Energy Policy

EPRI's Steve Specker calculates the cost of greenhouse gas reductions

As lawmakers consider a cap on greenhouse gas emissions, electric utilities could be looking at major challenges to increasing future energy output. During today's E&ETV Event Coverage, Steve Specker -- president and CEO of the Electric Power Research Institute -- compares the costs of various electricity generation options, including renewable energy, nuclear power and coal gasification. Specker, speaking last week at an event sponsored by Resources for the Future, also discusses major issues facing the utility sector, such as nuclear waste storage questions, rising natural gas prices and the feasibility of capturing and storing carbon dioxide emissions.

Click here for accompanying slideshow presentation.


Steve Specker: It's great to be here and I just want to give a bit of preview to the talk, a little bit of background. At EPRI we have a summer seminar every year in August where we get many leaders from the industry, from all aspects of the industry and policy makers together. Last August our seminar was based around this topic of generation technologies in a carbon constrained world. It was an excellent seminar, a lot of dialogue. Coming out of that was this framework that I'm going to go to today, that really tries to lay out very objectively and factually technologies for a carbon constrained world. At EPRI almost everything we do is based around the assumption that we're going to live in a carbon constrained future. For technology development we really have to make that assumption because that's, in effect, our insurance policy with a long lead time on technology development. We just have to be anticipating that. If it happens that that doesn't come to pass much of what we're doing is very valid anyway, but we have to err on the side of making sure the technologies are ready to deal with a carbon constrained future.

Just to kind of get our heads around all of this I want to begin with this slide to kind of get a perspective about our next hundred years, living in a carbon constrained future, if that is what comes about. And this is one of many scenarios that we've done at EPRI and I'm sure many of you in the audience have done your own scenarios of what a carbon constrained future might look like. This is global generation mix, assuming a 550 parts per million CO2 limit, which is about twice pre-industrial CO2 limits. And just to orient you, this is the mix of generation sources; oil, gas, coal, fossil with capture and non-emitting 2005 moving through to the late, to 2095. And I want to point out a couple of things here. The size of each circle is the size that represents the electricity generation in that given year. So here's 2005 and just look at the size of their circles. This is a conservative assumption about the growth in electricity generation over the next hundred years ... or next 90 years. We don't assume a hydrogen economy, which requires electricity to generate hydrogen. So it's relative and conservative.

Every scenario we run, the tighter you put the limits on CO2 emissions, the more electricity that's going to be required globally. So it's very important to realize electricity is going to be a growing part of the world, no matter what the limitations on CO2. But again, the greater the limits on CO2, the more electricity. Why is that? It shows up here very clearly as we go through this next hundred years, but with a scenario like this. If you looked at today's mix. Here's coal, which is a key piece, globally, of generation. But also if you look at this purple area, this is non-emitting sources. So it's renewables, it's hydro, and it's nuclear on a global basis, which already is a significant source of electricity generation. As we move through the years, and let's just go to 2050 here, and look at what happens. Coal without CO2 capture becomes a much smaller wedge and eventually goes away. But fossil with capture, which is coal primarily with CO2 capture, grows to, the 2050, this wedge is equivalent to about 1,100 gigawatts globally of coal with capture, so 1100 thousand megawatt plants with capture, so it's a huge amount.

And you can see by 2095, this scenario would say we are in a world of fossil with capture and then non-emitting. And this non-emitting includes tremendous growth in nuclear, in renewables, hydro. The message here is we need them all. We need every source of generation. But the one I want to really focus on today as we go through this is fossil with capture and what that means. But I'm going to lay out the economics of all of these, really, out through 2020. Then I'm not going to project any further than that, but any scenarios do we go through show this type of pattern. And I'm not going to put numbers on them because every scenario has different numbers, but the pattern is very clear.

