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Environmental Approach Social Approach Governance Approach

OUR ENVIRONMENTAL APPROACH North Antelope Rochelle Mine Our environmental approach is two‑fold with a focus on responsible coal mining and advanced coal use.

Responsible Coal Mining Advanced Coal Use We begin with a deep appreciation Our commitment to the environment and understanding for the land and does not end with our operations. communities where we operate. Before Society has a growing need for energy any mining activity starts, we complete and a desire to reduce emissions, and comprehensive baseline studies of we believe both goals can be achieved — local ecosystems and land uses and not by moving away from coal — but by incorporate our findings into detailed embracing technology. mine plans aimed at reducing potential As outlined in our Statement on Climate impacts from our operations. Change, Peabody recognizes that climate As safe mining commences, we use change is occurring and that human industry leading practices to make the activity, including the use of fossil fuels, most efficient use of natural resources, contributes to greenhouse gas emissions. while minimizing our environmental We also recognize that coal is essential footprint. This includes a focus on to affordable, reliable energy and will reducing greenhouse gas intensity, continue to play a significant role in the conserving water, advancing recycling global energy mix for the foreseeable and waste management programs, future. Peabody views technology as and applying contemporaneous land vital to advancing global climate change reclamation to lessen surface disturbance. solutions, and the company supports advanced coal technologies to drive Our governing principles for all sites are continuous improvement toward the outlined in our Environmental Policy, ultimate goal of near-zero emissions which applies to employees, contractors, from coal. visitors and vendors at all our sites. Peabody’s continuing actions to address climate change include funding research and participating in key initiatives in low-emissions projects and partnerships such as those already advancing in the U.S., Australia and China. In addition, we Target #1 engage with governments, academia, communities and other stakeholders Reclaim at least one to support constructive dialogue and graded acre for each acre encourage a true “all of the above” of land disturbed due to energy strategy that recognizes the mining activity. benefits and limitations of each fuel to meet society’s growing demand.

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Land Restoration Environmental Accomplishments

Peabody views land restoration as a vital part of the Peabody’s leading environmental and land reclamation mining life cycle and aims to commence restoration practices have been awarded more than 130 honors of the landscape as soon as land becomes available, since 2000. to create a safe, stable and sustainable landform In 2018, Peabody was recognized with the Communitas that benefits generations to follow. Reclamation is Award for our stewardship of the environment, undertaken on a progressive basis with consultation specifically highlighting our work with the U.S. Fish and between the environmental, technical services and Wildlife Service and Indiana Department of Natural production teams. In any given year, land reclamation Resources to protect the endangered Interior Least activities can vary due to production, weather Tern bird species and our ongoing reclamation of the conditions and other unforeseen factors. Big Creek watershed at our Wild Boar Mine. In 2018, Peabody continued to advance our restoration activities, reclaiming 1.4 acres of land for every acre disturbed. In total, we restored 5,344 acres of mined During the year, Peabody received land, which now serve as wildlife habitat, rangeland, hardwood forests, prime farmland, pastoral land three of four U.S. Office of Surface and wetlands. In addition, the company established Mining Reclamation and Enforcement 13 miles of high-quality streams and planted (OSMRE) awards. 555,445 trees.

