Report to the 

  Global CCS Institute

 

 

 

 

 

 

 

The Management of Public Engagement  at the Local, State and Federal Levels for the Tenaska Trailblazer Energy Center 

Project  

 

 

 

 

 

 

 

Final Report December 2010 

 

 

 

DISCLAIMER

This Report and the contents hereof (collectively, this “Report”) are being provided pursuant to and in accordance with that certain Funding Agreement by and between the Global Carbon Capture and Storage Institute Ltd. and Tenaska, Inc. (the “Funding Agreement”). Except as otherwise explicitly stated in the Funding Agreement, the provisions of the Funding Agreement are for the sole protection and legal benefit of the parties thereto, and their permitted successors and assigns, and no other person or entity shall be a direct or indirect beneficiary of, or have any direct or indirect cause of action or claim against, any party arising from the Funding Agreement or the publication, disclosure or distribution of this Report.

This Report does not constitute the provision of engineering or design services or advice and should not be utilized or relied on by any person or entity as engineering or design services or advice. For the avoidance of doubt, neither Tenaska, Inc., Tenaska Trailblazer Partners LLC, nor their affiliates shall be liable to any third party for any harm or loss associated with utilization of or reliance on this Report.

Abstract

The Tenaska Trailblazer Energy Center (‘Trailblazer’ or ‘the Project’) is a cutting-edge coal-fueled electric generating plant currently under development just east of Sweetwater, Texas, United States of America (USA). It will be among the first such plants in the USA to include commercial-scale post-combustion carbon capture equipment in its initial design.

The Project will be among the cleanest coal-fueled power plants in the USA and will make a significant contribution toward efforts to curb carbon dioxide emissions. Over the past three years, the development team has made significant strides in educating the public and gaining support for this ground-breaking Project at the local, state and Federal level. This report discusses the steps Tenaska has taken to educate the public, inform them of the facts, and seek to gain support for the Project.

The Management of Public Engagement at the Local, State and Federal Levels for the

Tenaska Trailblazer Energy Center

Table of Contents

1.0  INTRODUCTION .............................................................................................. 1 

1.1  Project Overview .......................................................................................................... 1 

1.1.1  General ............................................................................................................................... 1 

1.1.2  Economic Benefits............................................................................................................... 2 

1.1.3  Energy Security Benefits ..................................................................................................... 2 

1.1.4  Trailblazer Development Team Overview ........................................................................... 3 

1.2  Developer Overview ..................................................................................................... 3 

1.3  Partner Overview .......................................................................................................... 3 

1.4  Contractor Overview .................................................................................................... 4 

1.5  Report Overview ........................................................................................................... 4 

2.0  PURPOSE AND GOALS ................................................................................... 5 

3.0  EXECUTIVE SUMMARY .................................................................................... 6 

3.1  Pre-Announcement Activities ..................................................................................... 6 

3.2  Stakeholder Identification ........................................................................................... 6 

3.3  Community Outreach ................................................................................................... 6 

3.3.1  Basic Outreach Efforts ........................................................................................................ 6 

3.3.2  Specific Outreach Efforts ..................................................................................................... 7 

3.4  Legislative Outreach .................................................................................................... 8 

4.0  PRE-ANNOUNCEMENT ACTIVITIES ................................................................... 9 

4.1  Information Gathering ................................................................................................. 9 

4.2  Initial Local Contact ................................................................................................... 10 

4.3  Public Announcement ............................................................................................... 11 

4.3.1  Announcement Planning ................................................................................................... 11 

4.3.2  Legislative Briefings .......................................................................................................... 11 

4.3.3  Announcement Results ..................................................................................................... 11 

5.0  STAKEHOLDER IDENTIFICATION .................................................................... 13 

5.1  Local Stakeholders .................................................................................................... 13 

5.2  Regional Stakeholders .............................................................................................. 14 

5.3  State Stakeholders ..................................................................................................... 15 

5.4  Federal Stakeholders ................................................................................................. 15 

6.0  COMMUNITY OUTREACH ............................................................................... 17 

6.1  Basic Outreach Efforts .............................................................................................. 17 

6.1.1  Local Representation ........................................................................................................ 17 

6.1.2  Project Web Site ............................................................................................................... 17 

6.1.3  Stakeholder Emails ........................................................................................................... 18 

6.1.4  Civic Group Presentations ................................................................................................. 18 

6.1.5  Local Radio Talk Shows .................................................................................................... 19 

6.1.6  Open House ...................................................................................................................... 19 

6.1.7  Newspaper Advertising ..................................................................................................... 21 

6.1.8  News Releases ................................................................................................................. 22 

6.1.9  Media Briefings ................................................................................................................. 22 

6.2  Specific Outreach Efforts .......................................................................................... 22 

6.2.1  Nolan County Tax Abatement ........................................................................................... 22 

6.2.2  Economic Impact ............................................................................................................... 23 

6.2.3  Water request .................................................................................................................... 24 

6.2.4  Air Permit Application ........................................................................................................ 25 

7.0  LEGISLATIVE OUTREACH .............................................................................. 27 

7.1  Briefings ...................................................................................................................... 27 

7.2  Testimony ................................................................................................................... 28 

7.3  Membership in CCS Advocacy Organizations ........................................................ 28 

8.0  RELEVANCE TO CARBON CAPTURE AND STORAGE ........................................ 29 

9.0  CONCLUSIONS ............................................................................................. 31 

10.0  ACRONYMS AND CITATIONS ......................................................................... 32 

10.1  Acronyms .................................................................................................................... 32 

10.2  Citations ...................................................................................................................... 33 

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1.0 Introduction

1.1 Project Overview

1.1.1 General Trailblazer is a nominal 760 MW gross, 600 MW net supercritical pulverized coal electric generating station under development in Nolan County, Texas, USA, about nine miles east of Sweetwater, Texas. The Project is expected to be the first new-build pulverized coal plant in the USA to incorporate a commercial-scale carbon dioxide (CO2) capture plant into the initial design. As shown in Figure 1.1, the Project will produce enough electricity to power 600,000 Texas homes and capture 85 to 90 percent of the CO2 (approximately 5.75 million tons, or 5.22 million metric tons) that otherwise would be emitted into the atmosphere. The Project is being developed by Tenaska, Inc., (Tenaska) and is owned by Tenaska Trailblazer Partners, LLC. Tenaska Trailblazer Partners, LLC is owned 65percent by affiliates of Tenaska and 35 percent by Arch Coal Inc.

Sub-bituminous coal will be delivered to the Project from the Powder River Basin (PRB) in Montana and Wyoming via either the Union Pacific (UP) or Burlington Northern Santa Fe (BNSF) railroads. The Project site is bordered on the north by the UP and on the south by the BNSF. An existing natural gas pipeline crosses the site. The Project will interconnect to the existing Electric Reliability Council of Texas (ERCOT) 345 kV system, potentially at a substation about two miles from the Project site.

CO2 from the Project will be sold into the robust Permian Basin CO2 market, the largest CO2 market in the world, where it will be used in Enhanced Oil Recovery (EOR) efforts and ultimately permanently stored underground. CO2 has been safely used in the Permian Basin for more than 30 years. The Project plans to sell the CO2 at the fence line, so the purchaser will take ownership and responsibility as soon as the CO2 leaves the Project property. As a result, responsibility for monitoring, measurement, and verification of storage will fall to the CO2 purchaser. Should federal laws be implemented that make geologic storage more economically attractive than the sale of CO2 for EOR, geologic storage will be considered. The potential for geologic storage in Texas will be discussed in an upcoming report.

