Climate Change: An Opportunity for a Bi-Lateral Approach Driving Technology Innovation Woodrow Wilson International Center for Scholars Canada Institute May 23, 2007 Edward C Lowe General Manager GE Energy

2 GE Energy … a global technology business Operating in more than 100 countries … 125+ years 36,000 employees …~700 locations 2006 revenue $19B Investing in cleaner technologies – $3 billion invested over last 5 years – Growing annual investment to $1.5 B by 2010

3 Affordable, reliable & environmentally responsible Global power generation requirements Driving cost of electricity down Efficiency Reliability Emissions EfficientDiverse Nuclear Wind Gas Coal Oil Geothermal Biomass Hydro Solar Nuclear Wind Gas Coal Oil Geothermal Biomass Hydro Solar +

4 Requirements For Global Deployment of Cleaner Power Generation Technologies Predictable Stable Public Policy Policy should lead technology Set reasonable stretch performance goals Technology Advancements Innovation coupled with enforceable IP protection Predictable policy provides confidence for companies to invest for the long term Investment In Manufacturing Supply Chain New technology requires significant manufacturing investments by the OEM and its suppliers Predictable stable policy encourages investment

5 Global renewable installed capacity (GWs) Source: REN update + GE est (2/07) ‘05‘04 Wind All other ‘06 ~210 US capacity has grown from near zero to > 12,000 MW in 15 years Canada’s capacity has grown to 1.5 GW, 47% CAGR in 5 years 70 GW in 50 countries Global Wind to grow 13% CAGR through 2030 Clear Policy Accelerates Technology Development and Deployment – Wind Energy

6 Global Wind deployment driven by technology advancements and public policy ‘85‘95‘ COE (¢/kWh) 15 Technology Investments Project scale Public Policy Incentives Renewable Portfolio Standards Feed In Tariffs Production Tax Credits Investment Tax Credits Renewable Obligation Certificates

7 IGCC – Cleaner By Design In Integrated Gasification Combined Cycle (IGCC) plants, gasification converts low cost fuels, like coal, into a high value, natural-gas-like fuel called synthesis gas (syngas) to fuel a combined cycle system. In pulverized coal (PC) plants, coal is fed into a boiler, which combusts the coal, followed by post combustion pollution controls. Treats 1/100 th volume CO 2 concentration % in syngas (IGCC) vs 14% in flue gas (PC) 25% cost premium vs SCPC

8 IGCC: Emissions Approaching Natural Gas Source: GE internal data, average of 30 US permits granted, applications and publicly reported emissions Advanced PC/SCPC IGCC NGCC NOx SO2 PM10 Average Recent Permit Data Best Individual Plant Lb/MMBTU Water Usage Hg Hg % Captured PCIGCC % 90%+ PCIGCC PCIGCC PCIGCC 30-40% Less 90% + Hg removal 30% less water CO 2 capture ready 33% less NO x 75% less SO x 40% less PM 10 IGCC Environmental Benefits Versus Best in Class Supercritical Pulverized Coal

9 Technologies Pathways Carbon Capture Technology Amine Scrubbing IGCC Post-Combustion Pre-Combustion Oxy-Combustion Chilled Ammonia Membranes O 2 /CO 2/ /H 2 High efficiency shift Pre-mix H 2 combustor CO 2 $/Ton 1 $44 1 $21 1 Today Developing Post-Combustion Pre-Combustion 1 The Future of Coal, MIT 2007 Coal Energy Study ~$

10 Economics gal/MW-hr Water Makeup 4 kW penalty Net Equiv. Eff. Capital Cost COE Increase Avoided Cost $/MT Raw Water Usage CO %-70% $37,800 95% $3,412 Removal % $/lb Mercury 3 SCPC 2 IGCC 1 -13% -15% +32% 35 15% -18% 6 -30% +83% +68% % GE Energy Gasification Radiant, Illinois #6, 630MW Net (baseline), Selexol tm AGR 2 SCPC, 3500/1100/1100, Illinois #6, 550MW Net (baseline) Econamine tm scrubbing 3 The Cost of Mercury Removal in an IGCC Plant, DOE NETL, final report, Sept Power Plant Water Usage and Loss Study, DOE NETL, August Cost and Performance Comparison of Fossil Energy Plants, DOE NETL, Report 401/53106, May 2007 (Final), 90% CO2 capture 6 Including STG equivalent power reduction from Econamine tm regeneration

11 Uncertain Policy Hinders Deployment - IGCC GHG uncertainty delaying Integrated Gasification Combined Cycle Capacity additions based on the lowest COE Low carbon technologies will be disadvantaged Policy required that monitizes the benefits or offsets their cost premium EPAct of 2005 with ITC provisions was a significant step forward in accelerating deployment IGCC

12 Government Policy/Incentives to Accelerate Global Cleaner Coal Expand the current investment tax credits authorized and funded under the Energy Policy Act of 2005 to offset the current 20 – 25% CAPEX premium for IGCC or similar incentive Monitize benefits of lower criteria emissions (SOx, NOx, PM) Low carbon portfolio standard with trading among power generators for low carbon credits Carbon capture requirements for new coal power plants phased in over time CO 2 allocations for new low carbon plants EOR and saline aquifer carbon storage demonstration projects — Gov’t issued site selection criteria & monitoring reqm’ts — De minimis leakage and liabilities for leakage must be addressed

13 Accelerating Deployment of Low-Carbon Technologies Requires… Predictable Long term Public Policies Investments and advancements by technology providers Collaboration among multiple stakeholders for successful implementation