Carbon Capture & Storage (CCS) Is it viable? World’s first CCS pilot in Germany, 2008  Peak Coal is when? What is the price of C in China?

Carbon Dioxide -- CO2 At $33 per ton: a trillion dollar annual market Wall Street’s Next Big Inning?

American Electric Power drops CCS project July 2011 AEP and partner Alstom, a specialist in power plant CO2 capture processes, began operating a smaller-scale validation of the technology at the plant in October 2009, the first fully-integrated capture and storage facility in the world. "With the help of Alstom, the Department of Energy and other partners, we have advanced CCS technology more than any other power generator with our successful two-year project to validate the technology," said [AEP’s CEO Michael] Morris. "But at this time it doesn't make economic sense to continue work on the commercial-scale CCS project beyond the current engineering phase." (Source: Platts)

Coal Supplies Is there really a 100-year supply? The Resource: 861 billion tons USA: 238 billion tons Russia: 157 billion tons China: 114 billion tons Australia: 60 billion tons Germany: 40 billion tons Nearly half of U.S. power & more than 75% of China’s power come from burning coal

China’s Appetite 375 GW of capacity added since 2005 (IEA) Equal to all U.S. coal fired power generation Increase in coal consumption From 1 billion tons to 3 billion tons since 2000 Net importer Became importer in 2009 Projected imports in 2020 with 7% growth rate 3 billion tons World’s largest coal exporters, Australia is tops, will struggle to meet demand

How Long Will the Coal Last? Case Study: China Assume flat demand (& most optimistic reserve estimate) Reserves: 187 billion tons (source: China’s Ministry of Land and Resources) Demand: 3 billion tons per year Lifetime: 62 years (if there is no more growth) Assume 3.5% growth for 20 years Demand in 2020: 4.25 billion tons per year 36 billion tons: Consumed between 2011 & 2020 (3.6 billion ton/yr average) 151 billion tons: Reserves in 2021: (if no more discoveries) Lifetime: 35 years (if there is no more growth) Demand in 2030: 6 billion tons per year 51 billion tons: Consumed between 2021 & 2030 (5.1 billion tons/yr average) 100 billion tons: Reserves in 2031: (if no more discoveries) Lifetime: 17 years (if there is no more growth) 2047 deadline (if reserve estimates are accurate)

On Extraction This analysis assumes that the entire resource can be mined; but it cannot, as the last of the resource is harder to reach, and therefore more expensive to get than the first Some is too expensive to get out Some is just inaccessible Eventually it takes more energy to get it than it can give off Assume about half the reserves will be taken Therefore, instead of 35 years the likely peak for China is expected to be 15 - 20 years

China’s Coal Reserves? What if China’s estimate is too optimistic (at 187 billion tons)? 114 billion tons (Source: Energy Watch Group, Berlin) Assume 7% growth for 20 years Demand in 2020 = 6 billion tons per year 45 billion tons: Consumed between 2011 & 2020 (4.5 billion ton/yr average) 69 billion tons: Reserves in 2021 Lifetime: 11.5 years (if there is no more growth) Demand in 2030 = 12 billion tons per year 90 billion tons: Consumed between 2021 & 2030 Gone: = no Reserves before 2030 2030 deadline Where will the imports comes from? Entire 2008 seaborne steam coal trade = 630 million tons

CCS Dynamics Steps Separation from flue gas Compression for Transport via pipeline Injection for Storage underground Challenges Size, ie, scale Impurities in coal flue gas streams Cost (adds 50 – 80%) In order to pay for CCS, industry experts project that CO2 must cost $100 per ton (Richard Heinberg, Nature, Nov. 2010)

What will the Regulators do?

Shutting Down Coal Plants Canada plans to shutdown 33 of 51 plants by 2025 Only CCS after 2015 ~ 14,000 MW (10% of total capacity) TVA to shut down 18 units by 2017 2,700 MW AEP to shut down 5 plants by 2014 6,000 MW Washington & Oregon to shut plants by 2020 Who else?

FERC on Coal Power As much as 81 GW of coal-fired power, or 8 percent of the generation capacity, would be closed. EPA says that the benefits of such retirements would outweigh the costs by a factor of 10 to 1 while some in industry say that consumers would be harmed. Source: The Federal Energy Regulatory Commission (FERC)