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FIGURE 1 – Production of Electricity and CO2

1.1.2 Economic Benefits The Project will provide significant economic benefits, both locally and regionally. In 2008 the Project commissioned two economic impact studies as part of its public engagement plan – one that looked at the impact on Nolan County, where the Project is located, and one that looked at the broader impact on Abilene, the largest nearby city with a population of approximately 120,000, located around 30 miles east of the Project site. Both studies used very conservative assumptions, and thus represent the floor for the benefits that are expected. These studies and their results are discussed in more detail in Sections 6.2.1 and 6.2.2.

It is important to note that the benefits of the Project will be felt far beyond Nolan County and Abilene. In 2004, the Texas Bureau of Economic Geology conducted a study on the potential impact of expanded CO2-EOR in Texas and stated that conservative estimates indicated the potential for $200 billion in United States Dollars (USD) in economic value to the state and the creation of 1.5 million jobs.1 As discussed in Section 1.1.3, Trailblazer will provide a significant source of CO2 for use in West Texas EOR efforts.

1.1.3 Energy Security Benefits Trailblazer is designed to capture approximately 17,500 tons of CO2 per day, or approximately 5.75 million tons per year. At two barrels of oil per ton of injected CO2

2, the CO2 captured by Trailblazer when used in EOR could result in at least 11.5 million

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barrels of additional domestic oil production per year.

1.1.4 Trailblazer Development Team Overview As mentioned above, Tenaska is developing the Project on behalf of Tenaska Trailblazer Partners, LLC. Tenaska uses a matrix approach to its project development efforts. Each project development team is assigned members from the development, engineering, finance, legal and public relations disciplines. While project team members report directly up through their respective organizations, their project activities are directed by the project team director. In many cases, individuals can be assigned to more than one project team. For projects that are significantly advanced in development, a community representative and/or consultants are added to the project team, thus providing valuable local knowledge and presence.

Community representatives typically are highly respected retirees. Community representatives and public affairs consultants report to the Director of Public Affairs, but may take direction from any number of people on the development team. In addition, due to the multi-disciplinary structure of the development team, members from different disciplines often support each other’s initiatives. For instance, on the Trailblazer team, the project team director, the project developer and the project environmental director all serve as spokespeople for the Project, depending on the topic being discussed. Throughout this report, actions will be attributed to the Trailblazer development team, which includes this multi-disciplinary group.

1.2 Developer Overview

Since its founding in 1987, Tenaska has successfully developed and constructed 15 power generating facilities, totaling more than 9,000 MW. Today, Tenaska operates eight power generating facilities totaling 6,700 MW that it owns in partnership with other companies. Tenaska also provides and is involved in:

energy risk management services; asset acquisition and management; natural gas; power and biofuels marketing; fuel supply; natural gas exploration; production and transportation systems; and electric transmission development.

In 2009, Tenaska had gross operating revenues of $7.9 billion USD and assets of approximately $2.8 billion USD. In 2009, Forbes magazine ranked Tenaska as 16th among the largest privately-held USA companies, based on 2008 revenues. For further information see: http://www.tenaska.com.

1.3 Partner Overview

In March 2010, Arch Coal acquired a 35 percent share of Tenaska Trailblazer Partners, LLC, from affiliates of Tenaska. St. Louis-based Arch Coal is the second largest USA coal producer, with revenues of $2.6 billion USD in 2009. Through its network of mines

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in the PRB, Arch supplies cleaner-burning, low-sulfur coal to USA power producers to fuel roughly eight percent of the nation’s electricity. The company also ships coal to domestic and international steel manufacturers as well as international power producers. For further information see: http://www.archcoal.com.

In total, Arch Coal contributes about 16 percent of the USA’ coal supply from 11 mining complexes in Wyoming, Utah, Colorado, West Virginia, Kentucky and Virginia.

Arch Coal controls a vast domestic coal reserve base totaling 4.7 billion tons. Of that total, 88 percent is low in sulfur and nearly 83 percent meets the most stringent requirements of the USA’ Federal Clean Air Act, without the application of expensive scrubbing technology.

In addition to becoming a valued partner, Arch Coal also will provide low-sulfur Powder River Basin coal to the Project under a 20-year coal supply agreement.

1.4 Contractor Overview

Tenaska has selected Texas-based Fluor Enterprises (Fluor) to provide Engineering, Procurement and Construction (EPC) services for the Project. In addition, the Project will utilize Fluor’s Econamine FG Plus®

carbon capture technology. Fluor is one of the world's largest publicly owned engineering, procurement, construction, maintenance, and project management companies. Fluor has more than 36,000 global employees, and maintains offices in more than 30 countries across six continents. Fluor ranks No. 111 on the Fortune 500 list of America's largest corporations. Engineering News-Record magazine ranks Fluor No. 1 on its Top 100 Design-Build Firms list and No. 2 on its Top 400 Contractors list. See http://www.fluor.com for more information.

Burns & McDonnell serves as the Owners’ Engineer for the Project. Burns & McDonnell is a full-service engineering, architecture, construction, environmental and consulting solutions firm. Its staff of more than 3,000 represents virtually all design disciplines. Burns & McDonnell plans, designs, permits, constructs and manages facilities all over the world. In 2010, Engineering News-Record ranked Burns & McDonnell number 22 in design firms and number eight in power plant design firms. See http://www.burnsmcd.com for more information.

1.5 Report Overview

A full history of the Project’s development is contained in a previously submitted report to the Global CCS Institute entitled Development of the Tenaska Trailblazer Energy Center. The following report focuses on the public engagement aspects of the Project, including:

pre-announcement planning; stakeholder identification; community outreach; legislative outreach; issue identification; and lessons learned.

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2.0 Purpose and Goals

The purpose of this report is to discuss the public engagement efforts relating to the Tenaska Trailblazer Energy Center. Specifically, this report seeks to:

1. Describe the groundwork that was laid by the development and public affairs team prior to the announcement of the Project;

2. Describe the identification of the Project stakeholder groups and Project issues; 3. Discuss the Project’s community outreach efforts; 4. Discuss the Project’s legislative outreach efforts; 5. Highlight challenges and how they have been addressed; and 6. Discuss lessons learned and public engagement successes.

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3.0 Executive Summary

Trailblazer’s public engagement efforts began well before the Project’s formal announcement in February 2008. Early involvement by the public affairs group was important to help the development team create a supportive environment that is conducive to the success of the project. For Trailblazer, the development team has established a solid foundation of support and continues to expand its reach in support of the Project.

At a very basic level, public engagement is a necessary component of development activities in the USA because public input is solicited and encouraged at various stages of the development process, including permitting, local tax abatements, contracts with governmental authorities. In the case of an advanced carbon capturing coal-fueled plant, around which technology and regulatory discussions are still developing, the need for public engagement grows exponentially.

3.1 Pre-Announcement Activities

The development team spent four months laying the groundwork for the Project announcement. Research is essential to assembling a strong public engagement campaign. By learning about the area, its leaders and its concerns in advance, the development team was able to present the Project in a positive way and address concerns up front. Comprehensive intelligence gathering and careful advanced preparation is required to ensure a smooth project announcement with ample support and a well-tuned message designed to both inform and address concerns.

