ASSESSING CLEAN COAL AND

CLEAN TECHNOLOGY INITIATIVES IN

NORTH AMERICA AND GLOBAL

MARKETS

Shannon Angielski, Executive Director, CURC

Mines and Money Americas Summit

The Evolving Energy Mix and the Role of Battery Metals, Renewable Energy Sources, Uranium and Fossil Fuels in the New Power Paradigm

October 2, 2017 – Toronto, Canada

2

CURC Members

Companies in orange indicate

Steering Committee Members

*CURC Leadership Council

Coal Producers

Arch Coal, Inc.*

Cloud Peak Energy Resources LLC

Lignite Energy Council

Peabody Energy*

Equipment Suppliers

B&W Power Generation Group, Inc.*

Caterpillar Global Mining

General Electric*

Mitsubishi Heavy Industries America,

Inc. (MHIA)

Labor Unions

United Mine Workers of America

International Brotherhood of Boilermakers

International Brotherhood of Electrical

Workers

NGOs

ClearPath Action

CoalBlue Project

Research Organizations

Battelle

Electric Power Research Institute (EPRI)

Gas Technology Institute

University of North Dakota Energy &

Environmental Research Center

State Organizations

Energy Industries of Ohio

Greater Pittsburgh Chamber of

Commerce

Illinois Coal Association

Kentucky Energy & Environment Cabinet

Southern States Energy Board

West Virginia Coal Association

Wyoming Infrastructure Authority

Technology Developers

LP Amina LLC

NET Power

Trade Associations

American Coal Council

American Coalition for Clean Coal

Electricity (ACCCE)

Edison Electric Institute (EEI)

National Rural Electric Cooperative

Association (NRECA)

Universities

Lehigh University

Ohio State University

Pennsylvania State University

Southern Illinois University

University of Kentucky/CAER

University of Wyoming

West Virginia University

Utilities

American Electric Power (AEP)

Basin Electric Power Cooperative

Duke Energy Services

LG & E and KU Services Company

Southern Company

Tri-State Generation &

Transmission Association

3

What is the U.S. Coal Industry

Facing? Market forces:

• No new capacity markets

• Strong price, availability and competition from shale gas

• Divestment trends challenge support in financial markets

Regulations:• More stringent controls of

conventional pollutants

• Cooling water, coal ash, regional haze are all challenging the current coal fleet

• Greenhouse gas regulation – or not?

Public policies – financial incentives or regulatory requirements – favor renewables and non-coal options

No longer a “given” that coal must be an “option”• Shift to renewables and natural gas

• EIA & IEA latest analyses – the need for coal is significantly diminished

• Over-reliance on existing fleet

Less support for coal than historically• General public is indifferent

• Political support has waned in recent years

Development of Coal with Carbon Capture Utilization & Storage (CCS) necessary for low carbon coal use in the future, but not yet ready

3

5

Industry Trends

Natural Gas; Availability &

PricingDecreasing

Demand Growth

Aging Nuclear &

Coal Fleets

Increasing Distributed Generation

New Technologies

Environmental Regulations

Customer Trends

What is Driving Coal Technology

Innovation in the U.S.?

Source: Duke Energy

6

U.S. Generation2016

Natural Gas

34%

Coal

30%

Nuclear

20%

Renewables

15%

Petroleum

1%

Notes: Natural gas includes combined cycle, combustion turbine and

other gas-fired systems. Renewables includes conventional hydro and

pumped storage.

Existing Fossil Fuel Generation Represents Two-Thirds

of U.S. Electric Generation at Low Cost

2016 Generation: https://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_1_1

Electricity for Households: IEA Key World Energy Statistics 2017

32.7 ¢

22.51 ¢ 23.69 ¢

12.67 ¢

0

5

10

15

20

25

30

35

Germany Japan UnitedKingdom

UnitedStates

Household Electricity Costs (cents/kWh)

Low-cost power from the nation’s existing fossil fuel fleet keeps U.S. electricity

prices below those of other free market nations

7

U.S. Projections for Coal Use

8

EIA’s Projection: Modest to No New Coal

Through 2040

Source: DOE/NETL Historic Data: Ventyx Velocity Suite; Forecasted Data: EIA AEO 2013

Historic Forecast

Existing (AGING) coal fleet will generate 38% of electricity generation in

2040 – almost the same as today?

