Mike Eastman, Strategic Center for CoalNational Energy Technology Laboratory

Economic Tipping Point Economic Tipping Point or… or…

Opportunity for Opportunity for Clean Coal TechnologiesClean Coal Technologies

Carnegie Mellon University October 27, 2005

U.S. Scene for Electric Power & U.S. Scene for Electric Power & Future Energy SystemsFuture Energy Systems------

102705_cmu_mle

NETL• Only DOE national lab dedicated to fossil energy

− Fossil fuels provide 85% of U.S. energy supply• One lab, four locations, one management structure• 1,100 Federal and support-contractor

employees• Research spans fundamental science

to technology demonstrations

Pennsylvania

West Virginia Alaska Oklahoma

102705_cmu_mle

NETL Mission Areas

Strategic Centerfor Coal

AdvancedInitiatives

Strategic Centerfor Natural Gas

and Oil

102705_cmu_mle

0

100

200

NETL FY 2005 Budget: $748 Million

Coal R&D$288M

Gas R&D$45M

Non-FE$223M

Fossil Energy

Program Support

Clean Coal Technology Demonstration $10M

Clean Coal Power Initiative/FutureGen

$81M

Oil R&D$34M

$ Million

DHS

EE*

EA

Non-DOE

Other

$67M*Does not include ~$650M financially managed by NETL for EERE’s PMC

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NETL’s Investment in Pennsylvania

Impacting Economy Through On-Site Operations• Contribute over $69M annually through Federal and

contractor payroll, small purchases, and conferences• Draw nearly 3,000 visitors to Pittsburgh area per year

Impacting Economy Through R&D• $1.3B total value of agreements and contracts• Obligated $61M in FY04 generating 2,440 job-years in PA

−Small businesses - total value of $29M with $6M obligated annually

−Colleges/universities - total value of $292M with $21M obligated annually

FY 2004

102705_cmu_mle

Electricity = Quality of Life Poverty Impacts Global Security / Environmental Options

GD

P pe

r Cap

ita(1

03 $ /

pers

on /

year

)

Electricity / Total Energy Ratio(kWh / kgoe / year)

Luxembourg

Tajikistan

Norway

Sudan

Mexico

United StatesCanada

Japan

Peru

SingaporeSweden

0

10

20

30

40

50

60

0 1 2 3 4 5

World Resources Institute Database, accessed September 1, 2005 http://earthtrends.wri.org/searchable_db/

102705_cmu_mle

Rapidly Increasing Dependence on Energy Imports

Foreign Energy Imports Growing Due to Oil and Natural Gas

Impo

rt P

erce

nt o

f Tot

al C

onsu

mpt

ion

25%

30%

35%

40%

45%

50%

55%

60%

65%

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

AEO’05(extrapolation

’02

Increased a total of 7 Points (2025)(~6% per year

over last 3 years)’05

“I urge Congress to pass legislation that makes America

more secure and less dependent on foreign energy.”

President G. W. BushState of the Union Address, February 2, 2005

“I urge Congress to pass legislation that makes America

more secure and less dependent on foreign energy.”

President G. W. BushState of the Union Address, February 2, 2005

Annual Energy OutlookPublication Year

102705_cmu_mle

Energy Use Compared to Economic Growth

80120160200240280320360400440480

1970

1975

1980

1985

1990

199520

0020

0520

1020

15202020

25

Year

Real GDP

ElectricityGeneration

Total EnergyConsumption

$2.72 GDP/kWh

$3. 52 GDP/kWh

$2.46 GDP/kWh

$2.52 GDP/kWh

AEO ‘05

$2.58 GDP/kWh

Coal-firedGeneration

Inde

x: 1

973

= 10

0

GDP: History - U.S. DOC, Bureau of Economic Analysis; Forecast - Annual Energy Outlook 2004 Energy & Electricity: EIA, Annual Energy Review 2002; Annual Energy Outlook 2004

Rev. 061404

102705_cmu_mle

0

500

1,000

1,500

2,000

2,500

3,000

Coal Nuclear Natural Gas Renewables Oil

AEO'00 AEO'01 AEO'02 AEO'03AEO'04 AEO'05 '03 Actual

+774

+920

+130

+29

+66

3,029

LNGB

illio

n kW

h

LNG

AEO Estimates of Generation Fuel Sources by 2025

EIA, Annual Energy Outlook 2000, 2001, 2002, 2003, 2004 and 2005* - AEO 2000, 2001, 2002 trendline extrapolation from 2020 to 2025