3.2 Stakeholder Identification

The Trailblazer development team worked with elected officials, economic development personnel, external public relations counsel, legislative counsel and interested individuals to identify local, state and national stakeholders.

It is important to recognize that a project’s stakeholder list will change and grow as the project progresses. It is essential to continually analyze input and information to identify additional stakeholders who should be engaged.

3.3 Community Outreach

3.3.1 Basic Outreach Efforts Over the course of developing 15 power generation facilities totaling more than 9,000 MW, Tenaska has developed a number of basic community outreach techniques that can be applied to any project development effort.

Basic community outreach efforts employed for the Trailblazer project included:

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Hiring a local representative and opening a local office; Establishing and maintaining a project-specific web site; Using stakeholder emails as a way to quickly disseminate information, dispel

rumors and request action; Presentations to civic groups, such as Rotary, Kiwanis and Lions clubs; Appearance on local radio talk shows; Open houses, at which subject matter experts from Tenaska are available to

provide information and answer questions from the public; Newspaper and radio advertising; News releases; and Media briefings.

These basic outreach efforts serve to educate the public about the Project. In addition, the two-way nature of many of these efforts provides valuable intelligence to the team regarding issues or local concerns which need to be addressed.

3.3.2 Specific Outreach Efforts Throughout the course of project development, specific events or issues require more public involvement. For Trailblazer, special outreach efforts have been required to support the Project’s county tax abatement request, its request to purchase treated wastewater from the City of Abilene, and its state air permit application. These experiences suggest that additional resources may be required for particular issues that emerge in the context of a particular project and other projects should not underestimate the possible requirement for additional effort and expertise in niche areas. In each situation, the Trailblazer team followed a methodical approach to evaluate opportunities, research the area, plan actions, communicate with stakeholders and evaluate results. Details regarding Trailblazer’s specific outreach efforts are included in Section 6.2.

The primary objection that surfaced in response to each of these initiatives has involved water. Water is the one issue that resonates with the citizenry at large in semi-arid West Texas, and is an issue that would exist for any fossil-fueled plant being proposed in the region, whether it included Carbon Capture and Storage (CCS) or not. This experience demonstrates that in the development of an advanced technology project, such as a carbon capturing coal-fueled plant, developers should not underestimate the importance of basic issues such as water rights and usage.

Tenaska has taken several steps to address this issue with area residents, including a commitment to be the first large-scale coal plant in Texas to utilize water-saving dry cooling technology – a technology that reduces the Project’s water requirements by more than 90 percent. Until access to a sustainable water source is secured, we expect that water will continue to be an issue cited by environmental groups in their opposition to the Project.

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3.4 Legislative Outreach

Very early and throughout the Project’s development, Tenaska has briefed state and federal legislative leaders and staff (both in local and Capitol offices) and kept them informed through meetings, e-mail updates and mailings. Leaders with either a geographic or issue-oriented interest in the Project were identified first for communication activities and then approached.

Strong and early relationships, based on open, two-way communication with legislative leaders, are key to building and maintaining local support. Such relationships also provide opportunities to contribute to policy discussions at the state and federal levels that encourage clean energy development, and often provide advanced detailed warning of impending regulatory challenges or barriers.

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4.0 Pre-Announcement Activities

In early 2007, Tenaska began to believe it was increasingly likely that the USA Congress would take steps to regulate CO2 emissions. In response, the company formed a multi-discipline task force to investigate the development opportunities that would be created in a carbon-constrained environment. The task force believed there could be incentives for ‘first movers’ that might not be available on an ongoing basis.

Task force members were drawn from Tenaska’s Development, Environmental and Engineering groups. After a six-month review, the task force recommended development of a pulverized coal plant with carbon capture in West Texas. The recommendation was taken to the company’s Executive Board, whose members approved the recommendation in the fourth quarter of 2007. Once the Project was approved, a Trailblazer development team was selected and team members moved forward on a number of fronts, including public engagement.

4.1 Information Gathering

A potential site was identified in early November 2007. The site was located in Nolan County, Texas, USA, nine miles east of Sweetwater, Texas. As soon as the site was identified, the development team began researching newspaper archives and other online sources to gauge the likelihood of public acceptance for the Project. The team took several different approaches to researching the area at that time. Information was gathered on population demographics, existing local industry, the local economy, local issues in general and local elected officials.

That review indicated that the local citizens could potentially be supportive of a $3.5 billion USD investment in their community. Since the 1950s, the Nolan County population had experienced a slow but steady economic and population decline. As Table 4.1 shows, the emergence of Nolan County as the ‘Wind Capital of Texas’ helped to slightly reverse the trend, but the County still was well below its high water mark in the 1950s.

TABLE 4.1 – Nolan County Population

Estimate 2009: 14,917

Estimate 2008: 14,909

Estimate 2007: 14,580

Estimate 2006: 14,590

Estimate 2005: 14,599

Estimate 2004: 14,871

Estimate 2003: 15,010

Estimate 2002: 15,048

Estimate 2001: 15,338

Census 2000: 15,802

Census 1990: 16,594

Census 1950: 19,808

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Source: Texas Association of Counties, from USA Census Bureau data

The unemployment rate in Nolan County in 2007 was only 3.7 percent3, due largely to the influx of jobs created by the wind energy in the area. However, by 2009 the unemployment rate had risen to 6.4 percent4 as the recession brought wind development to a virtual halt. The average wage in Nolan County in 2007 was slightly less than $30,000 USD5, substantially less than the projected mean average $75,000 USD (in 2014 dollars) wage for Trailblazer employees.

In addition, Nolan County is no stranger to large industrial projects. The county has been home to two natural gas-fueled power plants, both of which are now mothballed, and continues to host two gypsum plants and a cement plant.

It is important to note that general information gathering continues throughout the development life of the Project as regional needs are identified and pursued or the project reaches new stages of development.

4.2 Initial Local Contact

One can only learn so much from news clips and other online resources. Eventually, local contacts must help confirm the intelligence that has been gathered. Prior to announcement, confidentiality is very important.

In most instances, it has been Tenaska’s experience that the head of the local economic development group is the best person with whom to make initial contact. Economic development groups – in this case, the Sweetwater Enterprise for Economic Development – are generally supportive of industrial projects, tend to understand the need for confidentiality when appropriate, and also tend to have a different perspective than an elected official would. That non-political perspective is valuable to the development team.

Existing relationships with elected and business leaders also play an important role in Tenaska’s ability to gauge the socio-economic characteristics, political interests and sensitivities, and demographics of the area. They also help the development team identify potential supporters of the Project. The Trailblazer development team learned a lot about the region from the Nolan County Judge. This individual is a retired electric utility employee whose extensive experience in the electric utility industry provided a unique perspective and understanding.

After meeting with the County Judge, the development team also met with the director of the Sweetwater Enterprise for Economic Development (SEED). Both the County Judge and the SEED Director recognized that a $3.5 billion project like Trailblazer would have an unprecedented impact on the local economy. They believed the Project would be embraced by the majority of citizens, and they were eager to assist the development team in bringing the Project to Nolan County. Their assessment was important, because community acceptance and support is an important component of Project development.

