presented byEvis C. Couppis, PhD, P.E.

Planning in a Carbon- Constrained World

R. W. Beck, Inc.

IPED COAL POWER CONFERENCE

January 18-19, 2007 St. Petersburg, FL

Agenda

Characterize CO2 emissions

Identify possible CO2 capture/sequestration options

Review CO2 capture/sequestration costs

Review possible CO2 allowance pricing

Identify planning options going forward

Will We Get CO2 Legislation?

In 2004, 60% of utilities surveyed believed we will get legislation

In 2006, 93% of utilities surveyed believed we will get legislation

We already have legislation in California and other programs such as RGGI in Northeast

The real issue isn’t whether it will happen but when it will happen

2006 U.S. CO2 Emissions

Sector MMetric Tons

TOTAL 5941

Power 2357

Transportation 1962

Industrial 1050

Residential 351

Commercial 221

EIA (2006)

U.S. CO2 Emissions by Sector

Power39%

Transportation33%

Industrial18%

Commercial4%

Residential6%

EIA (2006)

U.S. CO2 Emissions by Fuel Type

Petroleum 43%

Natural Gas20%

Coal37%

Other 0%

EIA (2006)

U.S. CO2 Emissions From Power Generation

Coal82%

Petroleum3%

Other 1%

Gas14%

EIA (2006)

U.S. Electricity Sector by Fuel Type, Qbtu

Coal53%

Gas15%

Nuclear20%

Renewables10%

Imports0%

Petroleum2%

EIA (2006)

CO2 Emissions by Technology/Fuel Type

PC 0.95

Gas Combined Cycle 0.41

IGCC 0.88

Technology/Fuel TypeEmissions, Tons/Mwhr

Carbon Capture Options

Amine scrubbing Amine-based solid sorbent Selexol process Rectisol process Aqueous ammonia scrubbing Aqueous ammonia multi-pollutant capture PC oxy-fuel combustion, cryogenic ASU PC oxy-fuel combustion, oxygen-selective membrane ASU Co-sequestration of CO2/SO2/NOx

Carbon Sequestration Options

Injection into oil/gas reservoirs Injection into deep, unmineable coal seams Injection into saline aquifers Injection into deep oceans Indirect sequestration (trees)

Cost Impacts of CO2

Capture/Sequestration

What are impacts if new plants were equipped with CO2 capture/sequestration?

Under stringent regulations – approximately 90% removal Under a cap and trade system, these capture/sequestration

costs may not represent the most cost effective option The costs presented are order of magnitude at best The costs of CO2 control under a cap and trade would depend

on all available options to generate credits/reductions/offsets Costs would be dependent on the stringency of the regulations

Heat Rate Impacts

NETL(2006), MPR Associates (June 2005), Bechtel (November 2002)

0

5

10

15

20

25

30

35

40

Perc

ent I

ncre

ase

Technology Type

PC

PCSC

IGCC

NGCC

Capital Cost Impacts

NETL(2006), MPR Associates (June 2005), Bechtel (November 2002)

0

10

20

30

40

50

60

70

80

90

Perc

ent I

ncre

ase

Technology Type

PCPCSC

IGCC

NGCC

Cost of Electricity Impacts

NETL(2006), MPR Associates (June 2005), Bechtel (November 2002)

0

10

20

30

40

50

60

70

80

Perc

ent I

ncre

ase

Technology Type

PCPCSC

IGCC NGCC

CO2 Avoided Costs

Cost of CO2 avoided=

($/Mwhr)capture – ($/Mwhr)reference ∕

(tCO2/Mwhr)reference – (tCO2/Mwhr)capture

Note: Mwhr based on net power

Possible Allowance Pricing

In Europe, 5-30 Euros/ton with an average approximately 15 Euros (2005-2006)

Southern Company Report (May 2005) estimates, high of $7 in 2010-$20/ton in 2030 (2004$); medium of $6-$7/ton

National Energy Commission recommended $7/ton in 2010 escalating 5%/year

ICF (January 2006) estimates, high of $10 in 2010-$20/ton in 2025 (2003$); expected $5-$15/ton

Will CO2 Costs be Fully Recoverable?

Depends on your generation mix

Depends on regulated vs. unregulated market

Depends on whether gas or coal is on margin

Gas will likely be impacted more than coal

Utility Planning Steps

Quantify present emissions Take advantage of easy efficiency

improvements (pick low hanging fruit)

Consider CO2 regulations/legislation in planning (particularly in technology selection)

Conduct risk analysis (level of regulation, timing, etc.)

Questions

Evis C. Couppis, PhD, P.E.R. W. Beck, Inc.

ecouppis@rwbeck.com(303) 299-5230

IPED COAL POWER CONFERENCE