By: Theresa Pugh Director, Environmental Services American Public Power Association Presented to:

1. CO2 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. 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. 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 CO2 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 1/500th of a percent of the CO2 that some expect to be injected from future power plants

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

5. APPA: Perspective on CO2 Control • APPA Supports Voluntary CO2-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 PowerTM Program for aforestation • Provide shade, improve photosynthesis, reduce CO2 • Golden Tree Award: one tree per customer served • APPA supports demonstration projects on CCS

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

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

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

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

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

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

12. Proximity to Infrastructure • Transmission Lines • Rail Lines for Delivery • Access to Water Resource for Generation • Must Meet Load Growth • Need Access to CO2 Pipeline Proximity to Infrastructure

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

14. 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) • CO2 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

15. Financial Issues Other Costs – Some Impossible to Calculate • Cost to separate CO2 at new CCS power plants • Cost to transport CO2 offsite to other states • How much does it cost to pay for retrofit of natural gas pipeline system for CO2 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

16. New Commercial/Business Risks and Costs to Power Plants Financial Issues • 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?

17. New Coal Generation + CCS = Parasitic Load Financial Issues • 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% Other, 3% Cooling system F&P, 13% CO2 compression, 53% Amine system Aux, 24%

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

19. 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

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

21. Personnel Shortfall • Drilling Expertise Needed in Contractors • Well Monitoring Experience Needed in Contractors Personnel Shortfall

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

23. 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

24. Location! Location! Location!Is not the same asGeology! 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

25. For Engineers and the Left-Brained… Comparison of CCS Volumes to Current UIC Volumes: [1] Electric Power Research Institute, Electricity Technologies in a Carbon-Constrained World. [2] Source: Advanced Resourced International, 2007, [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.

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

27. Total CO2 from Power Plants Projections from EIA: 2,400 Million Metric Tons in 2006 3,044 Million Metric Tons in 2030 (1.1% growth rate per year)

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

29. 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

30. 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

31. 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

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

33. Law of Unintended Consequences • CCS and IGCC will cause power plants to use/gasify more coal than PC plants • CO2 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?

34. 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?

35. 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?

36. 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