Vision – Chicago: Hub of the 21 st Century Clean Energy Economy

1. Vision – Chicago: Hub of the 21st Century Clean Energy Economy Growing Chicago’s Clean Energy Economy Sean Casten,President & CEORecycled Energy Development, LLCMay 11, 2010University of ChicagoChicago IL RED | the new green www.recycled-energy.com

2. What is Chicago’s core competence? • Richard Longworth’s question • Author, Caught in the Middle: America’s Heartland in the Age of Globalism • Former senior correspondent for Chicago Tribune • Now senior fellow at Chicago Council on Global Affairs • How has Chicago avoided the economic collapse that has struck the rest of the rust belt? • Longworth’s answer: other cities specialized in making things while Chicago specialized in understanding how things are made • World leaders in manufacturing-focused finance, advertising, consulting, insurance, logistics are all based in Chicago • How does Chicago clean energy economy best capitalize on these innate skills? RED | the new green www.recycled-energy.com

3. Chicago has deep understanding of how heat & power are produced and used. • 2/3rds of US fossil fuel use / CO2 emissions is associated with the production of heat and power. • Any transition to a clean energy economy will ultimately be measured by its ability to reduce our fossil fuel use per unit of economic activity. • Chicago’s industrial understanding gives knowledge base not found in other regions • GTI, UIC Industrial Assessment Center, etc. • The premier global energy recycling firms are all based in Chicagoland, drawn by regional competencies • Recycled Energy Development, Primary Energy, Capital Power, Lakeside, Endurant Energy, others. RED | the new green www.recycled-energy.com

4. RED representative project • Project will generate 60 MW of power from presently wasted heat • Will produce 464,000 MWh of fuel-free power/year – same as would be produced by 265 MW of solar PV. • Will lower the cost of silicon production - and therefore, PV. RED | the new green www.recycled-energy.com

5. Primary Energy representative project • 95 MW of power recovered from the exhaust of 268 coke ovens. • Saves host ~$40 million/year with negative CO2 emissions/MWh. • A clean energy economy depends upon steel, silicon, cement and other innately carbon-intensive raw materials; reducing their CO2-intensivity is key. • Courtesy Primary Energy RED | the new green www.recycled-energy.com

6. A clean energy economy needs a goal-driven, holistic policy. • Favored paths change over time, creating short-term incentives at odds with long-term capital investment. • Nuclear, ethanol, wind, PV have all seen spectacular boom/bust cycles over past 40 years in US and Europe • Incentives wax/wane with electoral cycles and energy crises • Cyclicality of incentives ironically at odds with goals. • Regulatory volatility has raised cost of capital for cleanest (often lowest risk) technologies. • Chicago’s manufacturing-dependent economy will suffer so long as environmental policies are in conflict with economic policies. • Clean energy is not innately expensive – but clean energy policy is often incompatible with cheap energy policy. RED | the new green www.recycled-energy.com

7. Deploying low-cost, clean generation requires reforms to affect power price and contract tenure. • No new baseload generation in nearly 30 yrs • Retail prices trended towards marginal costs as long as there was spare generating capacity on nuke/coal/hydro fleet • Supply constraints driven prices up since 2001, will continue • Wholesale markets also drive down to marginal cost; no generation technology (clean or dirty) can be built & amortized based on wholesale market signals. • Markets not yet deep enough to provide long-dated contracts • Long-dated contracts generally not available outside of utility commissions (which don’t work for non-utility participants) and path-driven RPS mandates; many win/win low cost & clean approaches have no route to market. RED | the new green www.recycled-energy.com