Trends for Dramatic Changes in North American Natural Gas-fired Generation Forecasts; LNG Acceptance Begins to Displace Coal in AEO’05

102705_cmu_mle

Energy Policy Needs Pyramid

socialacceptability

natural resourcesefficiency

cost efficiency

securityof supply

access tocommercial energy

debate possible

nodebate

possible

satis

fiers

defic

it ne

eds

Christoph W. Frei, The Kyoto Protocol – a victim of supply security? or if Maslow were in energy politics; Energy Policy 32 (2004) 1253-1256

“Can we observe similar patterns in historically observed energy priorities?”

“In Maslow’s pyramid, hierarchy illustrates that only once lower order needs of emotional

well being are satisfied do we concern ourselves with higher order needs of

influence and personal development.”

102705_cmu_mle

Broad Environmental Concerns About Coal

Cradle to Grave: The Environmental Impacts from Coal,Clean Air Task Force, Boston, MA,June 2001

102705_cmu_mle

0

1

2

3

4

1970 1980 1990 2000

Coal Use

Contaminant Emissions Down SharplyU.S. Power Plants

Inde

x: 1

970

= 1.

0

ElectricityGeneration

Nitrogen Oxides

Sulfur DioxideParticulateMatter

Natural Gas Use

YearEPA, National Air Quality and Emissions Trends Report, 1999 (March 2001)

DOE, EIA Annual Energy Review

102705_cmu_mle

0

20

40

60

1966 1976 1986 1996

330 GW of Coal-Fired CapacityHistoric U.S. Generation Capacity Additions

OtherNatural GasNuclearCoal

NPC Study 2003 based on EIA, Platt’s , AEP

GW

Inst

alle

d C

apac

ity

102705_cmu_mle

Coal Technologies Must Be Cost Competitive !

6

DOE Report #DE-AC-01-94FE62747, April 2001

0 1 2 3 4 5 6 7

Natural Gas Price ($ / MMBtu)

Cos

t of E

lect

ricity

(Cen

ts /

kWh)

Cost $500 -$600 / kW

Natural Gas CC

Coal-Fired Power PlantCapital Cost $1000 - $1200 / kWCoal Price $1.00- $1.25 / MMBtu

5

4

3

2

1

102705_cmu_mle

Increasing Trend in Natural Gas Price Forecasts

Forecasts of Near-term Price Troughs Hinder Coal Plant Development

$1.50$2.00$2.50$3.00$3.50$4.00$4.50$5.00$5.50$6.00$6.50$7.00$7.50$8.00$8.50$9.00

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

’99’00’01’02

’03’04’05Actual

AnticipatedLNG Supply/Price

Effect AlaskanPipeline

$/M

cf (W

ellh

ead)

Annual Energy OutlookPublication Year

RJA (10/10/05)

EIA October 2005 STEO +$3.18/Mcf delta from AEO’05 in 2006 (+$72 Billion to Consumers)

EIA, Annual Energy Outlook 1999, 2000, 2001, 2002, 2003, 2004 and 2005Short Term Energy Outlook, October 2005

Raymond James “Energy Stat of the Week” 10/10/05 (Henry Hub reduced by $0.75)

102705_cmu_mle

EIA Discrepancies in 12 Month Forecast4 Year Average… Actual Price 25% Off Forecast (29% Last 3 Years)

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

1999 2000 2001 2002 2003 2004 2005

Actual

$/M

cf (H

enry

Hub

)

$7.251/31/05

-9%-11%+41%

+1%

$5.73

$1.52

-13%

-28%

-33%

-26%EIA

Forecasts*(Actual Avg.