Our Bear Run Mine in Indiana earned the Good Neighbor Land and Bond Release Award for successfully working with surrounding landowners and the community while completing Peabody remains focused on restoring the land mining and reclamation. Recognition was also given and providing assurance for future obligations. The for reclamation completed at our former Big Sky company fully accounts for the projected financial Cattle graze at the former Wilkie Creek Mine where Peabody worked to incorporate local needs into post-mine land use. Mine in Montana, which features stream channels and impact of our final coal mine reclamation requirements wetlands, a sustainable supply of water for livestock through our asset retirement obligation on our and wildlife, and nesting areas for habitat and wildlife. balance sheet in accordance with Generally Accepted Accounting Principles. In addition to funding every Also in Indiana, OSMRE honored our Wild Boar LANDMARK ENVIRONMENTAL ACHIEVEMENT dollar of our coal mine restoration, Peabody pays tens Mine for achieving the most exemplary mining and of millions of dollars each year to the Abandoned Mine reclamation in the country. Wild Boar was also FOR FORMER WILKIE CREEK MINE Land (AML) Reclamation Program for the reclamation recognized by the Interstate Mining Compact of lands mined before the U.S. Surface Mining and Commission for reclamation work at the Barren Fork In early 2019, Peabody achieved a major environmental milestone at its former Wilkie Creek Mine in Control Reclamation Act of 1977. As the largest U.S. Pit. Reclamation activities extended over 480 acres Australia with the Department of Environment and Science formally certifying almost 90 hectares of coal producer, we contribute more annually to the of land and included the elimination of more than a mile the former mine site as fully rehabilitated. Mining at Wilkie Creek ended in late 2013, and Peabody has AML fund than any other coal producer. of highwall, the planting of more than 260,000 trees, rehabilitated 612 hectares of former mined land at the site. The decision recognizes the first section of the restoration of eight streams among the reclaimed In the U.S. and Australia, Peabody provides third- that area to be certified as safe, stable, self-sustaining and non-polluting. forest and the creation of natural habitat for wildlife party bonding facilities to meet reclamation liabilities. within the forested areas. Peabody understands that mining plays an important, but temporary, role in the life of a region and Reclamation liabilities are calculated based on each that the mined land must remain a community and economic asset long after final coal production. mine’s maximum disturbance area for a specified Recognition also extended to our workforce, As responsible custodians of the land and good neighbors, Peabody implements a progressive period. Our practice of contemporaneous reclamation with Peabody’s Monty Parke, Senior Manager — rehabilitation approach that starts land rehabilitation well before mine closure. At Wilkie Creek, team supports timely reduction of reclamation liabilities. Reclamation, recognized with the 2018 Vance members involved in the rehabilitation were not only locals, but also farmers who have worked the land “Pat” Wiram Award for Innovation in Reclamation and know what the soil and conditions respond to best. Technology by the Indiana Society of Mining and Reclamation. Monty’s contributions include uses To date, only a few areas within Queensland have been progressively certified. of cover crops and fertility management for water quality and safe and efficient methods to reclaim coal refuse sites.

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Percent Water Recycled of Total Recycled/Reused/Energy Recovery vs. Pounds of GHG Emitted per Withdrawn Globally Landfilled/Incinerated/Landfarmed Unit Produced (Includes mine methane emissions)

14.0 14.7 Water Consumed, Recycled/Reused/ Discharged and Energy Recovery Stored from Total 52% 48% Water Withdrawn 61% 39% Landfilled/ Incinerated/ Water Recycled from Landfarmed Total Withdrawn 2017 2018

*Does not include Middlemount JV or Shoal Creek. *Does not include Middlemount JV or Shoal Creek. CMJV included at 100%. CMJV included at 100%.