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4.3 Public Announcement

4.3.1 Announcement Planning The development team believed the Trailblazer announcement would garner considerable attention, given that it would be the first new-build pulverized coal plant in the USA to incorporate a commercial-scale carbon capture plant into its initial design. Due to the anticipated interest in the Project, the fact that Tenaska’s public affairs group is located in Omaha, Nebraska, and that local public affairs firms often have a unique understanding of the sensitivities, values and media targets in the state they do business, Tenaska retained a prominent public relations firm from Austin, the Texas state capital, to assist with the public announcement of the Project. This group helped make the necessary arrangements in Sweetwater and Austin for the public announcement.

It was decided that the initial announcement would take place in Sweetwater, giving priority to the proposed host community. The Project is located in unincorporated Nolan County, but the town of Sweetwater is the County seat and the location of county offices. Making the announcement there provided the community with good publicity and gained good will for the Project. The SEED director, who often is the first to know of new economic development prospects, invited community leaders to a breakfast at which he would have an announcement about a new business that was planning to locate in the area.

SEED provided the list of invitees (which also served as the beginning of the Project’s local stakeholder list) and sent the invitations. SEED also arranged for the announcement to be made at Texas State Technical College’s (TSTC) West Texas campus in Sweetwater. Tenaska views TSTC as an important potential resource for training future employees during both the construction and operation phases of the Project, and the development team was happy to draw the spotlight to TSTC and its campus.

4.3.2 Legislative Briefings Early in announcement planning, the team identified the need to bring local legislators up to date about its plans. Prior to the announcement, Tenaska briefed several key state legislators, including both the State Senator and the State Representative representing Nolan County as well as legislative leadership, key committee chairs and opinion leaders in energy, the environment, water resources and commerce. In the meetings, Tenaska shared the details of the Project that were available and answered questions one-on-one. In general, legislative leaders were enthusiastic about the Project and its environmental and economic prospects for Texas. They also provided important insight into the political, economic and environmental needs of the region. Early into the Project’s life, they helped to identify the Project’s water source as an important issue for West Texans.

4.3.3 Announcement Results Part of Tenaska’s research into the area included developing an understanding of regional media sources. The local newspaper, the Sweetwater Reporter, is an afternoon paper. Tenaska gave an exclusive interview to the Reporter the afternoon prior to the official announcement, again giving priority to the host community and county. The Project was announced the morning of February 19, 2008, and the Reporter had the story that same

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afternoon. The initial story was positive, focusing on the economic impact of the Project and the groundbreaking technology.

Approximately 70 city and county leaders were asked to attend an invitation-only announcement breakfast, and most of them attended. The local State Representative attended the announcement and welcomed Tenaska to Nolan County. The announcement was covered by both the Sweetwater Reporter and by media from Abilene, the nearest major city. The announcement was met with enthusiasm by virtually all of the leadership in Sweetwater and Nolan County, as they understood the significant economic impact a $3.5 billion project would have on their community. Many of those who attended that initial breakfast have become informal advisors to the Project.

Unintentionally, Tenaska provided enough information during the announcement to allow reporters to identify the Project site. They contacted the residents around the site before Tenaska had a chance to visit with them. Nearby residents were surprised to learn about plans for a large capital project in their area. The Trailblazer development team was reminded that an important component of any project rollout is neighbor relations, and Tenaska will keep that in mind as part of its future development efforts.

Tenaska successfully met with most neighbors soon after the announcement to directly apologize for the surprise and answer questions about the Project in an open and honest manner. With many neighbors, the meetings eased concerns and built relationships. Others continued to have concerns about the Project and eventually joined opposition efforts. The surprise of the announcement made it more difficult to build a trusting relationship between Tenaska and some neighbors with concerns. The costs and benefits of pre-announcement communication must be carefully weighed. Regardless, the implementation of a targeted neighbor outreach campaign, even after the Project was announced, was beneficial to Tenaska’s long-term relationships with its neighbors and reputation.

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5.0 Stakeholder Identification

A project of the magnitude of Trailblazer has a number of different stakeholders, including:

site neighbors; local officials; local businesses; local residents local job seekers; regional officials; regional businesses interested in providing services to the Project; regional job seekers; state officials; national officials; state and national environmental groups; state, local and national media; prospective customers and partners; and regional, national and global CCS advocates.

As discussed below, the Trailblazer development team worked in its research efforts with elected officials, economic development personnel, outside public relations counsel, legislative counsel and interested individuals to identify stakeholders. It should be noted that this is an ongoing process – the stakeholder list will change and evolve as the Project progresses. Stakeholder outreach efforts are discussed in further detail in Section 6.0 – Community Outreach.

5.1 Local Stakeholders

Tenaska used the invitation list for the Project announcement as the beginning of its local stakeholder list. That list included:

all Sweetwater and Nolan County elected officials; the local Chamber of Commerce executive director and board members; the SEED board members; members of the hospital district board; members of the Sweetwater Independent School District administration and

board; business leaders in the local community; and the Sweetwater and Abilene media.

Additional stakeholders have been identified and added as the development team continues to meet interested members of the community. For instance, when development team members speak at civic clubs, they meet club members who express an interest in obtaining additional information about the Project. Likewise, when the Project team held an open house in Sweetwater, names and email addresses were collected to add to the local stakeholder list.

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5.2 Regional Stakeholders

Once the Nolan County stakeholder list was developed and the Project had secured important local tax abatements, the development team turned its attention to developing a regional stakeholder list. This process was particularly accelerated when the Project asked the City of Abilene to sell it up to two million gallons of treated wastewater per day. The Project retained a local marketing firm to assist in identifying Abilene stakeholders. Our initial list in Abilene included all city and county elected officials, as well as leaders in that business community. As discussed in more detail below, the team continues to add to the regional stakeholder list as community outreach efforts continue in Abilene and surrounding communities.

The development team also has begun to develop a stakeholder list for entities and individuals involved in EOR efforts in the Permian Basin. As shown in Figure 5.2 below, Odessa, Texas, is approximately 130 miles west of the Project site and is one of the key centers for EOR business for the Permian Basin’s CO2 market. As a result, the Project has received little media coverage in that area, and a specific outreach plan was needed.

The potential economic benefits of plentiful, reasonably priced CO2 to the Permian Basin are enormous. As previously mentioned above, the Texas Bureau of Economic Geology conservatively estimated additional EOR efforts could bring more than $200 billion in economic activity to the Texas and create more than 1.5 million jobs.6

FIGURE 5.2 – West Texas Map

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5.3 State Stakeholders

As shown in Figure 5.3, Tenaska owns and operates two highly efficient, combined cycle natural gas-fueled power plants in Texas, and operates another such plant for a private equity fund affiliated with Tenaska. In addition, Tenaska Power Services Co. (TPS), a Tenaska affiliate that markets electricity and provides energy management services to approximately 20,000 megawatts of load and generation in the USA, is headquartered in Arlington, Texas, as is Tenaska’s development group. Tenaska’s Arlington office is second in size only to the company’s headquarters in Omaha, Nebraska. In total, Tenaska has about 200 employees in Texas.

As a result, Tenaska has a long-term government relations representative in Austin, Texas, USA, the Texas Capitol, and relationships with numerous state officials and legislators. Tenaska’s long-time experience in Texas allowed the development team to put together a comprehensive state stakeholder list.

FIGURE 5.3 – Tenaska Operations

5.4 Federal Stakeholders

Early in the project’s development, Tenaska government affairs representatives met with federal legislative leaders and agency representatives, including the USA Department of Energy, the Environmental Protection Agency and White House staff, as well as national environmental organizations. Early meetings briefed these stakeholders about the details of the Project and the areas of regulatory certainty required for early-mover carbon capture developers.

