Fossil Energy Coal R&D Program

Carl O. Bauer, Acting DirectorNational Energy Technology Laboratory

Enhancing the Use of Coal:Overcoming Technology

Challenges

Washington, D.C.May 19-20, 2005

Why Coal ?

Coal Provides Affordable Electricity and Increased Energy Security !

80

120

160

200

240

1970 1975 1980 1985 1990 1995 2000

Coal Use Linked to Economic Growth !In

dex

: 19

73 =

100

GDP: U.S. DOC, Bureau of Economic AnalysisEnergy & Electricity: EIA, Annual Energy Review 2003

Year

ElectricityGeneration

Total EnergyConsumption

GDPCoal-fired

Generation

Coal-fired Generation and GDP Have Grownat Nearly the Exact Same Pace Over Last 30 Years

U.S. Fossil Fuel Reserves / Production Ratio

Sources: BP Statistical Review, June 2004, - for coal reserves data - World Energy Council;EIA, Advance Summary U.S. Crude Oil, Natural Gas, and Natural Gas Liquids Reserves, 2003 Annual Report, September 22, 2004 - for oil and gas reserves data

-

250 Year Supply at Current Demand Levels !

258

11.7 9.7

0

100

200

300

Coal

Oil

Natural GasAnthracite & Bituminous

Sub-Bituminous

&Lignite

Energy WildcardsPerceptions About LNG Safety

World Oil Production Peaking

Pro

du

ctio

n

Time

Global Warming Concerns

200 150 50

350

300

250

200

100 0

20-2-4

∆Tatm (Vostok)

CO2 (Vostok)

Deg

rees

C

pp

m C

O2

Time, kyrs

AEO Estimates of Generation Fuel Sources by 2025

EIA, Annual Energy Outlook 2000, 2001, 2002, 2003, 2004 and 2005* - AEO 2000, 2001, 2002 trendline extrapolation from 2020 to 2025

Loss of 1,300 BkWh of N.A. Natural Gas-fired Generation from Forecasts;˜ 2X Today’s Gas-fired Generation

0

500

1,000

1,500

2,000

2,500

3,000

Coal Nuclear Natural Gas Renewables Oil

AEO'00 AEO'01 AEO'02 AEO'03AEO'04 AEO'05 '03 Actual

+774

+920

+130

+29

+66

3,029

LNG

+534 (69% of growth) from added LNG (in AEO’05)

Bill

ion

kWh

Little LNG anticipated

Converts to primarily an LNG fuelproposition for gas-fired growth (in AEO’04)

LNG

Loss of 1,300 BkWhN.A. natural gas-fired generation

AEO Estimates of Generation Fuel Sources by 2025

EIA, Annual Energy Outlook 2000, 2001, 2002, 2003, 2004 and 2005* - AEO 2000, 2001, 2002 trendline extrapolation from 2020 to 2025

LNG share of generation assumed equal to share of natural gas growth

Loss of 1,300 BkWh of N.A. Natural Gas-fired Generation from Forecasts;˜ 2X Today’s Gas-fired Generation

0

500

1,000

1,500

2,000

2,500

Natural Gas

LNG

LNG

Bill

ion

kWh

LNG

Loss of 1,300 BkWhN.A. gas-firedgeneration

Loss of 1,300 BkWhN.A. gas-firedgeneration +774

+534 ( 69% ofgrowth from addedLNG in AEO’05)

Little LNG anticipated

Converts to primarily an LNG fuelproposition for gas-fired growth(54% of growth from LNG in AEO’04)

2003Actual2003

ActualAEO’00AEO’00 AEO’01AEO’01 AEO’02AEO’02 AEO’03AEO’03 AEO’04AEO’04 AEO’05AEO’05

LNG

LNG

LNG

Substantial New Coal Capacity Planned(Accounts for 34% of New Capacity Additions thru 2025)

New Electricity Capacity Additions(EIA Reference Case)

0

20

40

60

2004-2010 2011-2015 2016-2020 2021-2025

Cap

acity

Add

ition

s (G

W)

Natural GasCoalRenewables

89 GW New Coal Capacity By 2025(~ 178 New 500 MW Plants)

Source: Data Derived From EIA Annual Energy Outlook 2005

DOE Report #DE-AC-01-94FE62747, April 2001

0 1 2 3 4 5 6 7

Natural Gas Price ($ / MMBtu)

Co

st o

f E

lect

rici

ty (

Cen

ts /

kWh

) 6

5

4

3

2

1

$500 -$600 / kW

Natural Gas CC

Coal-Fired Power PlantCapital Cost $1200 - $1600 / kWCoal Price $1.35 - $1.75 / MMBtu

Coal Technologies are Cost Competitive !

ParticulateMatter

Ind

ex:

197

0 =

1

Coal UseElectricityGeneration

NOxSO2

Year EPA, National Air Quality and Emissions Trends Report, 1999 (March 2001)DOE, EIA Annual Energy Review

Projections for NOx and SO2: Clear Skies Initiative

Coal Getting Cleaner While Demand Increases !