Changes in Water and Waste Reporting closed loop water circuits at our coal prep plants, with the Greenhouse Gas Intensity and average plant achieving recycling rates of 73 percent. Energy Efficiency In 2015, Peabody began reporting on six indicators for Each of our mines aligns its water management strategy Peabody’s Group Executive and Chief Marketing Officer Bryan water and waste in reference to the Global Reporting In order to extract the fuel needed for energy, Galli and Director of Sales and Marketing Dan Appelbaum visit with the specific challenges of its region. Our operations in Initiative (GRI) framework. Since that time, GRI has released we must use energy, and we are committed site of Arq Technology in Corbin, Kentucky. more arid environments focus on conservation, while mines new reporting standards for these indicators, which to doing so in a responsible manner. in humid climates routinely manage surplus water from require additional disclosures. We believe it is important storms or groundwater and mitigate flood risk. In Australia, We calculate greenhouse gas emissions across to continue to provide metrics on water and waste as core our operations must manage excess water during wet all operations in pounds of carbon dioxide parts of our business, and as such, 2018 data is presented PEABODY PARTNERS TO cycles and plan for water shortages during dry cycles. equivalent or CO e (CO , CH and N 0) per in the same format as prior years. Detailed water and 2 2 4 2 unit of production (raw tons of coal mined waste reporting can be found on our website. All the management and use of water at Peabody ADVANCE INNOVATIVE and cubic yards of overburden and rehandle). mines follows the regulatory frameworks specific to the In 2018, Peabody worked with a third-party COAL‑TO‑OIL TECHNOLOGY countries and regions where they are located. Water Use and Management consultant to re-evaluate the inputs and assumptions used in the calculation of our Coal mining is one of the least water-intensive forms of Recycling and Waste Management U.S. greenhouse gas intensity. Based on our In 2018, Peabody entered a new partnership with resource extraction. The U.S. Geological Survey reports evaluation and recommendations from the technology-based startup Arq to advance a process that all forms of mining total 1 percent of water withdrawn Peabody also employs waste management practices consultant, we have revised our stated 2017 that aims to use coal in oil products. While coal- in the United States compared to agriculture irrigation, that minimize waste products and maximizes recycling global CO e emissions. As such, global CO e to-liquids has been demonstrated at scale for which accounts for 37 percent of total withdrawals. 22 2 2 and reuse opportunities. In 2018, recycling, reuse and emissions will not be comparable to periods decades, Arq’s approach is considerably simpler Peabody primarily uses water for dust control and coal energy recovery programs accounted for 61 percent prior to 2017. We will continue to re-evaluate and targeted to be more cost-competitive than processing at preparation plants. Water is also used of the company’s waste disposal activities. In total, our inputs and assumptions based on industry conventional technologies. 15,212,222 kilograms of materials was recycled and for exploration, coal extraction and land reclamation guidelines and best practices. This partnership represents an opportunity for reused, or was used for energy recovery. activities, with minor amounts used for mine location While Peabody strives to conserve power and Peabody to simultaneously improve costs and drinking water, showers and equipment maintenance. Where needed, Peabody maintains multiple upstream reduce greenhouse gas intensity whenever efficiencies by increasing coal recovery; advance Water sources for Peabody mines include surface water, coal waste impoundments and has additional possible through comprehensive mine sustainability by reducing our environmental such as precipitation and runoff; rivers and streams; impoundments in various stages of the reclamation planning and engineering, sophisticated footprint; and expand markets for coal. ground water; and municipal or purchased water. process. Our upstream impoundments contain a mix technologies and leading operational The process is in early stages with Arq’s of coarse and fine coal waste materials, which have a practices, global 2018 CO e At Peabody, we work to conserve, reuse and recycle 2 first commercial facility in Corbin, relatively lower flowability as compared to finer materials Target #2 water whenever possible. Approximately 48 percent emissions rose 5 percent from 2017 Kentucky, currently under construction, typically found in non-coal tailings dams. Peabody of the water withdrawn by our operations in 2018 was levels, primarily related to mining Conserve energy and and Arq is assessing Peabody constructs impoundments to comply with best practices recycled and reused. In total in 2018, we recycled and activities in Australia, including reduce greenhouse gas sites for the applicability of this and strict regulatory performance criteria. Peabody reused 22,794 megaliters of water. Our total water increased diesel and electricity intensity at operations innovative technology.23 withdrawn in 2018 was 17 percent less than 2017 levels. has also developed its own rigorous standards that consumption at certain surface where possible through require mandatory risk assessments and inspections by mines. In the U.S., Peabody’s energy efficiency and We recycle water at our coal preparation plants, truck independent third-party experts in addition to annual CO e emissions remained largely other leading washes and coal storage areas, and we strive to use 2 regulatory inspections. flat with the prior year. practices.

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Target #3 Support for Advanced Coal Technology Continue support for Beyond responsible coal mining, Peabody emphasizes The Integrated Test Center in low-emissions projects responsible coal use through advanced technologies. Wyoming was honored as Carbon and partnerships. Since early 2000, we have invested more than $300 Capture and Storage Pioneer at the Fifth Annual Peabody Global million in global partnerships and projects to advance Clean Coal Leadership Awards. high-efficiency, low-emissions (HELE) and carbon capture, use and storage (CCUS) technologies in the U.S., Australia and China. We also serve in leadership positions and are members of organizations that are focused on technology research, development and deployment, and the appropriate policies to advance these technologies.