25% Off)

*-EIA wellhead forecast adjusted to Henry Hub using difference between year’s actual Henry Hub and Wellhead averages

Consistently Underestimated

One Year Price Forecast Comparison2001 - 2004

RJAForecasts

(Actual Avg.16% Off)

Actual Henry Hub prices per January 2005 Short Term Energy OutlookRaymond James “Stat of the Week”, February 7, 2005

102705_cmu_mle

Declining Domestic Natural GasProduction Forecast

16.017.018.019.020.021.022.023.024.025.026.027.028.029.030.0

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

’02

’03

Tcf/Y

ear ’04

AEO’05 Domestic Production Reduced by an AmountLarger Than Alaskan Pipeline (>1.5 Tcf/yr in 2020)

Annual Energy Outlook 2002, 2003, 2004 and 2005

Annual Energy OutlookPublication Year

’05

CERA(Midwinter Update: North American Natural Gas Market Review 1/20/05)

Lehman Brothers (4Q’04 Industry Survey 1/25/05)

- 6.6 Tcf(-23%)

- 2.2 Tcf(-8.2%)

102705_cmu_mle

Exxon Mobil LNG Forecast

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

AEO ’04

Exxon Mobil 12/04

Percent of total natural gas supplyand Bcf/d productionin 2010, 2020, 2030

AEO ’05

Developers’ Perspectives Even More Aggressive

Tcf/Y

ear

Reference: Exxon Mobil; The Outlook for Energy, A 2030 View; December 2004; http://media.corporate-ir.net/media_files/irol/11/115024/presentations/xom_120204.pdf

102705_cmu_mle

Status of North American LNG DevelopmentExisting and Proposed

LNG Terminals • 5 existing import terminals (including Energy Bridge)

• 19 FERC / Coast Guard / Canadian / Mexican approved sites

• 21 additional proposals

• 8.4 Tcf supply if all approved plants built

• EIA forecast for U.S. LNG = 6.4 Tcf by 2025U.S. Jurisdiction

FERC

U.S. Coast GuardAs of September 27, 2005

* U.S. pipeline approved; LNG terminal pending in Bahamas FERC Office of Energy Projectshttp://www.ferc.gov/industries/lng/indus-act/exist-prop-lng.pdf

102705_cmu_mle

Resurgence In Gas-fired Generation’sContribution to Electricity Production

16.0%

18.0%

20.0%

22.0%

24.0%

26.0%

28.0%

30.0%

32.0%

34.0%

36.0%

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

’02

’03

% T

otal

Ele

ctric

ity S

uppl

y

’04

’01

’05

Increased Based on “Revisions in Relative Capital Costs and Efficiencies for New Coal- and Gas-fired Generating Capacity”

EIA, Annual Energy Outlook 2001, 2002, 2003, 2004 and 2005

102705_cmu_mle

Are Risks of LNG Capital Costs Considered?$/

kW

New Gas-fired Generation Will Be Increasingly Requiredto Secure a Reliable Fuel Source, Adding ≈ $500/kW

0200400600800

1,0001,2001,400

Coal-fired LNG Derived Gas-firedNGCC

Generation Equipment Regasification Tankers Liquefaction Upstream Gas Dev.

$149

$185

$118$48

$650

5 years to complete

4 years to complete

geopolitical risk?

geopolitical risk?

References: QatarGas III Costs, Gulf States Newsletter, April 19, 2004;Calculated Based on 375 Bcf/y LNG Train per 10,000 MW Gas-fired Capacity;

Deutsche Bank, Global LNG, Exploding the Myths, July 22, 2004

102705_cmu_mle

U.S. is Poorly Positioned on Price for Delivery of LNG ($/mmbtu)

< 2.5 < 3 < 4 < 4 < 3

Graphic: Cambridge Energy Research Associates.31001-10

102705_cmu_mle

Conclusion: Gas-fired Generation Growth Overestimated; Cost Underestimated

• Generation growth, at one time expected to represent 1,200 BkWh, reduced to 100 BkWh, absent imported LNG

• Costs, expected to represent significant advantage over coal at $500/kW, left out import costs-U.S. pays highest shipping-raises cost competitiveness concern

• Roughly 2 LNG supply systems (365 Bcf/year each) required to support 20,000 MW of NGCC

• ConocoPhillips Qatar Gas III: $5 billion for 1 Bcf/day of gas (in 2010)*

• Actual cost of gas-fired generation -- $500/kW for plant plus $500+/kW for fuel supply infrastructure

* Matthew Simmons Coronado Club Speaker’s Luncheon, Houston, Texas, June 9, 2004

102705_cmu_mle

Coal Production History And Forecast

500

600

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

MM

st/Y

ear

Still A Significant Challenge For Nation’s Miningand Transport Industries

AEO ’05

+ 405MMst

(+37%)