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At a time when the USA Congress considers the value of incentives and regulatory options for greenhouse gas regulations, Tenaska was helpful in educating House and Senate members on the availability of carbon capture and storage technologies and the challenges and opportunities facing early projects. Tenaska government relations and environmental personnel participated in the briefings with legislators and their staff. Political leaders have very few concerns about geologic storage through EOR, since the process has been used to boost oil production in the Permian Basin for more than 30 years. Early engagement, as the debate over greenhouse gas regulations materialized in Congress, helped solidify Tenaska’s reputation as a leading expert in advanced energy technologies.

Since that time, federal contacts have been regularly updated through e-mails, and the list of federal contacts continues to grow as Tenaska is asked to meet with more officials and testify in Congress.

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6.0 Community Outreach

Trailblazer’s development team has employed a number of different methods in its community outreach efforts. There are some basic approaches that have been used on an ongoing basis, and specific approaches that have been used in particular situations.

Team members engaging in community outreach are typically organized around the project and issues. Consistent members of the team include project development leaders, the community affairs representative, and at least one member of the corporate public affairs group. Engineering, environmental, and government relations consultants and personnel are included on an ad hoc basis.

Input and opinions are solicited from inside the Tenaska organization as needed until community outreach team members are satisfied that the company’s outreach approach is in the best interest of the project. This organization allows the public affairs group to review issues from a variety of viewpoints and make the best informed decisions.

6.1 Basic Outreach Efforts

There are a number of basic outreach methods that have been used by the development team. After researching and action planning, the following communication efforts were initiated. Depending on the situation, different topics are addressed, but the communication and outreach vehicles have remained primarily constant.

6.1.1 Local Representation One of the development team’s first priorities was to establish a local presence in Sweetwater. The development team hired a respected retired banker to be the Project’s local representative on a contract basis through the duration of development. His reputation as an upstanding citizen and community advocate, his strong relationship with area elected and business leaders, and his knowledge and understanding of business activities have made him an invaluable resource for local residents.

The Project also opened a community office in one of the local bank buildings in downtown Sweetwater. Tenaska has found, through experiences in developing other projects, the presence of a local representative to be very beneficial in gaining and maintaining trust in the community and maintaining efficient information exchange. In addition, a local representative is one of the key means of identifying issues that need to be addressed. For example, the local representative has helped Tenaska navigate its approach to addressing area concerns about a water source for the Project. This individual is often contacted when residents have concerns or questions. For the community, having a local source of accurate information is invaluable in dispelling rumors and keeping the community well informed. The local representative is fully integrated as a member of the development team.

6.1.2 Project Web Site Tenaska established a project-specific web site, www.tenaskatrailblazer.com, to make easy-to-understand information about the Project widely accessible. The site uses helpful graphics and video to describe how the Project works, puts environmental issues into

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perspective, answers frequently asked questions and provides progress updates. It also serves as a first point of contact for residents with questions, interested vendors and job seekers.

In addition, it serves as a resource to the media, providing print-quality graphics and high resolution video for use in media applications. All Trailblazer-related news releases are also available on the site, giving media and other interested parties one-stop access to historical, as well as current information on the Project.

The website home page provides a link so that visitors can send a general question to the development team. The team usually responds to questions within one business day. This has proven to be a popular way for stakeholders to provide feedback and have questions answered.

6.1.3 Stakeholder Emails The development team communicates regularly with its stakeholders via email. Stakeholder emails have proven to be a quick and effective way to disseminate information, dispel rumors and request action. Tenaska has sent stakeholder emails on more than 50 issues since the Project was announced in 2008.

In some cases, stakeholder emails have been sent only to the local stakeholder list. Depending on the regional, state and national interest in the Project, others have been distributed on a wider basis. If needed, Tenaska has the ability to customize messages for different constituents, which allows the development team to highlight those portions of a message that may be of most interest to each constituent.

The stakeholder emails open another door to two-way communication. In many instances, the development team receives replies to stakeholder emails. In some cases, the recipient wants more information about the subject of the email. In others, the recipient wants to provide the team with information, or to express continued support for the Project. These emails have become another way to encourage dialog with the Project’s stakeholder groups.

6.1.4 Civic Group Presentations Civic group presentations provide an excellent opportunity for development team members to reach a number of civic-minded people at one time. The question and answer period that usually follows such a presentation allows the presenter to get a feel for issues that are important in the community.

For instance, one issue that became apparent based on questions asked during civic group presentations related to the presence of a coal plant in an area where natural gas and oil exploration and development is a significant economic driver. Especially in Abilene, which is a regional hub for natural gas and oil activity, the development team was repeatedly asked for the rationale of bringing coal in by rail when there were plentiful supplies of natural resources nearby. The development team has been able to modify presentations to present information about electricity markets that helps residents understand the demand-driven needs for developing different types of plants and to provide additional information on the benefits of EOR using the Project’s CO2.

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The Trailblazer development team has targeted certain groups to speak with and has made presentations to groups that are leaders in the community, well respected and informed opinion leaders such as:

Sweetwater and Roby Lions Clubs; the SEED Board of Directors; the Sweetwater Rotary; the Sweetwater Shriners; Leadership Sweetwater; Abilene Wednesday Kiwanis; Abilene Friday Kiwanis; Abilene Society of Professional Engineers; and the Taylor County Local Emergency Planning Committee.

Team members have spoken to some of these groups on more than one occasion.

The team continues to seek opportunities to speak to civic groups in other surrounding communities in an effort to bring the Project’s message to a more regional audience.

6.1.5 Local Radio Talk Shows Many local radio stations broadcast talk shows featuring local newsmakers. The Sweetwater area is no exception. Trailblazer development team members have been guests on morning and afternoon radio talk shows in both Sweetwater and Abilene. These shows provide another means of educating the public, and questions asked either by the talk show host or by callers are beneficial in encouraging dialog.

Radio talk shows typically like to discuss current events, so appearances on these shows allow the development team to address whatever issues are in the forefront at that moment in time.

6.1.6 Open House In July 2010, Tenaska held an open house in the Sweetwater Middle School gymnasium. Tenaska typically holds an open house for each of its projects. The open house is a setting in which area residents can speak one-on-one with the Project engineers and experts who are responsible for project development.

About 200 people attended the open house, at which they could visit any of 10 stations staffed by experts in various aspects of the Project. The event was advertised in the Sweetwater, Abilene and three other weekly papers in Nolan County. Radio ads announced the event on the Sweetwater radio station, which covers a large part of the region. In addition, the event was placed on community calendars managed by each media organization in Sweetwater and Abilene.

In this case, stations focused on topics about which there were questions or confusion within the community, and about which Tenaska wanted to provide information and education. Topics covered were:

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General information about Tenaska and Trailblazer; Dry cooling; Fuel handling and ash management; Emissions; Electric interconnection and effect on West Texas wind energy industry; Enhanced oil recovery; Economic benefits; Project engineering and design; Jobs; and Legislative support

As shown in the following photographs, the stations were spread throughout the gymnasium in a manner that encouraged an efficient traffic flow. Copies of the information included on the displays for each station are included in Exhibit 1 to this report.

PHOTOS FROM TRAILBLAZER OPEN HOUSE

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Appropriate timing for an open house is key to a successful information sharing effort. If the open house is held too soon in the development process, there are still many unknowns. Some citizens find this to be frustrating. If the open house is held too late in the process, it may not be able to address inaccurate perceptions that have developed.

