Coal – security of coal supply considerations of EURACOAL Paris – 24th May 2005

Coal in Europe Secure energy for Europe Economic energy for Europe Clean Coal – three stages in a long-term vision Working together for the right policies There is a need for balanced energy and environmental policies Paris, 24th May 2005, Figure 2

Europe is the world‘s third largest consumer of coal behind China and the US Data in mill. t for 2002 Lignite production Hard coal production Hard coal imports About 490 mill. t/a hard coal and 550 mill. t/a lignite in Europe Paris, 24th May 2005, Figure 3

Coal is key to power generation in states across Europe TWh Coal‘s share in % 3,018 30 2,678 26 144 92 76 66 55 63 572 50 246 33 387 32 36 25 284 12 82 12 559 4 44 46 54 37 Share in % Gross power generation - 2002 Paris, 24th May 2005, Figure 4

Rising gas prices are higher risk for generators and consumers than coal Average Generation Costs of New Baseload Power Plants Paris, 24th May 2005, Figure 5

Power requirements of the enlarged Europe will increase with coal remaining a major player Policies to limit demand and CO2 emission + 54% 4.5 Policies to promote renewables 18 % GWh 3.0 36 % Renewables (Hydro) 15 % Policies needed to increase efficiency in generation Gas 17 % 2 % Oil 6 % 17 % 32 % Nuclear 27 % 30 % Coal 2002 2030 Source: EU Commission, Trend to 2030 Policies are needed to enable all fossil fuels to contribute to the solutions for climate change Paris, 24th May 2005, Figure 6

Clean coal can balance energy security and economic needs with environmental needs Coal is inexpensive, secure and has no transport risks The environmental impact of coal use can be minimised by clean coal technologies Clean coal is the basis for long-term acceptance of coal and is a flexible concept which can be used by all countries Euracoal defines clean coal in three stages I Reduction in SO2, NOx, dust II Improved energy efficiency III The long-term vision of CO2 capture and storage Paris, 24th May 2005, Figure 7

Niederaußem‘s lignite-fuelled power plant illustrates step-by-step efficiency enhancement =>43% 1000 MW 2002 =35% 600 MW 1974 =34% 300 MW 1965-71 =31% 150 MW 1963 Paris, 24th May 2005, Figure 8

In the longer term there is a route to near-zero CO2 emission power stations CO2-capture pre-combustion at gasification plants post-combustion at conventional plants oxy-fuel combustion CO2-storage depleted oil and gas fields deep saline aquifers unmineable coal seams mineralisation Some technologies are well-proven, others need significant R&D. All require demonstration with monitoring & verification of storage sites. EU Framework Programme VII offers the opportunity to move ahead with demonstration projects and targeted R&D Paris, 24th May 2005, Figure 9

Implementation of emissions trading policies is of key importance for coal and for Europe Emissions trading will inevitably lead to fuel switching from coal to gas Increased gas burn within the EU will have an adverse impact on competitiveness and energy security Coal can provide low carbon solutions needs right political and investment climate Implementation of Phase I has been rushed – We need to start planning Phase II now Paris, 24th May 2005, Figure 10

Emissions Trading in Germany Security for investors beyond Kyoto Trading period 2005/07 Trading period 2008/12 Kyoto Post-Kyoto Section 10,NAP-G (National Allocation Plan Act): New installations replacing old plants Full allocation Installation-related benchmarks 4 CF Old plant + 14 years Compliance factor 1 New plant Paris, 24th May 2005, Figure 11

Coal in Europe Different countries, situations and needs for action Competitive electricity supply is important for Europe‘s economy – coal backs this competitiveness Past burdens should not hinder future potential to provide Europe with a valuable indigenous resource Reliable regulatory framework is needed for long-term investment in modernisation new mines / power plants Regulation of the electricity market should provide a framework to stimulate production and investment Paris, 24th May 2005, Figure 12