Annual Energy Outlook 2005Annual Energy Review 2003

102705_cmu_mle

Pull-back In Coal-fired Contributionto Electricity Production

44.0%

45.0%

46.0%

47.0%

48.0%

49.0%

50.0%

51.0%

52.0%

53.0%

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

’02

’03

Coa

l % o

f Tot

al E

lect

ricity

Sup

ply ’04

’01

Successful LNG Introduction &Alaska Pipeline

’05

Reflects a (Model) Preference for Imported LNGOver Coal-fired Generation

EIA, Annual Energy Outlook 2001, 2002, 2003, 2004 and 2005

102705_cmu_mle

New Coal-fired Capacity ForecastAEO’04 vs. AEO’05

Another Decade of Insufficient Domestic Market Scaleto Support 13,000 MW/Year Industry

01,000

2,0003,000

4,0005,000

6,0007,0008,000

9,00010,000

11,00012,000

13,00014,000

15,00016,000

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

AEO'04 AEO'05

Cap

acity

Add

ed M

W

~10 Years Until Real Growth Begins

Removed 6,650 MW

Annual Energy Outlook 2005

102705_cmu_mle

Coal Capacity History and Forecast AEO’05

Will Nation’s Industry be Prepared and Capableof Meeting This Coal Plant Forecast?

Cap

acity

Add

ed M

Ws

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,00011,00012,00013,00014,00015,00016,00017,00018,00019,00020,000

1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025

Capacity Addition Levels Not Seen

in 40 Years?

Industry Growth Trend Not Seen in

50 Years?

20 YearMarket Trough

Forecast - Annual Energy Outlook 2005Historic Data - UDI 2001 Operating Data

102705_cmu_mle

Government’s Coal R&D Investment Strategy

Demonstration Projects• Clean Coal Power Initiative• ~ $49 million in FY05

Financial Incentives• Encourage investment

in commercial projects with advanced technology

Market PenetrationTechnology Development

R&D• Core R&D program• FutureGen• $300 million in FY05

Comm

erc ial Rea dines sNETL

NETLNETL

102705_cmu_mle

Clean Coal Technology Development Must Address Near and Long Term Energy Needs

Short-term Needs:• Maximize existing fleet service• Provide advanced technologies

for new, near term plants• Provide technology bridge to

transition to future plants.

Long-term Needs:• Zero emissions coal technology• Reliable coal technology• Cost competitive coal

technology• Technology for Hydrogen

Economy

102705_cmu_mle

2000 2005 2010 2015 2020 2025O2

Membrane

AdvancedGasifier/

Combustor

SequestrationReady Integrated

Adv. Power System

Near-Zero Emission Plants with

Sequestration

Integrated Adv. Power System

Sequestration Ready Near-Zero Emission Power

Plants

Integrated Adv. Power System w/Fuel Cell

IGCC &CFB

Demos

Envr. Control(Hg, water, byproducts)

Gas Cleaning Advances in System

ComponentsATS Syngas Turbine

SECA Fuel Cell

ATS Turbine

CO2 Capture

CO2 Sequestration

Sequestration ReadyNear-Zero Emission

Plants w/CoproductionPower/Fuel

Coproduction Liquids

H2Membrane

Fuel Cell/IGCC Test

IGCC Demos

FutureGen-Coproduction Hydrogen/Power/Sequestration

Integrated Technology Roadmaps Drive R&D

Technology Module Demos

Integrated Plant Demos

Near-Zero Emission Plants

CCPI Round 1

CCPI Round 2

102705_cmu_mle

ReferencePlant 2010 2020

Plant Efficiency (HHV) 40% 45-50% 50-60%

Availability >80% >85% >90%

Plant Capital Cost$/kW

900 – 1300 900 – 1000 800 – 900

Cost of Electricity¢/kWh

3.5 3.1 <3.0

Performance Targets Keep R&D Focused & On Track

(Represents best integrated plant technology capability)

102705_cmu_mle

FE/NETL Coal Program ComponentsR&D Program FY05 ($300 M)

• Central Systems (~$85M)− Innovations for Existing Plants (~$19M)− IGCC (~$46M)− Combustion (~$5M)− Turbines (~$15M)

• Distributed Generation (~$77M)• Sequestration R&D (~$45M)• Fuels (~$32M)• Advanced Research (~$43M)• FutureGen (~$18M)

Demonstration Program• Clean Coal Power Initiative (~$49M)

