Carbon (CO2) Capture and Sequestration / Usage (CCS / CCU) Regulatory Framework in Europe

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com Content 1 Background (Why) 2 Clean Energy activities (How) 3 Carbon Capture and

1 Carbon (CO2) Capture and Sequestration / Usage (CCS / CCU) Regulatory Framework in Europe Taipei, August 2011 Bernhard Puerzer / bernhard.puerzer@linde-le.com Content 1 Background (Why) 2 Clean Energy activities (How) 3 Carbon Capture and Sequestration/Usage (CCS/CCU) (What) Enhanced Oil and Gas Recovery (EOR, EGR) and CO2 handling Biomass conversion, Biofuels and H2 Mobility Linde AG Engineering Division 2 1

2 Energy Demand Growth 400 Non-OECD Growth : +65% OECD Growth : 0% 100 Total 2010: ~500 quad. BTU Total 2030: ~ quad. BTU Linde AG Engineering Division 3 Energy Trilemma Security of supply Trilemma of Energy Economics Environment Linde AG Engineering Division 4 2

Dominance of Fossil Fuels 700 CAGR 90-35 650 Renewables 2.4% 600 550 Nuclear 1.9% 500 450 Coal 1.9% 400 Oil, gas and 350 coal will still 300 250 Natural Gas 1.

1% 50 0 1990 2000 2010 2020 2030 Linde AG Engineering Division 5 CCS contributing to energy related GHG emissions reduction GHG emissions reduction for different

lever for GHG reduction increasing energy efficiency CCS reduction potential of 1 to 2.

3 Dominance of Fossil Fuels 700 CAGR Renewables 2.4% Nuclear 1.9% Coal 1.9% 400 Oil, gas and 350 coal will still Natural Gas 1.7% cover >80% of global energy 200 demand in Liquids 1.1% Linde AG Engineering Division 5 CCS contributing to energy related GHG emissions reduction GHG emissions reduction for different climate-policy scenarios, in gigatonnes Reduction of GHG emissions Depending on political setting need to reduce GHG emissions radically by 8 to 15 Gt by 2030 Biggest lever for GHG reduction increasing energy efficiency CCS reduction potential of 1 to 2.5 Gt CO2 by 2030 critical to meet overall CO2 targets Note: 550 Policy Scenario corresponds to 3oC temperature rise and overall GHG reductions in 2030 from 41 Gt (reference) to 33 Gt 450 Policy Scenario corresponds to 2oC temperature rise and overall GHG reductions in 2030 from 41 Gt (reference) to 26 Gt Source: OECD/IEA World Energy Outlook 2008 Linde AG Engineering Division 6 3

However, there are a few buts Clean is expensive Clean Energy is often not economical on its own Many schemes

unexpectedly Disruptive technologies Tech breakthroughs might change the game High R&D & investment levels ($150

from 2005 to August 2009 Linde AG Engineering Division 7 Why CCS?

Kyoto protocol 2005: 141 nations agreed to reduce CO2 by 5.

4 However, there are a few buts Clean is expensive Clean Energy is often not economical on its own Many schemes depend on funding and subsidies Instable regulatory frame Regulations might fail or not realize Schemes can change unexpectedly Disruptive technologies Tech breakthroughs might change the game High R&D & investment levels ($150 bn*) Volatile public opinion Liability risks * Innovation Financing into Clean Energy (Clean tech VC, M&A & IPO) from 2005 to August 2009 Linde AG Engineering Division 7 Why CCS? Key option to address greenhouse gas effect by reducing emissions Fossile fuel including coal are main contributors Kyoto protocol 2005: 141 nations agreed to reduce CO2 by 5.2% until 2012, compared to 1990 EU 20% CO2 reduction target until 2020, compared to 1990 Germany announced CO2 reduction of 21% by 2012! Bali 2007: Initial agreements to agree on new targets, including USA IPCC: (International Panel on Climate Change) scientists believe 50% CO2 reduction by 2050 essential... Next Round in Durban South Africa high political drive on energy producers to cope with current and future regulations Linde AG Engineering Division 8 4

