2009 Summer Seminar. The Future of Coal: The Australian Experience

Transcription

1 2009 Summer Seminar The Future of Coal: The Australian Experience Preston Chiaro Chief Executive Energy & Minerals Rio Tinto plc 2009 Summer Seminar August 3-4, 2009

2 Rio Tinto is a large, geographically diverse international mining house Diamonds Borates Copper / Gold / Molybdenum Talc Coal Nickel Talc Coal Copper TiO 2 / Iron Iron Ore Talc Talc Alumina Alumina Iron ore Copper TiO 2 Copper / Gold Copper Copper Bauxite Alumina Bauxite Diamonds Uranium Copper TiO 2 TiO 2 Bauxite & alumina Uranium Diamonds Bauxite Salt Coal Iron ore Coal Alumina Talc Coal Iron Copper/gold Feasibility & development Existing operation Borates 2 Source: Rio Tinto

3 Rio Tinto How we are organized Iron Energy and Minerals Copper and Diamonds Technology Exploration 3

4 Rio Tinto Rio Tinto is a leader a leader in safety in safety 6 5 LTIFR per Hours Worked Rio Tinto Managed Operations USA (MSHA) Australian Minerals Council * *Australian data normalised to include restricted w ork days by a factor of

5 Rio Tinto is a major supplier, user and generator of energy 2008 energy consumption 531 PJ (148 billion kilowatt-hours) Indicative 2008 energy expenditure ~US$6bn Electricity Self generated and purchased Grid connected and remote sites Hydro fossil fuel fired nuclear Diesel Remote power Transport Natural Gas Power & process heat Carbon reductants Metal production Energy fuel supplier (Rio Tinto share) Coal 153 million tonnes per annum Uranium 14 million lbs per annum U 3 O 8 5

6 Rio Tinto accepts the urgent need for climate change action and recognises the issue as being one of our greatest challenges A price on carbon is the most important element of any policy approach, despite the political difficulties of implementation Any effective carbon price system must be comprehensive, must provide for technology deployment, and must prevent leakage Rio Tinto is a member of USCAP, which advocates for a market-based approach to carbon price setting 6

7 Carbon capture and storage (CCS) will play a critical role in decarbonising the power sector All credible modelling shows that all carbon reduction options will be required, and the availability of CCS reduces overall costs Role and importance of CCS Carbon capture and storage process The recent UN IPCC report recognised that technologies such as CCS will have a key role in reducing emissions The key hurdles to industrial scale deployment are not so much technological as commercial and building the necessary confidence CCS requires broad support and a regulatory framework that recognizes its higher costs compared with those of a conventional higher emitting plant Source: Rio Tinto 7

8 The nature of the challenge (i) GGE (t CO 2 -e / MWh) Existing Coal fired power Future carbon risk Advanced Natural Gas O-C All generation technologies have issues Gas Renewables Nuclear Future prices Natural Gas C-C Resource availability Hydro Photovoltaic Biomass IGCC 8 Intermittency Wind Public approval Nuclear CCS Technology maturity CCS Source: CISS, 2002

9 The nature of the challenge (ii) The cost of power LCOE (USD/MWh) Cost of electricity from new plants No carbon cost New conventional fossil fuel plants PC Bit + CCS OCGT Low emission technologies Nuclear CCGT + CCS Offshore Wind Biomass HDR Solar Thermal Solar PV PC Bituminous PC Brown Coal IGCC IGCC+ CCS CCGT Onshore Wind Geothermal (Volcanic) Paid off coal fired generators 9 9

10 The nature of the challenge (ii) The cost of power LCOE (USD/MWh) Cost of electricity from new plants Carbon cost $100/tonne Solar PV IGCC PC PC Bit + CCS OCGT Nuclear Bituminous CCGT + + CCS IGCC CCS PC CCGT Brown Coal Offshore Wind Biomass HDR Solar Thermal Paid off coal fired generators Onshore Wind Geothermal (Volcanic) 10 10

11 Australian CCS Activities Past Future Fundamental CCS Research Eg CSIRO, Research Grants Collaborative Research (Academia/Industry/Government) Eg CO2CRC Participation in Multilateral CCS Organisations, eg CSLF, APP Pilot Scale Demonstration Funding Eg Low Emission Technology Development Fund (AU$500M) Australian Coal Industry Billion Dollar Coal21 Fund Development of Geosequestration Legislation Development of National CCS Strategy & R&D Programme National C Storage Taskforce Global CCS Institute Commercial Scale Demonstrations 11