So let's get a little nearer term now and look over the next 15 years about technology. And what I want to do is provide a very objective and factual framework for discussing generation technologies and investment decisions in a carbon constrained world. So this is real time. This is what's facing those who have to make decisions on new generation. I want to lead you through what they're dealing with today on a very factual basis. And then project ahead as to where technology can take us over the next decade. So I'm going to show you a whole bunch of graphs and I always say if anybody is graphically challenged you may want to go out and enjoy the sunshine because I don't know how else to show this except to go through a lot of graphs. I'm going to show levelized costs of electricity using standard methodology that's widely used across the industry. I'm going to focus on two key uncertainties; the future cost of CO2, which is the best way to express a carbon constrained future, is in the economics and the costs of CO2 and the future price of natural gas, which is another huge uncertainty that faces anybody making decisions on new generation. I'm going to do two slices in time; 2010 and 2020. 2010 being the type of generation technology you could order today and have in operation by 2010. 2020 would be something you could order in about 2015, if you were looking for new generation, and have it in operation by 2020. So let's start with an easy one here first. And I'll get you oriented.

On the vertical axis is the levelized cost of electricity in dollars per megawatt hour. Which, we used dollars per megawatt hour because that's the typical units for wholesale power transactions in the US. If you're more comfortable with cents per kilowatt hour, just put a decimal point, so 50 is five cents a kilowatt hour. We can all relate to our own utility bills I guess better if we talk in cents per kilowatt hour, but that's the vertical axis. Along the horizontal is the cost of CO2 in dollars per metric ton. This is an assumed future cost. So this line is pulverized coal without capture. So this is a standard current technology pulverized coal facility that would be something that could be ordered and constructed today for operation in a few years. With no cost of carbon, the generation costs of that facility on a 30 year levelized cost basis is about $41 a megawatt hour or slightly over four cents a kilowatt hour. It's a very well-recognized number. All of these have some uncertainties. It depends on what part of the country, what the cost of coal is in that particular area, but this is pretty solid. A coal plant, pulverized coal, emits .8 tons of CO2 per megawatt hour. So let's just go all the way out to the end if CO2 costs $50 per ton, eight times 50 is 40. Fourty plus 41 is 81, so the cost of electricity would be $81 per megawatt hour. It's linear. It's simple, but that's the reality.

Today in Europe, in the E.U., CO2 is trading at about $30 a ton. So, today, if you have a coal plant in Europe that cost has to be fully accounted for. The cost of electricity in that plant is 65 versus prior to the cost of CO2 it was 41. So in the U.S. this is still somewhat an academic exercise, but in Europe it's real and that's what's happening. Plants are dispatched based on about a $30 cost per ton of CO2. And the electricity prices are in fact having this, it's having this kind of impact on electricity prices. So let's keep going here. This is natural gas combined cycle plants, which over 200 gigawatts have been put in over the last six or eight years in United States. This is at three different gas prices for natural gas; four dollars per million BTUs, six and eight. As this was presented in August this seemed like a reasonable range. Well as you all know and we all know, post Katrina meant it was up to $12. It's settling back down. It's on its way down. We think for the next few years a six dollar floor price is a reasonable price to have on natural gas. We don't think, over time, it's going to go much lower because if gas gets much lower than that then this huge amount of combined cycle gas turbines we have in the U.S. will all start operating more. The old inefficient coal plants will operate less. What's that going to do? It's going to increase the demand for gas. It's going to push the price right back up. So our analysis would say somewhere around six dollars is a reasonable assumption for a floor price on natural gas.

So if we use that and then start putting these together, this is a very interesting chart to look at intersection points. This is a natural gas combined cycle plants at six dollars and a pulverized coal plant without capture. In most parts of the country these are the two choices that someone looking for new power generation, either a utility or an independent power producer, these would be the two choices in the use of fossil energy, that they would be dealing with today. And as you look at this you can see if you're looking at a pulverized coal plant you could make a case that you could put that in without any CO2 capture and still be lower cost than a combined cycle unit even if you had to go buy credits at $35 a ton. That's about the break even point between these two choices. Those kinds of thoughts or decisions are what's facing people today as they think about this. Is do you go with natural gas combined cycle? Do you go with pulverized coal? With the uncertainty around the future cost of CO2, and then certainly the uncertainty around gas, if you think gas is going to be eight or 10, then it's off the map. You would not even be thinking about a combined cycle plant, because it would be totally uncompetitive.