5 Regulatory Frame in Germany Same Target as Europe: 20% less carbon emission in 2020 compared to 1990 Extended Target: % less carbon emission in 2050 compared to 1990 April 13 th, 2011 German Cabinet adopts CCS act (acc. to EU guidance 2009/31/EG) - CCS act allows for CCS technology facilities including CO2 storage underground - Public has to tolerate storage facilities - Annual volume per commercial storage facility up to 3 million tons - Over all yearly storage volume up to 8 million tons - Research storage facilities up to tons CO2 with less bureaucracy (non-ccs-rl) - Regulatory for experience exchange - Storage test until 2016, positive results will trigger approval of storage facilities - New or extension of existing power stations above 300 MW require a CO2 storage facility Acc. to Environmental News Network published July 19 th, 2011 emissions fell 8 % in Europe in the last year while competitiveness towards world producers keeps strong. Linde AG Engineering Division 9 Regulatory Frame in Europe Target: 20% less carbon emission in 2020 compared to 1990 EU NER300 funding scheme Target projects in NER 300 Funding scheme worth total of 4.5 bn based on sale of 300 million CO2 emission certificates ( 15 / ton CO2) First phase ( 3 bn): award 2012 operation 2016 Second phase ( 1 bn):award operation % for CCS, 50 % for renewables Selection in first phase of up to 8 CCS and 34 renewable projects by end of 2012 EU member state support All member states must match funding provided by NER300 UK government plans to provide additional funding above that from NER300 1 bn already committed to first CCS project (PCC at Scottish Power Longannet) New scheme for up to 3 additional projects to be launched in 2011 with funding of upto 7 bn UK will align project selection with NER300 CE target 2 projects with Linde as selected partner in 2011 Vattenfall, Jänschwalde, oxyfuel, Germany ASU equipment supply CO2 purification and Teesside CCS, IGCC, UK Project sponsor for syngas island SSE Peterhead, PCC on NG CCGT, UK Linde/BASF PCC solvent Equipment supply Alstom/Drax, Oxyfuel Selby, UK Project sponsor ASU supply only Woodspirit, Biomass to Methanol, Netherlands Project sponsor Renewable project Other projects that Linde is engaging with 2CO, IGCC, UK C-GEN, IGCC, UK Linde AG Engineering Division 10 5

6 Decision process in NER300 & UK CCS programme Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 NER300 9 th February 2011 Sponsors submit projects to member states. 22 CCS projects 131 renewable projects 9 th May 2011 Member states confirm eligibility criteria, and submit to EIB. 13 CCS projects 65 renewable projects 9 th February 2012 EIB completes financial and technical due diligence, and presents ranking list and recommendations to EC Q EC award decision. Expect 4-6 CCS Projects will receive funding. UK CCS Q Award expected of 1 bn to Scottish Power PCC project Q Call for tenders Q Submit tenders Q Shortlist 3 projects, Including alignment with NER300 shortlist. Funded FEED from this point. Q UK CCS award decision. Expect 2-3 projects will receive funding Linde AG Engineering Division Content 1 Background (Why) 2 Clean Energy activities (How) 3 Carbon Capture and Sequestration/Usage (CCS/CCU) (What) Enhanced Oil and Gas Recovery (EOR, EGR) and CO2 handling Biomass conversion, Biofuels and H2 Mobility Linde AG Engineering Division 12 6

7 Development Path Technology Development Path Laboratory Mini Plant MW el 0.01 mt / hr Pilot Plant 0.45 MW el 0.3 mt / hr solvent screening - screening methods proof of concept under synthetic conditions - comparision of solvents - validate simulation models litmus test for new process under real conditions Advanced design and new materials aimed at emissions reduction and capex reduction in the large scale Demo Plant MMW el mt / hr Commercial Plant MW el mt / hr test of complete CCS-chain capture,, transport, storage/eor Safe, reliable, and economical operation in compliance with regional and national regulations Linde AG Engineering Division 13 Linde pursuing technology development, engineering and solution offer in all three CCS pathways Technology Process Linde Portfolio 1 Pre-combustion ASU Gasifier CO Shift Gas cleaning (Rectisol) purification & Feedstock Feedstock 2 Oxyfuel ASU Boiler DeSOx DeNOx purification & 3 Postcombustion Feedstock Boiler DeSOx DeNOx capture & Linde AG Engineering Division 14 7

Linde engagement in pre-combustion CCS Coal gasification to generate syngas for power (IGCC), chemicals and liquid fuels enables cleaner utilization of coal 1 World coal reserves important source of

8 Linde engagement in pre-combustion CCS Coal gasification to generate syngas for power (IGCC), chemicals and liquid fuels enables cleaner utilization of coal 1 World coal reserves important source of energy in several geographies, e.g., China (>70% of energy sourced from coal) and India (>55% of energy sourced from coal) Increasing oil price providing incentive for coal utilization Linde leader in mega-asu s e.g. for applications involving coal gasification Linde leader in Rectisol methanol wash technology for selective H 2 S/COS and removal Example: 2000 TPD Linde ASU for O 2 supply for Shell coal gasification plant in Dongting, China Linde has supplied large scale air separation plant and Rectisol methanol wash technology for separation for a number of coal gasification plants in China Linde AG Engineering Division 15 Linde pursuing technology development, engineering and solution offer in all three CCS pathways Technology Process Linde Portfolio 1 Pre-combustion ASU Gasifier CO Shift Gas cleaning (Rectisol) purification & Feedstock Feedstock 2 Oxyfuel ASU Boiler DeSOx DeNOx purification & 3 Postcombustion Feedstock Boiler DeSOx DeNOx capture & Linde AG Engineering Division 16 8

Oxyfuel technology from pilot to demonstration scale: Linde partnership with Vattenfall 2 Pilot plant - Schwarze Pumpe/Germany - 30 MW th, max.