0

1

2

3

4

1970 1980 1990 2000 2010 2020

Fossil Energy Research & Development

Driving Coal To Zero Emissions!

Partnering With America To Develop Zero Emission Coal Technologies

Power IndustryResource Owners; Producers;

Distributors/Marketers

National LaboratoriesNETL, SNL, ORNL,

ANL, PNNL, INEEL and others

Academic CommunityTeaching Universities;

Research Institutes

Industrial SuppliersTechnology Developers; Equipment

Suppliers; A&E Firms

Federal, State & Local Governments

EPA, DOD, DHS; State Regulators; Municipalities

Coal & Power SystemsPublic -- Private

Partnerships

R&D Challenges for Zero Emission Coal Technology

• “Near-zero” emissions

• CO2 management

• High efficiency

• Water use

• By-product utilization

• Flexible (feedstocks, products, siting)

• Cost competitive with other energy choices

Core R&D Program• Innovations for

Existing Plants• FutureGen Support

Demonstration Program• Clean Coal Power Initiative• Power Plant Improvement Initiative• Clean Coal Technology Initiative

FutureGen• Integrated Sequestration,

Hydrogen, and Power Research Facility

Presidential Initiatives Presidential Initiatives ------ DriversDrivers•• FutureGenFutureGen•• Global Climate ChangeGlobal Climate Change•• Hydrogen Fuels Hydrogen Fuels ((FreedomCarFreedomCar))

•• Clear SkiesClear Skies

R&D Focused on Supporting Presidential Initiatives

2000 2005 2010 2015 2020 2025O2

Membrane

AdvancedGasifier/

Combustor

SequestrationReady Integrated

Adv. Power System

Near-Zero Emission Plants with

Sequestration

Integrated Adv. Power System

Sequestration Ready Near-Zero Emission Power

Plants

Integrated Adv. Power System w/Fuel Cell

IGCC &CFB

Demos

Envr. Control(Hg, water, byproducts)

Gas Cleaning Advances in System

ComponentsATS Syngas Turbine

SECA Fuel Cell

ATS Turbine

CO2 Capture

CO2 Sequestration

Sequestration ReadyNear-Zero Emission

Plants w/CoproductionPower/Fuel

Coproduction Liquids

H2Membrane

Fuel Cell/IGCC Test

IGCC Demos

FutureGen-Coproduction Hydrogen/Power/Sequestration

Integrated Technology Roadmaps Are Key to Success(Example: Joint CURC-EPRI-DOE Roadmap)

Technology Module Demos

Integrated Plant Demos

Near-Zero Emission Plants

CCPI Round 1

CCPI Round 2

ReferencePlant 2010 2020

Plant Efficiency (HHV) 40% 45-50% 50-60%

Availability >80% >85% >90%

Plant Capital Cost$/kW

900 – 1300 900 – 1000 800 – 900

Cost of Electricity¢/kWh

3.5 3.1 <3.0

Roadmap Targets Keep R&D Focused & On Track(Represents best integrated plant technology capability)

Critical Technology Pathways

Environmental Control for Existing Plants

• Low-NOx combustion; reduced cost• Mercury control (>90% capture)• Fine particle control

Advanced Combustion

• Ultra-supercritical steam• Oxygen combustion• Advanced concepts (e.g. oxygen

“carriers”)

Critical Technology Pathways

Gasification Systems

• Gasifier advances; new designs (e.g. transport gasifier)

• Oxygen membrane separation• Syngas purification (cleaning) and

separation (e.g. hydrogen, CO2)

Energy Conversion

• Advanced gas turbine technology using syngas

• Fuel cell systems using syngas

Gasification Provides “Multiple Product” Capability(Power, Hydrogen, Liquid Fuels, Chemicals, SNG)

Coal3000 TPD

Syngas1929 MMBtu/Hr

Quench Gasifier

85% Availability

Slag/Fines

Steam

Sulfur Removal

Particulate Removal

Steam Superheater Steam Turbine

StackWater

Solids

Plant Use

Pure Sulfur

Oxygen

Electricity9.7 MW

Hydrogen

Liquid Fuels

Chemicals

SNG

Water-Gas Shift

CO2

FutureGen

Gasification with Cleanup Separation System

Integration

CarbonSequestration

Optimized Turbines

Fuel Cells

H2 Production

FutureGen: Integrating Function for R&D Program

Advanced Technology Needed for FutureGen

Air

O2

Air

MercuryRemoval

Syngas Scrubber

Acid GasRemoval

GasCooling

ClausPlant

Heat Recovery

Steam Generator Stack

Coal

CO2 for Sequestration

Sulfur

Clean Syngas

H2 Product

Extracted Air

Gasifier

Upgraded GasCleaning with

Adv. Technology

Upgraded Adv.

