Wyoming Infrastructure Authority (WIA)

Winter Energy Conference

The Future of Coal in Wyoming; the U.S. and the World

The Impact of a Cost-Effective, Commercial CCUS Technology

Little America Resort February 3, 2015—Cheyenne, WY

Ben Yamagata

Executive Director

Coal Utilization Research Council

ADA-Environmental Solutions Aerojet Rocketdyne, Inc. Air Products and Chemicals Alpha Natural Resources Alstom Power, Inc. American Coal Council American Coalition for Clean Coal Electricity (ACCCE) American Electric Power Anglo American Thermal Coal Arch Coal, Inc.* The Babcock & Wilcox Company Caterpillar Global Mining Center for Coal Technology Research at Purdue University Cloud Peak Energy CONSOL Energy, Inc. Duke Energy Edison Electric Institute (EEI) Electric Power Research Institute (EPRI) Energy Industries of Ohio

CURC 2014 Members

FutureGen Industrial Alliance

The Greater Pittsburgh Chamber of Commerce

Illinois Coal Association

Illinois Department of Commerce and Economic Opportunity

Kentucky Coal Association

Kentucky Energy and Environment Cabinet

LG&E Energy

Lehigh University

The Linde Group

Mitsubishi Heavy Industries America

National Rural Electric Cooperative

Association (NRECA)

Ohio State University

Peabody Energy

Pennsylvania Coal Alliance

Penn State University

Schlumberger Carbon Services

Southern Company

Southern Illinois University

State of Ohio, Air Quality

Development Authority

Tri-State Generation & Transmission

Association

United Mine Workers of America

University of Kentucky

University of North Dakota’s Energy & Environmental Research Center University of Utah

University of Wyoming

West Virginia Coal Association

West Virginia University

Western Research Institute

Wyoming Mining Association

Companies in red indicate 2014 Steering Committee Members

2

What is CURC?

Coal Utilization Research Council Based in Washington D.C. & organized in

1997 50 members – coal producers, utilities,

equipment suppliers, states & universities Focused upon coal related technology

development and use as well as CCUS

U.S. Electricity Generation by Energy Source

(Source: U.S. DOE/EIA Electric Power Monthly, March 2014

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Sum

me

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apac

ity

Ad

dit

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s (G

W)

New Additions to U.S. Fleet of Coal, Nuclear, and NGCC

Ventyx Velocity Suite

EIA AEO 2014 early release Chart adopted from NETL information

Forecast AEO’14 Historic NATURAL GAS NUCLEAR COAL

CSAPR Stay

Announced

Ozone (O3)/PM SOx/NOx Cross State Air Pollution Rule (CSAPR) Water Coal Mining

Coal Combustion Byproducts MATS (Mercury/Air Toxics Standard) CO2

CSAPR

Issued

SO2 Primary

NAAQS

NO2

Primary

NAAQS

Ozone NAAQS

Revision

CO2 Regulation

(PSD/BACT) Effluent Guidelines

Proposed Rule

Issued

Begin CAIR

Phase 1

Annual

SO2 Cap

Proposed Rule

for CCBs

Management

Proposed PM NAAQS

Revision

CO2 NSPS

Proposed

Rule

Office of Surface

Mining Proposed

Rule Expected

316(b) Rule

Proposed

MATS

Proposed

Rule

Final CSAPR

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

CSAPR Vacated and

Remanded to EPA,

CAIR in Effect

CO2

NSPS

Final

Rule

Effluent Guidelines

Final Action

Proposed Rule

for CCBs

Management

Delayed

MATS

Final Rule

CAIR remains in

place while

CSAPR is

Finalized

Proposed NO2

Monitoring

Revisions

NO2 and SO2

Primary NAAQS

Final Revisions

PM NAAQS Compliance

Ozone NAAQS

Compliance Period Begins

MATS Compliance 3-4

Years after Final Rule

Final PM NAAQS

Revision

316(b)

