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ENERGYOptions of Growth

Indiana Energy Consortium

November 2, 2011

Indiana Center for Coal Technology ResearchLocated in the Energy Center at Discovery Park, Purdue University

Marty IrwinDirector

Indiana Center for Coal TechnologyResearch

US Energy PolicyDon’t just do something, sit there

2US Energy Policy: 1) Encourage Consumption, 2) Discourage Production,3) Make up the difference by buying importing energy and exporting $ and Jobs.Reprinted with permission from creator. 2006 cartoon, my how things have changed

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Are Americans using to much Energy?THE USA IS NOT THE PROBLEM IT IS THE SOLUTIONIt is not what you use, it is what you do with it.% World Population Energy GDP Energy/GDP

1000Btu/$USA 4.6% 19.5% 24.6% .793ROW 95.4% 80.5% 75.4% 1.07US population consumes 4.2 times the energy of the average person in the Rest Of the World;But we produce 5.4 times the goods and services of the Rest Of the World.

USA and Japan are the World’s model for energy efficiency.$GDP (Millions) per unit of energy use (constant 2007 $ per kg of oil equivalent).USA China India Japan6.3 2.13 1.95 9.86

Tons of CO2 per $ Billion manufacturing (2011, World Bank data)USA China India Japan (2007) Leading Manufacturing Economies Billion$ Rank3277 5682 8824 1353 USA 1,779.5 11.0 1.73 2.69 .414 China 1,691.2 2

Japan 950.1 3India 190.3 15

If you want to improve air quality then move manufacturing back to the USA.

If the rest of the world consumed energy as efficiently as the USAtotal World Wide Energy Consumption would be reduced by 25%

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USA leader where nuclear is not majority of Electric production

Manufacturing Output fromWorlds 4 largest Economies

4

0

200,000,000,000

400,000,000,000

600,000,000,000

800,000,000,000

1,000,000,000,000

1,200,000,000,000

1,400,000,000,000

1,600,000,000,000

1,800,000,000,000

2,000,000,000,000

1 2 3 4 5 6 7 8 9

United States

China

Japan

Germany

2001=1

2003 USA exceeded China and Japan Combined; in 2011 China will surpass USA2001-2009 China output increased 303%, Germany Increased 46% USA increased by >22% Japan >11%2011 first time in over 100 years USA not the world leader in ManufacturingWorld manufacturing production increase 74% from 2001-2008

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How dowe use Energy in Indiana ?

2010 GDP National RankDurable Goods 15.4% 2Non-Durable Goods 11.8% 1Total Manufacturing 27.2% 1

• 2010 Total Manufacturing of 27.2% is the highest in thenation, 14% the national average, (2nd is Oregon at 22%)

• Your CO2 Footprint is large if you live in Indianabecause we are a Manufacturing State:

• CO2 footprint measures your state’s economic output,• personal consumption is not relevant.

Indiana’s industrial sector provides about 27.2% of the state GDP & consumes 46% oftotal energy. Indiana consumes 35.7% more energy than average for Americans.

BEA 2011

Reducing your carbon footprint by purchasing a Honda’s Hybrid increases our carbon footprint

Indiana Primary Energy Consumption Source and Sectorhttp://www.eia.gov/state/seds/sep_use/total/pdf/use_IN.pdf

2009

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Coal1,365.449.4%

Petroleum767.427.8%

Natural Gas511.018.5%

Renewables119.44.3%

13.7 wind24.3 ethanol

Electricity1192.8

Manufacturing1150.143.8%

Residential &Commercial

880.333.6%

Transportation592.322.6%

95.0%

3.1%.1%

1.8%82.9%

.1%

1.3%

18.1%

Trillion Btu’s Trillion Btu’s

.8%

25.6%2.7%

595.7

456.0

.2

39.7%

67.7%

.03%

3.8%

38.2%

4.3%

19.3%

76.3%

.05%16.4%

7.2% 48.7%

43.4%

19.8%

20.3%

41.8%96.3%

1.1%

2.6%

19.6%14.9%

21.6%4.3%

11.8%141losses and export

49.9%

2,763,700,000,000,000 Btus total used in 2009

Renewables doubled in 3 years

.01%

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Indiana GDP and Energy2000-2009

0.600

0.700

0.800

0.900

1.000

1.100

1.200

1.300

1.400

1 2 3 4 5 6 7 8 9 10

GDP 2000=1.0

Energy 2000=1.0

BTUs /$ GDP 2000=1.0

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2000-2009 GDP increased 27.2%2000-2009 Energy Consumption decreased 11.1%Btus per $ GDP decrease 30.1% (where is our award for energy efficiency?)

