Challenges Economics of CCS Long-term liability FOSSIL.ENERGY.GOV

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2 GHG Regulations New Power Plants Federal and State regulations Standards set for new power plants at NGCC emission levels Social Cost of Carbon CCS identified as BACT Regulations for Existing Plants Advantages over Other Energy Sources Base load power systems Reliable fuel source with over 200 year supply Existing infrastructure Challenges Economics of CCS Long-term liability

3 First Generation EOR Technologies 9Billion Tons of CO2 demanded over 70 years 24 billion barrels of oil produced Next Generation EOR Technologies 17 Billion tons of CO2 demanded over 7O years 60 billion barrels of oil Demanded CO 2 is above what industry, NG, and other industrial sources provide EOR does not include ROZ or offshore resources Up to 30 GW could saturate the EOR market Improving Domestic Energy Security and Lowering CO2 Emissions with Next Generation CO2-Enhanced Oil Recovery (CO2-EOR), DOE/NETL-2011/1504, June 2011

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6 Cost of Capture, 2011 $/tonne CO Today's Supercritical PC with Capture ~$60/tonne Crosscutting Research 2 nd -Generation Post-Combustion Capture (Solvents, Sorbents or Membranes) and Adv. Compression A-USC Steam Cycle Large-Scale Testing 2 nd -Generation Target $40/tonne Transformational R&D: Transformational Post- Combustion Capture (Solvents, Sorbents, Membranes, or Thermal Separation and Multicontaminant Removal) Advanced Power Cycles (i.e. Supercritical CO 2 Cycles) Advanced Concepts and Materials Capture Advanced Turbines Crosscutting Research Large-Scale Testing Transformational R&D to Target Cost of Capture <<$40/tonne 10 0 Today nd Generation R&D Complete Beyond Transformational

7 Cost of Capture, 2011 $/tonne CO Today's IGCC with Capture ~$60/tonne Crosscutting Research Advanced Hydrogen Turbine (2650 F) WGCU, ITM, Dry, High Pressure Feed Advanced Sorbent, Solvent, Membrane Large-Scale Testing 2 nd -Generation Target $40/tonne Transformational R&D: Transformational Hydrogen Turbine (3100 F, Pressure Gain Combustion) ITM/Turbine Integration Transformational Hydrogen Production Transformational Pre-Combustion Capture Turbines Gasification Capture Crosscutting Research Large-Scale Testing Transformational R&D to Target Cost of Capture <<$40/tonne 10 0 Today nd Generation R&D Complete Beyond Transformational

8 < 5 MWe Bench and Small Pilot-Scale 2 nd Generation R&D Phase 5-25 MWe Pilot-Scale Field Testing of 2 nd Generation Demonstration of 1 st Generation (CCPI) 50+ MWe 2 nd Generation Ready for Demo. 1 st Generation Readyfor Deployment by nd Generation Readyfor Deployment Transformational Ready for Demo. Demonstration Phase Funding Opportunity Announcements

9 FutureGen 2.0 Large-scale Testing of Oxy-Combustionw/ CO 2 Capture and Sequestration in Saline Formation Project: ~$1.78B Total; ~$1.05B DOE SALINE 1 MM TPY 2017 start CCPI ICCS Area 1 FutureGen 2.0 Archer Daniels Midland CO 2 Capture from Ethanol Plant CO 2 Stored in Saline Reservoir $208M Total, $141M DOE SALINE ~0.9 MM TPY 2015 start Summit TX Clean Energy Commercial Demo of Advanced IGCC w/ Full Carbon Capture ~$1.7B Total, $450M DOE EOR ~2.2 MMTPY 2017 start HECA Commercial Demo of Advanced IGCC w/ Full Carbon Capture ~$4B Total, $408M DOE EOR ~2.6 MM TPY 2019 start Southern Company Kemper County IGCC Project Transport Gasifier w/ Carbon Capture ~$2.01B Total, $270M -DOE EOR ~3.0 MM TPY 2014 start NRG W.A. Parish Generating Station Post Combustion CO 2 Capture $775 M Total $167M DOE EOR ~1.4 MM TPY 2016 start Air Products and Chemicals, Inc. CO 2 Capture from Steam Methane Reformers EOR in Eastern TX Oilfields $431M Total, $284M DOE EOR ~0.93 MM TPY 2012 start Leucadia Energy CO 2 Capture from Methanol Plant EOR in Eastern TX Oilfields $436M -Total, $261M DOE EOR ~4.5 MM TPY 2017 start

10 Liberty Mine Treated Effluent Reservoir Water Treatment Area Gasification Area Lignite Storage Dome Combined Cycle Area Gas Cleanup Area Ash Management Area