7 % Demonstration plant - Jänschwalde/Germany - 600 MW th (250 MW el ), 250 t/h - (high dense ) - pipeline transport (>100 bar) - CO2 product: >95 % Linde AG Engineering Division 17 Linde new cold

new technology for NOx and simultaneous SOx removal with significant potential to reduce investment and operational costs in overall oxyfuel technology with capture Linde s cold DeNOx technology has

9 Oxyfuel technology from pilot to demonstration scale: Linde partnership with Vattenfall 2 Pilot plant - Schwarze Pumpe/Germany - 30 MW th, max. 10 t/h - -liquefaction - road transport (truck, 15 bar) - product: >99.7 % Demonstration plant - Jänschwalde/Germany MW th (250 MW el ), 250 t/h - (high dense ) - pipeline transport (>100 bar) - CO2 product: >95 % Linde AG Engineering Division 17 Linde new cold DeNOx technology for oxyfuel CCS 2 in oxyfuel CCS plants offers opportunity for costeffective NOx removal compared to conventional power plant NOx removal approaches such as SCR Linde has developed a new technology for NOx and simultaneous SOx removal with significant potential to reduce investment and operational costs in overall oxyfuel technology with capture Linde s cold DeNOx technology has been validated in a pilot unit installed at Vattenfall s oxyfuel pilot plant in Schwarze Pumpe Linde DeNOx technology pilot plant at Vattenfall s Schwarze Pumpe site A DeNOx pilot scrubber was integrated in the unit at Vattenfall s oxyfuel pilot plant DeNOx pilot plant operation in July 2010 Pilot successful and validates lab results Technology can now be commercially applied Linde AG Engineering Division 18 9

Linde pursuing technology development, engineering and solution offer in all three CCS pathways Technology Process Linde Portfolio 1 Pre-combustion ASU Gasifier CO Shift Gas cleaning (Rectisol)

10 Linde pursuing technology development, engineering and solution offer in all three CCS pathways Technology Process Linde Portfolio 1 Pre-combustion ASU Gasifier CO Shift Gas cleaning (Rectisol) purification & Feedstock Feedstock 2 Oxyfuel ASU Boiler DeSOx DeNOx purification & 3 Postcombustion Feedstock Boiler DeSOx DeNOx capture & Linde AG Engineering Division 19 Post combustion pilot at Niederaussem,Germany 3 PC A strong alliance for CCS C Signed in 2007 to develop an advanced PCCtechnology joint design, construction, testing and commercialisation Project essentials Location: Niederaußem, Germany Capacity: Nm3/h flue gas from lignite (7.2 t/d CO2) purity 94 vol % (wet) Start-up: June 2009 Partners: BASF, Linde, RWE BASF: process solvent RWE: operator Linde: PM, basic & detailed engineering, equipment supply, erection, start-up Linde AG Engineering Division 20 10

Content 1 Background (Why) 2 Clean Energy

Sequestration/Usage (CCS/CCU) (What) Enhanced

handling Biomass conversion, Biofuels and H2

Linde is already deeply involved in Clean

Hammerfest, Norway PCC flue gas wash, RWE,

Netherlands CO2 injection for EGR, Gas de

11 Content 1 Background (Why) 2 Clean Energy activities (How) 3 Carbon Capture and Sequestration/Usage (CCS/CCU) (What) Enhanced Oil and Gas Recovery (EOR, EGR) and CO2 handling Biomass conversion, Biofuels and H2 Mobility Linde AG Engineering Division 21 Linde is already deeply involved in Clean Energy business LNG plant, StatoilHydro, Hammerfest, Norway PCC flue gas wash, RWE, Niederaußem, Germany Oxyfuel pilot plant, Vattenfall, Schwarze Pumpe, Germany CO2 network, OCAP, Rotterdam/Amsterdam, Netherlands CO2 injection for EGR, Gas de France, Maxdorf, Germany CO2 injection / storage, GFZ Potsdam, Ketzin, Germany Linde AG Engineering Division

Content 1 Background (Why) 2 Clean Energy activities (How) 3 Carbon Capture and Sequestration/Usage (CCS/CCU) (What) Enhanced Oil and Gas Recovery (EOR, EGR) and CO2 handling Biomass conversion,