In Trailblazer’s case, the development team hoped to host an open house when it could report that a water source had been secured. Once negotiations for municipal wastewater were ended with the City of Abilene, however, the development team felt it was necessary to move forward with the open house to provide information about all of the other aspects of the Project and help the public understand Tenaska’s commitment to reduce water use at the plant through the use of dry cooling technology and its record of efficient water use at its existing facilities.

The feedback received by the development team was that the open house was a great success. The direct access to company officials was appreciated. People liked the layout, noting that it was easy to find the specific information they were looking for. People also said they were more likely to ask a question in a one-on-one situation than in a more formal ‘town hall’ type format.

6.1.7 Newspaper Advertising Tenaska has used newspaper advertising primarily as an educational tool, although the development team occasionally has used newspaper advertising to address a specific issue, as discussed in Section 6.2 below. Copies of educational ads are included as Exhibit 2.

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6.1.8 News Releases Tenaska has issued a number of news releases throughout Trailblazer’s development. News releases can serve a number of purposes, from educating the public to framing important issues to correcting misinformation. Copies of the news releases that have been issued regarding Trailblazer are included as Exhibit 3.

6.1.9 Media Briefings Tenaska has additionally met with local, regional and state media to discuss the Project and its benefits. One challenge in dealing particularly with local media is the turnover that occurs among staff members. As a result, the development team has scheduled repeat media briefing sessions in order to bring new staff members up to speed on the Project. In addition, the development team has prepared a comprehensive press packet that can be provided to new members of the press. The contents of the press packet are included as Exhibit 4.

Editorial Board meetings also have been held in major markets to provide information about the Project. Topics covered and questions fielded included the cost of carbon capture and storage, job creation, water supply, and environmental benefits in Texas and worldwide.

6.2 Specific Outreach Efforts

The Trailblazer development team has participated in a number of specific outreach efforts in support of specific issues or events. These efforts are discussed below.

6.2.1 Nolan County Tax Abatement The Texas Legislature provides that counties may grant tax abatements for up to 10 years to support economic development efforts. At its two Texas combined-cycle plants, Tenaska had asked for and received 75 percent county tax abatements for their first 10 years of operation. Tenaska made the same request of Nolan County.

In support of the request, Tenaska commissioned TXP Inc., an Austin economic analysis firm, to conduct an economic impact study that detailed the substantial economic benefits that the Project would bring to Nolan County. The research, which is included as Exhibit 5 to this report, found that the Project would bring:

Almost $750 million USD in increased economic activity during the five-year construction period;

About $300 million USD annually in increased economic activity once the Project entered operation;

More than 1,500 jobs at the peak of the five-year construction period; and 105 direct permanent jobs and 71 indirect permanent jobs at operation.

The business community overwhelmingly supported granting the tax abatement. Business leaders circulated petitions urging the Commissioners to approve the abatement, to which more than 775 individual names were signed. The Sweetwater City Commission and the SEED Board of Directors unanimously passed resolutions in support of the Project. Community leaders also had yard signs and bumper stickers printed which

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proclaimed “Be a Trailblazer – Support Tenaska.”

A small group of citizens, most of whom lived near the Project site and some of whom were not residents of Nolan County, opposed the tax abatement. They expressed concerns about environmental impacts of the Project. The Texas branch of Public Citizen, an environmental organization that opposes the use of coal as an energy source7 began providing assistance to the small group with concerns about the Project, as did the Lone Star Chapter of the Sierra Club, which broadly opposes the use of coal8.

The opposition group soon began to focus on the source of water for the Project as a concern. This message resonated among some of the West Texas population, which has faced droughts and water shortages in the area in the past. Signs focused on the plant’s use of water began appearing around the Project site. A letter from members of the opposition group was mailed to homeowners and leaseholders around nearby Lake Sweetwater and Oak Creek Reservoir claiming that Trailblazer would drain the lakes dry.

The development team provided information to those on its stakeholder list and to the county commissioners on the emissions from the Project. The commissioners did their own research, calling elected officials in every county in Texas – and some counties in other states – in which a coal plant is located. Commissioners asked about the effect of a coal plant on human health, crops and livestock. Based on the responses they received, they became convinced that the emissions from Trailblazer – which will be much lower than the emissions at any of the plant about which they inquired – would not harm the local environment. To counter concerns about water, Tenaska Development President Dave Fiorelli committed that Tenaska would not seek more water than that required to dry cool the Project from Nolan County resources. He also committed to using as much wastewater from Nolan County as possible. The Project publicized this commitment in an advertisement and a media release.

Eventually, the county commissioners voted unanimously to grant the tax abatement as requested.

6.2.2 Economic Impact In April 2009, Tenaska sent a letter to the City of Abilene requesting that it consider selling up to 2,000 acre feet per year (approximately 1.8 million gallons per day, or approximately 6.8 million liters per day) of treated municipal wastewater to the Project. The request matched the water requirement for the dry cooling technology to be used, which is considerably less that the wet cooling technology option.

Tenaska recognized the need to quantify the benefits the citizens of Abilene would receive as a result of the Project. Accordingly, the development team commissioned a further economic impact study specifically analyzing the impact of the Project on Abilene. The research was conducted by J&A Consulting, an Abilene firm whose principal is a respected business professor at Abilene Christian University.

Using extremely conservative assumptions, the study showed that 500 direct and indirect jobs would be created for Abilene residents during the Project’s five year construction period. The study projected an increase in economic activity in Abilene of $140 to $175

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million USD during the five year construction period, and an annual increase in economic activity in Abilene of $1 to $3 million USD thereafter. The Abilene economic impact study is included as Exhibit 6 to this report.

As discussed above, Tenaska worked with a local marketing firm to develop an initial stakeholder list of prominent business and opinion leaders. The development team held two luncheons in November 2009 and February 2010 for local business leaders introducing Tenaska and the Trailblazer project, and discussing the results of the Abilene economic impact study. In addition, the development team met with a number of targeted individuals on a one-on-one basis to provide them with information and answer questions. In each meeting, the development team asked for additional names of people with whom they should meet. In doing so, the team continued to expand the regional stakeholder list.

6.2.3 Water request In December 2009, Tenaska participated in an Abilene City workshop, at which presentations were given by the City Water Department and by the development team. The Water Department presented a study which determined that there was sufficient treated wastewater to meet existing demand, provide for future wastewater users and still provide water to Tenaska.

After the presentations, the public was invited to express their opinions. A small number of area residents, along with national and state environmental groups, objected to the sale of the treated wastewater, saying that eventually water would become so scarce in West Texas that Abilene would need to reprocess and drink its wastewater.

In one-on-one meetings with business and opinion leaders, the development team identified concerns that Tenaska would try to later expand its request to the City of Abilene in order to get the 10 to 12 million gallons of water per day required to wet cool the Project. Most of these concerns were resolved in April 2010, when Tenaska announced its commitment to dry cool the Project. That commitment was backed up later in April by the Project’s agreement with the Environmental Defense Fund (EDF), a national environmental group, which legally bound the Project to purchase no more than 2,000 acre feet of water per year, which would equate on average to 1.78 million gallons or 6.74 million liters per day.

Calling and letter-writing campaigns to Abilene elected officials and the local news media by concerned citizens, opposing environmental groups and supporters ensued. In anticipation of another public hearing in mid-June, 2010, the development team renewed its efforts to provide information in one-on-one meetings with Abilene citizens. The team also asked supporters in Sweetwater to reach out to their friends and acquaintances in Abilene to give them information about the Project and ask them to express their support of sale of wastewater to the Project.

