1. CO 2 CONTROL AND SEQUESTRATION: A RECENT EXERCISE WITH PUBLIC PERCEPTION By Theresa Pugh Director, Environmental Services American Public Power Association Addressed To Utility Air Regulatory Group 2006 Control Technology Committee Meeting March 16-17, 2006 Denver, CO

2. T. Pugh, CO2 & Sequestration, 2006 UARG Control Tech Mtg Confidential: Attorney/Client Priviliged Information 2 WHAT IS APPA? 2000 Municipal, State Utilities Which Are Community Owned Payment In Lieu Of Taxes Returned To General City Revenue For Fire, Police, Library, Schools Money Must Be Spent Wisely: Low Risk For Failure Results Must Satisfy Mayors, City Council And Utility GMs

3. T. Pugh, CO2 & Sequestration, 2006 UARG Control Tech Mtg Confidential: Attorney/Client Priviliged Information 3 APPA: PERSPECTIVE ON CO 2 CONTROL APPA Supports Voluntary CO 2 -Mitigating Steps Signatory on the President’s Climate Vision Memorandum of Understanding to Reduce –GHG emissions intensity by 18% by 2018 –Power sector GHG by 3-5% below ’02-’03 baseline APPA Tree Power TM Program: –Provide shade, improve photosynthesis, reduce CO 2 –Golden Tree Award: one tree per customer served

4. T. Pugh, CO2 & Sequestration, 2006 UARG Control Tech Mtg Confidential: Attorney/Client Priviliged Information 4 APPA MEMBERS ACTIVE IN IGCC Three New Plant IGCC Feasibility Studies in Progress Key Concern: “Co-Production” of Power, Value-Added Products –Essential to economical power production? –Telecommunications public policy struggle is instructive Scheduled Outages Harder For Public Power Communities (6 Weeks A Year?)

5. T. Pugh, CO2 & Sequestration, 2006 UARG Control Tech Mtg Confidential: Attorney/Client Priviliged Information 5 PUBLIC NCEP COMMENTS CAUGHT APPA’s ATTENTION November 9, 2005 Meeting of the National Commission On Energy Policy (NCEP) What Was Said: “The Utility Sector Is Halfway There To Carbon Sequestration At An Existing IGCC Plant” What Many Heard: “Practical CO 2 Control Is Almost Commercially Available” APPA Submitted Comments To Correct Any Misperceptions

6. T. Pugh, CO2 & Sequestration, 2006 UARG Control Tech Mtg Confidential: Attorney/Client Priviliged Information 6 APPA RECOGNIZES IGCC OFFERS ENVIRONMENTAL ADVANTAGES Control of Criteria Pollutants –SO2: to 99% –NOx: to < 0.05 lbs/MBtu –Particulate Matter: < 0.010 lbs/MBtu Thermal Efficiency –Present Capability: 38-40% –Future potential: to >50% Combustion Byproducts: 1/100 th of Conventional by Volume

7. T. Pugh, CO2 & Sequestration, 2006 UARG Control Tech Mtg Confidential: Attorney/Client Priviliged Information 7 IGCC vs. ADVANCED PC: COST 1 Basis: Cost of Generating Electricity (Amortized Capital and Production) –CO 2 Control NOT REQUIRED: IGCC > Advanced PC by 15-20% –CO 2 Control REQUIRED: IGCC > Advanced PC Decreases (5-10%) Alternative: Consider Impact on Cost of CO 2 Control –Advanced PC: CO 2 Control - 70% premium –IGCC: CO 2 Control - 25% premium 1. Source: “Coal-Fired Generation: At The Crossroads”, EPRI Journal, Summer, 2005

8. T. Pugh, CO2 & Sequestration, 2006 UARG Control Tech Mtg Confidential: Attorney/Client Priviliged Information 8 IGCC: GENERALIZATION IGCC Must Be Applicable to All Coals Current Demo Mix Limited To Narrow Range EPRI: Matrix of Gasifier Designs Required –3 types of entrained-flow –2-3 transport-flow –8 SOA Designs Needed (Coalfleet For Tomorrow) APPA Members Have Experienced Limited Coal Choices in Recent Years –Transportation, costs, labor, force majeur, other –Will IGCC make this better or worse?