12 Content 1 Background (Why) 2 Clean Energy activities (How) 3 Carbon Capture and Sequestration/Usage (CCS/CCU) (What) Enhanced Oil and Gas Recovery (EOR, EGR) and CO2 handling Biomass conversion, Biofuels and H2 Mobility Linde AG Engineering Division 23 Hammerfest LNG Project Norway -Reinjection World s first industrial project to deliver separated onshore back offshore and injected into a reservoir Europe`s first export facility for liquefied natural gas (LNG) Terminal and process plant on Melkøya island outside Hammerfest in northern Norway Annual LNG export: 5.67 billion sm³ - Content: 5.0% to 8.0 % captured in onshore plant Conveyed back with subsea pipeline Storage underground Emission reduction of more than 50 % Norwegian -Tax: 50 Euro/ton Linde AG Engineering Division 24 12

25 - Injection plant GdF at Maxdorf Operator Location Capacity PEG Maxdorf 16-32 t/h Quality 99.

13 - Reinjection in the Hammerfest LNG project fluid liquid carbon dioxide flow rate 110 m³/h (485 gpm) discharge pressure 215 barg (3120 psig) pump type G4T, rod trust 356 kn, stroke 350 mm power 585 kw hydraulic / 900 kw variable speed drive Linde AG Engineering Division 25 - Injection plant GdF at Maxdorf Operator Location Capacity PEG Maxdorf t/h Quality % Source Vattenfall (pilot plant) Start-up I / 2009 Special: Pressurization of liquid, vapour and supercritical CO2 (pressure between bar) Linde AG Engineering Division 26 13

14 Content 1 Background (Why) 2 Clean Energy activities (How) 3 Carbon Capture and Sequestration/Usage (CCS/CCU) (What) Enhanced Oil and Gas Recovery (EOR, EGR) and CO2 handling Biomass conversion and Biofuels Linde AG Engineering Division 27 Greenhouse and Pipeline: OCAP What is Greenhouse? Greenhouses currently burning fossil fuels like propane increasing content promoting plant growth Instead of burning fossil fuels is captured at industrial customers, transported via pipeline to a greenhouse region and then distributed in a pipeline network to individual greenhouses OCAP, a 50%/50% joint venture of Linde Benelux with Volker Wessels Co, globally first such project OCAP currently operates a pipeline infrastructure in Netherlands transporting captured from Shell H 2 plant to supply greenhouses Example OCAP pipeline in Netherlands Supply of to greenhouses leading to net reduction of 170,000 tons pa emission Linde AG Engineering Division 28 14

DSP Linde s contribution for algae technology: CO2 supply optimization Typical CO2 source Typical CO2 supply battery limit (OSBL)

fluegas H2O Biomass Lipids/ Fuel Proteins Cellulose Gasification Plant RECTISOL wash CO2 SMR Plant NG Plant Ethanol Plant Air MEA

Algae-to-fuel Open pond system Algae-to-fuel Closed PBR Algae-to-food hybrid system DSP1: Fuel, Protein, CH s DSP2: Fuel, Protein,

Processing, PBR = Photobioreactor, OSBL= Outside System Battery Limit, ISBL= Inside System Battery Limit, CH = Carbohydrate

15 DSP Linde s contribution for algae technology: CO2 supply optimization Typical CO2 source Typical CO2 supply battery limit (OSBL) On-site / Remote location Power Plant CO2 Capture fr. fluegas H2O Biomass Lipids/ Fuel Proteins Cellulose Gasification Plant RECTISOL wash CO2 SMR Plant NG Plant Ethanol Plant Air MEA wash Glycol/ Amine SELEXOL CO2 separation Air capture plant Pipeline & Storage Compression Typical algae plant battery limit (ISBL) Algae-to-fuel Open pond system Algae-to-fuel Closed PBR Algae-to-food hybrid system DSP1: Fuel, Protein, CH s DSP2: Fuel, Protein, CH s DSP3: Fuel, Protein, CH s Potential residual biomass recycle 29 Linde AG Engineering Division 29 * DSP = Down Stream Processing, PBR = Photobioreactor, OSBL= Outside System Battery Limit, ISBL= Inside System Battery Limit, CH = Carbohydrate Cooperation Linde & Sapphire Energy: CO2 management system for algae fuel production CO2 management system for commercial scale algae plants producing bio-fuel. amount of CO2 needed for one single algae plant is about 6,000 MTD or an annual amount of approximately 2.2 million tons per year today, the total merchant CO2 market in the US is approximately 12 million tons per year. Process Flow Overview Single ponds of CDF Commercial Demo Facility (CDF) Linde AG Engineering Division 30 15

16 Questions? Linde AG Engineering Division 31 16

The Jänschwalde CCS Demo project

The Jänschwalde CCS Demo project Professor Niels Peter Christensen Chief Geologist Vattenfall Group UK CCS Community Network 14-15 September 2010 CCS delivers 1/5 of the lowest-cost GHG reduction solution