Clean Coal: THE Green Alternative Energy

1
Clean Coal THE Green Alternative Energy
4th AnnualClean-TechInvestorConference Feb. 7,
2008
Gregory H. BoyceChairman and Chief Executive
OfficerPeabody Energy
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Like Many, You May Be Asking Yourself
How Do We

• Meet our environmental goals?
• Improve our energy security?
• Achieve strong economic growth?
• Help people live longer and better?
• Provide a sustainable future?

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Why Coal? How Coal?
Or You May Be Thinking More Directly
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Why Coal? Because

• Global Energy Demand is Soaring
• The Best Economies Use the Most Coal
• China and India Change the Equation
• Other Energy Forms Have Inherent Limitations
• We Cant Shrink Our Way to Prosperity
• Coal Electricity Health and Wealth
• Coal Only Large-Scale Sustainable Fuel

Key Words for Venture Capital Growth and Scale
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How Coal? New Uses and Zero Emissions

• New Economics New Uses for Coal CO2
• A Long Record of Clean Technologies
• The Enabling Technology Carbon Storage
• New Entrants and Emerging Technologies

For the First Time in Decades Entrepreneur Access
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• WHY COAL?

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A Rising Tide as the World Awakens to Modern
Energy
Electricity Usage per Capita
Passenger Vehicles per Capita
Per-Capita Electricity Use Just 1/10th (China)
and 1/30th (India) the U.S. Level
Source United Nations Human Development Report
2005, World Energy Outlook ConocoPhillips.
8
Demand Driver The Rise of the Automobile
812 Million Vehicles in 2002, Growing to 2.1
Billion
China
United States
India
Brazil
Mexico
Source Dargay and Gately 2006.
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Electrification is Essential toHelp People Live
Longer and Better
Electricity Use Per Capita and the U.N. Human
Development Index
1.0
Sweden

• Italy

United States
Canada
Finland
0.9
Argentina
Qatar
UAE
0.8
Malaysia
Brazil
China
0.7
South Africa
Indonesia
Morocco
Human Development Index
0.6
India
Bangladesh
0.5
Zimbabwe
0.4
Zambia
Mozambique
Ethiopia
0.3
0.2
0
5 000
10 000
15 000
20 000
Electricity Use
Source International Energy Agency, World Energy
Outlook 2005.
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Coal Use, Electricity, GDP and Life Expectancy
All Grow in Tandem
U.S. Economic and Energy Growth
GDP 164
Electricity Use 117
Indexed to 1974 (100)
Per Capita Income 86
Coal Use 78
1974 72
2004 77.8
2000 77
1995 75.8
1990 75.4
1985 74.7
1980 73.7
Life Expectancy
Source Energy Information Administration Annual
Energy Review 2006 National Center for Health
Statistics, National Vital Statistics Report,
December 28, 2007.
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A Rising Tide as the World Awakens to Modern
Energy
World Coal Consumption by Region
2004 - 2030 Growth 72
Total Coal Use
1980 - 2004 Growth 48
Emerging Economies
Billion Short Tons
Mature Market Economies
Transitional Economies
Source EIA International Energy Outlook 2007
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The United States Another Developing Nation
Turns to Coal as Alternatives Lag
U.S. Electric Power Generation by Fuel Type
Coal
Million KiloWatt Hours
Natural Gas
Nuclear
Renewables
Petroleum
Source Energy Information Administration,
Annual Energy Outlook 2007.
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U.S. Energy Options are Limited
by Supply and Availability
All Energy Forms Needed for Diversity of Supply

• OIL
• Persistent high
  prices reserves
  declining risky sources
• NUCLEAR
• Valuable but constrained by
  cost, safety and waste disposal concerns
• 
  
• RENEWABLES
• No growth in supply, low
  availability and publicresistance

• ETHANOL
• Clean but energy inefficient,
  strains food supplies, cellulosic years away
• NATURAL GAS
• Above 6 / mcf declining
  reserves, sources from volatile regions
• ENERGY EFFICIENCY
• Greater use of green
  technologies, energy management and conservation
  