So let's keep building this up a little bit. You've all heard or many of you have heard about integrated gasification combined cycle, IGCC. This is IGCC without capture, this blue line here. What you see, without any CO2 capture, are a couple of things. IGCC today, currently looking at the technology, is about 15 to 20 percent more costly than a pulverized coal plant. The other thing to note, without any CO2 capture, IGCC emits just as much CO2, about .8 tons per megawatt hour, so it has the same slope. I didn't mention earlier, a natural gas combined cycle emits about half the CO2 per megawatt hour as a coal plant, still about .4 tons per megawatt hour, but this just shows where IGCC fits without capture. One of the things I want to really emphasize that I find is misunderstood a lot is that when people hear IGCC there's an assumption made many times that that includes CO2 capture and storage. It's not the case. Just IGCC is gasifying coal and running it through gas turbines, does not do anything for the CO2 as I'll show you later. Though, it does make it more economical to capture CO2, if you have that capability. But just by itself, IGCC does not capture CO2.

Now I want to switch to, that's sort of the end of the 2010 view of the fossil technologies, coal and gas. I want to switch now to wind. When we gave this presentation first in August at our seminar, lots of discussion around wind, the economics of wind and there were diverse viewpoints. It was, Steve, you're way too optimistic. Steve, you're way too conservative. All over the place. So we went back and for 2004 we obtained the capacity factor of every wind site in the United States and this is what we got. There are locations with capacity factors of over 40 percent, which is very good. Those tend to be up in the Dakotas and northwest Iowa. And there are those that aren't so good, particularly right down here with almost zero. The average was 29 percent, roughly 30 percent capacity factor was the average in the U.S. in 2004. So what does that mean? If we put that on this same economics chart here, wind at 42 percent, and this is without any production tax credits. I'm showing no tax credits on anything I show because it would it would greatly distort the technical view of this. But wind at 42 percent is about $55, which is competitive even without the production tax credit. But at 29 percent, which is the average, you can see its 75. At 20 percent it's over $100 or over ten cents a kilowatt hour. And for some of those plants that were on the tail 10 percent capacity factor, it's clear off the charts. And obviously if it has no, if it doesn't turn at all then it's infinite because you divide something by zero it's at infinite cost. So wind is extremely important. It's very valuable, but it all depends on the capacity factor. And we're going to watch this very closely. And I know there's some of you in the audience that are very close to the wind industry. We think that the wind siting is getting much more sophisticated and we would expect the capacity factors on average to be higher as time goes on because of the sophistication of, you're going to put the facilities where the wind blows and that's obviously very important. So what we're going to use for this set of charts is wind at 29 percent, because that's what the data says was the 2004 capacity factor. When we get 2005 data we're going to update this whole presentation to 2005. But we're trying to stay really, really firm on its got to be shown by the data or we're not going to put it on here.

