Natural Gas & Climate Change Forum Octo October 4, 2007 Ronald Reagan Building

1. Natural Gas & Climate Change Forum Octo October 4, 2007 Ronald Reagan Building Washington, D.C.

2. May XX, 2006 American Gas Foundation Natural Gas and Climate Change ForumOctober 4, 2007

3. Many Different Bills to Reduce GHG Emissions

4. Economy-Wide Proposals in 110th Congress

5. One Source, Innovative Solutions Please contact us to discuss how SAIC’s energy and climate change teams can help you: Steve Messner Ph: 858 220-6079 Email: steven.d.messner@saic.com Michael Mondshine Ph: 703 676-4835 Email: michael.r.mondshine@saic.com Jette Findsen Ph: 202 488-6624 Email: jette.findsen@saic.com Contact Us

6. U.S. Environmental Protection Agency Office of Atmospheric Programs EPA Analysis of The Climate Stewardship and Innovation Act of 2007S. 280 in 110th CongressPresentation for the Natural Gas & Climate Change ForumOctober 4, 2007Allen A. FawcettThe full analysis is available at:www.epa.gov/climatechange/economicanalyses.html

7. Results: S. 280 Senate ScenarioSources of GHG Abatement (ADAGE) • S. 280 allows offsets and international credits to make up 30% of the total allowance submissions requirement. • The quantity of offsets allowed decreases as allowance submissions decrease. • Since the quantity of offsets allowed is decreasing over time and the quantity of abatement is increasing over time, offsets make up a large fraction of abatement in the early years of the policy, and there contribution to total abatement decreases over time.

8. Results: S. 280 Senate ScenarioU.S. Electricity Generation, mid-term results (ADAGE) Note: Other non-fossil includes hydro, geothermal, wind, solar, biomass and municipal solid waste.

9. Results: S. 280 Senate ScenarioGlobal CO2 Concentration (MiniCAM) • S. 280 Senate Scenario • USA adopts S. 280. • Group 1 countries (Kyoto group less Russia) follow an allowance path that is falling gradually from the simulated Kyoto emissions levels in 2012 to 50% below 1990 in 2050. • Group 2 countries (rest of world) adopt a policy beginning in 2025 that returns and holds them at year 2015 emissions levels through 2034, and then returns and maintains them at 2000 emissions levels from 2035 to 2050. • After 2050, all countries hold emissions caps constant at 2050 levels. • CO2 Concentration Results • In the reference scenario, Global CO2 concentrations rise from historical levels of 354 parts per million (ppm) in 1990 to 718 ppm in 2095 • In the Senate scenario, CO2 concentrations are 481 ppm in 2095. While CO2 concentrations are significantly reduced in the Senate scenario, they are not on a stabilization trajectory. • Incremental Effect of S. 280 • If the U.S. adopts S. 280 and no other countries adopt emissions caps, then CO2 concentrations in 2095 are 23 ppm lower than the reference scenario. • If the U.S. does not cap emissions, and all other countries take on the targets from the Senate scenario, then CO2 concentrations in 2095 are 25 ppm higher than the Senate scenario. • The larger incremental effect when the U.S. acts alone is, in part, due to the fact that the U.S. is able to achieve more of its carbon-equivalent emissions reductions through non-CO2 greenhouse gas abatement. • This is counterbalanced by a smaller marginal effect on ocean uptake from the U.S. emissions reductions when the U.S. acts alone.

10. Climate Change and Natural Gas:A View From EIAforNatural Gas and Climate Change ForumAmerican Gas FoundationOctober 4, 2007

11. Impact of a CO2 Value on Energy Prices

12. Energy-Related CO2 Emissions(million metric tons) 2005 2020 2030 2005 Actual Reference S.280 Reference S.280 • The electric power sector dominates energy-related CO2 emission reductions. • Although the S.280 GHG target for covered entity emissions in 2030 is 18 percent below the 1990 level (equivalent to 34 percent below the 2005 level), total energy-related CO2 emissions in the S.280 Core Case are only about 7% below the 2005 level in 2030 due to the use of offsets and banked allowances, partial coverage and greater reduction of other GHGs. If more (less) international offsets were available, projected 2030 energy-related emissions under S.280 would be higher (lower).

