1. CO 2 Sequestration for Power Plants: Facing Sober Realities of Cost, Location, Liability and Permitting By: Theresa Pugh Director, Environmental Services American Public Power Association Presented to: Platts’ Carbon Capture & Sequestration Conference Houston, Texas June 26, 2008

2. 2 What is APPA? 2,000 Municipal, State Utilities Which Are Community Owned Of 1,400 Utility Members; 1,011 are Water Utility Owner/Operator Payment In Lieu Of Taxes Returned To General City Revenue For Fire, Police, Library, Schools Money Must Be Spent Wisely: Low Risk Tolerance For Failure Results Must Satisfy Mayors, City Council And Utility General Managers Electric Rates Must Be Just and Reasonable

3. 3 Why New Generation and CCS Matters to APPA: Population increase predicted 2010-2030 Need to keep up with generation needs to serve our population and communities Energy efficiency is an excellent start but won’t get us there given population and increasing needs What to keep in context: Total current CO 2 injected at EOR sites = only 13 (coal) power plants of 500 MW each EIA projects utility sector to emit 3 trillion tons/year Current UIC Chemical Injection Program = 34 million liters or 40 million metric tons or about 1/500 th of a percent of the CO 2 that some expect to be injected from future power plants

4. 4 New Generation is Driven by Population Data Source: U.S. Census Bureau, Population Division, Interim State Population Projections, 2005

5. 5 New Generation is Driven by Population

6. 6 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 for aforestation –Provide shade, improve photosynthesis, reduce CO 2 –Golden Tree Award: one tree per customer served APPA supports demonstration projects on CCS

7. 7 Sequestration Unknowns: Carbon Dioxide Capture and Storage 1 ( Battelle) –“…..CO2 injection can be considered an established technology….” –“….large-scale deployment of CCS systems…….requires the continued development and field demonstration of more advanced drilling and CO2 injection schemes….” IPCC Report 2 (2005) –“…there must be hundreds, and perhaps thousands, of large – scale geologic storage projects…..” –thirteen key questions (page 204) discussed and addressed 1.Carbon Dioxide Capture and Geologic Storage, Global Energy Technology Strategy Program Phase 2, April, 2006. 2.Carbon Dioxide Capture and Storage, Intergovernmental Panel On Climate Change, Final Report, Cambridge University Press, 2005.

8. 8 Source: United States Geological Survey. Estimated Use of Water in the United States in 2000.

9. 9 Source: United States Geological Survey. Estimated Use of Water in the United States in 1995

10. 10 Water Demand with and without CCS: Water Use Increases 33-100% Source: Cost and Performance Baseline for Fossil Energy Plants (DOE/NETL-2007/1281)

11. 11 Aquifers of the United States Source: USGS, National Atlas of the United States

12. 12 Sequestration: What’s Involved? Reference: 1 GW Generates 30,000 tons CO 2 /d Inject as “Supercritical” Fluid (Acts Like Both a Liquid and Gas) To 1/2 Mile or Deeper to Minimize Volume CO 2 Once Injected is: –less dense than encased fluids, and under pressure –Will migrate both laterally and up –Can diffuse, adsorb, mineralize, and solubilize –Can we predict the ultimate fate? 1 GW Plume: Spreads to 100 km 2 (100 m Thick)

13. 13 Municipal / Public Power Convergence of Issues on Geologic Sequestration and Public Power Utilities Just and Reasonable Cost of Electricity Reliability Located at or near the Local Government

14. 14 Proximity to Infrastructure Municipal / Public Power Convergence of Issues on Geologic Sequestration and Public Power Utilities

15. 15 Proximity to Infrastructure Transmission Lines Rail Lines for Delivery Access to Water Resource for Generation Must Meet Load Growth Need Access to CO 2 Pipeline Proximity to Infrastructure

16. 16 Proximity to Infrastructure Municipal / Public Power Convergence of Issues on Geologic Sequestration and Public Power Utilities Financial Issues

