Climate Change: An Opportunity for a Bi-Lateral Approach

Driving Technology Innovation

Woodrow Wilson International Center for ScholarsCanada InstituteMay 23, 2007Edward C LoweGeneral ManagerGE Energy

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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

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Affordable, reliable & environmentally responsible

Global power generation requirements

Driving cost of electricity down

Effi

cie

ncy

Reliab

ilit

y

Em

issio

ns

EfficientDiverseNuclearWindGasCoalOil GeothermalBiomassHydroSolar

NuclearWindGasCoalOil GeothermalBiomassHydroSolar

+

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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

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Global renewable installed capacity (GWs)

Source: REN21 2006 update + GE est (2/07)

182160

‘05‘04

Wind

All other

‘06

~210

• 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

Clear Policy Accelerates Technology Development and Deployment – Wind Energy

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Global Wind deployment driven by technology advancements and public policy

‘85 ‘95 ‘050

5

10

20

COE (¢/kWh)

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Technology Investments Project scale

Public Policy Incentives

• Renewable Portfolio Standards

• Feed In Tariffs

• Production Tax Credits

• Investment Tax Credits

• Renewable Obligation Certificates

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IGCC – Cleaner By Design

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.

•Treats 1/100th volume

•CO2 concentration 40-50% in syngas (IGCC) vs 14% in flue gas (PC)

•25% cost premium vs SCPC

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IGCC: Emissions Approaching Natural Gas

Source: GE internal data, average of 30 US permits granted, applications and publicly reported emissions

Advanced PC/SCPC

IGCC NGCC0.00

0.05

0.10

0.15NOxSO2PM10

Average RecentPermit Data

Best IndividualPlant L

b/M

MB

TU

0.09

0.03

0.16

0.017 0.02

0.010.01 0.01

0.0020.01

0.04

Water Usage

Hg

Hg % Captured

PC IGCC

50 -90%

90%+

PC IGCC

PC IGCC

PC IGCC

30-40%Less

• 90% + Hg removal• 30% less water• CO2 capture ready

• 33% less NOx

• 75% less SOx

• 40% less PM10

IGCC Environmental Benefits Versus Best in Class Supercritical

Pulverized Coal

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Technologies

Pathways

Carbon Capture Technology

•Amine Scrubbing

•IGCC

Post-Combustion

Pre-Combustion

•Oxy-Combustion

•Chilled Ammonia

•Membranes O2/CO2//H2

•High efficiency shift

•Pre-mix H2 combustor

CO2 $/Ton1

$441

$211

Tod

ay

Develo

pin

g Post-Combustion

Pre-Combustion

1 The Future of Coal, MIT 2007 Coal Energy Study

~$331

--

--

--

--

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Economics

gal/MW-hrWater Makeup4

kW penalty

Net Equiv. Eff.

Capital Cost

COE Increase

Avoided Cost $/MT

Raw Water Usage

CO25

40%-70%

$37,800

95%

$3,412

Removal %

$/lbMercury3

SCPC2IGCC1

-13%

-15%

+32%

+32%

35

15%

-18%6

-30%

+83%

+68%

75

123%

750 1042

1GE Energy Gasification Radiant, Illinois #6, 630MW Net (baseline), Selexoltm AGR2SCPC, 3500/1100/1100, Illinois #6, 550MW Net (baseline) Econaminetm scrubbing3The Cost of Mercury Removal in an IGCC Plant, DOE NETL, final report, Sept 20024 Power Plant Water Usage and Loss Study, DOE NETL, August 20055 Cost and Performance Comparison of Fossil Energy Plants, DOE NETL, Report 401/53106, May 2007 (Final), 90% CO2 capture6 Including STG equivalent power reduction from Econaminetm regeneration

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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

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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

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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