1. CoalFleet for Tomorrow ® CoalFleet for Tomorrow ® is a registered service mark of Electric Power Research Institute, Inc. MIT Report-Commentary Neville Holt (nholt@epri.com) Technical Fellow, Generation Group Tampa, FL March 21, 2007

2. 2 © 2007 Electric Power Research Institute, Inc. All rights reserved. MIT Report – Executive Summary Main Points of Agreement CCS is critical enabling technology for coal use with CO 2 emission reduction. Scale of required enterprise is Vast!! Priority Objective Large scale Integrated CCS Demo Regulatory policy with public & political support needed for large scale CCS Current programs completely inadequate to confirm CCS High priority Sequestration Demos >1 MTPY in several geologies and Capture Demos for PC and IGCC “Grandfathering” is a significant issue. U.S. leadership in CO 2 reduction is a likely pre-requisite for action by emerging economies i.e. China, India.

3. 3 © 2007 Electric Power Research Institute, Inc. All rights reserved. MIT Study- Points of some Controversy/Disagreement. EPAct assistance should only be for plants with CCS. This writer believes IGCC needs assistance to overcome FOAK contingencies- otherwise it will not be selected. Capture is less the issue with IGCC but larger gasifiers and GT’s need to be deployed and commercially proven. Pre-Investment in “Capture Ready” unlikely to be attractive. Maybe. CO 2 emission price of 30$/mt (25$ Capture 5$ TMS) would make Coal plants with CCS competitive with coal plants without CCS. Writer believes that at today’s capital costs the price would need to be higher – dependent on specific technology

4. 4 © 2007 Electric Power Research Institute, Inc. All rights reserved. MIT Study- CH.8 Findings & Recommendations #1.New coal be built at highest efficiency. OK but MIT grossly overestimates CO 2 savings from current USC at 21% whereas its more like 11-12%. #2. 3-5 Sequestration projects >1 Million TPY. #3. DOE/USGS inventory sequestration sites/coal plants. India, China etc need same. #4.Exec. Office should initiate Interagency process to determine regulatory framework for CCS. Enforcement by EPA. #6A Low priority for Federal assistance for new coal without CCS #6B Congress should act to close the potential “grandfathering “ loophole.

5. 5 © 2007 Electric Power Research Institute, Inc. All rights reserved. MIT Study- CH.8 Findings & Recommendations #7. Federal Assistance to 3-5 FOAK coal plants with CCS (250-500 MW) #8.Federal to pay for CO 2,(in absence of emissions charge) to enable coal conversion with capture to be built #9.Demos (#2, #7 & #8) must succeed. Form quasi- public “Clean Coal Demonstration Corp.” Estimate 5B$ over 10 years. “ No reason to delay prompt consideration and adoption of a U.S. carbon emission control policy until completion of the recommended sequestration program.” #10.Develop Modelling & Simulation tools for analysis and costing of coal plants with and without CCS.

6. 6 © 2007 Electric Power Research Institute, Inc. All rights reserved. MIT Report – Additional Comments (Holt) Ch. 3. Subcrit vs USC (4640psi/1112 F/1130F/1130 F or 320 bar/600c/610C/610C) with Ill#6 coal!! MIT HR 9950 vs 7880!!. EPRI estimate 9450 vs 8500 Btu/kWh for these steam conditions with Ill#6. Report seems to misunderstand the COP E-Gas technology, Hydrogen firing of GT’s and gasifier turndown. Fig. 3-A3 should add dry coal fed IGCC with lower degradation of performance with LR coals All costs are much higher today than those cited in the MIT report. Any increases in capital cost will also increase the CO 2 cost. Latest information also suggests higher costs for Transportation, Monitoring and Storage/Sequestration (TMS)