Abilene officials scheduled a further public hearing in late July 2010. A month prior to the scheduled public hearing, however, the Mayor of Abilene held a press conference to say he would not support the sale of treated wastewater to Tenaska. Later that day, two of the Abilene City Council members also told the press that they did not support selling

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water to Tenaska.

Given that three of the seven people who ultimately would vote on the request were not comfortable pursuing a treated wastewater sale to the Project, Tenaska withdrew its request on July 1, 2010. Due to the intense interest in the issue, Tenaska sent out a press release and stakeholder emails explaining its decision.

The development team continues to look for a water supply that will both meet Trailblazer’s minimal water needs and maintain the region’s ability to grow.

6.2.4 Air Permit Application The Project filed its air permit application with the Texas Commission on Environmental Quality (TCEQ) in February 2008. Subsequent to the initial filing, a case-by-case Maximum Achievable Control Technology analysis, a Class II area air dispersion modeling analysis and a Class I area air dispersion modeling analysis were submitted. The TCEQ issued a Draft Air Permit in February 2009. A public meeting was held in March 2009, which was attended by supporters and citizens with questions and concerns about the Project.

Prior to the public meeting, the development team held a luncheon for approximately 75 of the Project’s strongest supporters. Project supporters turned out in force, as did those with questions and concerns.

As a result of contested case hearing requests for the Project, Tenaska elected to request a direct referral to State Office of Administrative Hearings (SOAH). Tenaska could have asked the TCEQ Commissioners to rule on each request for a contested case hearing, and potentially could have limited the topics that were allowed for discussion at such a hearing if the requests were granted. Tenaska elected to request a direct referral to a contested case hearing and avoid the potential three to six month delay that would have resulted from asking the TCEQ Commissioners to rule on each separate request. A preliminary hearing was held in Sweetwater in October 2009, during which the Sierra Club and EDF were granted standing. In addition, the Multi-County Coalition (MCC), a local group whose opposition was supported by the Sierra Club and Public Citizen, was granted standing.

The local bank, in whose building the Trailblazer office is located, offered to hold a breakfast for supporters prior to the preliminary hearing. A number of supporters attended before the hearing. At the hearing, affirming comments were made for the record by the Sweetwater Mayor, the Nolan County Judge, the Sweetwater Independent School District Superintendent, the Chamber of Commerce President and the SEED Executive Director.

There were a small number of residents who expressed concern about the air emission aspects of the Project at the preliminary hearing. Rather than focusing on emissions, most opponents expressed concern over the Project’s proposed water use. These water concerns were not relevant to the issues being considered in the application adjudicated by TCEQ.

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Subsequent to the preliminary hearing, Tenaska reached an agreement with EDF in which EDF agreed to withdraw from the contested case hearing for the Project’s air permit. In return, Tenaska signed a legally binding agreement committing to install the equipment designed to capture at least 85 percent of the CO2 that otherwise would be emitted by the Project and committing to purchasing no more than 2,000 acre-feet per year of water, enough only to support dry cooling at the plant.

Seven days of hearings were held by the SOAH in Austin, Texas in June 2010. The TCEQ staff, Tenaska, the MCC and the Sierra Club presented witnesses. The hearings were covered extensively by the Abilene newspaper. At the end of the hearing, the development team sent a stakeholder email to update its stakeholders about the proceedings.

On October 1 2010, the Administrative Law Judges assigned to the case issued their proposed order, which flagged a predisposition to support for the permit. On December 14, 2010, the TCEQ Commissioners voted to approve the permit, and the final permit was received on December 30, 2010.

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7.0 Legislative Outreach

Trailblazer is a cutting-edge, first-of-a-kind project whose success could have far-reaching effects on the future of electricity generation in Texas, the USA and perhaps the world. It is generally recognized that any project that incorporates CCS will incur incremental costs. In order to offset these added costs, either some value must be placed on the reductions of greenhouse gases that CCS projects provide, or direct, policy-based inducements need to be developed to encourage early CCS deployment and ultimate commercialization. In either approach, new policy is necessary. Tenaska has recognized the need to help educate lawmakers regarding CCS policies that encourage development.

One avenue for placing a value on reducing atmospheric CO2 levels has been associated with climate change legislation that has been deliberated in the USA Congress, whereby a limitation on greenhouse gas (GHG) emissions through a reduction mechanism, like cap and trade, would impose a regulatory cost on GHG emissions and convey a value on GHG reductions. In addition to creating an economic incentive for reducing GHG, proposed climate change legislation has also included provisions aimed at encouraging CCS. In addition, stand-alone legislation has been introduced in the USA Senate that would provide direct incentives for CCS projects.

Tenaska has been a leading resource for lawmakers developing federal and state policy designed to encourage the development of CCS projects. The company has participated in dozens of meetings with members of Congress and staff and members of the Texas legislature and staff to discuss the merits of CCS, and in particular, Trailblazer, as well as how legislation supportive of CCS commercialization could be structured. Tenaska personnel have testified at federal and state hearings on CCS and Trailblazer, and have commented on proposed legislation.

In almost all cases, discussions concerning carbon storage and Trailblazer have been met with considerable interest and enthusiasm by members and staff. In addition to its educational outreach and legislative advocacy, Tenaska has discussed changes to the USA tax code that are needed to revise existing CCS tax credit policy in a manner to facilitate commercial terms necessary to support project financing.

7.1 Briefings

As mentioned above, it is important to ensure that key legislators are aware of both the economic and national energy security benefits of the Project. Towards that end, Tenaska has participated in dozens of briefing sessions on Trailblazer with staff and legislators at both the state and national level.

In addition to Capitol Hill meetings in Washington, D.C., Tenaska has been a central resource for lawmakers in CCS policy development in Texas. The Texas Legislature, recognizing the benefits of carbon dioxide’s role in enhanced oil recovery based on decades of experience, was interested in formulating legislation to encourage clean energy development including CCS. Representatives of Tenaska worked closely with CCS advocacy groups and members of the legislature to craft clean energy legislation that has potential to provide significant economic incentives to the Trailblazer project.

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7.2 Testimony

Dr. Greg Kunkel, Tenaska’s Vice President of Environmental Affairs, has testified about the Trailblazer project before a number of state and federal legislative committees, including:

the USA House of Representatives Committee on Energy and Commerce Subcommittee on Energy and the Environment;

the USA House of Representatives Committee on Natural Resources Subcommittee on Energy and Mineral Resources;

the USA House of Representatives Select Committee on Energy Independence and Global Warming;

the Texas Senate Committee on Natural Resources; and the Texas House of Representatives Committee on Energy Resources.

Copies of Dr. Kunkel’s testimony are included as Exhibit 7.

In addition, representatives from Tenaska presented information and perspective on CCS to President Obama’s Interagency Task Force on Carbon Capture and Storage (Task Force). The Task Force was charged with developing a comprehensive and coordinated Federal strategy to speed the commercial development and deployment of carbon capture and storage technologies in line with the Administration’s goals for climate protection and a goal of bringing five to 10 commercial demonstration projects online by 2016. Tenaska was invited to meet with the Task Force to describe its involvement and experience with CCS. In addition, organizations of whom Tenaska is a member, and works closely, including the Coal Utilization Research Council, the North American Carbon Capture and Storage Association, the Electric Power Supply Association, and the Clean Air Task Force supplied comments to the Task Force that were influenced by Tenaska’s participation.