Nuclear, a lot of discussion about new nuclear. As we look at new nuclear and as others do, on this cost basis, where we're looking at a levelized cost of electricity, $1700 a kilowatt, nuclear comes in at about $48 per megawatt hour. This number has been publicly confirmed by companies such as Southern Company, who have done a lot of their own analysis and it comes in in that range. Others, if you look at on a first-year basis, if you were looking at a merchant nuclear plant, you would have a significantly higher number, but it would still be up somewhere between 55 and 60. But on a consistent basis with all these others, this is where new nuclear comes in. So these are the non-emitting technologies on the same chart here. Wind, I didn't talk biomass. Biomass is somewhere around 60. We show it, it's relatively flat. Biomass is considered non-CO2 emitting, because you're basically, you are emitting CO2, but you're growing the, whether it's trees or switch grass or whatever, you're taking in the CO2 and then you're releasing it. So it's, in effect, non-emitting. So these are the three key ones. I always get asked where's solar? Solar for centralized generation of electricity, so parabolic mirrors or troughs, we evaluate at about 160. So solar is somewhere up here. Passive solar, for homes, for our buildings and that, on a distributed basis, is very important. I don't want to dismiss the importance of solar, but for the centralized generation of electricity, it simply does not fit on this chart. And as you'll see for 2020 we don't see it fitting on the chart for 2020. So these of the non-emitting technologies that we see.

So now we put all that together. And this sometimes is affectionately referred to as a pixie sticks chart. But this is all of what I just presented together. So if today, with no costs of CO2, if one's making a new investment decision in new generation and not thinking about, let's just assume no future costs of CO2, pulverized coal without capture is the lowest. And that's why you see many, many decisions being made today to go with a new pulverized coal plant. Nuclear is next up and is very competitive. Nuclear and IGCC are in the same range. And this is why you see a lot of interest in new nuclear. IGCC, even though it's somewhat higher, I'll show you, as one looks at future CO2 capture, it becomes very attractive. Natural gas combined cycle at six is next and there's parts of the country where almost by default new generation is going to be natural gas combined cycle because of timing needs and environmental restrictions. So there will be still considerably more natural gas combined cycle installed. And then you see biomass and wind. As you sit today though and think about what might be a future cost of CO2 in a cap and trade system, which would be the most likely. And let's think about Europe, remember Europe is at about 30. So if you draw that vertical line up at 30 you sort of, nuclear, clearly from an economic standpoint is very attractive. I always use the analogy of France here or reality of France, which has about 80 percent nuclear. They, as a country, they are basically neutral to the cost of CO2. They don't care. For the power sector, obviously the auto sector and that there's a big impact. But their power sector is almost independent because they don't, they have very low CO2 emissions in their power sector. But if nuclear is not a possibility in the region of the country and under consideration, then you get up into this very complicated mix. If you're thinking ahead to let's say $30 CO2, they all sort of intersect right around that area, which makes for a very complicated decision process with today's technology. So I'll come back to this later, but I just want to show you, to me, and I've asked this question of many that are faced with these decisions, this may be the most uncertain time almost ever for making decisions on new base load generation of electricity. It's very complicated, high uncertainty around CO2 and high uncertainty around natural gas.

So what's possible in 2020? Now I want to really talk about what are we and others in the electricity sector really focused on in terms of developing new technologies for a carbon constrained future? And I'll go through some of these a little faster now. Pulverized coal without capture, we see movement towards ultra super critical higher efficiency pulverized coal. The higher the efficiency the less CO2 it emits per megawatt hour, so it sort of start flattening out the slope with higher efficiency. IGCC without capture, we have and others in the industry, and I'll talk about them later, have a very aggressive program to drive down the cost of IGCC, the basic gasification technology. We have very focused effort to get that down basically to be competitive with pulverized coal. Again this is without CO2 capture. Now I want to move to these technologies with CO2 capture. And this is a very, the next three charts I think are very important to get an understanding of. This shows, again, the same line you've looked at before, now with 2020 technology without capture. But to capture CO2, transport it and store it, which is what this means takes a tremendous amount of the energy output of the pulverized coal plant in order to capture the CO2, regenerate it, pressurize it, transport it and then, we're assuming, deep geologic storage in a saline aquifer type of location. So you can see the penalty that's required. The energy penalty is very significant. The cost goes from about $40 a megawatt hour up to $65, so more than a 50 percent increase in the cost of electricity. And I'll come back to what we're trying to do about that, but that showed that.

