Australian coal: supporting advanced coal-fired technologies

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1 Australian coal: supporting advanced coal-fired technologies Mike Lawson A/g Deputy Secretary, Department of Industry, Innovation and Science 5 September 2017

2 Overview Australia A long standing, reliable, competitive supplier of high quality coal meeting future demand in Asia Australia has abundant high quality coal reserves with emerging investment opportunities in new coal projects Australia s challenging domestic electricity market provides opportunities for advanced technologies Australia s brown coal - potential role in Japan s hydrogen economy, including carbon capture and storage

3 Australia s share of thermal coal exports Source: Department of Industry; Innovation and Science (2017) REQ June Quarter 2017

4 Million tonnes $billion Australia s forecast coal export volumes remain steady 250 Australia's coal exports Thermal volume Metallurgical volume Thermal value (rhs) Metallurgical value (rhs) Source: Department of Industry; Innovation and Science (2017)

5 Australia continues to meet regional coal needs Key importers of Australian coal (million tonnes) Source: Department of Industry; Innovation and Science (2017)

6 Global coal demand is steady overall and increasing in India and Asia Source: International Energy Agency, Medium-Term Coal Market Report 2016

7 Clean coal technology is being embraced in Asia Source: Department of Industry; Innovation and Science (2017)

8 Coal-fired power generation is expected to increase in South East Asia and India IEA forecast Indian coal fired power generation to more than double by 2040 (compared 2014 data) Source: International Energy Agency, World Energy Outlook 2016

9 Australia s thermal coal cost curve Source: AME Group.

10 Australia has abundant resources and new investment opportunities 112 years of resources at 2014 production levels. Opportunity for opening of the Galilee Basin. Source: Geoscience Australia

11 Coal infrastructure investment in NSW NSW Coal Ports Port of Newcastle: Largest coal export port in the world Exported 159 million tonnes in Recent expansion to allow up to 211 million tonnes exported per annum, Port Kembla: Expanded capacity to 22.5 million tonnes per annum Considering expansion to 26.5 million tonnes per annum. NSW Rail Hunter Valley Rail Network Hexham Train Support Facility - $186 million purpose built facility for fuelling, storage and maintenance of the rail stock Hunter Valley Corridor Capacity Strategy a range of projects to expand capacity of the rail network valued from $320 million to $351 million Source: PWCS & NCIG; Department of Industry, Innovation and Science (2017)

12 Coal infrastructure investment in QLD Queensland Coal Ports Abbot Point Coal T3 (part of Alpha Coal Project) expansion project of port facilities to export 60 Mtpa valued at $1,800 million, planning to commence 2018 Queensland Rail Wiggins Island rail project - $858 million Goonyella System Expansion Project - $121 million Abbot Point T0 (Phase 1 and 2 Adani) an expansion project of the port facilities to export 70 Mtpa - $1,400 million Hay Point Coal Terminal (phase 3) - $3,540 million committed in 2015 Wiggins Island Coal Terminal (phase 1) a new terminal at Gladstone - $1,500- $2,500 million Source:Department of Industry, Innovation and Science (2017)

13 Australia s domestic electricity relies on coal Coal Gas Hydro Wind Solar Oil other Renewable Source: Department of Industry, Innovation and Science, 2017

14 Australia s electricity prices within OECD context Denmark* Germany Belgium Italy Spain Portugal Ireland Austria Japan United Kingdom Switzerland Australia New Zealand* Greece Latvia France Luxembourg Slovenia Netherlands Sweden Finland Slovak Republic Chile OECD Total Czech Republic Poland Israel* Turkey Estonia Hungary United States Korea Canada Norway Mexico *2015 data Source: International Energy Agency, Energy prices and taxes, 2017 Household electricity prices, 2016 (US$/MWh)

15 Jun-2001 Jun-2002 Jun-2003 Jun-2004 Jun-2005 Jun-2006 Jun-2007 Jun-2008 Jun-2009 Jun-2010 Jun-2011 Jun-2012 Jun-2013 Jun-2014 Jun-2015 Jun-2016 Jun-2017 Index Jun 2001=100 Australia s electricity prices are near historic highs 300 Electricity Gas Automotive fuels CPI 50 Source: Australian Bureau of Statistics, Consumer Price Index, Australia, June 2017,

16 per cent change in consumption Australia s electricity consumption growth is slowing Note: consumption is measured in GWh Source: Department of the Environment and Energy (2017), Australian Energy Statistics

17 QLD coal-fired power fleet is ageing MW gross mid-2017 Both mothballed Apr 2013 Queensland EARLY RETIREMENT GAS BLACK COAL Source: CAPE OTWAY ASSOCIATES 2017

18 NSW coal-fired power fleet is ageing MW gross mid-2017 Decommissioned July 2012 Closed: last generation Jul 2014 Decommissioned Nov 2014 Decommissioning 2022 NSW EARLY RETIREMENT GAS BLACK COAL Source: CAPE OTWAY ASSOCIATES 2017

19 VIC coal-fired power fleet is ageing MW gross mid-2017 Decommissioned Aug 2014 Decommissioned Aug 2015 Decommissioned Apr 2017 Victoria EARLY RETIREMENT GAS BROWN COAL Source: CAPE OTWAY ASSOCIATES 2017

20 Opportunities for Replacing Baseload Power

21 Opportunities for value adding and alternative uses of coal: Hydrogen Brown Coal Combustion Steam Hydrogen Power generation Power generation, transport fuels, crude oil refining, production of fine chemicals Gasification to Syngas Methanol Ammonia Feedstock for plastics industry, transport fuels, fine chemicals Fertilisers, refrigerant gas, cleansers Drying Pyrolysis (high temperature liquefaction) Methane Liquid fuel Cooking and heating, power generation, feedstock for chemical industry Transport fuels, feedstock for chemical industry Soil carbon additive Agriculture Low temperature processing Export quality coal Liquid hydrocarbons Power generation Transport fuels, feedstock for chemical industry Source: Adapted from figure by the Victorian State Government, Department of Economic Development, Jobs, Transport and Resources.

22 Opportunities for alternative uses: Hydrogen Energy Supply Chain Source: Kawasaki Heavy Industries, Ltd., 2016

23 CCUS in power and industrial sectors Gorgon LNG Project Callide Oxyfuel Project South West Hub Project CarbonNet Project CCS remains the only technology solution capable of delivering significant emissions reductions from the use of fossil fuels in power generation and industrial processes. - IEA, 2016, 20 years of Carbon Capture and Storage

24 Key Messages Australia s coal supply is reliable and will continue to meet regional needs Australia continues to have diverse coal supply without concentration of coal ownership or production Australia has good investment opportunities and is interested in developing coal resources Australia is interested in HELE and experimental clean coal technologies such as coal to hydrogen

25 Department of Industry, Innovation and Science Industry House 10 Binara Street Canberra City, ACT 2601, Australia Telephone

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