Energy costs for families earning less than $50,000rose 98.5% between 2001 and 2009

8Gasoline up 140.5%, Residential heating up 46.9%, Electricity up 71.3%:Total Energy Cost up 98.5% in 8 years.

Total Expenditures $ 2,427 (4.85%) $ 4,819 (9.63%)2001 2009

$-

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

Electricity Home heating Gasoline Total

2001

2009

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Energy Cost Affect Families Differently

• Half of U.S. households paid 20% or more of their after-tax incomes on energy in 2008.

• Poor and working families – those with incomes lessthan $30,000 - paid nearly one-quarter of their after-tax income on energy in 2008.

• Government subsidies increase as price of energyincreases.

• It is imperative that we maintain a low energy cost notjust for business and industry but for American Families

9Us DOE and US Census data

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Coal, Natural Gas, & Renewablesas Sources of Indiana Electricity Supplies

Capacity vs. Generation

Indiana Electricity Production:

Coal96.5%

NaturalGas2.6%

Wind.7%

Petro.2%Coal

70.7%19,757mw

NG21.5%6,003 mw

Petro1.8%503mw

Renewables6.0%

1,686mw

WindWIND 6,000 MWUnclassifiedNot reliable enoughto be included

Indiana Electric Generation Capacity

Least cost dispatch

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Relative Cost of Energy1990-2010

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1.5

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3.5

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4.5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

OilNatural GasCoalElectriciyInflation

1990=1Electricity and coal have not kept up with inflation

Evolution of the Coal Power PlantYet electricity per ton of coal continues to increase

?

CO2 is anticipated that successful progression from laboratory- through full-scale demonstration will result in several

of these advanced technologies being available for commercial deployment by 2030. NETL May 2011

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The production of a KWh of electricity with the addedenvironmental equipment and parasitic load takes

7.5% less energy than it did 35 years ago

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9400.0

9600.0

9800.0

10000.0

10200.0

10400.0

10600.0

10800.019

7019

7119

7219

7319

7419

7519

7619

7719

7819

7919

8019

8119

8219

8319

8419

8519

8619

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8919

9019

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9319

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9519

9619

9719

9819

9920

0020

0120

0220

0320

0420

0520

0620

07

BTU/Kwh10650 Btus/Kwh

9900 Btus/Kwh

Under Energy Security Act of 2008 this does not qualify as Energy Efficiencyhttp://www.eia.doe.gov/emeu/states/state.html?q_state_a=in&q_state=INDIANA

Population, GDP and energy use IncreaseEmissions Decrease

When you use electricity you rent pollution control

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1970-2008NOX reduced 82% SOX reduced 88% PM10 reduced 96%And we are the Dirty fuel.

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Sources of MercurySource Tons/year

• Nature: Volcanoes, Subsurface Ocean vents 9,000-10,000• Chinese Coal and Oil Power Plants* 400• Forest Fires 44• USA Coal and Oil Power Plants* 44• Human Cremations* 26• CFLs* 2.2

*Less than 5% from Human activity

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Indiana’s Average CO2 & PowerProduction from 1 Ton of Coal

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•1MWh of power ≈ 1 Ton of CO2 produced•Illinois Basin and Powder River Basin coalproduce 2.09 pounds of CO2 per KWH Produced

Coal means electricity and electricity means CO2

•Average Indiana Household consumes 10 tons of coal in the form of electricity andother energy. The household is responsible for the formation of produces 22.6 tonsof CO2 a year

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CO2 control would require largeamounts of physical space

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Gibson Power plant 3340 MW coal fired Scrubbed power Plant 3rd largestcoal fired plant in the US consumes 10 Million tons of coal a yearCreating 800 mine jobs and 3200 ancillary jobs.