Now here's IGCC. And what I'll do is just skip ahead because I think it's better to put them on the same one. Here we have, without capture, the red and the blue dash lines, IGCC and pulverized coal. We think by 2020 those are going to be almost on top of each other from a cost standpoint. But look at the significant advantage IGCC has when you are looking at capturing CO2. And that's because out of IGCC you get a much purer stream of CO2 that's already pressurized. It just takes less energy to capture it. The same amount of cost to transport and store it as pulverized coal, but less energy to grab that CO2 back and take it out of the stream. So the big interest in IGCC, which is a very important interest and is certainly very valid, is that if one looks at a carbon constrained world and you want to turn coal into a non-CO2 emitting technology IGCC today, as we look ahead, has a substantial cost advantage over doing it with a conventional pulverized coal plant. I'm going to come back later to this gap. We are working very hard at EPRI to close this gap. We would like to see these two technologies be in a horse race. Both being very competitive sources of CO2-free fossil generation, so fossil with capture.

Natural gas combined cycle, as we go from 2010 to 2020 there are still efficiency improvements, so there can be some lowering of cost and gaining of efficiency. We see a significant opportunity for the reduction in the cost of wind. Much of this is through bigger wind turbines, more offshore wind, so this is sort of an average. You couldn't take this and locate it in every part of the country or the world. But as turbines get bigger, the blade materials can get lighter, more advanced composite blade materials. So we think wind has significant opportunity to continue to be lower in costs. Biomass is another one we're working very hard on circulating fluidized bed technology that we think can reduce the cost of biomass. The point I would make on both biomass and wind is though that we always have to understand there is a limit to the amount of biomass and wind that can be used, whether it's land areas or whatever else, that it's very important as part of the mix but it isn't the answer. A point that I always make is we need them all. We need every source of generation technology. That we should not pick favorites. We need them all and then depending on the location or the energy needs, the more options you have the better. That's the message.

OK, so we put them all together again. This is 2020. This is what we can do with technology. It's all very doable, we have programs in place across the industry to drive to this point. And what you're now seeing, in 2020, and this is technology we think could be available to be ordered by 2015. You have a set of options, a portfolio that's relatively carbon free, very little CO2 emission. And still in an affordable range. So if you look at, this is 2010, that's 2020. And my real take away point here is we really have an extraordinary opportunity to develop this low carbon portfolio. Nothing that I presented takes radical new inventions. It's technology that takes a lot of time to develop. We've got to demonstrate that it's reliable. Lots of issues, but it's just good hard basic blocking and tackling, engineering, technology development, demonstration of these technologies. But to get to where we think we can be by 2020 we have to move very fast. This is not a leisurely pace. Developing technology of this scale takes a long time and a lot of work. So this is the picture for 2020. What I'd like to do now is dive a little deeper, particularly into the coal technologies with CO2 capture. That's an area that as you can see, the nuclear is moving along well I think from an economic standpoint. And I'll show some of the uncertainties as we get to a later chart. And the renewables, I think, are moving along well, but coal with capture is where we really have, I think, the biggest challenge in the next few years. I want to go through those a little more in detail. So if one talks about advance coal technology platforms, this really three. I've talked about IGCC with CO2 capture and deep geologic storage. I've talked about advance pulverized coal with we would say post combustion CO2, because with pulverized coal you've got to get the CO2 out of the flue gas, the dilute gases that are going up the stack. And the third is the advanced circulating fluidized bed, which would be very well-suited to biomass and coal, either one. All of these technologies are needed as we move ahead.