102705_cmu_mle

Integrated R&D Developments Required for Zero-Emissions Coal Systems

Gas CleaningGas CleaningGasificationGasificationOxygenOxygen

GasStreamCleanup

Products/Products/ByproductsByproductsUtilizationUtilization HH22/CO/CO22

SeparationSeparationFuels/Chemicals

Fuel Cell

High Efficiency Turbine

Electricity

LiquidsConversion

ProcessHeat/Steam

Coal

OxygenMembrane

Gasifier

H2

Figure 2

PowerPower

FuelFuel

CO2

Fuels and Fuels and ChemicalsChemicalsCOCO22

SequestrationEnhanced Oil Recovery

SequestrationCoal Seams Saline Formation

102705_cmu_mle

Energy System Dynamics− Fuel Cells / Hybrids− Gas Combustion− Carbon Capture− FutureGen

Computational and Basic Sciences− Computational Chemistry− Device Simulation− Advanced Fuel Systems− Gas Hydrates

Geological and Environmental Systems

− Carbon Sequestration− Clean Air Technology− Water & Coal Utilization

Byproducts

Conduct Intramural ResearchNETL Focus Areas

102705_cmu_mle

University/NETL R&D InitiativeA New Collaborative R&D Effort

Collaboration = Grant ProgramRelationships that provide

opportunities for mutual benefit and results beyond what any single organization or sector

could realize alone.Leader to Leader Institute-2005

17 Projects Recently Selected ~ $2.5M; CMU gets 5

102705_cmu_mle

Program Model

Mission Relevance

NET

L Te

chni

cal C

apab

ilitie

s

ExistingProgramFocus

Fits with FutureEnergy/EnvironmentalFocus

Sust

ains

, Sh

arpe

ns E

xist

ing

Dev

elop

mor

e,be

tter,

or n

ew

Address N

ational G

rand Challe

nges

18

25

4

37117

36 30

12

17

26

27

19

6

1431

1

9

29

3239

38

28

13

10

2

3

24 33 16

8

23

35

40

21

22

102705_cmu_mle

Advanced Research - Power SystemsIngenuity, innovation and implementation

R&D Activities• Advanced Materials• Novel Sensors & Controls• Adv Power Plant Simulations• Bioprocessing Technologies• Educational Foundation

Programs

Computational Energy SciencesScientific Consortium, visualization,

Modeling, and simulation

ObjectivesBridge gap between basic andapplied researchFoster development of innovative systemsImprove efficiency and environmental performance, reduce cost

Advanced materials consortium for ultra-supercritical power plants

102705_cmu_mle

IGCC Future Challenges

• Lower capital cost− $200 to $400 / kWe reduction

• Greater reliability− Single train availability

> 85 to 90%

• Improved efficiency− 60% HHV

• Near- zero emissions (including CO2)− Improved separation/capture technology− Low cost, safe, permanent sequestration options

102705_cmu_mle

IGCC Technology Issues

H2/CO2 Separation

Fuel Gas

Oxygen MembraneGas

Cleaning

Durability of MembraneIntegration with Overall Process

Oxygen

Coal

GasificationCO2

Hydrogen

Cost-Effective Multi-Contaminant Control toUltra-Clean Specifications

Moderate TemperatureHg Removal at Elevated

TemperaturesIntegrated Specifications

with DownstreamProcess Requirements

Integration with NOx Reduction Processes

Injector ReliabilitySingle Train AvailabilityDurability of Refractory MaterialDurability and Accuracy of

Monitoring DevicesAlternative FeedstocksFeed System ReliabilityHeat RemovalTemperature Measurement & Control

Low-rank Coal

Durability of MembranesLow Flux Contaminant SensitivityHeat Removal

102705_cmu_mle

Contributions to Program TargetsGasification Systems

Projects Cost Efficiency Reliability H2 Product & CO2 Capture

TransportGasifierCompactGasifierAlstom Chemical LoopingGE ChemicalLoopingStamet Pump Dry Feed

Instruments & Materials

102705_cmu_mle

Driving Down Cost For Gasification Systems(1)