12 Australian CCS Activities National Low Emission Coal Council Australian National Low Emission Coal R&D National CCS Strategy CCS R&D Program to support Strategy National Carbon Storage Taskforce National Carbon Mapping & Infrastructure Plan Funding for Demonstrations Commonwealth Government : Coal Industry: State Governments: AU$2 Billion AU$1Billion AU$0.5 Billion 12

13 Australian activities on project siting and infrastructure development Source: Australian Carbon Sequestration Task Force 13

14 Timeline for storage development in Australia Gippsland Demo Surat Demo Perth Demo Otway West Bonaparte Denison Demo. Gippsland Off. Canning On. Carnarvon Surat Perth On. Bass Eromanga Galilee RFSU 2018 RFSU 2018 RFSU=Ready For Start Up RFSU 2020 RFSU 2020 Source: Australian Carbon Storage Task Force Pre exploration/gazettal Exploration Appraisal & development Construct RFSU 2021 RFSU 2021 RFSU 2022 RFSU 2022 RFSU 2023 RFSU 2024 RFSU 2024 RFSU

15 Indicative Australian CO 2 transmission and storage costs 15 Source: Australian Carbon Storage Task Force

16 Australian low emission projects Capture Efficiency Storage Zerogen Gorgon Moomba Callide Tarong Fairview Coolimba Munmorah Hazelwood H3 Cool Energy FuturGas Otway Loy Yang Monash CTL HRL IDGCC Mulgrave Source: CO2CRC,

17 Summary CCS is a necessary part of any rational plan of action to reduce emissions Commercial CCS projects will require: A workable legislative framework Public acceptance Suitable and accessible disposal geology Demonstration of commercial plant viability ( bankability ) Cost reductions through design optimisation Demonstrations at scale are the only way this will happen Australia has developed a strategic approach Line of sight to demonstration funding Systematic approach to geological and infrastructure Development of legislation International co-operation through the Global Carbon Capture & Storage Initiative Key lessons: start early on geology, and aligning on cost estimates 17

18 2009 Summer Seminar The Future of Coal Preston Chiaro Chief Executive Energy & Minerals Rio Tinto plc 2009 Summer Seminar August 3-4, 2009

19 Rio Tinto is highly active in promoting the demonstration of CCS technology Formed in 2007 as a joint venture between Rio Tinto and BP to develop low-carbon hydrogen with CCS as a fuel for electricity generation Rio Tinto is a member of this public-private partnership to build a first-of-its-kind coalfuelled, near-zero emissions power plant Otway Basin Pilot Project We sponsor one of the most comprehensive subsurface monitoring programmes in Australia, the Otway project, to demonstrate the feasibility of CCS Global CCS Institute Rio Tinto is a founding member of the Global CCS Institute 19

20 Australian low emission projects - storage Otway Project, CO2CRC, Victoria Demonstration of the technical feasibility of long term CO 2 geological storage; monitoring options; verification of geological models; public outreach Schematic diagram of Otway Project Comments Project type Demonstration Project focus Storage Project status Operational Commenced 2008 Capture N/A Storage Geological Scale, CO 2 tpa 50,000 Scale, MWe equiv. 8 Cost $A 40 Million Partners CO2CRC, industry, government Source: CO2CRC 20

21 Australian low emission projects capture & storage -ZeroGen, Stanwell, Queensland Coal based 400 MW IGCC + CCS power plant Source: CO2CRC ZeroGen power plant 21 Comments Project type Commercial scale Project focus Capture, storage Project status Feasibility Commencing date 2016 Capture Pre-combustion Storage Deep saline formation Scale, CO 2 tpa 2,000,000 Scale, MWe 400 nett Cost ($ 2008) $ 4.3 B Partners Queensland Government, coal industry, Stanwell, MHI

22 Australian low emission projects capture & storage Gorgon, Chevron, Western Australia CO 2 capture from natural gas and storage Gorgon Gas fields Comments Project type Commercial scale Project focus storage CO 2 /NG separation, Project status Feasibility Start date 2012 (projected) Capture CO 2 /NG separation Storage Geological Scale, CO 2 tpa 3,000,0000 4,000,000 Cost ($ 2008) Over $A11 billion Partners Chevron, Esso, Shell Source: CO2CRC 22