U.S. Coal A 21st Century Resource

Gasification Technologies Council Board Meeting February 6th, 2014 ~ St. Augustine, Florida

Janet Gellici NCC Executive Vice President & Chief Operating Officer

Presentation Overview

National Coal Council Update on the Coal Industry

National Coal Council - Purpose

THE NATIONAL COAL COUNCIL PROVIDES ADVICE AND

RECOMMENDATIONS TO THE

SECRETARY OF ENERGY ON GENERAL POLICY MATTERS

RELATING TO COAL AND THE COAL INDUSTRY.

Review of federal policies which affect the production, marketing and use of coal.

Advice on plans, priorities and strategies to address technological, regulatory and social impacts related to coal production and use.

Advice on the appropriate balance between various elements of federal coal-related programs.

Advice on scientific and engineering aspects of coal technologies.

Advice on the progress of coal research and development. Celebrating 30 years ~ 1984|2014

NCC is a Federal Advisory Committee organized under FACA legislation.

National Coal Council - Membership

Members are federally appointed, nominated to serve and approved by Secretary of Energy

110-125 members

Industry – coal suppliers, utility & industrial consumers & coal transportation

Support Services – engineering firms, vendors, consultants & attorneys

Academics NGOs – environmental &

trade association reps Government – PUC &

state energy officials

National Coal Council - Leadership John Eaves, NCC Chair

President & CEO Arch Coal, Inc.

Jeff Wallace, NCC Vice Chair Vice President Fuel Svcs Southern Company

Fred Palmer Coal Policy Committee Chair

Senior Vice President Peabody Energy

Bill Brownell, Esq. Coal Policy Committee Vice Chair

Chairman Hunton & Williams

Executive Committee ADA-ES Alliance Coal Ameren Energy Arch Coal CH2M Hill Connemara Ltd. CSX Transportation Elm Street Resources Hunton & Williams Peabody Energy PPL EnergyPlus PSEG PTI Resources LLC Shenhua Group Southern Company Tri-State G&T

National Coal Council - Studies Over 30 Studies Conducted for the Secretary of Energy 1984|2013 Extensive Range of Topics

Carbon Management Clean Coal Technologies Coal Exports Coal Conversion Coal’s Image Utility Deregulation Climate & Clean Air Regulations Building New Coal Power Plants Industrial Coal Use Externalities Interstate Transmission CCUS for EOR

Studies prepared by NCC members. At no cost to DOE.

A Decade of NCC Research 2000|2012 Coal is Good for the Economy Coal is Good for the Environment Coal is Good for People

Coal-based energy is the foundation of social development, allowing more people to live better and live longer.

Continued and expanded utilization of America’s vast coal endowment is overwhelmingly in the public interest, the epitome of energy security.

Coal conversion to electricity, liquid fuels, substitute natural gas and chemicals will enable the United States and the world to meet the ever-rising tide of energy demand.

Clean coal technologies, including: (a) higher efficiency generation and (b) carbon capture, utilization, and storage (CCUS) are the pathways to sustainable energy, economic growth and climate change policy goals.

Affordable and reliable electricity from coal enables the expansion of electro-technologies, which are the basis of modern society.

Update Coal Supply U.S. Coal Exports U.S. Coal Generation Energy Policy Technology Coal Conversion

Coal Supply

Coal Supply Production Discipline Cost-cutting Periodic short-term idling 4-day work week

Optimizing Assets Divestitures & Acquisitions Horizontal Integration

CORE Safety Initiative Pushback on Permitting Controlling CAPEX Prioritizing projects

Flex Contracts New Markets Exports

Coal Rising: World’s Major Source of Energy

Bio 10%

Nuclear 6%

Coal 27%

Oil 32%

Natural Gas 22%

12,730 MTOE/Day

Hydro 2% Other

1%

Nuclear 5%

Coal 30%

Oil 27%

Natural Gas 23%

Hydro 2%

Other 3%

Bio 9%

18,676 MTOE/Day

2010 2035

IEA Current Policies Scenario, 2012 11

U.S. Coal Exports

2004 2005 2006 2007 2008 2009 2010 2011 2012

Total 48 49.9 49.6 59.2 81.5 59.1 81.7 107.3 126

2004 2005 2006 2007 2008 2009 2010 2011 2012

Met 26.8 28.7 27.6 32.3 42.6 37.3 56.2 69.5 70

Steam 20.5 20.8 21.7 26.4 38.5 22.5 25 37.2 55

Record: 126 mst in 2012

In Million Short Tons Source: National Mining Association

Estimated: 118 mst in 2013

Source: CIA World Fact Book, United Nations Development Program’s Human Development Report.