CO2 Control Cost

18National Energy Technology Lab, August 2011Jared Ciferno

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What does the EPA say about CO2in their “Findings”

“This document itself does not convey any judgment or conclusion regardingthe question of whether GHGs may be reasonably anticipated to endangerpublic health and welfare, as this decision is ultimately left to the judgment

of the administrator.”

Endangerment and Cause or Contribute Findings for Greenhouse Gasesunder Section 202(a) of the Clean Air Act. EPA December 7, 2009Page ES-1

The document does not contain any data or scientific findings that canjustify the control of CO2, but that is not necessary to have:Administrator need only use her JUDGEMENT.

USA CO2 Policy is to be based on the JUDGEMENT of ONE PERSON,Not FACT or Science.

This statement was removed after first printing of report

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“While EPA acknowledges that come 2016, the administrative burdens may stillbe so great that compliance … may still be absurd or impossible to administer atthat time, that does not mean that the Agency is not moving toward the statutorythresholds,”the EPA wrote in a September 16 court briefing.

Who says this administrationis not creating Jobs?

“Hiring the 230,000 full-time employees necessary to produce the 1.4 billionwork hours* required to address the actual increase in permitting functionswould result in an increase in Title V administration costs of $21 billion per

year,” the EPA wrote in the court brief.($91,300 per employee a year for 3 years to complete the work)

(1.4 billion work hours will actually require 673,076 employees to perform@2080 hours per person per year, and 229 hours per business per year)

If the EPA wins its court battle and fully rolls out the greenhouse gas regulations,the number of businesses forced into this regulatory regime would grow

tremendously — from approximately 14,000 now to as many as 6.1 million.

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•If we convert all of the coal, oil and gas electric powerunits to nuclear:•If we eliminate Nat Gas for home heating, commercialuse and for industrial processes and substitute nuclearelectric:•If we remove all 230 million gasoline and diesel enginesand replace them with pure electric motors plugged intonuclear power sources:we still would not reduce manmade CO2 by 80%.•To do the above would require the building of 800+ nuclearplants, 24 in Indiana alone, by 2050, at a cost of $12 Trillion +•Pay $220 / month per household every month for next 40 yearsover the current level of payment.

Reduce CO2 by 80% from its 1990levels by 2050

Obama campaign pledge

Human energy consumption drops from 10KW to 2 KW per capitaroughly 1840 levels of energy consumption.

Energy EfficiencyPC (unscrubbed) vs. IGCC

Unscrubbed PC IGCC % chgOnline 1951 2011Mw 110 640 481%BTU/KWH 14367 10400 -27.6%Efficiency 23.4% 38.5% 64.5%SO2 0.16 lb/ MMbtu 0.014 -91.25%NOx 0.12 0.02 -83.33%PM10 0.015 0.007 -53.33%Hg 0.0000023 0.00000019* -91.74%Tons of Coal 152,959 (2007) 1,800,000Onsite Jobs 68 97Coal Mining Jobs 12 144Ancillary Jobs 36 432

More jobs are created from coal production than from the operation of the facility* 1 pound of mercury for every 420,596,000 pounds of coal

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Future Demand by FuelNext 20 years Coal remains the

Primary fuel

232024 NG levels out while coal continues to rise2010 shale gas is 12% of the Natural gas supply, by 2024 it will need to be 60%

US Sources OfNATURAL GAS

243.5 Times as much gas from shale in next 20 years.33% reduction “Standard” sources

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Fracking

25Taxes paid: $26,958 per oil/gas Job, average worker $107,000 1.5 workers per wellAll other industries $ 4,769 per Job, average worker $ 44,000

New Albany Shale has 86 Trillion cubic feet of gas95 Quads of Energy

Indiana uses 555.5 Trillion BTUs of Natural Gas per year (.555 Quads)Indiana consumes 3.028 Quads of energy per year

Potentially a major supplier of Shale gas in the US

26EIA states that Natural Gas cost will be level for the next 20 years. It also says that Shale gas will constitute 45% ofthe gas consumed in 2025. Shale gas will cost more than Natural Gas, overall “gas” price will increase. We willneed to drill thousands of new shale wells, to replace NG sites, None of which have been approved by thisadministration. (you need to read the footnotes)

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Wind and Solar EconomicsThe Sun and the Wind are free, aren’t they?

