Air & Waste Management Association September 13, 2012 The Cahaba Lilies Photo by Danny Smith U.S. Environmental Policy Issues and the Natural Gas Solution

2 The First Issue: Climate Change Policy

3 Carbon Tax? Energy Efficiency Requirements? GHG Cap & Trade Program? Who do you regulate? Renewable Portfolio Standards? Who are the Winners & Losers? GHG Emission Limits? Would a Federal Program Preempt Existing State Programs? Carbon Offsets? Carbon Sequestration? A Menu of Options and Issues Associated with GHG Regulation Full Fuel Cycles?

State Government Regulation of GHG Emissions 4

EPA’s Mandatory GHG Emission Reporting Rule On September 22, 2009 EPA issued the Mandatory Reporting of Greenhouse Gases Rule. The rule requires reporting of annual GHG emissions from the following: Suppliers of fossil fuels and industrial greenhouse gases (GHGs) Manufacturers of vehicles and engines outside of the light duty sector Facilities that emit 25,000 metric tons or more of GHGs per year to submit annual reports to EPA. The rule is intended to collect accurate and timely emissions data to guide future policy decisions on climate change. 5

EPA’s Proposed New Electric Power Plant CO 2 Standard Would limit CO2 emissions from new electric power plants to 1,000 pounds per megawatt-hour Would apply to new fossil fuel-fired power plants greater than 25 megawatts in size The end result will be that new fossil fuel-fired power plants will more than likely be fueled with natural gas rather than coal or utilize Carbon Sequestration technologies These proposed new rules were published on March 27, 2012 for 60 days public comment that was extended to June 25 6

CO 2 Capture and Sequestration as a Climate Change Strategy 7 Campfire Photo by Danny Smith

CO 2 Geologic Storage Injection Rock (Target Formation) Cap Rock (Confining Formation) Sandstone with porosity Shale with no porosity Slide Source: Southern Company

Large CO 2 geologic storage capacity is available Deep Saline Sandstone Formations100 – 10,000 GtC Depleted Oil and Gas Reservoirs100 – 1,000 GtC Coal Seams10 – 1,000 GtC Mississippi-Alabama-Florida Sandstone Saline Formations GtC EOR utilizationcurrently <0.1 GtC/yr Sequestration Option Capacity (order of magnitude est.) NOTE: “GtC” = Gigatonnes Carbon Slide Source: Southern Company

Enhanced Oil Recovery (EOR) Primary oil production uses reservoir pressure or pumping to get 10 ‐ 20% of OOIP. Secondary production, using water flooding gets another10 ‐ 20%. Injecting CO 2 reduces the oil viscosity and, with water can drive the mixture to production wells with another 10 ‐ 20%. Some of the CO 2 comes up with the oil and is recycled. Source: USDOE/NETL Slide Source: Southern Company

CO 2 Injection CO 2 Injection CO 2 Source Oil to Market Production Well CO 2 Recycled CO 2 Recycled Oil Bank Swept Area Saline Reservoir Integrating CO 2 -EOR and Geologic Storage 1 ton CO 2 = 1-3 bbl oil Slide Source: Southern Company

The Cahaba Lilies in Alabama - Photo by Danny Smith Natural Gas as a Climate Change Strategy CLEAN ABUNDANTEFFICIENT

Natural Gas is a Cleaner Generating Choice Approximately 23% of the electricity in the United States is generated from natural gas Source: American Gas Association

14 The Full Fuel Cycle is the Basis for Sustainable Energy Choices

U.S. natural gas reserves are growing with more new gas discovered every year. Analysts believe enough future supply exists to meet America’s diverse energy needs for 100 years. Natural Gas is Abundant in the USA 15

U.S. Natural Gas Production, (trillion cubic feet) 2012 Annual Energy Outlook Early Release, Energy Information Administration.

U.S. and Canada Shale Basins 17 Source: National Energy Board, Understanding Canadian Shale Gas, 2009.

Global Shale Resources 18 Source: EIA Annual Energy Outlook 2011

Shale Gas Production Technologies such as directional (horizontal) drilling and hydraulic fracturing have unlocked the potential for gas development from shale rocks 19

20 The Second Issue: New EPA Hazardous Air Emission Standards for Electric Power Plants

EPA’s New Mercury and Air Toxic (Utility MACT) Standards for Electric Power Plants Issued February 16, 2012 These Standards will reduce mercury and various other air toxic emissions from new and existing coal- and oil-fired power plants Emissions-control technology options include: Scrubbers Electrostatic Precipitators Fabric Filters Activated Carbon Injection / Dry Sorbent Injection Blending or Switching Fuels (i.e. natural gas!) Compliance time up to 4 years Natural Gas Fired Power Plants are not Effected by these Standards!

In the U.S., Power Plants Emit: 22 60% of the SO 2 20% of the chromium 13% of the NO x organics, dioxins/furans, and others 50% of the mercury over 50% of many acid gases 30% of the nickel 60% of the arsenic Sources: NEI Trends Data (2009) and IPM (2010) (SO 2, NO X ); Proposed toxics rule modeling platform, based on inventory used for 2005 NATA (Hg); Inventory used for 2005 NATA (other toxics) Source: EPA

23 Source: National Electric Energy Data System (NEEDS 4.10) (EPA, December 2010) Source: EPA The New Standards Affect 1,350 Coal and Oil-Fired Units at 525 Power Plants Natural Gas Power Plants are not affected by these new standards

24 The Third Issue: Proposed EPA Regulation of Coal Ash

25 Proposed EPA Regulation of Coal Combustion Residuals (Coal Ash) Source: Tennessee Department of Health December 22, 2008 TVA Kingston Power Plant Failure of a Fly Ash Pond Dam Approximately 5.4 Million cubic yards of fly ash sludge was released into a branch of the Emory River

Coal Combustion Ash Bottom Ash: Falls to the bottom of the furnace Fly Ash: Collected by electrostatic precipitators Source: Georgia Power Company

Typical Coal Ash Handling Facilities Ash LandfillAsh Pond Source: Georgia Power Company

Proposed EPA Options for Regulating Coal Combustion Residuals (Coal Ash) Option #1: Treat it as Hazardous Waste (Expensive!!) Option #2: Treat it as non-hazardous waste and impose new pond design requirements NOTE: Coal combustion Residuals are currently exempt from federal regulation and are only subject to state and local requirements

The Conclusion – Natural Gas Wins 29

Questions? 30 The Cahaba Lilies in AlabamaPhoto by Danny Smith