United Nations Links Affordable Energy to Quality of Life

U.S. Coal Export Opportunities

13

United StatesFinlandSweden

Canada

Qatar

South Africa

Brazil

ChinaIndonesia

India

Bangladesh

Ethiopia

Japan

Russia

Nigeria

DR Congo

GermanyUK

Argentina

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000

U.N

. Hum

an D

evel

opm

ent I

ndex

Electricity Use Per Capita (kWh/year)

Every 10-Fold Increase in Per Capita Electricity Use Drives a

10-Year Increase in Longevity

U.S. Coal Trade

PRB

West Bit

ILB

Source: Wood Mackenzie Coal Market Service

CAPP NAPP SAPP

U.S. Coal Exports Coal demand from

emerging & developing nations

Addition of export capacity at U.S. East, Gulf & West Coasts

Northwest Passage?

Supportive rail rates Government

acknowledgement of coal’s contribution to U.S. trade balance & President’s National Export Initiative

Domestic Coal Generation

-120 -90 -60 -30 0 30 60 90 120 150 180

2012 2013 2014 2015 0

10 20 30 40 50 60 70 80 90

100

U.S. Coal Consumption million short tons (MMst)

Electric power (right axis) Retail and general industry (right axis) Coke plants (right axis) Total consumption (left axis) Consumption forecast (left axis)

annual change (MMst)

Source: Short-Term Energy Outlook, January 2014.

Forecast

0 25 50 75

100 125 150 175 200 225 250

Jan 2006 Jan 2008 Jan 2010 Jan 2012 Jan 2014

U.S. Electric Power Coal Stocks million short tons

Source: Short-Term Energy Outlook, January 2014.

Note: Colored band around stock levels represents the range between the minimum and maximum from Jan. 2006 - Dec. 2013.

18.8% 20.1% 21.6% 21.4% 23.3% 23.9% 24.7% 30.4% 27.4% 26.7%

49.6% 49.0% 48.5% 48.2% 44.4% 44.8% 42.3% 37.4% 40.0% 40.3%

Forecast

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

U.S. Electricity Generation by Fuel, All Sectors thousand megawatthours per day

Coal Natural gas Petroleum Nuclear Hydropower Renewables Other sources

Source: Short-Term Energy Outlook, September 2013

Note: Labels show percentage share of total generation provided by coal and natural gas.

Future U.S. Coal Generation

Factors Driving Generation Decisions

$

-120 -90 -60 -30 0 30 60 90 120 150 180

2012 2013 2014 2015 0

10 20 30 40 50 60 70 80 90

100

U.S. Coal Consumption million short tons (MMst)

Electric power (right axis) Retail and general industry (right axis) Coke plants (right axis) Total consumption (left axis) Consumption forecast (left axis)

annual change (MMst)

Source: Short-Term Energy Outlook, January 2014.

“Access to electricity is strongly correlated with every measurable indicator of human development”

- Berkeley Science Review, 2008

1

Ecowatts: Using more affordable kilowatts for economic growth and a cleaner

environment by avoiding fossil fuel combustion at the point of

use

Electro-technologies: The means to drive

the application of Ecowatts to create benefits

for society, including enhanced energy efficiency

Economic Growth Quality of Life Workplace

Improvement Environmental

Progress

2 3

Affordable Electricity is Good… More is Better

Beneficial Electrification: Improving the quality of life

through Electricity

Coal Generation Demand Energy Efficiency

1% increase in plant efficiency ↓ CO2 by 2%

Preserve Existing Coal Plant Investments Retain newer, efficient

plants with post-combustion CCS potential

Generation Diversity Maintain coal optionality Hedge against increasing

consumer $$$

Supportive Rail Rates

Energy Policy

Energy Policy National Commitment to Coal Federal Investment in

Clean Coal Technology RD&D $$$ Focus on driving down $$$

of new technology

Policy Certainty ? An Oxymoron Litigation Paralysis Financial Paralysis Sue & Settle Process

