FUTURE EU ENERGY MIX - WILL COAL PLAY AN IMPORTANT ROLE?

1. FUTURE EU ENERGY MIX - WILL COAL PLAY AN IMPORTANT ROLE? International Conference in Gliwice 29 May 2006 Matthias Dürr RWE AG

2. Diversity of the Energy Mix will be key • Each individual energy source has its own advantages and disadvantages • In a world of general uncertainties, no one knows how the costs and supply conditions will evolve – including economic and social costs • Therefore, a well thought-out strategy calls for a diversification of the energy mix in order to reduce dependence on the current polluting and imported sources • This also includes greater efficiency in power plants and in the deployment of plant and equipment, sparing use of valuable resources • Lignite is the only indigenous fuel available in Germany that can be extracted cost-effectively and without subsidies in the long term

3. Facts on lignite • Lignite is a domestic, zero-subsidy resource that is mined at the site of its utilization • Germany is the world’s number one lignite mining nation with 182 million tons of in 2004 • 92% of the lignite mined are used for power production and it accounted for 26.1 % of Germany’s total power production • Commercially attractive lignite resources in the „Rheinland“ alone account for ca. 50 billion barrels of oil equivalents (boe) • This energy content exceeds the remaining oil and gas resources in the entire north sea by the factor 1.3 (estimated at 40 billion barrels of oil equivalents) • At the current rate of depletion, resources in the Rhineland are expected to last for more than 200 years

4. Significant fossil energy sources in the future energy mix World electricity generation in bn MWh Increasing world energy consumption requires more use of fossil energy sources 25.8 4.9 Global climate protection requires efficient technologies and policies + 55 % 3.0 16.7 1.3 Water etc. 6.8 3.0 Nuclear energy + 62 % 2.6 • Global solutions • Inclusion of threshold and developing countries • Implementation of JI and CDM • Intelligent technology solutions for CO2 reduction Oil 1.2 3.2 9.8 Fossil Natural gas 6.7 Coal 2003 2020 Source: IEA, World Energy Outlook, 2004 Edition

5. Lignite is a modern energy The CO2 emission penalization is a challenge for power generators, but modern lignite technology can turn the challenge into commercial advantage The near future: Increased efficiencies The future: Zero-CO2 emissions plan Available today: Upgrade options CO2-”cleaning” for modern steam technology Pre-dried lignite Zero-CO2 IGCC power plant

6. Our vision: Power production with CO2 separation and storage: RWE pursues IGCC* technology RWE is the only company that combines coal power plant and gasification know-how (RWE Power) with the theoretical knowledge of CO2 storage in e.g. depleted gass wells (RWE Dea) in Europe. Key data for the envisaged pilot plant: 450 MWel 40% efficiency with CO2 separation** 2.3 million tons of CO2 storage per annum € 1 billion investment In production*** 2014 * IGCC = Integrated Gasification Combined Cycle ** without CO2 separation, above 51% thermal efficiency can be achieved *** assuming full cooperation of government agencies in approving partially new technology

7. Swift implementation by 2014 calls for parallel development of power plants and CO storage facilities today 8/2007 2010 2014 Engineering, approval Power plant Construction, commissioning Project development Decision Energy source/location Approval Decision to build Start of operation CO2 storage site Screening, exploration, approval Construction, commissioning Approval Start of operation The geological conditions found in the storage site will determine what amounts of CO2 can be fed at the start and how they can be increased

8. Back-up

9. RWE has a strong Carbon Footprint due to Coal based Activities Germany: Power Produced in 2005 in TWh ( own plants only) UK: Power Produced in 2005 in TWh Lignite 70.91) Hard coal 17.8 Nuclear energy 45.1 Gas 14.82) Hard coal 16.7 Gas 12.52) Others 0.5 Others 3.3 Oil 0.3 Total 148.5 Total 33.4 CO2 emissions in 2005 120 million tons CO2 emissions in 2005 22.7 million tons 1) Including plant consumption 2) Inlcuding CHP

10. Lighthouse Project of RWE‘s Climate Strategy: The zero-CO2 power plant Drying Coal gasification Gas treatment CO2 capture Gas and steam turbine Power Dry coal Raw coal

11. Power generation with CO2 capture and storage: RWE is pushing forward the IGCC technology RWE has the in-house know-how in power plant and gasification processes (RWE Power) and basic knowledge for CO2 storage (DEA) IGCC* Oxygen Gasification Gas and steam turbine Power Hydrogen Coal 450 MWgross can also be used as H2, or to produce SNG, methanol, fuel CO2 per pipeline to CO2 storage facility * IGCC = Integrated Gasification Combined Cycle

12. CO2 storage at the IGCC power plant CO2 is liquefied in the power plant using high pressure, transported per pipeline and permanently stored at great depths underground. H2O IGCC power plant Coal Power CO2 Depth: approx. 1,000 – 3,000 m Aquifer, old oil, gas field (North German basin)

13. RWE is strenghtening its development of CO2 scrubbing - for lignite and hard coal Technology suitable for retrofitting existing power plants and those being built Power Zero-CO2 flue gas Air Advanced steam power plant CO2 scrubber Power Coal CO2 per pipeline to CO2 storage site

14. Development steps towardsearly availability of the CO2 scrubber • Development of new scrubbing agents in the context of the EU CASTOR project/test facility at Esbjerg PP (DK) • Creation of partnerships with suppliers and chemical industry for development and optimization • Plant trialling in lignite-fired power plant of RWE • until 2008: pilot project • from 2009: demonstration plant (start of engineering) • RWE budget: approx. € 90 mill.