• California mandate of 1/3 electric from renewables, currently 52,000 Mw-Need 17,000 Mw: Assume 8,500 Mw each of solar and wind

Ivanpah Solar Plant 370 Mw covering 5.5 square miles @ $2 BillionNeed 23 more just like it. Total 129 square miles of surface area

covered with panels at $46 Billion (not counting the cost of theland) areas equal to ¼ of the Los Angeles Basin.

Roscoe Wind Farm Texas 781.5 Mw covering 154 square milesneed 11 just like it. Total 1544 square miles of surface area

10% of the State of California needs to be covered. $16.9 Billion (notcounting the cost of the land) (50 tons of steel /Mw)

Transmission lines: San Diego Gas & Electric tried to construct 117miles of transmission lines to connect utility with geothermal projectin Imperial County. Lawsuit filed to stop construction.

Cost off transmission line $16.2 Million per mileNew York times 6/7/2011

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Adding Value to a Lump of CoalCoal is of no value until it is converted into something else

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1 ton ofcoal

GasificationIndirect Conversion(FT)

GasificationDirect (Catalytic)

Electric Power ProductionProducts Value2.25 MWh Electric $78.75FT Fuels and PowerProducts Value0.41 MWH Elect $14.000.34 bbls Naphtha $15.001.36 bbls jet fuel $81.00Total $110.00

Fertilizer, FT Fuels and PowerProducts Value0.07 MWh Elect $ 0.230.17 bbl naphtha $ 8.000.78 bbl Jet fuel $46.500.25 tons ammonia $87.00Total $141.73

Source: RenTech

Coal @$32/tonElectricity @$.035/KWhNaphtha @$48/bblJet Fuels @$60/bblAmmonia @$350/Ton

PulverizedCoalCombustion

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Coal Technology Projects inIndiana

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Coal CorridorMedaryville, IN

Indiana coal to cokePurdue University, Calumet

Clean Coal RefiningCoal to liquidsNewport, IN

Recovering Coal slurryfor fuel Crawfordsville, IN

Biomass / Coal blendsfor utility fuel Washington, IN

Direct Coal to Liquids,Warrick County

Underground CoalGasificationGibson County IN

Indiana Center forAdvanced Energy TechnologyVincennes University

Oxy Fuel CombustionMerom, IN

Waste to energyMicrogridCrane, IN

Indiana Coal GasificationRockport, IN

Indiana coal projects1. Indiana Coal to Coke, Purdue Calumet, starting 3rd year of CCTR funding of the project, which is now in

the small scale test mode, gathering Steel Industry support. If all goes well should have a full scalecoking unit in 2-3 years. Potential of 6 million tons of Indiana coal a year.

2. Fuelstreaming has purchased the Crawfordsville municipal power plant and will be upgrading the boilersto include a gasifier to burn a pellet created from the coal slurry and gob waste from an abandoned minein southern Indiana. Potential is 1 million tons of recovered fuel a year, fully operational in 2 years.CCTR is working with the group to help with the technology to recover the coal slurry and convert it to auseful fuel

3. Clean Coal Refining will be taking 1500 acres from the Newport Munitions Depot to build a coal to liquidsplant producing 10,000 barrels a day. Currently CCTR is working with them to secure funding for the PreFEED portion of the project. This will be able to use coal, MSW or petcoke as a feedstock. If funded fullyoperational in 36 months.

4. OXY-Fuel Combustion technology is based on a study done at Purdue Lafayette funded by CCTR. Thistechnology will use pure Oxygen instead of air in the combustion process. This will greatly reduceemissions and enable older smaller scale power units to keep producing power under the EPA rules. Thetechnology is currently under consideration by Hoosier Energy for use in the Frank Ratts plant.

5. Indiana Center for Advanced Energy Technology (ICAET) will be based at Vincennes University andfocus on apply the technologies developed by CCTR to retrofitting on existing power units. ICAET willwork with the coal industry to develop and train the new wave of coal miner that will be needed especiallyas we move to more underground mining. The center is also working on a new technology that will usecoal ash from power plants to build pillar systems in deep mines in order to increase the coverable coalfrom 45% of the resource to up to 90% per mine. CCTR is working with ICAET to secure Federalfunding.