Price on Carbon

Technology

Retrofit Programs Increase Efficiency, Decrease Emissions

Prior to commercial CCUS, existing plants can reduce CO2 emissions through the retrofit of the efficiency increasing technologies

Technologies are widely available and range from combustion improvements to enhanced heat transfer

AEP estimate: upgrades would yield reductions of more than 3.5 MMT of CO2 per year in its generation fleet

Millions of tons of CO2 reductions per year can be realized even with single-digit improvements

Additional oil is accessible in the residual oil zone (ROZ). The U.S.

ROZ may contain over 100 billion

barrels

U.S. Oil is There - We Need More CO2

Source: U.S. Department of Energy, 2011

20 years

The Goal: Near-Zero Emissions

Efficiency improvements at Existing Plants

Building New Supercritical and Ultra-Supercritical Plants

Demonstrating and Deploying IGCC and Carbon Capture, Utilization and Storage

Advancing Carbon Capture, Utilization and Storage and Btu Conversion

Retrofitting Existing Coal-Based Generation with Carbon Capture/Storage Up to 90% Lower CO2

CO2-Enhanced Oil Recovery, Producing 4 Million b/d

Technology is the Path to Achieve U.S. Environmental Goals

Technology Federal & Private Sector

Investment in Clean Coal Technology

Regulatory Framework Support for Technology Innovation

Creative Funding

Demonstration Projects Pursue EOR & Industrial

Applications to Accelerate CCS/CCUS

Stick to a Plan

Clean Coal Technologies Work

-100%

-50%

0%

50%

100%

150%

1970 1975 1980 1985 1990 1995 2000 2005 2011

% C

hang

e Si

nce

1970

+ 103%

- 89% - 93%

Sources: USDA 2011, EIA 2012, NETL 2011

+ 170%

28

Clean Coal Technologies for Energy Efficiency & Sustainability Goals

Carbon is a Product, Not a Problem: Used for EOR, Construction, Food Electricity

Industrial Gas

Pipeline SNG

Ethanol

Diesel

Jet Fuel

Hydrogen CO2 Capture and Sequestration

Conversion/ Gasification

Coal

Coal Conversion The Value of Coal Versatility

Chemicals and Fertilizers

In Association With

CTχ (Coal toχ) : The Value of Coal Conversion February 26th, 2014 χ Washington, DC

LUNCHEON KEYNOTE Dr. Holly Krutka, Executive Editor

Cornerstone Magazine World Coal Association

& Shenhua Group

Samuel S. Tam U.S. Department of Energy

Dr. Robert Freerks

Emerging Fuels Technology Mark J. Riedy

Kilpatrick Townsend & Stockton

West Virginia University

Catholic University of America The Ohio State University

University of Kentucky University of Wyoming

DKRW Energy LLC

LP Amina Adams Fork Energy Project Texas Clean Energy Project Synthesis Energy Systems

Clean Coal Refining Corporation

0

500

1,000

1,500

2,000

2,500

Coal to Hydrogen

Coal to Chemicals

Metallurgical Coal

Coal to Gas Coal to Liquids

Coal-Based Electricity

Total Coal Consumption

Mill

ion

Tons

Per

Yea

r Coal as the Sustainable Pathway to American Energy Sufficiency Clean Coal Technologies Will Unlock the Full Value of Coal

70 100

125

340

475

1,300 2,410

32

Coal Conversion “Stay the Course” support

for development of domestic transportation fuels from alternative sources

Creative financing; engage financial community in new projects

Janet Gellici 202-223-1191 ~ jgellici@NCC1.org

www.nationalcoalcouncil.org