(> 40% Cost Reduction Potential from R&D)$/

kW

Today 2010 2020

650

600

550

500

450

400

350

300

$355 /kW

Regenerable SorbentsAir Separation Membranes

System Integration

Dry Fuel Flexible FeedsTransport Gasifier

Reference Plant 625/kW2020 Plant1 355/kW

1High Efficiency Near Zero Emission

$625 /kW

(1) Air Separation, Coal Feed, Gasification, Gas Stream Purification/Separation

102705_cmu_mle

Why Interest in IGCC is Rising

• Recognition of continuing high-price of natural gas

• Excellent environmental performance of IGCCs (SO2, NOx, particulates and solid waste)

• Potential for economic control of mercury emissions

• Growing environmental community view of IGCCs as BACT for coal systems

• Consolidation of IGCC development companies

• Uncertainty of carbon management requirements and potential suitability of IGCC for CO2 controls

102705_cmu_mle

Tampa ElectricIGCC Power Plant

Low-NOx Burners

Advanced Pollution Controls• Now installed on 75% of U.S. coal plants• 1/2 to 1/10 cost of older systems

CCT Program Success Stories

PSI Energy Wabash RiverIGCC Power Plant

Proven Advanced CoalPower Systems• Two “super-clean” coal-based IGCC

plants operating reliably• World’s largest CFBC power plant

JEA CFBC Power Plant

102705_cmu_mle

IGCC Technology in Early CommercializationU.S. Coal-Fueled Plants

• Wabash River − 1996 Powerplant of Year Award*− Achieved 95% availability

• Tampa Electric− 1997 Powerplant of Year Award*− First dispatch power generator

Nation’s first commercial-scale IGCC plants, each

achieving > 95% sulfur removal > 90% NOx reduction

*Power Magazine

102705_cmu_mle

Clean Coal Power Initiative

• Demonstrate emerging technologies in coal-based power generation− $1-2 billion, 10-year program − 50/50 cost-shared− Government / industry

partnerships

• Coal key component of National Energy Policy

102705_cmu_mle

NeuCo, Inc. Integrated Optimization Software

$8M – DOE $10M – NeuCo

Projects in CCPI – Round 1Great River Energy

Lignite Fuel Enhancement$11M – DOE$11M – GRE

U. of Kentucky Research FoundationMulti-Product Coal Utilization

$4M – DOE $5M – UK

Western GreenbrierClean Coal Co-Production

$107M – DOE $107M – WGC

Wisconsin Electric Power Co.TOXECON Multi-Pollutant Control

$25M – DOE $25M – WEP

WMPI PTY., LLC Coal-to-Clean Fuels and Power

$100M – DOE $512M – WMPI

Rev. 071404

102705_cmu_mle

Projects in CCPI – Round 2

Southern Co. Services, Inc. Southern Co. Services, Inc. IGCC (Transport Gasifier)IGCC (Transport Gasifier)

$235M $235M –– DOE DOE $322M $322M –– Southern Co.Southern Co.

Excelsior Energy Inc. Excelsior Energy Inc. IGCC (EIGCC (E--Gas)Gas)$36M $36M –– DOE DOE

$1,149M $1,149M –– ExcelsiorExcelsior

Pegasus Technologies, Inc.Pegasus Technologies, Inc.AI / SimulationAI / Simulation

$6M $6M –– DOE DOE $6M $6M –– PegasusPegasus

Peabody EnergyPeabody EnergyMultiMulti--Pollutant ControlPollutant Control

$19.5M $19.5M –– DOE DOE $59.4M $59.4M –– PeabodyPeabody

102705_cmu_mle

CCPI Priority Technologies($49 million in FY2005)

Technologies for

Zero-Carbon Emission

Plants

• Advanced Power Technologies− Improved efficiency / lower capital cost− Sequestration friendly

• Sequestration

Technologies for

Clear SkiesCompliance

• Emission control− Mercury− NOX

Round 2 Round 3 Round 4 Program Goals

Rev. 071404

102705_cmu_mle

Reducing CO2 Emissions(All Fossil Fuels & Energy Sectors Contribute CO2 Emissions)

Industry29%

Industry29%

Commercial18%

Commercial18%

Residential21%

Transportation32%

Transportation32%

Oil43%Oil

43%

Coal36%Coal36%

Natural Gas21%

Electricity39%

Electricity39%

Other30%

Other30%

Transportation32%

Transportation32%

United States Carbon Dioxide Emissions(By Source & Sector)