17. 17 Financial Issues CCS Increases Cost of Generation & Cost to Consumer CCS Preparation for Permitting will be more Expensive Financial Performance Bonds or Surety (is this Private Insurance, Bonds, or Other Method) CO 2 Disposal Fees Under State UIC Programs Title V Operating Permit Fees Compensation to Oil/Gas/Private Water for Contamination or Damage to Hydrocarbon Recovery or Future Water Use Additional Electricity use for Water Utility: –Additional Water use –Pump and Treat if Groundwater is contaminated by salinity, arsenic, etc. Financial Issues

18. 18 Other Costs – Some Impossible to Calculate Cost to separate CO 2 at new CCS power plants Cost to transport CO 2 offsite to other states How much does it cost to pay for retrofit of natural gas pipeline system for CO 2 with booster compressors? Who pays? What is the environmental liability or remediation cost to a power plant that might trigger liability under CERCLA, RCRA, ESA, NRDA, and SDWA? –pH changes? Water quality issues? –Impacts to future water use—western water law? –Plant losses or endangered plant species Financial Issues

19. 19 New Commercial/Business Risks and Costs to Power Plants Is the power industry prepared to compensate oil and gas companies for lost hydrocarbon value for future EOR? What can this cost at $100 bbl? $8 Mcf? And what are those costs in 30 – 50 years? What constitutes “performance bond” for utility sector for non-EOR sites? Required by SDWA How much is post closure monitoring? How long? Financial Issues

20. 20 New Coal Generation + CCS = Parasitic Load Do you really know the cost? Existing coal plants emit approximately 27% of U.S. GHGs (EPA 2007) For new plants, cost estimates on CCS do not consider increased consumption of coal for gasification or combustion to compensate for parasitic energy for CCS - 12% drop in efficiency from 33% to 21% on top of IGCC parasitic loss This means power for compression and fans, pumps, capture system to cooling water Additional Power Needs for CCS Fans & pumps, 7% Amine system Aux, 24% CO 2 compression, 53% Other, 3% Cooling system F&P, 13% Financial Issues

21. 21 Proximity to Infrastructure Municipal / Public Power Municipal or Private Water Utilities Convergence of Issues on Geologic Sequestration and Public Power Utilities Financial Issues

22. 22 Municipal or Private Water Utilities Electricity Customers of Public Power Utility Cost of Monitoring near Water Resources Anticipated Long-Term Drinking Water use 50- 100 years from now CCS parasitic energy means Utility uses Twice the Water for Generation Municipal or Private Water Utilities

23. 23 Proximity to Infrastructure Municipal / Public Power Municipal or Private Water Utilities Convergence of Issues on Geologic Sequestration and Public Power Utilities Personnel Shortfall Financial Issues

24. 24 Personnel Shortfall Drilling Expertise Needed in Contractors Well Monitoring Experience Needed in Contractors Personnel Shortfall

25. 25 Proximity to Infrastructure Municipal / Public Power Municipal or Private Water Utilities Convergence of Issues on Geologic Sequestration and Public Power Utilities Personnel Shortfall Financial Issues State Permit / Regulatory Issues

26. 26 State Permit / Regulatory Issues Most States Don’t Update Geologic / Hydrologic Data Most States have no UIC Permitting Staff for this Scale of Permitting Some States will need to get State primacy Most States have not Surveyed for Abandoned Wells, Faults, etc. All States have not Forecasted Expected Groundwater use over 50- 100 Years State Permit / Regulatory Issues

27. 27 Location! Location! Location! Is not the same as Geology! Geology! Geology! Load and population drives location decisions for new power plants - Access to water for cooling water - Access to rail lines for coal - Access to transmission lines Land Use NETL’s 2006 report suggests 1 acre of surface land for each 100 MW of generating capacity NETL projects capture and compression to require 60 acres for 500 MW or 12 times the first estimate The subsurface land use may not be available due to state laws or lack of law on right of way on subsurfaces