7.3 Membership in CCS Advocacy Organizations

Tenaska has joined several organizations whose purposes include support and advocacy for carbon capture and storage initiatives, including:

the Texas Carbon Capture and Storage Association (www.txccsa.org/); the Clean Coal Technology Foundation of Texas (www.cctft.org/); the North American Carbon Capture and Storage Association (www.naccsa.org/); the Coal Utilization Research Council (www.coal.org); the American Coalition for Clean Coal Electricity (www.cleancoalusa.org); and the Global Carbon Capture and Storage Institute (www.globalccsinstitute.com).

Tenaska is committed to working with these groups at the state, national and international level to support the continued use of coal to generate electricity in an environmentally responsible manner.

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8.0 Relevance to Carbon Capture and Storage

As the first new pulverized coal plant to incorporate a full-scale carbon capture plant into its initial design, the knowledge gained by Trailblazer during the development and execution of the Project will be very valuable to other CCS projects and CCS advocates striving towards the overall goal of deploying CCS projects worldwide that will capture and store CO2.

Public engagement has been an important component in Tenaska’s approach for developing large-scale power plants since the company was founded in 1987. Public engagement typically is a necessary part of development activities in the U. S. because public input is solicited and encouraged at various stages of the development process, including permitting, local tax abatements, and contracts with governmental authorities. For instance, laws and regulations require that USA and state environmental agencies solicit public comments on air quality permit applications. For municipalities and counties to enter into contracts for water or taxes, a public hearing is typically required by the bylaws of the governmental unit or the laws of the state. Therefore, no power plant, whether a renewable plant, natural gas-fueled plant, or a clean coal plant, can be developed in a vacuum without developing relationships with the local and state officials representing the area.

In the case of an advanced coal-fueled plant with CCS, around which technology and regulatory discussions are still developing, the need for public engagement grows exponentially. Rather than maintaining strong relationships only at the local and state levels, these more complicated and capital-intensive projects broaden the audience of stakeholders beyond local citizens and officials and state and federal leaders connected to the area. The audience expands to the additional publics below:

1) Federal/state leaders promoting development of CCS technologies 2) USA Environmental Protection Agency developing rules to regulate GHGs 3) State and national environmental organizations 4) Coal producers and associations 5) Oil/natural gas production industry 6) Water and Irrigation Districts 7) National/global CCS advocacy organizations 8) National/global media

This report describes such engagement opportunities to which the Tenaska Trailblazer Project team has responded over the last three years of project development. In each case, a methodical approach was applied to evaluate opportunities, research the area, plan actions, communicate with stakeholders and evaluate results.

Lessons learned by Tenaska as it develops this first-of-a-kind plant can help guide other similar projects worldwide. These lessons include:

Continuous and methodical research, action planning, communication and evaluation are critical factors to developing a successful and long-term public engagement program.

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Early engagement to inform community, state, and federal leaders and develop a sense of comfort in asking questions is key to building trust for the company.

Leaders and lawmakers considering policies that reduce greenhouse gas emissions appreciate receiving an industry perspective on the commercial availability of CCS technology and the challenges and opportunities faced by early adopters.

Not all public affairs challenges can be foreseen, but being accessible and practicing straightforward, honest communication builds (and repairs, when needed) relationships.

The effort to share information as it develops about the Project is ongoing and must be communicated in multiple formats and settings, from media relations, to paid advertising, to presentations and e-mail updates.

Utilizing company expertise helps a Project’s public affairs group anticipate opportunities and challenges. Local community representatives provide valuable insight into the socioeconomic, cultural and political environment of a community and reinforce Tenaska’s goal of maintaining accessible, two-way communication with local residents. Although each project will face unique local issues, Tenaska’s experience in identifying stakeholders and providing effective two-way communication with those stakeholders should be useful and developing and maintaining solid working relationships is very important.

In Tenaska’s experience, the complexities of the issues surrounding the continued use of coal as an electric generating fuel in a carbon-constrained world make public engagement critically important. As do many other CCS projects across the globe, Tenaska and its Trailblazer Energy Center serve as concrete examples of industry working to meet the policy goals of reducing GHG emissions. With local and state leaders at the forefront of making this advanced energy facility a reality, federal and global leaders are hungry for an understanding of how various policies impact or encourage real-life CCS projects.

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9.0 Conclusions

While the Project has garnered significant international, federal, state and local support, and has made great progress towards its goal of becoming the first new-build coal-fueled power plant to incorporate a commercial-scale carbon dioxide capture plant into the initial design, it has not been an easy endeavor.

The development team has built a solid base of local support for the Project. Local elected officials and business leaders understand the economic impact of bringing a $3.5 billion USD project to the area. They also appreciate the Project’s dedication to communicating with local citizens through the establishment of a local office, the hiring of a local representative, presentations to local civic groups, stakeholder emails and an informative and interactive web site.

As the Project moves forward, the development team is expanding its focus to regional stakeholders. The team will be explaining the benefits of a plentiful, reasonably priced source of CO2 for use in EOR efforts in the region in order to gain a broader base of support for the Project.

It is clear from the experiences so far that non-CCS issues, such as opposition to coal use and concerns over water, can easily impact a CCS project.

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10.0 Acronyms and Citations

10.1 Acronyms

Acronym Definition

BNSF Burlington Northern Santa Fe Railway

CCS Carbon Capture and Storage

CO2 Carbon Dioxide

EDF Environmental Defense Fund

EOR Enhanced Oil Recovery

EPC Engineering, Procurement and Construction

ERCOT Electric Reliability Council of Texas

Fluor Fluor Enterprises

GHG Greenhouse Gas

MCC Multi-County Coalition

Project Tenaska Trailblazer Energy Center

SEED Sweetwater Enterprise for Economic Development

SOAH State Office of Administrative Hearings

Task Force President Obama’s Interagency Task Force on Carbon Capture and Storage

TCEQ Texas Commission on Environmental Quality

Tenaska Tenaska, Inc., developer of the Tenaska Trailblazer Energy Center

TPS Tenaska Power Services, Co.

Trailblazer Tenaska Trailblazer Energy Center

TSTC Texas State Technical College

UP Union Pacific Railroad

USA United States of America

USD United States Dollars

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10.2 Citations

1 CO2-Enhanced Oil Recovery Resource Potential in Texas – Potential Positive Economic Impacts, Texas

Bureau of Economic Geology, http://www.rrc.state.tx.us/about/tepc/CO2-EOR_white_paper.pdf.

2 Melzer Consulting, http://www.melzerconsulting.com/images/stories/melzer/melzerchart.jpg

3 Texas Association of Counties, from Texas Workforce Commission data -

http://www.txcip.org/tac/census/profile.php?FIPS=48353.

4 Ibid.

5 Texas Association of Counties, from U.S. Bureau of Economic Analysis data -

http://www.txcip.org/tac/census/profile.php?FIPS=48353.

6 CO2-Enhanced Oil Recovery Resource Potential in Texas – Potential Positive Economic Impacts, Texas

Bureau of Economic Geology, http://www.rrc.state.tx.us/about/tepc/CO2-EOR_white_paper.pdf.

7 http://www.citizen.org/Page.aspx?pid=767.

8 http://www.sierraclub.org/coal/.