Overview of EPA Initiatives for Deployment of Integrated Gasification Combined Cycle (IGCC) Plants

1. Overview of EPA Initiatives for Deployment of Integrated Gasification Combined Cycle (IGCC) Plants Presentation to the Environmental Technology Council’s “Brown Bag Seminar Group” May 11, 2006

2. Conventional Coal-Fired Power Plants in the U.S. • Existing Controls: • Almost all units have particulate matter (PM) control devices • About one-third of capacity has sulfur dioxide (SO2) scrubbers • Most have initial nitrogen oxides (NOx) controls (low-NOx burners) • About one-third of the capacity (primarily in the east) will have advanced NOx control (SCR) when NOx SIP-call is fully implemented • Future Controls: • About two-thirds of the capacity (primarily in the east) will have SO2 scrubbers when CAIR is fully implemented • About one-half of the capacity (primarily in the east) will have advanced NOx control (SCR) when CAIR is fully implemented • • Affected Facilities: • – About 1,300 coal-fired • generation units (~ 500 coal-fired • power plants), representing about • 305 GW of generation capacity

3. Fuel Combustion- electric utilities Other stationary combustion * Industrial Processing Transportation Miscellaneous Power Generation Is a Major Source of Emissions 2000 Sulfur Dioxide 1999 Mercury 2000 Nitrogen Oxides Utilities (22%) Utilities (63%) Utilities (40%) * Other stationary combustion includes residential and commercial sources.

4. EPA and Gasification • Integrated Gasification Combined Cycle (IGCC) • Generating electricity from the gasification of coal and other fossil fuel byproducts • Office of Air and Radiation is lead office on development and deployment of IGCC technology • Pursuing industrial applications – polygeneration • Waste-to-Energy • Utilization of biomass, petroleum residuals, petroleum coke, secondary materials • Office of Research and Development in conjunction with the Office of Solid Waste are the leads on the waste-to-energy effort • OAR, ORD and OSWER are working together as a cross-Agency team to promote these technologies for deployment

5. Future of Electricity Generation in the U.S. • U.S. has a well-known, readily available supply of coal • 250+ years of coal reserves • Limited natural gas availability • Need to utilize coal reserves more efficiently • Incorporate renewables (e.g., biomass) into our fuel diversity mix

6. Coal – The New Frontier • The world needs to make electricity from coal in an environmentally and economically sustainable way • IGCC has fundamental advantages from both environmental and efficiency perspectives relative to conventional coal-fired power generation technologies • Inherently lower emissions of NOX, SO2 and Hg • Requires less fresh water – special issue in the drier, water-limited Western regions of the U.S. • Considerably more commercially useful byproducts (and thus, less waste materials) • High potential for reducing Greenhouse Gas (GHG) emissions by allowing for carbon capture and sequestration at costs significantly below conventional PC generation costs CINERGY’s Wabash River Facility

7. Why is IGCC so Attractive – Part 1? Useful Byproducts Very LowEmissions CO2 Energy Efficiency Source: NETL Source: Department of Energy

8. Shift and CO2 Capture Shift and CO2 Capture CO2 CO2 Greenhouse Gas Sequestration Why is IGCC So Attractive – Part 2? Courtesy: DOE/NETL

9. Gasification Offers Clean Alternative Estimated New Plant Emissions Performance 2 1.5 lb/MWh Da SO2 limit 1 Da NOx limit 0.5 ~0 ~0 ~0 NOx SO2 PM Hg NOx SO2 PM Hg NOx SO2 PM Hg Da PM limit* ~80% 95%+ SCPC IGCC NGCC * - Alternative adoption of PM-CEMS is allowed

10. Environmental Technology Initiative • Identify short- and long-term priority environmental problems with attainable technological solutions • Two Gasification Technology Applications Selected • IGCC – generate electricity from coal and other fossil fuel byprodcuts • Waste to Energy – utilization of biomass, petroleum residuals, petroleum coke and secondary materials • Coordinate efforts within EPA and other Federal agencies to identify and implement such technological advancements and solutions • Creation of joint EPA/DOE team to promote deployment of IGCC • Create partnerships with other groups to incentivize technology enhancements and deployment of IGCC units