28. 28 Injected MaterialMass of Material (mil. Metric tons/year) CO 2 emissions from power plants2,400 [1] [1] CO 2 in Class II wells for oil recovery43 [2] [2] Class I hazardous waste22 [3] [3] Regional Carbon Sequestration Partnerships, total 2 [1] [1] Electric Power Research Institute, Electricity Technologies in a Carbon-Constrained World. [2] [2] Source: Advanced Resourced International, 2007, [3] [3] U.S. EPA Office of Solid Waste and Emergency Response, National Biennial RCRA Hazardous Waste Report: Based on 2005 Data, Dec. 2006, at 2-5, Exhibit 2-5. For Engineers and the Left-Brained… Comparison of CCS Volumes to Current UIC Volumes:

29. 29 …and for the rest of the sane world! Comparison of CCS Volumes to Current UIC Volumes:

30. 30 Projections from EIA: 2,400 Million Metric Tons in 2006 3,044 Million Metric Tons in 2030 (1.1% growth rate per year) Total CO 2 from Power Plants

31. 31 Seismic Risk Seismic Risk and “geologic time” restrictions in UIC Class I derived from RCRA Guidance (EPA)

32. 32 Subsurface space required for only 40% of the Carbon Dioxide from a 300 MW power plant for one year: 2,750 Acres Source: J. Gledhill, Policy Navigation for APPA

33. 33 Subsurface space required to sequester 40% of the Carbon Dioxide from approx. 9 500 MW Plants over their 40-year lifetime: 2,580 square miles Roughly 1.5 times the size of Rhode Island Roughly half the size of Connecticut

34. 34 Retrofit of Power Plants: What to do with Existing Fleet? Existing coal and gas fleet have no commercial available and demonstrated technology A retrofit unit with a pre-retrofit energy conversion efficiency of 33%, means a post-CCS retrofit efficiency of 21%, a loss of >30% of output of power plant Replacement of parasitic power in utility sector means installation of over 100 GW of additional new capacity Replacement power and capture/compression systems mean huge energy capacity shortages Are we building additional capacity with coal to run CCS? Space-surface and subsurface Right of Way and subsurface ownership issues

35. 35 Proximity to Infrastructure Municipal / Public Power Municipal or Private Water Utilities Convergence of Issues on Geologic Sequestration and Public Power Utilities Personnel Shortfall Financial Issues State Permit / Regulatory Issues

36. 36 Law of Unintended Consequences CCS and IGCC will cause power plants to use/gasify more coal than PC plants CO 2 capture system (amine) requires twice the water as PC plant APPA asks: Does the public understand the consequences of using more coal and more water to produce electricity? Is more water use realistic in all states?

37. 37 Conclusions: OK, Let’s Assume Carbon Separation Technology Works and is Cheap How much does electricity cost the consumer with carbon separation + CCS? 2x? More? What will costs of carbon dioxide control costs (CCS) do to dispatch costs to the entire utility sector? What do these costs do to costs in fully de-regulated markets? RTO markets? APPA asks: Do our customers really understand these increases? Do we?

38. 38 Conclusions, Continued APPA supports Future Gen and DOE Regional Partnership Projects along with private research APPA urges more research on geo-engineering in addition to CCS – don’t put all eggs in CCS basket Slow down the selection of CCS technology – we need to know more Consumer deserves to understand costs to monthly electric bills Cities and consumers need to understand higher risk profile to electric utility sector Power plant locations are dictated by load (population), transmission lines, and rail – not geology Will Americans accept power plants that use up to 40% more coal to support CCS?

39. 39 Contacts Theresa Pugh Director, Environmental Services American Public Power Association (APPA) 1875 Connecticut Ave, NW Ste 1200 Washington, DC 20009 (202) 467-2943 tpugh@APPAnet.org Engineering Questions: JP Blackford (202) 467-2956 http://www.appanet.org/files/HTM/ccs.html Horinko legal liability overview Carter technology review paper Carter paper on parasitic energy impacts UIC drinking water issues, power plants and CCS issues