The RWE Group s Coal-based Power Plant Projects on Carbon Capture and Storage

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National Conference of State Legislatures 31 October to 2 November 2007 Tampa, Florida The RWE Group s Coal-based Power Plant Projects on Carbon Capture and Storage Dr. Dietmar Keller, Prof. Dr. Wolfgang Straßburg, RWE Power AG

Contents Introduction Overview of CCS activities of the RWE Group IGCC-CCS project Power plant technology Development of CO 2 storage facility CCS power generation costs Necessary prerequisites to ensure timely implementation Next steps in the project 2

Climate protection policy and trend in energy demand are setting the framework World Fossil fuels will retain their outstanding global position in power generation billion MWh 33.8 Renewables Nuclear Oil Gas Fossil Coal 17.4 3,2 2,7 1,2 3,4 6,9 + 94 % + 113 % 7,0 3,3 0,9 7,8 14,7 RWE Coal dominates RWE's generation mix Total power output in 2006: 184 billion kwh Share of energy sources in % Gas 11% Hard coal 32% Renewables + other 3% Nuclear 21% Lignite 33% 2004 2030 Source: IEA's World Energy Outlook 2006 Conflicting energy demand and climate protection goals require a comprehensive CO 2 mitigation strategy 3

RWE's Clean Coal Power 2010 2015 < 2020 Horizon 1 Horizon 2 Horizon 3 Application of state of the art technologies Further development of advanced power plant technology Development of zero-co 2 power plants Efficiency increase (primary measure for CO 2 reduction) CO 2 capture and storage (secondary measure) 4

RWE s activities for zero-co 2 coal-based power generation IGCC-CCS 2008 2010 2012 2014 Power plant Transport Storage facility IGCC power plant with CO 2 capture, 450 MW gross, 2.6 mill. t/a CO 2 Planning, pipeline planning and erection Screening, exploration, construction; developm. of standards and methods Legal framework Post-combustion CO 2 scrubbing (PCC, also as retrofit option) Amine, D Lignite-based pilot plant Lignite-based demonstration plant Amine, UK Chilled Ammonia Pilot plant HC, USA Hard coal-based pilot plant Hard coal-based demonstration plant R&D commitment COORIVA (IGCC), COORETEC programme OXYCOAL AC (Oxyfuel), COORETEC programme ADECOS (Oxyfuel), COORETEC programme ENCAP (IGCC, Oxyfuel), 6th framework programme of the EU CASTOR (PCC), 6th framework programme of the EU CO2SINK (storage facility), 6th framework programme of the EU + BMWi funding Further R & D contracts of RWE for carbon storage been prepared 5

IGCC Technology (optional) (optional) Coal O 2 Gasification CO desulphuri- CO 2 1,000 MW th conversion zation capture th CCGT plant 450 MW gross CO 2 to storage facility IGCC offers favourable preconditions as zero-co2 power plant technology All process steps are commercially available Technical and economic statements are robust Power plant can also be operated efficiently without capture IGCC has reserves for further reducing classic emissions High fuel flexibility, high product flexibility Commercial Operational Experience Four commercial coal-based IGCC plants exist world-wide (without carbon capture), some of them having been operated for more than 10 years Commercial-scale coal gasification, gas cleaning, combined cycle and also carbon capture components have been available for a long time now Buggenum IGCC 6

CO 2 storage: Intermediate result of storage site screening by RWE Dea for the North West of Germany RWE Dea has identified an onshore storage potential of 4.8 bn t of CO 2 for the North West of Germany alone Oil fields 0.15 bn t Deep saline formations (DSF) 3.1 bn t Gas fields 1.55 bn. t H 2 S gas 0.95 bn. t Due to high percentage of H 2 S not suitable for EGR Further regions of Germany currently under investigation: the German North Sea Central and Eastern Germany 7

Carbon storage and pipeline project today Phase 1 2008 Phase 2 2010 Phase 3 2014 Screening: Exploration: Construction: Storage site screening Exploration Sink boreholes Feasibility study for (2D/3D seismics, drilling) 2 3 sites Above-ground facilities Selection and approval of Feasibility study for storage site Installation of pipeline pipeline Routing approval Commissioning Approximate routing FEED (pipeline) Monitoring plan Important parallel activities: Establishing methods and standards for evaluating carbon storage sites and their long-term tightness collaboration with research institutes and experts Establishing a framework under approval law (laws and regulations, technical rules) European and national legislators Achieving public acceptance of CCS technology and facilities Joint tasks of companies, policy-makers, R&D institutions and authorities 8