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U.S. Coal Production Grows While U.S. Natural
Gas at Peak
Fossil Fuel Production, 1975 2005
Coal
Natural Gas
Quadrillion Btu
Oil
14
15
Breaking Point U.S. Natural Gas Supplies are
Low and Declining
AEO 2003 Demand Projection 35 TCF by 2025
Imports Will Not Close the Gap
26.1 20.5
22.0 18.2
U.S. Natural Gas Demand
21.1 21.0
Trillion Cubic Feet
U.S. Natural Gas Supply
Source Energy Information Administration,
Annual Energy Review 2003, 1970-2000 Annual
Energy Outlook 2007 Reference Case, 2005-2030.
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Natural Gas Supplies Not Meeting Increasing
Demand
Natural Gas for Electricity to Strain Supplies
At Current Growth Rate, Gas for Electricity
Generation Would Raise U.S. Natural Gas Demand by
6 TCF/Year
Tcf / Year
2002
2007
2012
2017
2022
2027
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Coal Comprises 60 of Global Energy Resources
And 50 of U.S. Electricity
And 85 of U.S. Fuel Resources
50
Oil 5
Gas 10
Percent of Electricity Generation
20
19
Coal 85
7
2
2
Oil
Gas
Coal
Other
Hydro
Nuclear
Ultimately recoverable demonstrated reserves on
Btu basis. Source USGS, National Assessment of
United States Oil and Gas Resources, U.S. Coal
Reserves Energy Information Administration
Monthly Energy Review, March 2007 Table 7.2b,
2006 data.
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The Compelling Case for Coal
Resources Needed to Replace Electricity from Coal

• SOLAR
• 3,000x more solar generation than currently in
  use
• WIND
• 730,000 1-MW wind turbines over 140 million acres
• NUCLEAR
• 400 new nuclear plants
• NATURAL GAS
• 17 tcf nearly double current U.S. production
• HYDRO
• 700 facilities the size of Hoover Dam
• EFFICIENCY
• 5 reduction in use 135 more NG generation
  than exists

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• HOW COAL?

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Technology is Driving Greater Coal Use and
Economic Growth With Lower Emissions
Electricity from Coal Has Tripled Since 1970
While Emissions Have Been Significantly Improved
203
GDP
182
Electricity from Coal
Index 1970
Energy Consumption
47
47
Population
Total Emissions
-42
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Btu Conversion Technologies Expand Markets for
Clean Coal
DUKE POWER AEP
EPIC
CONOCO- PHILLIPS
DOW CHEMICAL
RENTECH
U.S. AIR FORCE
FUTUREGEN
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Abundant U.S. Coal Can Be Turned Into Natural Gas
and Transportation Fuels
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Clean Coal Technologies Provide the Path for
Affordable Adequate Energy Supplies

• Coal-to-Liquids CTL with CCS can produce better
  fuels at the same rate of CO2 emissions as
  imported oil. Adding biomass increases cost but
  improves CTLs carbon footprint.
• Coal-to-Gas Coal can be gasified to create NG
  for power plants and the CO2 can be captured and
  stored. SNG from coal with CCS has much better
  footprint than LNG.
• Coal-to-Electricity New supercritical clean
  coal plants emit 15 less CO2. FutureGen and
  GreenGen would have near-zero emissions.

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The Enabling TechnologyCarbon Storage
Source U.S. Department of Energy, Office of
Fossil Energy, National Energy Technology
Laboratory, Carbon Sequestration Atlas of the
United States and Canada.
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U.S. Has Ample Room forCarbon Storage
CO2 Storage Capacity Based on Years of Current
Emissions
U.S. Geology More Than 1,500 Years Space for
Carbon Storage
Years of Storage Capacity
Source Pacific Northwest National Laboratory.
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Peabody is the Global Leader in Clean Coal
Solutions
Advancing Signature Climate Projects in U.S.,
China and Australia
BTU is the only non-Chinese equity partner
in GreenGen, Chinas centerpiece commercial
climate initiative
BTU is a long-standing supporter of the Vision 21
and FutureGen clean coal projects
BTU is a member of Australias Coal21 Fund to
advance near-zero emissions through technologies
such as oxyfuel
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China Also Seeking Technology Solutions to
Climate Challenge

• BTU is only non-Chinese equity partner in
  GreenGen carbon initiative led by China Huaneng
  Group
• Multi-phase commercial project 650 MW IGCC
  plant with carbon capture for EOR and
  polygeneration
• Construction starting this year first 250 MW
  phase on line in 2009

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Latest Example of Clean Energy Investments
GreatPoint Energy

• BTU has investment in GreatPoint Energy that
  markets proprietary bluegasTM technology
• Process converts coal into clean natural gas with
  carbon storage
• Technology being advanced to commercial scale
  Massachusetts pilot demo under way

GreatPoint Bluegas Demonstration Facility
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Why Coal? How Coal?
Green Coal
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The Role of Venture Capital in Clean Coal and
Related Technologies

• Emerging Technologies for Carbon Storage Such as
  CO2-Consuming Algae
• Development of New Products Using Coal Such as
  Coal-to-Gas and Coal-to-Liquids
• Disruptive Electric Supply Chain Technologies
  Such as Transmission Breakthroughs and Electric
  Car Batteries
• New technologies to improve energy efficiency

31
Clean Coal THE Green Alternative Energy
4th AnnualClean-TechInvestorConference Feb. 7,
2008
Gregory H. BoyceChairman and Chief Executive
OfficerPeabody Energy