I want to now try to put storage in some kind of context for you. I've used this chart a few times and I'm still not totally, I wish there was a better way to show it, but we'll see if we can put this in perspective. What this shows, and this is going to build into several charts, there are 21 locations in the world where there's actively CO2 storage under way. Some for enhanced oil recovery, but these are the 21 locations. And I want you to just look at the size of the dots. What this shows, the size is proportional to the lifetime CO2 storage of these particular locations. And one is, like the smallest is 0 to 10 million tons of CO2 and on up. This dot right here is the 50 year storage requirement of one IGCC plant operating, its 250 million tons of CO2. So this is one big new IGCC or pulverized coal plant. This is the lifetime storage of the 21 areas where CO2 is currently being stored. This is the amount of storage required between '05 and 2050, for CO2 storage in the U.S. if one is living with a 550 parts per million constraint on CO2. This big thing. 8000 million tons of CO2 for basically this 45 year period that would be required if we're going to try to limit CO2 in the atmosphere at 550. One more blob. And I'm told this is not quite to scale. This is what it would be worldwide. It's 30,000 million tons needs to be stored. And this is based on that first scenario I showed you where we've got to have fossil with capture to meet the 550. So it puts in perspective what we're doing today with these 21 locations that many of you hear about, but what we're really talking about on a both U.S. and global scale in storing CO2. Many find this very depressing. It isn't quite as bad as one might think. And this chart, I've got to walk you through it because it's a little bit, well, let's just walk through it and you'll see what I mean. The yellow is good. Let's look at the U.S.A. here.

What this shows is a ratio of cumulative emissions for 1990 to 2095, basically over a hundred years, so the maximum potential geologic storage capacity by region. So let's look at the yellow. Here's the US. Over a hundred year period, based on what I just showed you, in the U.S. we would be using up less than 10 percent of the geologic storage capacity that we have. So in the U.S. we're blessed with a lot of coal and a lot of suitable geologic storage capability for CO2. So it's a very good news story. So even though it's a huge scale we have that potential, so does Canada, former Soviet Union, Australia and New Zealand. On the other end of the spectrum, red is not good. Red says that Japan, Korea and I know Taiwan is in the same situation, they have no capability to store CO2. They have no geologic formations that are suitable for storing CO2. So for those countries, and there are others, CO2 capture technology has no relevance. Capturing CO2 from fossil fuel, from coal, what do they do with it? They have no ability to sequester or store the CO2. So if they're going to use fossil fuels they're going to have to go buy credits. They're going to have to go through like the clean development mechanism and others to offset their CO2 emissions. In between are many countries and regions that are shown here in blue, such as China, which over that hundred year period still would use less than 70 percent of its known geological capability. And I think in China and other countries it hasn't been as extensively looked at geologically as the US. In the last most of deep aquifers have already been looked at because that's also where gas and oil are usually found. So we've poked holes in most locations to identify what's down there. So the story is certainly for many of the industrialized or industrializing countries, there is very significant geologic storage capability to store CO2. The infrastructure is daunting. You're talking about capturing it, transporting it and injecting it into these deep aquifers. But the storage capability is there, particularly in the US. We've got them both, coal and we've got plenty of storage capability.

Now I want to just very quickly go through, before I close here, you hear about many of the programs going on around the industry on advance coal. And I just wanted to put three of them in front of you and these are all focused around what I just showed. Getting us, by 2020, to having coal technology that is very low or non-CO2 emitting. We have a program at EPRI called coal free for tomorrow, where we're really focused on accelerating the deployment of these early IGCC plants. So we're working with those utilities who have decided to move ahead with IGCC. We worked on the incentives that were included in the energy policy act. We're working on design guidelines, trying to help remove any barriers that are there to the early deployment of these plants because we need to get them out there. We need to have a half a dozen IGCC plants operating by 2010, 2011, to really prove out the basic IGCC technology. This is a very big collaborative. We have over 50 participants in our collaborative on advance coal. We are also working on ultra super critical pulverized coal, so high-efficiency, upper 40 percent type of efficiency pulverized coal plants. And as I mentioned before the circulating fluidized bed. We're working all three of these. And we are working on, in that program, at least the capability to capture CO2. But as you'll see in the third program this upper one is just looking at are these capture capable, not the actual technology.