Carbon Capture Coalition Peabody is a participant in the Carbon Capture Coalition, which brings together coal, oil and gas, electric power, ethanol, chemical and energy technology companies, labor unions and national environmental and energy policy organizations in an ultra-supercritical coal-fueled generation unit effort to make CCUS a widely available, cost effective COAL21 Fund National Carbon Capture Center is currently under construction in China and is and rapidly scalable technology solution in the U.S. Peabody is a founding member and current board Peabody is a co-funding partner of the National expected to be among the most efficient coal- The coalition was a leader in successfully advocating chair of Australia’s A$1 billion COAL21 Fund, an Carbon Capture Center. Since its creation by the U.S. fueled generating plants in the world. Plant for the 45Q tax credit in the U.S. as pivotal legislation industry effort to pursue a collection of low-carbon Department of Energy’s Office of Fossil Energy in commissioning is targeted in 2020. to support global environmental goals. This bipartisan technologies. To date, Peabody has committed more 2009, the center has established itself as a world-class, than A$30 million to the COAL21 Fund, which has neutral research facility, focused on accelerating the bill aims to reduce costs and barriers to deploy CCUS ● Nabha Power Limited, a wholly owned subsidiary directed more than A$300 million to demonstration development and commercialization of next-generation at scale. of Larsen & Toubro — Recognized for High- projects covering CO capture, geological storage carbon capture technologies by giving technology 2 Efficiency and Sustainability Leadership and developers engineering support and a power plant host Carbon Capture Leadership Council and methane emissions abatement at operating Innovation. The 1,400-megawatt power plant 24 at which they can test their technologies. Peabody serves on the Carbon Capture Leadership underground coal mines. in Rajpura, Punjab, achieved the best heat rate Council, a national effort to catalyze support for and auxiliary power consumption in India’s Consortium for Clean Coal Utilization carbon capture and elevate it as a priority in the U.S. 660-megawatt class for FY 2017 — 2018 and Peabody is a founding member and board member Peabody Global Clean Coal Awards policy agenda. Council objectives include positioning has 100 percent dry fly ash utilization and zero carbon capture as an essential and equal component of the Consortium for Clean Coal Utilization (CCCU), Peabody believes in recognizing the good work liquid discharge. of the broader portfolio of low and zero-carbon energy which is a cutting-edge research program focused being done by others to advance coal technologies. options and encouraging and supporting state officials on advanced coal utilization and carbon capture ● Wyoming Integrated Test Center — Named Now in its fifth year, the Peabody Global Clean and stakeholders in efforts to deploy carbon capture technologies at the prestigious Washington University Carbon Capture and Storage Pioneer. The test Coal Leadership Awards highlighted outstanding and CO pipeline infrastructure projects. in St. Louis. Peabody has renewed its funding center is one of the few research and testing 2 examples of leadership and innovation among coal- commitment to the CCCU through 2021. facilities at an operating coal-fueled generating fueled generating plants and projects, with honorees Carbon Utilization Research Council plant and offers space for researchers to test represented from the U.S., China and India. Peabody serves as co-chair of the Carbon Utilization Global Carbon Capture and Storage Institute CCUS technologies using 20 megawatts of coal- Research Council (CURC), a coalition of fossil fuel Peabody is a founding member of the Global Carbon Peabody named top performers in the categories based flue gas. Additional research looks at taking producers, electric utilities, equipment manufacturers, Capture and Storage Institute (GCCSI), which of high-efficiency low-emissions leadership and carbon emissions from flue gas and turning it into a technology innovators, and national associations working was launched in Australia and now serves as an innovation; high-efficiency and sustainability marketable commodity. internationally recognized advocate for CCS. GCCSI to identify ways for the U.S. to use low-cost fossil fuels leadership and innovation; and carbon capture and The 2018 recipients reinforced the major aims to provide relevant information on the status of while meeting societal energy needs and goals. storage pioneer. The award honorees included: environmental benefits that can be achieved using CCS and other practical policy advice regarding CCS today’s advanced coal-fueled generation technologies to government and other key stakeholders. Huaibei Shenergy Power Generation Co. Ltd — ● as well as the tremendous possibilities for technology Honored for High-Efficiency, Low-Emissions in the future. Leadership and Innovation. The 1,350-megawatt

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