Gasification

Supplementing Air Sep. with Adv. Technology

Pressure Swing

Adsorption

ShiftReactors

CryogenicAir Sep.

N2Gas

TurbineComb.

Low NOx Comb. Technologies Syngas

Conditioning

Critical Technology Pathways

Carbon Management

• CO2 capture• CO2 sequestration• Monitoring and verification

Systems Integration

• Integrated power plant modeling and virtual simulation

• Sensors and smart-plant process control

Tracking the Progress of Fossil Energy R&D

Validating the Pathway To Zero Emissions!

Systems Analysis Used to Track R&D Progress(Example cost reduction potential for CO2 capture developments)

32%

23%

17%

10%

0

5

10

15

20

25

30

35

A B C D

O2 Capital i 4 %

Per

cen

t In

crea

se in

CO

E(R

elat

ive

to N

o C

aptu

re C

ou

nte

rpar

t)

O2 Load i 5 %

Adv. Sorbent i 4 %

Co-Storage i 1 %

Shift Mem. i 2 %

O2 Membrane i 9 %

Shift Mem. i 4 %

O2 Membrane i 9 %

Adv. Sorbent i 8 %

A—Current ScrubbingB—Oxygen MembraneC—O2 Membrane + WGS Membrane + Adv. SorbentD—O2 Membrane + WGS Membrane + Adv. Sorbent

+ Co-Storage H2S/CO2

5.5 c/kWh 5.2 c/kWh 4.9 c/kWh 4.6 c/kWh

Goal

Basis: No Capture COE 4.2 c/kWh 400 MW Net Output90 % CO2 Capture80% Capacity FactorSaline Formation Storage

…the results of NETL’s systems, analysis and

planning activity…

Driving Down Cost For Gasification Systems(1)

(> 40% Cost Reduction Potential from R&D)

$/kW

Today 2010 2020

650

600

550

500

450

400

350

300

$355 /kW

Regenerable SorbentsAir Separation Membranes

System Integration

Dry Fuel Flexible FeedsTransport Gasifier

Reference Plant 625/kW2020 Plant1 355/kW

1High Efficiency Near Zero Emission

$625 /kW

(1) Air Separation, Coal Feed, Gasification, Gas Stream Purification/Separation

Today 2010 2020

350

325

300

275

250$250/kW

Driving Down Cost for Turbines(> 30% Cost Reduction Potential from R&D)

$/kW

$350/kW

Advanced Natural Gas Turbine: Design for Syngas

H Turbine Technology:Improved Metallurgy, Blade

Design, Cooling

Reference Plant 350/kW2020 Plant1 250/kW

1High Efficiency Near Zero Emission

Driving Down Costs For Fuels Cells(1)

(Order of Magnitude Cost Reduction Potential)

$250/kW

SECA Target for NG Fuel

Transition to Coal Applications

• Improved Syngas Purification Technology• Advanced Contaminant Tolerant Materials• Overcome Barriers to Scale-up

Today 2010 2020

800

700

600

500

400

300

200

100

$/kW

• Advanced Electrode/Electrolyte Materials

• Lower Cost Manufacturing

Today >2500/kW2020 Plant1 250/kW

1High Efficiency Near Zero Emission;Cost is Stack Only

>$2500/kW

0

20

40

60

80

100

2000 2005 2010 2015 2020

$ B

illio

n

Cumulative Benefits

DOE Coal R&D Program Reaping Big Benefits

CumulativeInvestment

Total (DOE & Private)

CumulativeBenefits

CumulativeInvestment

Total Investment $10.7B1

Total Benefit ~$100BBenefit to Investment

Ratio ~10

1Assumes current annual funding is maintained; includes R&D anddemonstration activities

Conclusions

•• Coal will continue to be a valued resource with over 100 GW of new coal plants projected by 2020

• Advanced technology is required to meet economic and environmental goals

• Industry and DOE have identified critical technology needs to meet the goals -- integral with the Coal Program roadmap

• Achieving cost and environmental goals requires maintaining our Nation’s investment…both government and industry

• Budget pressures cause premature technology decisions and substantially increase program risk

16.0

17.0

18.0

19.0

20.0

21.0

22.0

23.0

24.0

25.0

26.0

27.0

28.0

29.0

30.0

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

Declines in Domestic Natural GasProduction Forecasts

’02

’03

Tcf

/Yea

r ’04

AEO’05 Domestic Production Reduced by an AmountLarger Than Alaskan Pipeline (>1.5 Tcf/yr in 2020)

Annual Energy Outlook 2002, 2003, 2004 and 2005

Annual Energy OutlookPublication Year

’05

- 6.6 Tcf(-23%)

- 2.2 Tcf(-8.2%)

CERA(Winter 2005: North American Natural Gas Market Review 2/15/05)

Lehman Brothers (4Q’04 Industry Survey 2/10/05)

Simmons & Co. International (Outlook for Natural Gas:2005 and Beyond - 1/18/05)

Raymond James & Associates (estimate - 3/4/05)