1. Presentation to APPA Climate Change Task Force Oct. 17, 2006 FutureGen and Technology Challenges for Climate Change Michael J. Mudd Chief Executive Officer FutureGen Industrial Alliance

2. Gasifier Coal, Water and Oxygen Sulfur Removal Solids and Co-Products Sulfur Clean Syngas Other Chemical Products Electricity Electricity Steam Water Cooling Water Air Advantages of IGCC Potential for lower emissions and higher efficiencies Allows coal to benefit from gas turbine technology improvements Easier to permit than new pulverized coal Versatile - feedstock flexibility and multiple products (electricity, chemicals - including hydrogen, transportation fuel, or "synthetic" natural gas) Potential to reduce incremental cost of CO 2 capture Advantages of IGCC Potential for lower emissions and higher efficiencies Allows coal to benefit from gas turbine technology improvements Easier to permit than new pulverized coal Versatile - feedstock flexibility and multiple products (electricity, chemicals - including hydrogen, transportation fuel, or "synthetic" natural gas) Potential to reduce incremental cost of CO 2 capture IGCC: Innovative Technology

3. Transitioning from NGCC to IGCC Adds Cost and Complexity Combined Cycle GAS TURBINE STEAM TURBINE CONDENSER TO STACK HP, SUPERHEATED STEAM CONDENSATE Heat Recovery Steam Generator C O C A T A L Y S T S C R POWER Natural gas POWER

4. TRIG™ Simplified Flow Diagram Combined Cycle GAS TURBINE STEAM TURBINE CONDENSER TO STACK HP, SUPERHEATED STEAM CONDENSATE Heat Recovery Steam Generator C O C A T A L Y S T S C R POWER Gasifier Island COAL PILE PROCESS AIR COMPRESSOR PARTICULATE COLLECTION HIGH TEMPERATURE SYNGAS COOLING LOW TEMPERATURE SYNGAS COOLING SULFUR REMOVAL AND RECOVERY COAL MILLING & DRYING HIGH PRESSURE COAL FEEDING SOUR WATER TREATMENT AMMONIA RECOVERY SYNGAS RECYCLE SYNGAS VENT GAS ANHYDROUS AMMONIA SULFUR SYNGAS G-ASH HP BFW HP STEAM MERCURY REMOVAL TRANSPORT GASIFIER AIR F-ASH EXTRACTION AIR

5. Gasifier Island Combined Cycle COAL PILE PROCESS AIR COMPRESSOR PARTICULATE COLLECTION HIGH TEMPERATURE SYNGAS COOLING CO2 and SULFUR REMOVAL AND RECOVERY COAL MILLING & DRYING HIGH PRESSURE COAL FEEDING SOUR WATER TREATMENT AMMONIA RECOVERY GAS RECYCLE GAS TURBINE STEAM TURBINE LOW TEMPERATURE GAS COOLING CONDENSER SYNGAS Hydrogen/ Nitrogen EXTRACTION AIR VENT GAS ANHYDROUS AMMONIA SULFUR GAS G-ASH HP BFW HP STEAM TO STACK HP, SUPERHEATED STEAM CONDENSATE MERCURY REMOVAL TRANSPORT GASIFIER AIR Heat Recovery Steam Generator C O C A T A L Y S T S C R POWER F-ASH WATER GAS SHIFT REACTION CO2 TRIG TM with Carbon Separation Technology Added

6. Coal Gasification to Produce SNG (North Dakota) Petcoke Gasification to Produce H 2 (Kansas) Source: Dakota Gasification Source: Chevron-Texaco Examples of Syngas CO 2 Capture Systems

7. CO 2 Storage Variety of Reservoir Types Courtesy of Peter Cook, CO2CRC

8. Commercialization Pathway Existing Commercial IGCC IGCC w/Carbon Capture & Storage Challenges: ………….. 1.Verify Capex / OpEx 2.Prove electricity costs 3.Validate design decisions 4.Verify operability Carbon Capture Challenges: 1.Incremental Capex and OpEx costs 2. Additional design and operational complexity Sequestration Challenges: 1.Uncertainty in sequestration science 2.Permitting and compliance for long-term. AEP IGCC Plant FutureGen

9. Commercial-scale, 275-MWe Plant Minimum of 1 million tons/year CO 2 captured and sequestered Production of electricity from hydrogen “Living laboratory” to test and validate cutting-edge technologies Public-private partnership Stakeholder involvement International participation FutureGen Project Key Features

10. FutureGen Project Benefits Supports a technology-based climate change strategy –Mitigates the financial risks of climate change Validates the cost and performance of an integrated near-zero emission coal-fueled power plant –Advances IGCC technology –Advances carbon capture, sequestration, and hydrogen-production technologies –Sets groundwork for CO 2 sequestration siting and licensing Creates the technical basis to retain coal U.S. energy mix with a long-term goal of zero emissions Enables the public and private sector to share the cost and risk of advanced technology demonstration –Platform for emerging technology demonstration

11. The FutureGen Alliance An international, non-profit consortium of some of the largest coal and utility companies in the world Partnering with US Department of Energy to design, construct and operate the facility

12. FutureGen Site Selection Underway 12 Sites in 7 States C. Davidson 2006 Candidate Sites

13. FutureGen Project Address the Technology Challenges Establish the technical, economic, and environmental viability of near- zero emission coal plants by 2015; thus, creating the option for multiple commercial deployments by 2020 Adopting aggressive goals: –Sequester >90% CO 2 with potential for ~100% –Extensive control of other emissions >99% sulfur removal <0.05 lb/mmbtu NOx <0.005 lb/mmbtu PM >90% Hg removal –Integrate new equipment, yet achieve commercial availability –With potential for a N th plant commercial cost no more than 10% greater than that of a conventional power plant