Rule

Delayed

316(b) Final

Rule

Updated CO2

NSPS

Published

Proposed CO2

Limits for

Existing Units

State

Implementation

Plans for CO2

Limits on

Existing Units

CSAPR Upheld by

US Supreme Court

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Cap

acit

y (G

W)

Age

99% Existing Baseload Coal-fired Capacity Aging 27 years

Existing Capacity

New AEO Capacity (2013-2020)

Reference – Ventyx Velocity Suite (existing units and announced retirements - EIA AEO 2013 (forecasted additions and Retirements)

Includes AEO ‘13 additions after 2012 Accounts for announced retirements And EIA forecasted retirements

Capacity-weighted

Average Age 62 2013 2020 2030 2040

Operating at Highest Capacity Factors Ever at

62 Years Average Capacity-weighted Age

Announced & Planned Coal Retirements: 2010-2020

CURRENT US coal fleet

MATS Mercury

EPA proposed §111(d) rule

Total US coal fleet capacity

2014: 310 GWs

310 GWs

2016-2020: 50-54 GWs

256 -260 GWs

2020-2030: EPA scenario 49 GWs

207 -211 GWs

Within the next 15 years, US retires 1/3rd of the US Coal Fleet

Diminishing Capitalization of Major U.S. Coal Producers

What are the Challenges Facing the U.S. Coal Industry? Market forces:

• No new capacity markets

• Strong price, availability and competition from shale gas

Regulations:

• More stringent controls of conventional pollutants

• CO2 (§§111(b) & (d))

• Cooling water, ash, regional haze

Public policies, whether financial incentives or regulatory requirements, strongly favor renewables & non-coal options

Development of Coal with CCS technology may be too little, too late

No longer a “given” that coal must be an “option”

• EIA & IEA latest analyses – the need for coal is significantly diminished

• The existing coal fleet is aging, yet EIA predicts it will run longer and harder to balance the energy system

Support for coal is shallow and weak

• General public is indifferent

• Failure to expand coal stakeholders to include those benefiting from reliable, low electricity prices

• Politicians’ support for “dirty” coal comes at too high a price with constituents or political party

1. Promote the Benefits Derived from the Existing Coal Fleet

2. Identify the Importance of Energy Options

3. Explain Why CCS is Critical to Addressing Climate Concerns

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CURC’s Goals

Polar Vortex (the winter of 2013 – 2014)

10% increase in electricity costs leads to 1% decrease in GDP and loss of 1.5 million jobs

Low cost electricity in the U.S. provides a competitive edge versus other free market nations

Low cost coal has been a “buffer” to natural gas prices

Value of the Existing Coal Fleet

Cost Per kWh & Percent of Coal Power Sector Generation

Source: www.sourcewatch.org

US Competitive Advantage: Low cost, abundant, reliable electricity supplies*

U.S. Denmark France Germany Italy Spain UK

Residential 12 42 20 41 32 31 24

Industrial 7 15 13 20 23 17 16

Consumer class

Electricity Price in 2013, cents/kWh

*The National Coal Council: Reliable and Resilient The Value of Our Existing Coal Fleet, May 2014, pp. 24

Energy Options are Important

All options have challenges

• Nuclear -- significant costs to construct; public perceptions post Fukushima

• Renewables -- intermittent resource, requires backup capacity, limited by geography

• Natural gas -- price volatility; delivery infrastructure

• Coal -- environmental challenges; public perceptions of “dirty coal”, current costs of CCS

Fuel Price Volatility

*The National Coal Council: Reliable and Resilient The Value of Our Existing Coal Fleet, May 2014, p.

