Transforming Our Energy Future: Kevin Crutchfield CEO, Alpha Natural Resources

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1 Transforming Our Energy Future: An Industry Perspective Kevin Crutchfield CEO, Alpha Natural Resources 1

2 single No solution would defuse more of the Energy-Climate Era s problems at once than... 2

3 ... the invention of a source of abundant, clean, reliable and cheap electrons. Thomas L. Friedman Hot, Flat and Crowded 3

4 ... our current public policy focus : Making CLEAN fuels abundant, reliable, and cheap 4

5 ... while insufficient attention is paid to Making abundant, reliable, and cheap fuels CLEANER 5

6 Transitioning i to a Low carbon world Choosing The right paths forward 6

7 Three paths forward - increase ENERGY EFFICIENCY ( production and end use ) - develop NON FOSSIL FUELS ( renewables & nuclear) - develop/deploy CARBON MANAGEMENT TECHNOLOGIES ( coal & natural gas) 7

8 Why Coal?? 8

9 First... conservation simply can t win the day If all the nation s incandescent lights were replaced with compact fluorescent lights, 52 million tons of CO2 would be eliminated. That s % of an 80% reduction target. 9

10 Second... meeting renewable energy standards poses great challenges... GREATEST CHALLENGE... the being to SSEB s member states ( because Class 4 wind areas are scarce in the South ) 10

11 Third... natural gas has its own challenges e.g., over 90% of power plants built since 2000 have been gas-based. This is what it s done to electricity prices 11

12 Last ( but not least )... coal is both abundant and affordable MOST AFFORDABLE ELECTRICITY Rank State Price Coal Nat Other (cents per % Gas Major KWh) % Source 1 Wyo Idaho Hydro (79.6%) 3 Utah N NM Dak. 5 Mo W. Va Neb Ky Wash Hydro (70.7%) 10 Iowa LEAST AFFORDABLE ELECTRICITY Rank State Price (cents per KWh) Coal % Nat Gas % Other Major Source 50 HI Other (81.1%) 49 Conn Mass N.H N.Y R.I Alaska N.J Maine Md SOURCE: American Energy Freedom Center; EIA; Electric Power Monthly

13 So it will take a full portfolio o o of technologies to fuel our country and decarbonize it 13

14 Why Coal?? ( Let s have a peek outside our borders ) 14

15 Earth s population expands by a quarter million people each day people each day. Nearly a quarter of the Earth s population 1.5 billion people - have no electricity. 80% of developing countries new power plants will run on low-cost coal. 15

16 Availability of electricity = Better Electricity Use Per Capita (KWh/yr.) tricity Use Per Capita (kwh/yea ar) Elec 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Mozambique Zambia Niger Liberia Cameroon quality of life South Africa Morocco India China Russia Brazil Finland Qatar Canada UAE United States Australia New Zealand UK Portugal Argentina UN Human Development Index SOURCE: United Nations Human Development Report 2009; CIA World Fact Book 16

17 Let s start with India The average American uses 20 times as much electricity as the average Indian. There e are 300 million Americans. There e are 1.2 billion Indians. 17

18 And don t overlook China Coal has played a VITAL ROLE in bringing electricity to 450 million Chinese. Electrification in China is a remarkable success story - International Energy Agency (IEA) 18

19 Coal will remain the predominant source of electricity generation in China CAGR 5% 6,079 7,338 8,546 Historic & Projected electricity Generation (in TWh) CAGR 1% 2,772 3,966 4,944 China OECD Europe 3,357 3,682 3,968 4,204 4,402 4, % 78% 74% 73% 75% 75% % electricity from coal 29% 27% 25% 23% 22% 22% SOURCE :EIA 2009 International Energy Outlook; Global Insight 19

20 manage Unless we learn to carbon emissions from coal we NEVER make our CO2 targets If we conduct business as usual % change ( ) [ Billions of metric tons ] Global CO2 emissions, from coal % Global CO2 emissions, from all sources % If no growth in U.S. coal use from 1990 to 2035 U.S. CO2 emissions, from coal % Global CO2 emissions, from coal % Global CO2 emissions, from all sources % If all OECD nations stop using coal by 2035 OECD CO2 emissions, from coal % Global CO2 emissions, from coal % Global CO2 emissions, from all sources % SOURCE: EIA, International Energy Outlook 2009/

21 So let s get There is no climate solution without coal 21

22 According to the International Energy Agency... Carbon capture and storage provides one-fifth of the needed CO 2 reductions in Without CCS, cost of stabilization rises by 70%. CCS is the only low-carbon solution for gas/coal, cement, and iron & steel sectors. 22

23 An ambitious global ramping plan is needed for CCS Millions of tons of captured CO2/yr. SOURCE: IEA; World Coal Institute 23

24 Let s get 24

25 Targets should not be codified before the technology to attain them is commercially available. 25

26 William Howard Taft was President the last time total t U.S. CO2 emissions i were as low as specified by the America Power Act (Graham-Kerry-Lieberman). Another way to look at it: 420 million Americans will be living in 2050, according to Census projections. Per person, they would be held to the same overall emissions as 40 million Americans emitted in SOURCE: Steven Hayward, American Enterprise Institute 26

27 We are PROGRESS making ROGRESS PROGRESS PROGRESS PROGRESS PROGRESS PROGRE PROGRESS PROGRESS PROG PROGRESS PROGRES PROGRESS PROGRES27

28 Large-scale integrated projects are NOW storing successfully CO2 Weyburn Sleipner Snohvit In Salah Rangely 28

29 BUT for progress to continue WE MUST PERFECT 1. capturing CO2 in existing and new power plants 2. permanent sequestration in various geologic formations AND 3. address transportation of CO2 4. address ownership & liability issues 5. determine cost efficacy at scale 29

30 In sum, we can t get to our CO2 targets without abundant reliable cheap... and CLEAN COAL 30

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