0

5

10

15

20

25

0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90 93 96 99

Cap

acit

y (G

W)

Age

99% Existing Baseload Coal-fired Capacity Aging Out in 23 Years

New Coal Capacity

Existing Coal Capacity Existing Nuclear Capacity

New Nuclear Capacity

20402017

Reference – Ventyx Velocity Suite (existing units and announced retirements- EIA AEO 2014 (forecasted additions and Retirements)

60 years or older by 2040

Coal: 168 GW (66%)

Nuclear: 43GW (42%)

Virtually no new Coal Capacity and very little Nuclear Capacity to

make up for aging and retired units

10

Without Coal, a Future that Relies on Natural

Gas and Renewables?

Environmental

regulations for new &

existing sources

Abundant, low cost

shale gas

Renewable Portfolio

Standards

Federal & state

renewable subsidies

Aging fossil &

nuclear fleet

No new coal or

nuclear plants in

planning to replace

aging fleet

What is Happening

Today in the U.S.

Electric Generation - 2016

Source: EIA Annual Energy Outlook 2017 and AEP

Natural Gas

34%

Coal

30%

Nuclear

20%

Renewables

15%

Natural Gas

75%

Renewables

(non-hydro)

15%

Hydro

10%

2040 Electricity Generation

by Fuel (Hypothetical)

Natural Gas

34%

Coal

30%

Nuclear

20%

Renewables

15%

Petroleum

1%

11

Why is Technology Necessary?

WEO Special Report on Energy & Climate Change

Changing Dynamics of Power Generation

(Source: IEA WEO 2015)

Internationally, coal-based power plants will

remain the largest source of electricity

generation until 2040 at 29%.

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Importance of Technology

*Source: IPCC, 2014

“Carbon capture and storage (CCS) is the only technology able to deliver significant emissions reductions from the use of fossil fuels. CCS can reduce

emissions not only from power generation, but also from industrial sectors such as iron and steel, refining, petrochemical, and cement manufacturing.”

– International Energy Agency (DATE)

Reductions from

Carbon Capture

“Many models could not limit warming to below 2°C if bioenergy, CCS and their combination are limited” Source: International Panel on Climate Change, 5th Assessment report, 2014

14

Technology Must Address the Different

Coal Markets:

Apply technologies to improve the efficiency, reliability,

and flexible operations of the existing fleet that provides

affordable, resilient and reliable electricity

Incentivize new, state of the art technologies and

construction of new and improved fossil fueled

generating plants to ensure energy security through a

balanced portfolio of generation options

Double down on funding for RD&D to accelerate

development of new, transformational coal technology

options

15

What About Low Carbon Coal

Technologies? High efficiency, low emissions coal technologies

• Global opportunities for building new, highly efficient coal

• In the U.S., market is driving investments towards low cost natural

gas

• Highly efficient coal in the U.S. likely required to be “CCS Ready”

Carbon capture and storage technologies

• Still an immature and costly technology for power generation

applications

• Technologies in development that have transformational attributes

that will change the way in which coal is converted to energy

• Opportunity in the U.S. for coal replacement options with aging fleet

16

Current Carbon Capture Technology

is too Expensive Levelized Cost of Electricity

for New Unit Commencing Operation in

2022

Le

velized

CO

E, 2

016 $

/ M

Wh

Source: EIA AEO 2017 and *Coal w/o CCS from EIA AEO 2016

0

20

40

60

80

100

120

140

Coal w/oCCS*

Coal - 90%w/CCS

AdvancedCombined

Cycle

AdvancedCombined

Cyclew/CCS

Nuclear OnshoreWind

Solar PV

VOM

FOM

Cap

17

Economic Potential of CO2-EOR in the US

Price of Oil: Bloomberg Energy

Represents over

$14 Trillion in

domestic crude oil

sales at

$50 -$52/barrel of oil

Regional Distribution of CO2-EOR Potential

18

Falling Costs for Other Clean Energy

Technologies in the U.S.

As witnessed by the deployment

curve with renewable energy

technologies, we know that

improved technologies, coupled

policies to support the successive

application of CCS, will reduce the

cost of these technologies over

time.