9. T. Pugh, CO2 & Sequestration, 2006 UARG Control Tech Mtg Confidential: Attorney/Client Priviliged Information 9 IGCC: RELIABILITY Most Reliable Demo – Wabash River – 79% Do Public Power Towns Have To Build Two- Gasifier Designs, Or Two Separate Units? Provisions of the National Energy Policy Act of 2005 Testify to Unproven Reliability: –$1.8 B Clean Coal Power Initiative: 70% to IGCC –APPA supports DOE funding & bonds –$800 M investment tax credits for IGCC but not eligible for APPA members since not tradable

10. T. Pugh, CO2 & Sequestration, 2006 UARG Control Tech Mtg Confidential: Attorney/Client Priviliged Information 10 SEQUESTRATION: THE HARDEST STEP? Greater Uncertainty Than CO 2 Capture Direct: Inject CO 2 Where It Is Not (Or In Low Concentrations) –Oil/gas reservoirs –Unminable coal seams –Underground saline formations Indirect: Improve Uptake, Absorption Into Earths Resources –Ocean –Terrestrial

11. T. Pugh, CO2 & Sequestration, 2006 UARG Control Tech Mtg Confidential: Attorney/Client Priviliged Information 11 SEQUESTRATION: OIL/GAS RESERVOIRS What We Know –Capped by non-porous, impermeable media –CO 2 improves oil/gas recovery: value-added step but not likely to work at most public power plants What We Don’t Know –Will higher pressure alter physical structure and prevent further influx, or prompt seepage? –Will a process to maximize (not minimize) CO 2 consumption produce different results? –Will new pipelines need to be built as CO 2 requirements differ compared to natural gas

12. T. Pugh, CO2 & Sequestration, 2006 UARG Control Tech Mtg Confidential: Attorney/Client Priviliged Information 12 COAL BEDS, SALINE FORMATIONS What We Know –Coal beds: CO 2 can be used in lieu of water to displace CH 4 –Saline formations: significant storage potential exists, many near generating sites What We Don’t Know –Coal beds: high pressure CO 2 injection may fracture coal, inhibit influx, or prompt seepage –Saline formations: unproven long-term storage-will CO 2 migrate to surface?

13. T. Pugh, CO2 & Sequestration, 2006 UARG Control Tech Mtg Confidential: Attorney/Client Priviliged Information 13 OCEAN SEQUESTRATION DOE: 80-90% CO 2 Contacting Ocean Is Absorbed – But Slow (CO 2 peak ~100-200 yrs) Can We Speed Up Nature? What We Know –Oceans present significant CO 2 absorbing capacity –Injecting micro/macro nutrients will accelerate What We Don’t Know –CO 2 plume consequences –Impact on ocean acidity (pH changes presently noted), consequences to biological activities, aquatic species

14. T. Pugh, CO2 & Sequestration, 2006 UARG Control Tech Mtg Confidential: Attorney/Client Priviliged Information 14 TERRESTRIAL SEQUESTRATION Enhance Natural Terrestrial CO 2 Sinks: The Most Cost-Effective Approach? Protect Existing Carbon Sinks –Forests, agriculture, biomass crops –Deserts, wetlands Manipulate Ecosystems To Increase Carbon Removal –Higher density –Encourage biomass crops

15. T. Pugh, CO2 & Sequestration, 2006 UARG Control Tech Mtg Confidential: Attorney/Client Priviliged Information 15 SUMMARY APPA Supports Demo of IGCC: Broad Technology Array Required Taxpayers Money: Always Requires Caution Sequestration at Utility Sites is Highly Uncertain: Caution Should Be Exercised –Unknown consequences severe? –Long time constants: advise slow and steady Learn From The Past –Leaking Underground Storage Tanks & Superfund –MTBE –SO 3 plumes from SCR APPA Supports IGCC Where Units Provide Collateral Benefits