1. Climate Action Plan and Alternative Energy Overview UNC Energy Task Force March 17, 2010

2. Agenda Introduction Overview of Climate Action Plan (CAP) and Alternative Energy Study Modeling Results Question and Answer

3. Climate Action Plan UNC became an early signatory to the American Colleges and Universities Presidents Climate Commitment (ACUPCC) in 2007 and began development of its Climate Action Plan Overall goal = zero net greenhouse gas emissions by 2050 The plan addressed all sources of greenhouse gas (GHG) emissions in UNC’s inventory: – On-site fossil fuel combustion (Scope 1 emissions) – Purchased electricity (Scope 2 emissions) – Transportation and other indirect sources (Scope 3 emissions) The plan includes measures affecting both energy demand and energy supply

4. Alternative Energy Study In 2008, in support of the Climate Action Plan, UNC initiated a study of several alternative energy technologies for potential implementation at UNC Involved a diverse team of experts, including UNC Energy Services staff, contractors, and technology suppliers Publicly-available and proprietary studies were reviewed, suppliers were interviewed, and plant trips were made to examine operational examples of the alternative energy technologies under consideration

5. Alternative Energy Study The alternative energy technologies included: – Biomass Gasification – Co-firing Biomass – Landfill Gas – Poultry Litter – Solar PV – Solar Thermal – Anaerobic Digestion of Animal Waste – Wind Power – Geothermal – Ocean/Tidal Energy – Algae – Carbon Sequestration – Modular Nuclear – Municipal Solid Waste (MSW) Plasma Gasification – Fuel Cells

6. Alternative Energy Study Alternatives that impact the central utility plant: – Switch to Natural Gas – Large-scale Biomass Plant – Co-firing Biomass – MSW Plasma Gasification – Modular Nuclear Through significant research and discussion, the team evaluated the merits of each technology, the potential for implementation at UNC, and made recommendations for further, more detailed evaluation

7. Near-term Alternatives – Carbon Reduction

8. 50% Natural Gas 50% Coal Substitute 100% Coal Substitute Large Scale BiomassPlasma Gasification Near-Term PortfolioLong-Term Common Long-Term Alternative LFG Banked Offsets Additional Projects

9. This is How We Looked at Alternatives Process & Key Assumptions Process overview – Decision quality – “Sustainable” decision criteria Well defined baseline – Building blocks – Highlights Energy price forecasting – Natural gas – Coal – Biomass Financial risk exposure to climate change – Legislative policy scenarios – Cost of carbon – Results by scenario Analysis & Insights Sample alternative (use model) Abatement Curve Portfolio Development Impact on Energy Consumption Conclusions

10. 1. Process overview - Decision quality Process Elements Decision quality Investment analysis Stakeholder questions Insights versus answers Fit the objective “Sustainable” decision criteria Commitment to Action

11. Sustainable decision criteria 1)Traditional economic financial metrics 2)Monetize non-traditional risks Reliability Climate change 3) Explicit consideration of non-monetized values: Environmental Social Economic

12. Well defined baseline – the “Base Case” Building blocks

13. Well defined baseline – the “Base Case” Highlights

14. Energy Price Forecasting – Full Cost

15. Financial risk assessment Climate change Most risk exposures of colleges and universities fall within the following six categories: – Strategic risk – Operating risk – Compliance & regulatory risk – Financial risk – Reputational risk – Technology risk Financial exposure

16. Proposed legislation informed the development of Energy Strategies’ Policy Scenarios

18. Energy Strategies developed a set of carbon allowance price forecasts…

19. Financial risk exposure to climate change

20. Sample Alternative

22. CAP Portfolio – Near-term Alternatives – Thin Clients – Business Travel – Duplex Printing – Behavioral Initiatives – Computer Standby – Chiller Plant Efficiency Projects – Low-cost ECMs – Commuter Travel – Commercial Mail Management – Green Building (SB 668) – Campus Fleet – Composting – Heat Recovery Chillers at IRB (Phase 1 and 2) – Consolidated Delivery The following are near-term alternatives (implemented 2010 through 2015) that are cost effective regardless of the value of greenhouse gas emissions abated:

23. CAP Portfolio – Near-term Alternatives Additionally, the following near-term alternatives are included because they are either already in progress or they would be cost effective in a carbon- constrained world: – Landfill Gas – Co-Fire 20% Coal Substitute

24. Near-term Alternatives Abatement

25. Near-term Alternatives – Cash Flow

26. Near-term Alternatives - Impact on Energy Demand and Coal Use

27. Long-term Portfolio Paths Common Alternatives The following alternatives will be implemented in the mid- or long-term and will be common to all long- term Portfolio Paths: – Solar Thermal/Heat Recovery Chillers (Carolina North) – Biomass Gasification Plant Phases 1 and 2 (Carolina North) – Moderate ECM Implementation (Main Campus)

28. Long-term Portfolio Paths After the near-term alternatives are implemented, there are 4 mutually exclusive paths UNC may follow to carbon neutrality. These paths are characterized by a major change to the central heating plant: – 50% Coal Substitute, 50% Natural Gas – 100% Coal Substitute – MSW Plasma Gasification – Syngas w/ NG (Replace all Coal) – Large Scale Biomass Plant

29. Portfolio Comparison – Cash Flow

30. Conclusions 1.Almost 50% reduction from business-as-usual GHG emissions and coal use achieved by 2020. 2.Several viable long-term paths to GHG mitigation and the elimination of coal are being pursued. 3.CFB boilers offer valuable “optionality” for use of alternative solid fuels. 4.GHG mitigation greatly accelerated in a cost effective manner if a price is legislated for GHG emissions.