Slide 1:CO2 CONTROL AND SEQUESTRATION: A RECENT EXERCISE WITH PUBLIC PERCEPTION

By Theresa Pugh Director, Environmental Services American Public Power Association Addressed To Utility Air Regulatory Group 2006 Control Technology Committee Meeting March 16-17, 2006 Denver, CO

Slide 2:WHAT IS APPA?

2000 Municipal, State Utilities Which Are Community Owned Payment In Lieu Of Taxes Returned To General City Revenue For Fire, Police, Library, Schools Money Must Be Spent Wisely: Low Risk For Failure Results Must Satisfy Mayors, City Council And Utility GMs

Slide 3:APPA: PERSPECTIVE ON CO2 CONTROL

APPA Supports Voluntary CO2-Mitigating Steps Signatory on the President’s Climate Vision Memorandum of Understanding to Reduce GHG emissions intensity by 18% by 2018 Power sector GHG by 3-5% below ’02-’03 baseline APPA Tree PowerTM Program: Provide shade, improve photosynthesis, reduce CO2 Golden Tree Award: one tree per customer served

Slide 4:APPA MEMBERS ACTIVE IN IGCC

Three New Plant IGCC Feasibility Studies in Progress Key Concern: “Co-Production” of Power, Value-Added Products Essential to economical power production? Telecommunications public policy struggle is instructive Scheduled Outages Harder For Public Power Communities (6 Weeks A Year?)

Slide 5:PUBLIC NCEP COMMENTS CAUGHT APPA’s ATTENTION

November 9, 2005 Meeting of the National Commission On Energy Policy (NCEP) What Was Said: “The Utility Sector Is Halfway There To Carbon Sequestration At An Existing IGCC Plant” What Many Heard: “Practical CO2 Control Is Almost Commercially Available” APPA Submitted Comments To Correct Any Misperceptions

Slide 6:APPA RECOGNIZES IGCC OFFERS ENVIRONMENTAL ADVANTAGES

Control of Criteria Pollutants SO2: to 99% NOx: to < 0.05 lbs/MBtu Particulate Matter: < 0.010 lbs/MBtu Thermal Efficiency Present Capability: 38-40% Future potential: to >50% Combustion Byproducts: 1/100th of Conventional by Volume

Slide 7:IGCC vs. ADVANCED PC: COST1

Basis: Cost of Generating Electricity (Amortized Capital and Production) CO2 Control NOT REQUIRED: IGCC > Advanced PC by 15-20% CO2 Control REQUIRED: IGCC > Advanced PC Decreases (5-10%) Alternative: Consider Impact on Cost of CO2 Control Advanced PC: CO2 Control - 70% premium IGCC: CO2 Control - 25% premium 1. Source: “Coal-Fired Generation: At The Crossroads”, EPRI Journal, Summer, 2005

Slide 8:IGCC: GENERALIZATION

IGCC Must Be Applicable to All Coals Current Demo Mix Limited To Narrow Range EPRI: Matrix of Gasifier Designs Required 3 types of entrained-flow 2-3 transport-flow 8 SOA Designs Needed (Coalfleet For Tomorrow) APPA Members Have Experienced Limited Coal Choices in Recent Years Transportation, costs, labor, force majeur, other Will IGCC make this better or worse?

Slide 9:IGCC: RELIABILITY

Most Reliable Demo – Wabash River – 79% Do Public Power Towns Have To Build Two-Gasifier Designs, Or Two Separate Units? Provisions of the National Energy Policy Act of 2005 Testify to Unproven Reliability: $1.8 B Clean Coal Power Initiative: 70% to IGCC APPA supports DOE funding & bonds $800 M investment tax credits for IGCC but not eligible for APPA members since not tradable

Slide 10:SEQUESTRATION: THE HARDEST STEP?

Greater Uncertainty Than CO2 Capture Direct: Inject CO2 Where It Is Not (Or In Low Concentrations) Oil/gas reservoirs Unminable coal seams Underground saline formations Indirect: Improve Uptake, Absorption Into Earths Resources Ocean Terrestrial

Slide 11:SEQUESTRATION: OIL/GAS RESERVOIRS

What We Know Capped by non-porous, impermeable media CO2 improves oil/gas recovery: value-added step but not likely to work at most public power plants What We Don’t Know Will higher pressure alter physical structure and prevent further influx, or prompt seepage? Will a process to maximize (not minimize) CO2 consumption produce different results? Will new pipelines need to be built as CO2 requirements differ compared to natural gas

Slide 12:COAL BEDS, SALINE FORMATIONS

What We Know Coal beds: CO2 can be used in lieu of water to displace CH4 Saline formations: significant storage potential exists, many near generating sites What We Don’t Know Coal beds: high pressure CO2 injection may fracture coal, inhibit influx, or prompt seepage Saline formations: unproven long-term storage-will CO2 migrate to surface?

Slide 13:OCEAN SEQUESTRATION

DOE: 80-90% CO2 Contacting Ocean Is Absorbed – But Slow (CO2 peak ~100-200 yrs) Can We Speed Up Nature? What We Know Oceans present significant CO2 absorbing capacity Injecting micro/macro nutrients will accelerate What We Don’t Know CO2 plume consequences Impact on ocean acidity (pH changes presently noted), consequences to biological activities, aquatic species

Slide 14:TERRESTRIAL SEQUESTRATION

Enhance Natural Terrestrial CO2 Sinks: The Most Cost-Effective Approach? Protect Existing Carbon Sinks Forests, agriculture, biomass crops Deserts, wetlands Manipulate Ecosystems To Increase Carbon Removal Higher density Encourage biomass crops

Slide 15:SUMMARY

APPA Supports Demo of IGCC: Broad Technology Array Required Taxpayers Money: Always Requires Caution Sequestration at Utility Sites is Highly Uncertain: Caution Should Be Exercised Unknown consequences severe? Long time constants: advise slow and steady Learn From The Past Leaking Underground Storage Tanks & Superfund MTBE SO3 plumes from SCR APPA Supports IGCC Where Units Provide Collateral Benefits