14. FutureGen Industry’s View of the Facility Air Advanced Electricity Generation Research “User Facility” Advanced Gas Clean-Up Syngas CO 2 H2H2 Advanced CO2 separation O2O2 Syngas H2H2 CO 2 Coal Air Slag Air Separation Unit Gasification Gas Clean-Up** CO 2 Separation** Electricity Generation** Transportation and other H 2 uses CO 2 Sequestration & Monitoring Electricity/Hydrogen Generation “Backbone” with CO 2 Sequestration/Monitoring System Advanced Oxygen Separation **Candidate for Multiple Technology Upgrades over FutureGen’s Lifetime. Other Technologies Electricity, H 2, or other Products Advanced Coal Conversion Full-Scale Gasification Research Platform Sequestration Sub-scale Research User Facility POWER H2 POWER

15. Requires diffusion type burner due to H 2 flame speed Operations will require fuel flexibility  H 2, syngas, NG 15 ppm NOx is achievable with H 2 / diluent  Will need SCR Combustor technology improvements needed: –Fuel flexibility –Catalytic & premix based combustion H 2 / N 2 Flame Hydrogen Combustion Is Challenging

16. Gen H 2 / Diluent 24% Air - 100% Gas Turbine Natural Gas 2% NG Exhaust 102% H 2 Exhaust 124% Hydrogen Fuel Affects Gas Turbine Operations Gas turbines are 'mass flow' machines –More mass throughput = more power –Current design geometries based on NG Fuel input is part of total mass flow through hot section –Changing from NG to H 2 affects flows and output –H 2 / Diluent has higher mass flow –Unbalanced mass flow in turbine section can impact compressor stability Turbine impacts of H 2 firing: –Higher H 2 0 in exhaust reduces life –Requires reduced firing temperatures (lost efficiency)

17. Other Required Process Operations Water Gas Shift Reactors – convert CO in syngas to CO 2 and H 2 Syngas in Absorption at process pressure CO 2 -lean solvent Pure CO 2 Steam Clean gas out CO 2 -rich solvent Regeneration T/P depends on solvent properties Compression ~830°F ~550°F ~555°F ~600°F ~550°F Syngas in water quench or steam addition CO + H 2 O  CO 2 + H 2 COS + H 2 O  CO 2 + H 2 S Carbon Separation Equipment –remove CO 2 and H 2 S from H 2

18. +53%+38%+63% Cost of Electricity -20 to 25%-18% to 22%-30% to 35%Efficiency +85% to 90%+30% to 40%+65% to 75%Capital Cost NGCCIGCCPulverized Coal Impact of Adding CO 2 Capture CO2 Capture - Eastern Coal Carbon capture (“scrubbing”) is a difficult and expensive process: –CO 2 is a very stable molecule –CO 2 concentration is very low in flue gases –Amine processes (MEA) are the only currently proven approach - high capital cost –A large amount of steam is required to regenerate the amine (strip the CO 2 from the “carbon getter”) – large efficiency penalty 0 500 1000 1500 2000 2500 PC w/o CO 2 PC w/CO 2 IGCC w/oCO 2 IGCC w/CO 2 Capital Cost$/kWHeat Rate x10 (BTU/kWh) Source: AEP, EPRI, and US DOE 3000

19. IGCC RD&D Implementation Path for Cost Reduction Case: Slurry-fed gasifier, Pittsburgh #8 coal, 90% availability, 90% CO 2 capture, 2Q 2005 dollars 1200 1400 1600 1800 2000 2200 200520102015202020252030 Near-Term Add SCR Eliminate spare gasifier F-class to G-class CTs Improved Hg Detection Mid-Term ITM Oxygen G-Class to H-class CTs Supercritical HRSG CO 2 -Coal Slurry Dry Ultra-low-NO X combustors Long-Term Membrane separation Warm gas cleanup Longest-Term Fuel cell hybrids Total Plant Cost ($/kW) Courtesy EPRI

20. IGCC RD&D Implementation Path for Efficiency Improvement Case: Slurry-fed gasifier, Pittsburgh #8 coal, 90% availability, 90% CO 2 capture, 2Q 2005 dollars 30 32 34 36 38 40 200520102015202020252030 Near-Term Add SCR Eliminate spare gasifier F-class to G-class CTs Improved Hg Detection Mid-Term ITM Oxygen G-Class to H-class CTs Supercritical HRSG CO 2 -Coal Slurry Dry Ultra-low-NO X combustors Long-Term Membrane separation Warm gas cleanup Longest-Term Fuel cell hybrids Plant Net Efficiency (HHV) Courtesy EPRI

21. FutureGen Project Schedule 20052006200720082009201020112012201320142015 Alliance Established Full Scale Plant Operations Siting, Environmental Review & Permitting Project Structuring and Conceptual Design Design Facility Construction Plant Startup

22. Summary – Issues to address Barriers to commercialization of CCS –Cost Penalty CO 2 Capture –Efficiency Penalty of CO 2 Capture –Need to prove integration of CCS systems –Need to conduct meaningful injections (>1MTPY) –Need to provide liability protection for first several projects The FutureGen project is addressing many of these issues