Costs of power generation with CCS Lignite-based IGCC-CCS demonstration plant Industrial-scale CCS plants Industrial-scale Dry lignite-fired IGCC-CCS PC twin unit plant with CO 2 scrubbing Net capacity Efficiency Spec. invest. 330 MW 35.5 % 5,000/kW 1,600 MW 37 % 3,000/kW DAC* in /MWh 100 Forward 2008 baseload 54/MWh 50 95-100 75 % 65-70 20 % 0 *) Discounted average costs in today s monetary value incl. transport and storage; CO 2 scenario with full auctioning; development of CO 2 prices: 20 to 40/t; after-tax IRR: 8 % The high costs and challenges for first-of-their-kind CCS plants require substantial funding, both on EU and national level. 9

Funding instruments for CCS demonstration plants Due to high costs and enormous challenges initial plants of this new technology need effective financial support from the EU and the member states. Following proposed funding instruments should be discussed as soon as possible: Integration of CCS into the EU Emissions Trading Scheme (EU-ETS): In principle CCS demo plants should be allocated the full amount of free CO 2 - certificates as a plant without CCS would require. Alternative: Supply fee at a guaranteed price: By analogy with the supply fee for offshore wind (91 /MWh at present) Direct investment aid: European funding appears difficult. German government is called upon to act. Examples of national commitments: US DOE-funding: UK-CCS funding: 400 m, Norway-CCS funding: 200 m. up to 74% of the FutureGen project costs ( $ 1.2 bn), 10

The creation of the necessary legal framework for CO 2 transport and storage EU Commission is currently drawing up a framework directive governing CCS. In November 2007 it is due to be submitted to the EU Parliament for deliberation. At the earliest in January 2009 it could be adopted by the EU Parliament. The aspects planned to be the subject of EU legislation to date are rightly limited to a minimum. EU Commission expressly wishes a broad-based national framework. EU Commission has stated that CO 2 is not intended to be defined as waste. Storing CO 2 in depleted oil and gas reservoirs for the purposes of EOR and EGR is possible in Germany under the national mining law. The storage potential of saline formations is very interesting, but there is no legal basis at all today. Since the legal issue of exploration and operation of a CO 2 - storage site is closely linked with mining activities, it would be useful to take the national mining law as the basis. 11

Prerequisites for timely realization of the IGCC-CCS project 8/2008 1/2009 11/2009 12/2010 2014 Power plant CO 2 storage (in aquifer) Pipeline Project development Decision on overall process Screening, exploration, approval Detail engineering Prepar. of request for approval Start of prepar. of request for approval Preparation of request for approval Request for approval. Approval, decision to build Erection, commissioning 1 st grid connection Erection, commissioning Necessary prerequisites: Establishment of legal framework Establishment of funding instruments 11/07 CCS framework directive draft CCS framework dir. EU Commission CCS framework dir. EU Parliament In parallel: development of national legislation 12/07 EU directive EU directive CCS in EU-ETS National funding instruments 1/09 Clarity about CCS funding National implementation 1/09 Binding legal framework RWE is leading the way in technology at enormous challenges We urgently need a legal framework for storage to be created by politicians 12

The next steps in the power plant project: contracting IGCC is a new power plant technology with many interfaces Optimal exploitation of the improvement potential requires one contractor for the gas island and one for the CCGT plant IGCC power plant Gas island WTA Gasification ASU Gas proc. CCGT For both parts, the contracts governing planning and optional supply are to be concluded by mid-2008. Preparations are under way. Today Mid-2008 2014 Gas island: Gas island supply contr. PDP 1) FEED 2) EPC 3) CCGT: CC supply contr. GT service contr. Support Support EPC 3) 1) PDP: Process Design Package (objective: fix the IGCC process) 2) FEED: Front End Engineering & Design (basic engineering and approval planning, basis for EPC) 3) EPC: Engineering, Procurement & Construction 13

Status of RWE s IGCC-CCS project Pi p el in e Storage region Power plant Basic technology: El. capacity: Net efficiency: CO2 storage: Investment cost: Power cost: Commissioning: IGCC 450 MWgross, 330 MWnet 36 % 2.6 mill. t/a in gas deposits or deep saline formations 1.6 bn (real 2007) 95 100 /MWh (discounted average costs; today s monetary value) 2014 14

Thank you for your attention contact: dietmar.keller@rwe.com 15