Impacts of Over-Reliance

Japan & Fukushima Germany & Renewables

• Spending extra $35 B/year on fossil fuels • Trade deficit of $112 billion in ‘13,

quadruple deficit in ’11 • Residential energy bills >20% • Industrial energy bills >30%

Source: Forbes 7/29/14

• Leads Europe & much of the world in total renewable generating capacity (71 GWs) • Average residential electric rate in 2013 (U.S. $) ~ $0.40/kWh • Subsidies for renewables totaled €120.4 billion since 2002 • Plan to add 7,400 MW of coal-fueled generation by 2015

Climate Change – CO2 Reductions Require CCS

Coal is fastest growing fossil fuel used worldwide – soon to surpass oil

3.6 Billion People Have No or Only Partial Access to Electricity

The world will not be successful in addressing significant reductions in CO2 without CCS and CCUS

Developing Countries will Use Majority of Coal and Emit Majority of CO2

According to EIA, China's share of global coal consumption will increase from 47% in 2010 to 55% in 2040. India will surpass the United States as the second-largest coal-consuming country after 2030.

According to EIA, world energy-related CO2 emissions are projected to increase nearly 46% between 2010 and 2040. In 2040, the developing non-OECD nations account for 69% of the world total. Today, the U.S. coal fleet only accounts for roughly 3% of total global GHG emissions.

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It’s more complicated than just “Plugging into an electrical outlet”

The Polar Vortex

60 GW of coal plant Retirements & Electricity reliability

Renewable energy • RPSs • Market distortions

Limiting future options • Nuclear accidents • Natural gas price volatility

Environmental goals & stewardship

BUT, generally the American consumer expects to plug into the outlet and power up everything

The Path Forward Rely upon American ingenuity

Unlikely that either China or India will develop CCS technology

Patience -- a realistic transition time and substantial public financial incentives

Aggressively develop and deploy CCS

Technology is key

Source: CURC analysis of EIA AEO 2013er

Current Technology Levelized Cost of Electricity for a New Electric Generating Unit Commencing Operation in 2018

(Based on EIA/AEO 2013er)

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Technology Developed to Address other Environmental Concerns

With the application of new technologies developed in partnership between DOE and the private sector, the U.S. is significantly reducing criteria

emissions (particulate matter, sulfur dioxide, carbon monoxide, lead, ozone, and nitrogen oxides)

1990 SO2 Concentrations 2009 SO2 concentrations

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New Supercritical Technology in the U.S.

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The U.S. Continues to Modernize its Coal-Fueled Generating Fleet with Over 11 GW of New Supercritical Technology Capacity.

Supercritical Technology Since 2000

Operating

Oak Creek: 1,230 MW (2009)

Comanche: 750 MW (2010)

Oak Grove: 1,600 MW (2009)

Iatan 2: 850 MW (2010)

Trimble County 2: 750 MW (2011)

Sandy Creek: 900 MW (2011)

Westin 4: 530 MW (2008)

Longview: 695 MW (2011)

Council Bluffs 4: 790 MW (2007)

Prairie State: 1,600 MW (2012)

Cliffside: 825 MW (2012)

Turk: 600 MW (2012)

Total: 11,120 MW

Permitted

Holcomb East: 895 MW

Washington: 850 MW

Trailblazer: 600 MW

Coleto Creek 2: 650 MW

Limestone 3: 750 MW

Total: 3,745 MW

Trimble County

Cliffside

Turk

Iatan

Council Bluffs

Prairie State Holcomb East

Comanche

Oak Creek

Oak Grove

Sandy Creek

~ 40 million tons of coal annually in new operating plants or in construction

Westin

Washington

Limestone

Longview

Trailblazer

Coleto Creek

Source: Carbon Capture & Sequestration Technologies@MIT

CCS Projects in US and Europe

CCPI

ICCS Area 1

FutureGen 2.0

International Project

Southern Company Kemper County IGCC Project

IGCC-Transport Gasifier w/Carbon Capture

~$2.67B Total; $270M DOE Est.’d @$5,596B (July 2014)