Each of these technologies has dropped 40-90% in cost in the

U.S. since 2008

Indexed Cost reductions since 2008. (Source: energy.gov/fe)

19

New Technologies Under Development

Technology Methods Description

Pressurized Oxygen

Combustion

Entrained Flow

& Fluidized Bed

The combustion of fossil fuels in nearly pure oxygen, rather than

air, carbon capture in power plants. Pressurized oxygen-

combustion oxygen to the combustion process by separating

oxygen from air.

Chemical Looping MeOx and CaOx A metal oxide instead of air is used as a carrier to provide the

oxygen for combustion in the fuel reactor or boiler.

SCO2 Cycles Indirect & Direct Replaces steam in traditional rankine cycle with supercritical CO2

as the working fluid. Enables compact turbomachinery to be used

with higher temperature cycle and results in significantly improved

performance.

Advanced

Ultrasupercritical

Materials

700° C+ and

high pressure

materials

Development of components using AUSC materials will enable

highly efficient combustion systems and support other high

temperature and pressure technologies under development

Carbon Capture Pre- and post-

combustion

Advances in solvents, sorbents and membranes focused on

lowering regeneration energy requirements, higher CO2 adsorption

capacity, improved permeability and selectivity, and lower costs.

Hybrids and cryogenic applications under development.

CO2 Storage Onshore and

offshore.

Saline, enhanced oil and gas recovery, and other geologies being

explored. Focusing on R&D as well as CO2 storage infrastructure

in the U.S.

20

Thank you!

Questions:

Shannon Angielski

Executive Director

Carbon Utilization Research Council (CURC)

www.curc.org

sma@vnf.com

21

$44,067

$5,162

2016-2025

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

Tax Incentives(Millions of Dollars)

Total TaxIncentives forRenewableElectricity

Total TaxIncentives forCoal

Coal Renewable Electricity

Natural Gas Nuclear

(38% of electric

716

1,22(27% of

80(18% of electric

generation)1,724

(16% of electric

generation)

Electric Generation - 2025(in gigawatthours)

Renewable Incentives: Electricity production and investment tax credit for wind, solar and other renewable energy sources.

Coal Incentives: Expensing of exploration and development costs, excess of percentage depletion over cost depletion, capital gains treatment of coal

royalties, credit for investment in clean coal facilities, and Indian coal production credit.

Comparison of Tax Incentives for Renewable

Electricity & Coal with U.S. Electric Generation

Even a modest amount of tax incentives

will achieve the same objective of

providing significantly more low carbon

power in the future, with far greater

benefit for the federal investment.

Sources for Tax Incentives:Table 14-1, Analytical Perspectives, Budget of the United States, FY 2017 (tax expenditure estimates for renewables and coal)

JCX-142-15, Estimated Budget Effects of Division P of the FY2016 Omnibus Appropriations Bill (estimates for wind and solar extension)

JCX-143-15, Estimated Budget Effects of the Protecting Americans from Tax Hikes Act of 2015 (estimates for coal related extenders)

Source for 2025 Generation Data:

EIA Annual Energy Outlook 2015

22

Coal Technology Driven by the Following

Factors:• Need to reduce capital costs to compete with gas

• Capability of responding to slow and declining load growth demand and capacity needs

• Aging fleet

• Ability of baseload power to adjust more rapidly to cycling load demands with increased renewables on the grid

• Ability to integrate with distributed power systems in the future

• Accelerated development of transformational technologies to replace aging baseload fleet and transition to fossil fuel fleet (more NGCC)

• The carbon challenge

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0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85Averag

e c

ap

acit

y f

acto

r

(%

)

Unit age in years

Average capacity factor by unit age for coal operations, 1998-2014

Potential Baseload Coal GW Equivalence Needed

Reference – Ventyx Velocity Suite; - EIA AEO’13 remaining coal unit identities; AEO 2014er reference case generation; missing generation estimate 144 GW @80% average C.F. for new units to meet 2040 demand

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1,400

1,600

1,800

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BkW

h

EIA AEO’14 Generation

80%

60%

14%

144GW

1,0

07

BkW

h

109GW

56GW

31GW 79

GW

Development needed today?