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 % 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 Global solutions Inclusion of threshold and developing countries Implementation of JI and CDM Intelligent technology solutions for CO 2 reduction Source: IEA, World Energy Outlook, 2004 Edition Increasing world energy consumption requires more use of fossil energy sources Coal Natural gas Oil Water etc. Fossil World electricity generation in bn MWh Nuclear energy + 62 % + 55 % 4.9 Global climate protection requires efficient technologies and policies

5 Lignite is a modern energy The near future: Increased efficiencies Pre-dried lignite The future: Zero-CO 2 emissions plan Zero-CO 2 IGCC power plant The CO2 emission penalization is a challenge for power generators, but modern lignite technology can turn the challenge into commercial advantage Available today: Upgrade options CO 2 -”cleaning” for modern steam technology

6 Our vision: Power production with CO 2 separation and storage: RWE pursues IGCC* technology * IGCC = Integrated Gasification Combined Cycle ** without CO 2 separation, above 51% thermal efficiency can be achieved *** assuming full cooperation of government agencies in approving partially new technology RWE is the only company that combines coal power plant and gasification know-how (RWE Power) with the theoretical knowledge of CO 2 storage in e.g. depleted gass wells (RWE Dea) in Europe. Key data for the envisaged pilot plant: 450 MW el 40% efficiency with CO 2 separation** 2.3 million tons of CO 2 storage per annum € 1 billion investment In production*** 2014

7 Swift implementation by 2014 calls for parallel development of power plants and CO storage facilities Power plant CO 2 storage site Screening, exploration, approval Engineering, approval Construction, commissioning Approval Decision to build Start of operation ApprovalStart of operation today8/2007 Decision Energy source/location The geological conditions found in the storage site will determine what amounts of CO 2 can be fed at the start and how they can be increased Project development

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) Lignite ) Nuclear energy 45.1 Hard coal 16.7 Gas ) Others 3.3 Total Hard coal 17.8 Gas ) Oil 0.3 Others 0.5 Total 33.4 CO 2 emissions in million tons UK: Power Produced in 2005 in TWh CO 2 emissions in million tons 1) Including plant consumption 2) Inlcuding CHP

10 Lighthouse Project of RWE‘s Climate Strategy: The zero-CO2 power plant DryingCoal gasification Gas treatment CO 2 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 per pipeline to CO 2 storage facility * IGCC = Integrated Gasification Combined Cycle RWE has the in-house know-how in power plant and gasification processes (RWE Power) and basic knowledge for CO 2 storage (DEA) can also be used as H 2, or to produce SNG, methanol, fuel IGCC* Gas and steam turbine Power Hydrogen CO MW gross Oxygen Coal Gasification

12 CO2 storage at the IGCC power plant CO 2 is liquefied in the power plant using high pressure, transported per pipeline and permanently stored at great depths underground. Power H2OH2O Coal IGCC power plant Depth: approx. 1,000 – 3,000 m Aquifer, old oil, gas field (North German basin) CO 2

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 Air Coal Advanced steam power plant CO 2 Zero-CO 2 flue gas per pipeline to CO 2 storage site CO 2 scrubber

14 Development steps towards early 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.