Many of you have heard about FutureGen Alliance, which is a very large program that is not EPRI led. We participate in it, but it's really led by a consortium, led by AEP and Southern Company, which is all about a living laboratory for advancing the IGCC technology and CO2 capture. So our program is just let's accelerate the deployment of plants that are going to be used for real electricity generation. So they're going to run flat out base load. FutureGen is focused on when it is going to produce electricity, but it's going to be a laboratory. They're going to try different things. They will, it's not as focused on running flat out base load all the time.

Finally, the third one is a new initiative we have just kicked off, which is CO2 capture, a pilot. And I'll show you more on this, its focus on pulverized coal plants. The biggest technical gap we see is the question and the technology for capturing CO2 from a pulverized coal plant. Is it, can it be cost effective? And you saw from my earlier charts it was the outlier. It was the high cost option. And we want to really focus around trying to close that gap. Here's the picture I showed before. This cost gap between pulverized coal and this MEA stands for it's in a mean technology. It's kind of the current technology for capturing CO2 from pulverized coal. We're focusing on reducing this cost gap so that we can make pulverized coal with capture competitive with IGCC.

We have a pilot that we are currently in the funding stage for and we're in discussions with Alston to work on a 5 megawatt chilled ammonia pilot. This is a new technology. It looks very promising to go after this cost gap. And we would also then test, with the CO2 that was captured, to see will that be suitable for transportation and pipeline? Because it will have all of the CO2 from any sources captured. It has various contaminants in it. And you want to make sure that the materials are reliable for compressing, transporting and injecting. If that works well we'll scale it up to a 10 megawatt. The timeline on this is about two years to build this and start getting test results. So we'll be somewhere out in 2008 before we'll start to be able to get an answer, can we close this gap? It's very important. I think it's our biggest technical challenge right now particularly with coal, is that, because if we can close this gap you also open up the opportunity for existing pulverized coal plants to be able to retrofit a capture technology. Or if you're going to build a new pulverized coal plant over the next few years, should you at least allow the footprint of, these are basically big scrubbers, that's the way to think about them, on a coal plant. At least put the footprint in there so that you could have that optionality at some point in the future to capture CO2.

So just kind of a closing thought here. As we look at it there's four big uncertainties out there as we look at new generation in a carbon constrained world. First is what's going to happen with CO2 and the timing of that? Is there going to be a cap and trade? When is it going to be? Is there going to be a safety valve on that? All kinds of considerations that we just don't know today, certainly in the US. Future price of natural gas is obviously a huge one. If gas was long-term at two or three dollars it would be a pretty simple decision. Everybody would go natural gas combined cycle. The economics would be compelling. But none of us see that future. There's going to be tremendous volatility. We think the floor price we think is around six dollars. And that's what our analysis was based on. Two other uncertainties; spent nuclear fuel storage on the nuclear side. You saw the economics of nuclear, very compelling, but certainly this, if one looks at uncertainties this is a key uncertainty around nuclear. But I also have to add CO2 capture and storage, which in effect, in a carbon constrained world, that's the waste stream of fossil fuels, is CO2. The capture technology is an uncertainty, but we're working on it. We're working hard. Storage, we've got the storage capacity. But I always remind the audiences we've got a lot to do with public acceptance and the whole regulatory permitting situation around CO2. There will be a 'not under my backyard' issue. Even though one can say it's technically very benign, we need to be working today on demonstrations of large-scale storage, not small-scale, but large-scale storage to start building the social political acceptance of storing CO2. So that's a big uncertainty out there. But in the end I'm very optimistic. I really do think we have an extraordinary opportunity to put this low carbon portfolio in place. We've got to really keep our head to the ground and work hard on the technology, but it is doable, so that by 2020 we could have a portfolio that's low CO2 emitting and affordable. So that those curves I showed keeps electricity in a range that's still affordable for our residential, industrial commercial base.

[End of Audio]



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