14. www.eia.doe.gov

15. GHG Legislation and Implications for the Natural Gas Industry Natural Gas & Climate Change Forum Joel BluesteinOctober 4, 2007

16. U.S. GHG Emissions – 2004Total = 7,074 MMTonnes

17. U.S. GHG Emissions by Fuel and Sector - 2004

18. S. 280 Cap Compared to BAU Data source: EIA analysis of S. 280 – McCain/Lieberman Bill

19. EIA Projection of S. 280 Response

20. EIA Projection of Offset Usage

21. CO2 Prices Shift New Technology Choices EIA Case

22. Capital Costs Also Shift Technology Choices Current “High Cost” Case

23. NGC Modeling of Gas Consumption

24. Contact Information Joel Bluestein ICF International jbluestein@icfi.com 703-528-1900

25. Landfills 24% Oil & Natural Gas Systems 26% CH4 8% Other 19% CO2 84% N2O 6% Coal Mining 10% HFCs, PCs, & SF6 2% Enteric Fermentation 21% U.S. Greenhouse Gas Emissions: The Importance of Methane • Methane is potent greenhouse gas (GHG) with 100-year global warming potential of 23; atmospheric lifetime of ~12 years • The 2nd most important GHG accounting for ~18% of total climate forcing • A primary constituent of natural gas and a valuable, clean-burning energy source Inventory of U.S. Greenhouse Gas Emissions and Sinks 1990 – 2005, USEPA, April, 2007

26. Producing Wells Transmission Lines Gathering Lines Processing Plant Compressor Stations LNG or Propane/Air Plant Underground Storage Large Volume City Gate Customer (Regulators/Meters) Regulator/Meter Residential Distribution Mains (Lines) Customers Commercial Customer Methane Emission Reduction Technologies & Practices Gas Production & Processing • Reduced Emission Well Completions • Install Plunger Lifts on Gas Wells • Identify, Measure & • Fix Leaks in Processing Plants • Install Flash Tank Separators on Dehydrators Gas Transmission • Identify, Measure & Fix Leaks in Compressor Stations, Pipelines • Use Pipeline Pumpdown • Replace High-Bleed Pneumatics Oil Production • Install VRUs on Crude Oil Storage Tanks • Route Casinghead Gas to VRU or Compressor for Recovery & Use or Sale Gas Distribution • Identify, Measure & Fix Leaks in Pipelines & Surface Facilities • Use Pipeline Pumpdown Techniques to Minimize Venting Picture courtesy of American Gas Association

27. Natural Gas STAR Partner Accomplishments (1990 – 2005) Total U.S. greenhouse gas emissions (left axis) U.S. oil & natural gas sector methane Emissions (right axis) U.S. Oil & Natural Gas sector methane emissions are 10% under the 1990 level emissions Units in teragrams of CO2 equivalent (TgCO2E) Inventory of U.S. Greenhouse Gas Emissions and Sinks 1990 – 2005, USEPA, April, 2007

28. Natural Gas – a Premium Fuel Goal is to meet our expanding energy needs while preserving the environment Natural gas is part of the solution • Use it wisely • Ensure adequate supplies Over the long term, a bridge to a low carbon future….

29. Super Boiler – Breakthrough Technology

30. Revolutionary MelterHelps Glass Industry Compete • 40 bcf/yr of natural gas demand • Improved capital cost, efficiency, and productivity • Supported by consortium of glass manufacturers: Corning, Johns Manville, Owens Corning, PPG, Schott

31. Carbon Management Opportunity Liquefaction Transportation Fuels Syngas Gasification Pipeline Quality Gas / Chemical Feedstock Excellent Environmental Performance Pipeline / Chemical Plant Power Plant Fuel Power Plant Gasification – Pathway to Secure, Clean Energy Supply

32. Flex-Fuel Test Facility at GTI for Next Generation Fuels

33. Bio-Methane (Bio-gas) Renewable methane from biomass, landfills, wastewater treatment

34. Congressman Peter Roskam Fuels a Hydrogen Vehicle

35. Engineering Responses to Climate Change- Carbon Management -Natural Gas & Climate Change Forum Ah-Hyung Alissa Park Earth and Environmental Engineering Columbia University October 4, 2007

36. Research Clusters in Academia • Columbia University • Earth Institute • Lenfest Center for Sustainable Energy • MIT • MIT Energy Initiative • Stanford • The Global Climate and Energy Project • Berkeley • Berkeley Institute of the Environment

37. Carbon Management CO2 Removal • Necessary Characteristics • Capacity and price • Environmentally benign fate • Stability Separation Transportation Sequestration US DOE target: $10 per ton of carbon avoided

38. [Source: http://esd.lbl.gov/GEOSEQ] Carbon Sequestration Technologies Different Geological Sequestration Options Example: Statoil's Sleipner West gas reservoir in the North Sea: 106 ton/year CO2 are injected into a brine formation [Source: “Demonstrating Carbon Sequestration” Geotimes, March 2003] Sources: DOE

39. http://www.princeton.edu/~chm333/co_two/minerals/ Carbon Sequestration Technologies Mineral sequestration Ocean sequestration Air capture Sources: DOE

40. Sources: DOE