11. EPA Actions to Date – Progress Report • Regulatory Issues • Current issue for IGCC facilities is New Source Review (NSR) and Prevention of Significant Deterioration (PSD) permitting • December 13, 2005 – EPA memo (IGCC and BACT) • EPA’s interpretation of when IGCC should be considered in NSR and PSD permitting • In the case of pulverized coal boilers and similar conventional coal-fired technologies, IGCC should not be considered as control technology candidate under BACT • Selective Catalytic Reduction (SCR) as BACT for IGCC units • Headquarters and Regional offices want to work with companies interested in developing IGCC technology in the near future • EPA is committed to working with State permitting authorities • States are the primary permitting authority under NSR/PSD – often can be more stringent than Federal regulations • Agency is attempting to be “upfront” and let States know “where we stand” on IGCC permitting issues • Anticipate this may help expedite and streamline the NSR and PSD permitting process considerably

12. Potential Regulatory Hurdles • Should Selective Catalytic Reduction (SCR) be required as best achievable control technology (BACT) for IGCC? • TECO’s Polk Power Station, Tampa, Florida • Florida DEP ultimately decided in conjunction with Region IV that SCR was not required as BACT – a position supported by Headquarters • BACT is a case-by-case determination • “One Size Doesn’t Fit All” • Circumstances at a new plant may not be the same as what drove our decision at Polk Power Station • Regardless, SCR as BACT is a decision that merits our attention and resolution sooner as opposed to later • Cost Estimate for SCR is $6,040 -$11,870 per ton of NOx removed • Currently reviewing an industry request for EPA guidance on SCR as BACT for a planned IGCC facility

13. Potential Regulatory Incentives • Final New Source Performance Standards (NSPS) for Subpart Da • IGCC Units constructed on/after February 9, 2005 would be subject to the same emission limits as a coal-fired boiler • Given current IGCC technology, this should not pose any regulatory burden on new, planned IGCC facilities • Final Clean Air Mercury Rule (CAMR) • Created separate source category for IGCC units • Hg emission limit of 20 x 10-6 lb/MWh • Comparable to a bituminous PC-fired power generation system

14. Future Plans and Needs • EPA is working on models to assess the economic viability of IGCC plants under different conditions • Working closely with DOE on these economic and environmental efforts • One existing barrier today is the cost of IGCC technology • EPA is working in conjunction with DOE to evaluate various proposals to address this economic barrier • Energy Policy Act of 2005 • Exploring options and incentives such as loan guarantees and tax credits • To incentivize the commercial deployment of IGCC technology EPA needs to better understand the environmental footprint of these facilities relative to conventional power generation technologies • Joint EPA/DOE study on environmental and cost aspects for an IGCC unit versus a conventional coal plant • Environmental Footprints and Costs of Coal-Based IGCC and PC Technologies • Nexant, Incorporated (subcontractor to Cadmus, Incorporated) • Final Report released in May 2006

15. Air Emission Comparisons* * All emissions in lb/MMBtu. IGCC NOx based on 15 ppmvd/15% O2 and with no SCR. An SO2 removal of 87% reflects a very low coal sulfur content (0.22%).

16. Summary of EPA’s Efforts on IGCC • EPA has undertaken several initiatives to facilitate and incentivize IGCC technology • Environmental Technology Council adoption of IGCC Technology • Environmental/Cost Study (release: May 2006) • Results of IGCC vs. PC Study: • IGCC thermal performance significantly better than PC technologies applied in US • Ultra-supercritical PC thermal performance may match or exceed current IGCC performance • Better environmental performance for IGCC • IGCC has potential advantage in capturing and sequestrating CO2 at lower costs • Limited information available for the study on low-rank coal applications for IGCC and on ultra-supercritical PC plants • EPA is not trying to pick a technology winner, but trying to ensure that IGCC has a chance to prove itself commercially