Climate Change: A Bi-Lateral Approach Driving Technology Innovation

1. Climate Change: An Opportunity for a Bi-Lateral ApproachDriving Technology Innovation Woodrow Wilson International Center for ScholarsCanada Institute May 23, 2007 Edward C Lowe General Manager GE Energy

2. GE Energy … a global technology business • Operating in more than 100 countries … 125+ years • 36,000 employees …~700 locations • 2006 revenue $19B • Investing in cleaner technologies • $3 billion invested over last 5 years • Growing annual investment to $1.5 B by 2010

3. Global power generation requirements Diverse Efficient Nuclear Wind Gas Coal Oil Geothermal Biomass Hydro Solar Emissions Reliability Efficiency + Driving cost of electricity down Affordable, reliable & environmentally responsible

4. Requirements For Global Deployment of Cleaner Power Generation Technologies • Predictable Stable Public Policy • Policy should lead technology • Set reasonable stretch performance goals • Technology Advancements • Innovation coupled with enforceable IP protection • Predictable policy provides confidence for companies to invest for the long term • Investment In Manufacturing Supply Chain • New technology requires significant manufacturing investments by the OEM and its suppliers • Predictable stable policy encourages investment

5. Clear Policy Accelerates Technology Development and Deployment – Wind Energy Global renewable installed capacity (GWs) • US capacity has grown from near zero to > 12,000 MW in 15 years • Canada’s capacity has grown to 1.5 GW, 47% CAGR in 5 years • 70 GW in 50 countries • Global Wind to grow 13% CAGR through 2030 ~210 182 160 Wind All other ‘04 ‘05 ‘06 Source: REN21 2006 update + GE est (2/07)

6. Global Wind deployment driven by technology advancements and public policy • Public Policy Incentives • Renewable Portfolio Standards • Feed In Tariffs • Production Tax Credits • Investment Tax Credits • Renewable Obligation Certificates COE (¢/kWh) 20 15 10 5 0 ‘85 ‘95 ‘05 • Technology • Investments • Project scale

7. IGCC – Cleaner By Design • Treats 1/100th volume • CO2 concentration 40-50% in syngas (IGCC) vs 14% in flue gas (PC) • 25% cost premium vs SCPC In Integrated Gasification Combined Cycle (IGCC) plants, gasification converts low cost fuels, like coal, into a high value, natural-gas-like fuel called synthesis gas (syngas) to fuel a combined cycle system. In pulverized coal (PC) plants, coal is fed into a boiler, which combusts the coal, followed by post combustion pollution controls.

8. IGCC: Emissions Approaching Natural Gas 0.16 PM10 0.15 SO2 Hg % Captured NOx 90%+ Average RecentPermit Data 0.10 0.09 Lb/MMBTU 50 - 90% Best IndividualPlant 0.05 0.04 0.03 0.02 0.017 0.01 0.01 0.01 0.01 PC PC IGCC IGCC 0.002 0.00 Hg NGCC Advanced PC/SCPC IGCC Source: GE internal data, average of 30 US permits granted, applications and publicly reported emissions 30-40% Less IGCC Environmental Benefits Versus Best in Class Supercritical Pulverized Coal PC PC IGCC IGCC Water Usage • 33% less NOx • 75% less SOx • 40% less PM10 • 90% + Hg removal • 30% less water • CO2 capture ready

9. Carbon Capture Technology Pathways Technologies CO2 $/Ton1 Post-Combustion Pre-Combustion • Amine Scrubbing • IGCC $441 $211 Today • Oxy-Combustion • Chilled Ammonia • Membranes O2/CO2//H2 • High efficiency shift • Pre-mix H2 combustor Post-Combustion Pre-Combustion ~$331 -- -- -- -- Developing 1 The Future of Coal, MIT 2007 Coal Energy Study

10. Economics • IGCC1 • SCPC2 • Mercury3 • 95% • $3,412 • 40%-70% • $37,800 • Removal % • $/lb • Water Makeup4 • 750 • gal/MW-hr • 1042 • CO25 • -13% • -15% • +32% • +32% • 35 • 15% • -18%6 • -30% • +83% • +68% • 75 • 123% • kW penalty • Net Equiv. Eff. • Capital Cost • COE Increase • Avoided Cost $/MT • Raw Water Usage 1GE Energy Gasification Radiant, Illinois #6, 630MW Net (baseline), Selexoltm AGR 2SCPC, 3500/1100/1100, Illinois #6, 550MW Net (baseline) Econaminetm scrubbing 3The Cost of Mercury Removal in an IGCC Plant, DOE NETL, final report, Sept 2002 4 Power Plant Water Usage and Loss Study, DOE NETL, August 2005 5 Cost and Performance Comparison of Fossil Energy Plants, DOE NETL, Report 401/53106, May 2007 (Final), 90% CO2 capture 6 Including STG equivalent power reduction from Econaminetm regeneration

11. Uncertain Policy Hinders Deployment - IGCC • GHG uncertainty delaying Integrated Gasification Combined Cycle • Capacity additions based on the lowest COE • Low carbon technologies will be disadvantaged • Policy required that monitizes the benefits or offsets their cost premium • EPAct of 2005 with ITC provisions was a significant step forward in accelerating deployment IGCC

12. Government Policy/Incentives to Accelerate Global Cleaner Coal • Expand the current investment tax credits authorized and funded under the Energy Policy Act of 2005 to offset the current 20 – 25% CAPEX premium for IGCC or similar incentive • Monitize benefits of lower criteria emissions (SOx, NOx, PM) • Low carbon portfolio standard with trading among power generators for low carbon credits • Carbon capture requirements for new coal power plants phased in over time • CO2 allocations for new low carbon plants • EOR and saline aquifer carbon storage demonstration projects • Gov’t issued site selection criteria & monitoring reqm’ts • De minimis leakage and liabilities for leakage must be addressed

13. Accelerating Deployment of Low-Carbon Technologies Requires… • Predictable Long term Public Policies • Investments and advancements by technology providers • Collaboration among multiple stakeholders for successful implementation