AEO2004

102705_cmu_mle

Carbon Sequestration Program Structure

Infrastructure7 Regional Partnerships

• Engage regional, state, local governments

• Determine regional sequestration benefits

• Baseline region for sources and sinks

• Establish monitoring and verification protocols

• Address regulatory, environmental, & outreach issues

• Test sequestration technology at small scale

Power/SequestrationComplex

• First-of-kind integrated project• Verify large-scale operation• Highlight best technology

options• Verify performance &

permanence• Develop accurate cost/

performance data• International showcase

IntegrationBreak-

throughConcepts

Measurement, Monitoring & Verification

Non-CO2GHG

Mitigation

Sequestration• Direct CO2

storage• Enhanced

natural sinks

Core R&D

Capture of CO2

Initiated FY 2003

Initiated FY 2004

Carbon Carbon SequestrationSequestrationLeadership Leadership

ForumForum

102705_cmu_mle

Systems Analysis Used to Focus and Track R&D (Example cost reduction potential for CO2 capture developments)

32%

23%

17%

10%

0

5

10

15

20

25

30

35

A B C D

O2 Capital 4 %

Perc

ent I

ncre

ase

in C

OE

(Rel

ativ

e to

No

Cap

ture

Cou

nter

part

)

O2 Load 5 %

Adv. Sorbent 4 %

Co-Storage 1 %

Shift Mem. 2 %

O2 Membrane 9 %

Shift Mem. 4 %

O2 Membrane 9 %

Adv. Sorbent 8 %

A—Current ScrubbingB—Oxygen MembraneC—O2 Membrane + WGS Membrane +

Adv. SorbentD—O2 Membrane + WGS Membrane +

Adv. Sorbent + Co-Storage H2S/CO2

5.5 c/kWh 5.2 c/kWh 4.9 c/kWh 4.6 c/kWh

Goal

Basis: No Capture COE 4.2 c/kWh 400 MW Net Output90 % CO2 Capture80% Capacity FactorSaline Formation Storage

…the results of NETL’s systems, analysis and

planning activity…

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FutureGen: A Presidential Initiative

One-billion-dollar, 10-year demonstration project to create world’s first coal-based, zero-emission electricity and hydrogen plant

President Bush, February 27, 2003

• Produce electricity and hydrogen from coal using advanced technology

• Emit virtually no air pollutants

• Capture and permanently sequester CO2

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FutureGen Uses Cutting-Edge Technologies

• Can accommodate technology innovations with minimal modifications − Emerging from national or international R&D− Slipstream or full stream tests− Over life of project

• Some emerging new technologies− Membrane-based O2 and H2 separation− High-efficiency hydrogen turbines− High-throughput gasifiers− Monitoring systems− Fuel-cell systems FutureGen will be a global

showcase of very best technology options for coal-based systems with zero carbon emissions

FutureGen will be a global showcase of very best technology options for coal-based systems with zero carbon emissions

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Energy WildcardsPerceptions About LNG Safety ?

World Oil Production Peaking ?

Prod

uctio

n

Time

Global Warming Concerns ?

200 150 50

350

300

250

200

100 0

20-2-4

∆Tatm (Vostok)

CO2 (Vostok)

Deg

rees

C

ppm

CO

2

Time, kyrs

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Signals of an Economic Tipping Point or Opportunity for Coal

What to look for…• Serious Legislative commitment to expand

domestic energy resources; Recognition of sharply declining energy security

• Continued high natural gas price; Evidence of declining supply

• Slow development for future LNG plants; More safety/security reports; Commercialization learning curve for offshore LNG; Current LNG business model (Expectation of Low Gas Prices, Independent of Oil) unproven

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Signals of an Economic Tipping Point or Opportunity for Coal (continued)

What to look for…• Regional electricity shortages 2007-2010

due to insufficient fuel for gas-fired generation, lack of alternative generation

• Meaningful progress on new coal-fired or nuclear project(s), by respected industry leader, Shifts in industry philosophy (risk management); Academia and industry focus on human resource needs

• Implementation of Energy Policy Act (converting policy to actions)

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Closing Comments

• Coal must continue play a key role in securing healthy U.S. economy

• Must maximize existing fleet performance as bridge to the future

• New clean coal plants needed soon – we see challenging but “do-able” path forward for coal

• R&D will show near-zero emission coal-based energy is possible…and affordable?

Rev. 061404

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Visit Office of Fossil Energy & NETL Websites

http://fossil.energy.gov/ www.netl.doe.gov