1701 North Congress, three guys could set the price of crude around the world. That's not the case with today's Railroad Commission. We don't set the price of crude around the world. That's changed. That's changed considerably since the Ô70s.

And so what we've got to do is figure out how to put the state and the country in the best position to respond to prices that have been set around the world, and part of that response is avoiding the volatility that is created by, to some extent, the issues about, as I said earlier, about concerns about peaking oil supplies, the susceptibility to political issues in other parts of the world. How do we move away from that is sort of what our policy challenge is.

Man 5: Could you comment on recent efforts to create an organized African-American presence inside the Texas Republican Party?

Commissioner Williams: I think in many ways the effort let's talk about the why. I mean, you know, sometimes I thought you were asking me sometimes people ask me, Why in the world are you a Republican, which I always find to be a fairly interesting question.

But I tell folks that I firmly believe I'm a Republican because I'm black, not despite it. I mean, it was just this whole range of issues that relate to what I think is the success of for the African-American community that I think sort of fall in line with my notions of being a Republican and my notions of being conservative.

And we can sort of outline those, but, you know, that's why I am where I am. And because I am where I am, and because I think it's the right decision for me and right decision for my family, right decision for my larger family I mean, that larger community that is my native community you know, it's extremely important for me to sort of do what I think I do fairly well, and that's to champion a cause and challenge people and invite folks.

And so to build that group and expand that group of African-Americans that call themselves Republicans, I think that's going fairly well. But we've got some challenges. I mean but it's going well if you just look at what's happening on the national scene right now in terms of candidates. You have an African-American who now has the nomination to the United States Senate of Maryland, the current Lieutenant Governor. You have an African-American who you know as a Hall of Fame football player that played for the Pittsburgh Steelers. I know him as a average long jumper in the USC track team when I was an intermediate hurdler on the USC track team, Lynn Swann, running for governor of Pennsylvania.

An African-American Secretary of State running for governor of Ohio, and African-American running for the United States Senate in Michigan. So, I mean, right now, if you look at what's happening in terms of statewide elections, there are more African-Americans running for statewide elections I mean, the top two seats as Republicans than there are as Ds. But we've got some challenges. There's no doubt about it.

You know, if you had heard me give a speech to African-American audiences as I do, I typically say, you know, what we have to do in order to attract, we don't have to change who we are. But we do have to remember some things. I mean, when we see wrongdoing, we got to say we see wrongdoing.

You know, when we see something stupid, we got to say we see something stupid, and I'll share an experience with you. It had to have been five, maybe five election cycles ago, and you may remember when some knuckleheads were going across the South burning churches.

And at the time, I was giving advice and counsel to Republican candidates who were running against Democrat incumbents for Congress, and somebody finally burned a church outside of Dallas. And I said, You know, you might want to send out a press release to say that the burning of this church is a bad thing. You're running in an area where that congressional district is about 35 percent African-American.

And the candidate called me back and he said, Well, Michael, I talked to my advisors and they said that I shouldn't do it. And I said, Now, think about it again. Call me back. And he called me back and said, My advisors told me don't do it.

And two things happened about that, I think, that's instructive. The first one was my wife and I were going to hold a fundraiser for this candidate at our home with what I would call nontraditional African-American Republican donors... black folks.

And Donna said no man was going to come into her house and raise money who didn't have the sense to say the burning of a church was a bad thing. So that's the first thing that happened. Second thing that happened, you know, he had all these proposals where he wanted to talk about, you know, school vouchers and how you move mothers from welfare to work and entrepreneurship. He had all these great ideas, you know, these great initiatives on paper.

And he called me, and he wanted to know why African-American ministers wouldn't call him back. And I was reminded of something that Lee Atwater said years ago. He said, You know, people don't care what you know until they first know that you care.

One of the things that we have to do as a party, when we see stupid stuff is to say it's stupid. One of the things you'll probably hear me talk about at this convention is what I think is the role for us as not Republicans, but the role as Americans in terms of Sudan. And not only in terms of our giving to humanitarian efforts and not only our praying, but, you know, on two occasions, unfortunately, I've been trying to talk to pension fund Texas pension fund directors for Employees Retirement Fund as well as Teachers Retirement fund -- my parents are retired teachers and see if we would encourage those folks to divest in companies that are doing business in Sudan.

And so, I mean, all of those kinds of things, I think, will inure towards us making some progress. And if we had not made progress in terms of the African-American vote, George Bush would not be president today. It's what he did, was able to do in moving in Ohio from 9 percent to 14, what he was able to do in Florida in sort of the same kinds of magnitude of increase in African-American votes, allow him to be president today.

And I've had a lot of fun. You've probably heard me I'll share it within. You probably you know, in the last election cycle, I got to go around the country as part of a trio and going into predominantly African-American audiences. I had on one side I had Miss America in 2003, and on the other side I had Boxing Promoter Don King. I had the Beauty and the Beast.

But if you haven't campaigned with Don, you just haven't campaigned. I mean, there's nothing like campaigning anywhere with Don King. We were in front of a train station in New York City. Don was standing in the middle of the street with three lanes of traffic going this way, three lanes of traffic going the other way, two American flags, standing [indiscernible] Vote for George Walker Bush, Vote for and I mean, traffic stopped, because when you see a troll doll standing out in the middle of the street, you know, I mean, traffic just stopped.

But Don was just phenomenal in campaigning for the President, and I'll do that. I think the other thing that's happening on that front is that with Michael and Marilyn and Ken in Ohio, Keith in Michigan, and Lynn in Pennsylvania, and hopefully myself and Wallace and Dale here in Texas, and other African-Americans statewide-elected officials, that generation grew up in, or at least as products, in close proximity to civil rights leaders and understands sort of the necessity understands sort of movement politics, and I think understand that real notion of maintaining a understandable connection with the African-American community, because I think most African-American voters, the first thing they want to know from us probably isn't about clean coal.

You know, well, they first want to know, Are you still black? And, you know, I have this phrase about saying that I think what you're seeing in this generation are folks that in many ways are fundamentally conservative but authentically black, and there's no question that they're black. And that's going to go a long way in terms of expanding the opportunities for African-Americans expanding sort of the attraction of African-Americans to the Republican party would be elected officials and African-American elected officials and others who leased that old canard about, They left us, in part of what won't be as easily made.

Yes, sir. In the back.

Dr. James Henson: If there are no other questions, we're going to thank you very much for coming.

Commissioner Williams: Thank you. Thank you. My pleasure. My pleasure.

Dr. James Henson: Thanks very much and if I can..

Commissioner Williams: Thank you. Thank you.