11 Plant Type Sequestration Power Industrial Saline EOR Rate* Feedstock Pre-combustion HECA (IGCC-Polygen) X X X 2.55 NM Sub-bituminous Coal/Petcoke Blend Southern-Kemper Co. (IGCC) X X 3.0 MS Lignite Summit Texas (IGCC-Polygen) X X X 2.2 Leucadia, Lake Charles (Methanol & Hydrogen) WY Sub-bituminous Coal X X 4.5 Petroleum Coke Air Products and Chemicals, Inc. (SMR) X X Natural Gas ADM (Ethanol Production) X X Corn Fermentation Post-combustion NRG Energy X X 1.4 Oxy-combustion FutureGen 2.0 X X 1.0 WY Sub-bituminous Coal IL Bituminous /PRB Coal Blend CCPI ICCS Area 1 FutureGen 2.0 *Rate in million metric tons per year

12 Released for public comment July 3, 2013 Final Solicitation issued* 4 th Quarter 2013 Applications received* 1 st Quarter 2014 *anticipated Eligibility Requirements for Projects: 1. Use advanced fossil energy technology 2. Avoid, reduce, or sequester air pollutants or anthropogenic emission of greenhouse gases; and 3. Employ New or Significantly Improved Technology as compared to Commercial Technology in service in the United States

13 Multiple approaches targeting cost reduction MW Pilot-Scale Testing Slipstream testing/actual flue gas/host sites or NCCC MW Pilot-Scale Testing Integration of multiple components

14 Laboratory/Bench-Scale -Simulated operating conditions -Short duration tests (hours/days) - Proof-of-concept and parametric testing -High risk -0.2 to 1,000 scf per minute up to 0.5 MWe > TRL: 2-4 Pilot-Scale Slipstream - Real operating conditions -Longer duration tests (weeks/months) -Lower risk -5,000 to 100,000 scf per minute 8 on-going projects 1.0 to 25 MWe > TRL: 5-6 Demonstration-Scale - Variable operating conditions -Extended duration (typically years) - Demonstrate integrated fullscale; Minimal risk commercial application -CO 2 Utilization/Storage Project(s) 50 to 500 MWe > TRL: 7+ 1 MW Solvent Pilot (Neumann) 5 MW Oxy-combustion Pilot (Alstom) Then (>$100/Tonne) 25 MW Solvent Heat Integration (Southern Company) Now (~$60/Tonne) Future (<$40/Tonne)

15 Approach: Design and construct a module of the NeuStream-C absorber technology Colorado Springs Utilities Drake #7 coal-fired power plant. Status: ~30% complete. Testing planned 4/2013-8/2014 Advantages: Significant reduction in absorber capital cost Compact, modular and scalable gas/liquid contactor Broadly applicable to solvent-based systems Novel NO x control possible Challenges: Maintaining optimal gas/liquid dispersion in full scale equipment Conventional Absorber Significant Size Reduction NeuStream-C Flat Jet Gas/Liquid Contactor

16 Approach: Design and construct a 1-MW pilot plant to demonstrate solid sorbent-based CO 2 capture technology Status: Construction 50% complete Advantages: ~25% reduction in thermal energy requirements Significant reductionin volatile amine emissions ~20% reduction in raw water use Components of process equipment are mature Challenges: Long-term stability of sorbents Ability to scale-up sorbent manufacturing without impacting performance Process design that controls sorbent temperature and counteracts changes from heat of reaction, erosion, and/or corrosion 1 MWe pilot: Plant Miller, Quinton, AL

17 Approach: Develop and test a low pressure drop, membrane mega-module on a 1 MWeslipstream at the National Carbon Capture Center Status: Startup planned 3/2014 Advantages: Compact equipment Smaller footprint Efficient scale-up 20-25x larger than current modules Capital cost reduction Reduced process complexity Challenges: Overcoming sweep side pressure drop Effective use of all membrane area Maximizing packing density while minimizing pressure drop

18 Challenges Scale-up (550 MWeplant = 15,000 TPD) Parasitic load Contaminants (O 2, SOx, NOx, ) R&D Objectives Increase compression efficiency Reduce footprint and capital cost Power plant integration/heat recovery Cost Approach 1: High PR 2-Stage Inter-stage Heat Recovery Approach 2: Compression Cool Pump

19 Current 2 nd Generation Post-Combustion Portfolio URS/Texas Univ. Illinois B&W Linde TDA ADA SRI B&W Linde Neumann TDA ADA SRI Southern Co. MTR Highest Probability of Meeting Goals Through Integration of Multiple Approaches URS/Texas Linde Kentucky Southern Co. MTR MTR ADA GE (membrane) Neumann

20 Goal Develop technologies under realistic conditions that will reduce the cost of advanced coal-fueled power plants with CO 2 capture Post-combustion Carbon Capture Center Pilot Solvent Test Unit (PSTU) 0.5 Mwe (10 tpdco 2 )

21 To forecast the development of a market with CO 2 capture, transport, utilization and storage under various assumption scenarios Location? Timing? Volume? Costs? To assess the impact of FE/NETL Program R&D Goals on each of the above To provide a fully integrated energy system context in which to perform simulations and analysis Being incorporated into NEMS for Annual Energy Outlook 2014

22 Both regulatory and economic drivers exist for CO 2 capture and EOR EOR has significant advantages as a first mover for CCS Economics of carbon capture require second generation technologies be developed Wide scale deployment of CCS beyond EOR necessary to meet emissions reduction goals for climate change

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