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Indiana coal projects,6 Indiana Coal Corridor is an extension of a CCTR study on rail systems in Indiana. CCTR is working with coal

companies, power plants and rail system to find the least cost and best means of moving Indiana coal northto Schahfer power plant (potential 4 million tons per year) and on to Burns Harbor where it is estimated thatEurope will need 600 million tons of coal a year as the nuclear industry shuts down. This track will alsoconnect to the Illianna Express rail plan when and if Illinois ever gets around to building it. Our goalconstruction in 12 months. Potentially in the short run the corridor would enable coal companies to expandtheir markets by 4 million tons a year with a long term potential of over 100 million tons of year over the nextdecade.

7. Biomass /Coal blends as power plant fuel will use the waste biomass, in this case primarily wood waste fromthe furniture industry to make a fuel for power plants. The advantage will be the use of the now wasted woodresidue and to allow more use of older plant in that the new fuel will have a significant emission reduction.The company has already ordered 1.2 million tons of coal to be delivered over the next year and plans toship the fuel to Europe via Mt Vernon and out of New Orleans. Currently CCTR is working on placing the fuelin the small scale Eagle Valley power plant in Martinsville and possible in IPL’s Stout plant on the south sideof Marion County. The company sees a big potential for the fuel if it could be shipped out of Burns Harborrather than New Orleans.

8. Nu Steel is proposing a coal to liquids plant for Warrick County, not Rockport as originally proposed. Theplant will use Indiana coal and produce 10,000 Barrels /day 4 million tons of coal a year. Countrymark isalready shown interest in purchasing the raw fuel. CCTR is helping them with finding funding for the project

9. Rockport Power Plant is n need extensive retrofitting for their power plants to meet new EPA standards.CCTR introduced to I&M the possibility of using one of the 1300 MW units and convert it to a steel makingoperation which would produce 1200 MW of power for sell to I&M. The use of this method would be a lessexpensive way of producing the amount of power I&M needs without the emissions. This meeting just tookplace on Tuesday August 9 and there fore was not put on the original map. 6 million tons of coal and a 36month construction period if I&M decided to proceed.

10. Indiana Gasification Inc. coal to gas plant is still being discussed for Rockport. CCTR is not working withthem and is not sure what their current status is.

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Coal Wind HybridConfiguration

32If you LOVE Wind Power, You had Better Like Transmission Lines,and gasification plants.

100 Mw Wind+ 50 Mw Gas turbines= 60 Mw constant power

100 Mw wind willgenerate on average27 mw of powerAnnually by itself.

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Coking Coal from Indiana Coal

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Center for Coal Technology Research

http://www.purdue.edu/dp/energy/CCTR/byTopic.php

CCTR & Purdue CalumetHow to replace about halfof the 6 Million tons (+) ofimported metallurgicalcoal with Indiana coal,

Greatly reduce the airemissions from the 400+coke ovens,

Produce coke at a lowercost.

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CO2 Sequestration For EORand CAPTURE

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Small amounts of CO2 dissolve inthe oil, increasing the bulk volume& decreasing the viscosity, sofacilitating flow

On average only 13% of the original oil in place has been taken outEnhanced Oil Recovery, EOR

2-4 tons of CO2 yields 1 Barrel of petroleum

Sources: “Carbon Dioxide Capture and Storage”, Intergovernmental Panel on Climate Change, WMO, UNEP, 2005

400 Mile CO2Green Pipeline

Edwardsport Indiana to Jackson Mississippi.

North throughIndiana Via I69781 miles @

$1.5 Million/Mile4 years to complete.

CCS retrofitting willnot be available forLarge scale powerplants for at least10 years (NETL).There is time.

Denbury Resources

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Indiana Center for Coal Technology Research,Purdue University203 S Martin Jischke Drive, Rm. 105W Lafayette IN 47907-1971Phone: 765-494-7037http://www.purdue.edu/dp/energy/CCTRMarty W. Irwin, Directormwirwin@purdue.edu (765) 494-7414ormirwin@oed.in.gov (317) 232-8970Center for Coal Technology1 North Capital StreetSuite 600Indianapolis, IN 46204

Indiana Center for Coal Technology ResearchLocated in the Energy Center at Discovery Park,

Purdue University