1. 1 Steven Winberg Program Manager Battelle :: Infrastructure & Environment Pittsburgh, PA The Future of Coal 33rd USAEE/IAEE North American Conference October 25-28, 2015 Pittsburgh, PA. The Future of Coal

2. Our Founding Mission Established by steel industrialist, Gordon Battelle Nonprofit, charitable trust formed in 1925 in Columbus, Ohio Profits reinvested in science & technology, and in charitable causes “Bring business and scientific interests together as forces for positive change” Gordon Battelle’s last will and testament 2

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4. US Coal Production Through 2014 4 2015 estimate  Production down 9% from 2014  Production down 22% from 2008 peak  Exports down 17% from 2014  Exports down 36% from 2012 peak

5. US Coal Production Through 2014 5 Coal Use  93% Electricity Generation  5% Industrial (excluding coke ovens)  2% Coke Ovens – Metallurgical coal

6. My Focus Coal’s Future for Power Generation

7. You can’t talk about the future of coal without talking about natural gas

8. Paradigm Shift  The majority of natural gas E&P was in the Gulf deep water until the 2007 shale boom.  Shale shifted the paradigm 3-5 years to build a deepwater well vs. 6-9 months for a shale well Lower amplitude on price variability Shorter time between boom and bust cycles

9. U.S. Natural Gas Wellhead Price 9 Summer 1987 $1/Mcf – Ohio Snow & Cold Hurricane Katrina High Energy Prices

10. Paradigm Shift  The majority of E&P was in the Gulf deepwater until the 2007 shale boom.  Shale shifted the paradigm 3-5 years to build a deepwater well 6-9 months for a shale well Lower amplitude on price variability Shorter time between boom and bust cycles  2014 Winter was the 1 st time the spot price of natural gas did not climb when the thermometer dropped in the Northeast  2014-2015 negative basis between Henry Hub and Pennsylvania production  Henry Hub = $2.66  Western PA production into pipeline = $1.05  Maybe this current bust cycle is the new norm??

11. You can’t talk about the future of coal without talking about the Clean Power Plan

12. Electricity Generation CO 2 Emissions Million Tonnes Year CPP 2030 Goal – 32% below 2005 baseline 1643 Million Tonnes CO 2 32%

13. Coal-Fueled Electricity Generation under CPP CPP 2030 CO 2 Emissions 1,643,000 M Tonnes 2030 Coal if lost gen. is from zero-emitting sources 634,000 M Tons 2030 Coal if lost gen if from natural gas 527,000 M Tons (17% additional loss) Year M Tons of coal M Tonnes of CO 2

14. You can’t talk about the future of coal without talking about the aging coal fleet FirstEnergy's Lake Shore power plant, built in 1911, is closing.

15. EIA Coal Retirement Forecast Does not consider the impacts of the Clean Power Plan

16. 2014 Coal Consumption & Capacity Factor Age of Coal Fleet (years) 12% 28% 41% 10% 7% 2% GW/MMTons of Coal % Capacity Factor

17. You can’t talk about the future of coal without talking about what replaces the aging coal fleet. 17

18. So What Gets Built? Wind, of course, but there are limits Solar, of course, but even more limited than wind Biomass, maybe but also limited Nuclear, unlikely Fossil Energy - Natural Gas Generation wins over coal  Lower capital cost  Shorter construction times  Less potential for cost overrun  Less environmental regulatory uncertainty  Less public opposition Coal Generation - Unlikely, in the next 10 years

19. New Generation Cost Current Grid Price

20. New Generation Cost

26. Current Grid Price

27. New Generation Cost Current Grid Price

28. What are these Next Gen Coal Technologies? Chemical Looping Advanced Supercritical Oxyfuel Combustion Pressurized Fluid Bed Comb. Supercritical CO 2 Brayton Cycle

29. So What’s the Future For Coal? One Future Slow decline of coal to 500 million tons (50% reduction) in next 15 years… perhaps quicker & greater decline More mines shuttered With this shuttering comes lost reserves More bankruptcies Fewer coal companies competing for a decreasing market. OR

30. A Better Future Coal has to take ownership of the next generation of coal technologies - Coal can no longer rely on utilities/IPPs to advance coal technology  They have other, less expensive options  They have higher priority uses of their capital  Many have mandates to reduce coal consumption - Coal must partner with technology providers - Coal must build the pilot plants on mining property Coal must build, own and operate the equipment that uses its product! albeit a challenging future…

31. 800.201.2011 | solutions@battelle.org | www.battelle.org The best way to predict the future is to create it. The best way to predict the future is to create it. Peter Drucker