524 MW on syngas (582 MW peak) Adjusted for 90% capture =

$11,900/kW

EOR – 3 M TPY 2014 start

NRG W.A. Parish Generating Station

Post Combustion CO2 Capture 250 MW slip stream from 610 MW unit

$339M Total; $167M DOE Total Est.d cost $1.0B

EOR for TX oilfield owned by NRG EOR – 1.4M TPY end of 2016 est.d start

Summit TX Clean Energy Commercial Demo of Advanced

IGCC w/ Full Carbon Capture ~$1.7B Total; $450M DOE EOR – 3M TPY 2014 start

Hydrogen Energy California

Commercial Demo of Advanced IGCC w/ Full Carbon Capture

~$4B Total; $408M DOE EOR – 3M TPY 2018 start

Leucadia Energy CO2 Capture from Methanol Plant

EOR in Eastern TX Oilfields $436M - Total, $261M – DOE

Project cancelled in October 2014

Air Products and Chemicals, Inc. CO2 Capture from Steam Methane Reformers

EOR in Eastern TX Oilfields $368M – private, $284M – DOE (??)

In operation

FutureGen 2.0 Large-Scale Testing of Oxy-Combustion w/ CO2 Capture

& Sequestration in Saline Formation ~$1.3B Total; ~$1.0B DOE

SALINE – 1.3M TPY 2016 start

Archer Daniels Midland CO2 Capture from Ethanol Plant CO2 Stored in Saline Reservoir

$208M Total; $141M DOE SALINE – ~1 M TPY 2011 start

Major U.S./Canada Demonstrations

SaskPower Boundary Dam Post Combustion CO2 Capture & EOR 139 MW gross (110 MW net) Retrofit ~$1.24B Total; ~$240 M Canada Gov’t

FINAL Cost/kW= $1.35B/110MW = $12,300/kW EOR – 1.0M TPY Oct 2014 strart-up

Source: U.S. DOE NETL 2013; reference to Canadian project from SaskPower presentation to CURC, October, 2013

The Roadmap is a plan – to be undertaken in partnership with the

federal government – to improve the environmental

performance of coal while continuing to

deliver low-cost electricity, energy and

other valuable coal-derived products to

America, and defines a set of specific technology

solutions in order to meet those goals.

August 2012

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Independent of a climate driver, less CO2 is emitted as a result of increased power

generation efficiency, and less coal is used for the same unit of power output

Reduced emissions of traditional air pollutants, reduced water use and consumption, and

reduced CO2 emissions

2010 “State of the Art” Baseline Data Reductions reflect a range of values for both PC and IGCC technology changes after 2010, but the reductions in 2010 are very significant:

CO2: 0% (no carbon controls in use) NOx and SO2: 90 - 99% reduction PM: 99.6% reduction Mercury: 90% reduction Water Withdrawal Reduction (as a result of cooling towers): 98%

Adequate Time & Funding Produces New and Better Technologies

Successful Technology Development Results in Coal-fueled Electricity Cost-Competitive with Low Carbon Alternatives

Slightly larger cost reductions are possibly by 2035 if RD&D

is successful on emerging “transformational” power

concepts

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President's Request

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President & Congress Coal Budgets

Expect decreasing coal R&D budgets as overall spending by the federal government decreases and coal is perceived to be of lesser importance as a needed energy options in the U.S.

Annual funding levels called for in the

CURC/EPRI Technology Roadmap $400+M

FY 2015 President’s

request $302M

FY 2014 Congress provided $392M

HR 83 “CRomibus”

$400M ($571M to fossil

R&D)

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3-Part Technology Program Coal from 2015 to 2050 & Beyond

Efficiency, reliability, and

flexibility of the existing

coal fleet

Support coal-fueled facilities (CTL,

SNG, chemicals, electricity) and

spur the development of CO2

capture through enhanced oil

recovery

Support Investments in RD&D Today:

• Improve today’s coal-use technologies

(target costs & performance)

• Develop “transformational” technologies

and create new ways to use coal

2013 2025 2050

Near Term Program

Existing Coal Fleet

Mid-Term Program

New & retrofitted coal with CCS

CO2 use for EOR +

Long-Term Program

Transformational

technologies

for the future

CU

RC

’s T

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art

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no

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rog

ram

Thank You