COAL21 – Pathway for Lowering Emissions from Coal

Josh CosgraveDirector – Government Relations, COAL21 Ltd

Overview

• The Sustainable Development Goals and Mining• The Sustainable Development Goals and Coal• The Challenge and a solution• COAL21 – a part of the solution

SDGs and Mining

SDGs and Mining

The Greater Good Business Drivers:• Used to be focused only on

compliance

• Poor performance impacts on future approvals

• Good performance makes companies the miner of choice

• Cements ‘social licence’ and reduces the risk of outrage and a regulatory response.

• There is a link between sustainability and long term company value

SDGs and Coal

Today’s global use of coal71% of global steel 69% of global cement

38% of global electricity ~ 20 million Electric Vehicles by 2020

Nearly 1 billion people live without access to electricity

About 1 billion people worldwide live without access to electricity

Nearly 2.7 billion rely on traditional fuels for cooking

Urbanisation and industrialisation are transforming developing and emerging economies

Asian thermal coal use rises from 2024Asian thermal coal imports (millions of tonnes)

-

200

400

600

800

1,000

1,200

2007 2009 2011 2013 2015 2017 2019f 2021f 2023f 2025f 2027f 2029f

SE Asia

Other Asia

India

Korea

Taiwan

Japan

China

Source: Commodity Insights, Market Demand Study: Australian Export Thermal Coal , June 2018

Metallurgical coal demand stableCountry Metallurgical Coal Imports (millions of tonnes)

0

50

100

150

200

250

300

350

400

2017 2020f 2025f 2030f

Source: Commodity Insights, Market Demand Study: Australian Export Thermal Coal , June 2018

Brazil

Europe

Taiwan

South Korea

Japan

India

China

The Challenge and a solution

The Challenge and a solution

Source: International Energy Agency CCS Unit

2 degreesReference

CCUS - 14 % Gt CO2 cumulative reductions

Beyond 2 degrees

(2 degrees)

CCUS – additional 32 %

Messaging on coal and CCUS remains a challenge

Australians want to see that coal has a future based on safe and deployable low emission technologies

Restructuring economies to succeed in a carbon constrained world lies in the deployment of effective low emissions technologies

Well understood economic and employment benefits

9 out of 10 don’t understand coal link to steel and cement production

Climate concern is growing – coal considered for now, not forever.

Little understanding of the importance and global effort to capture carbon.

Fossil fuel v renewable energy focus only one third of the equation.

Transport one fifth and industry more than 6% of emissions.

In 2 degrees scenario CCUS required for 14% of reduction

In below 20 CCUS will be 32% of reductions.

CCUS

COAL21 – a part of the solution

What is COAL21?

History

Collaboration

Current Commitment

Future Commitment

A $550m collaboration by the Australian black coal industry focused on lowering emissions from coal to support cost-effective, reliable and cleaner energy both in Australia and globally.

Established in 2007 and funded by a voluntary levy on all black coal production and co-invests with other stakeholders:Government, electricity generators, equipment suppliers and other investors.

Invested over AUS$300 million on projects and aims to leverage a further $550 million from other sources (industry and government).

At least AUS$255 million committed for new projects out to 2027.

Australian CCUS Projects

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Gorgon ProjectOperating - 3.4 to 4 Mt

South West Hub Project

CarbonNet FlagshipProject Development &

Commercial EstablishmentAppraisal underway

CTSCoFID for Construction 2020

Glencore/Uni of Queensland/ANLEC

Commercial Location Data

CO2CRC Otway PilotPhase 3

CallideOxyfuel demonstration

completed

Precompetitive Exploration

Ongoing, NSW and Qld

• Since 2007 committed to 14 projects, including:

– Capturing CO2 at Callide Oxy-Fired coal power plant

– Sequestering 80,000 tonnes of CO2 in Otway Basin in Victoria

– Groundwork for a CCUS Hub in the Surat Basin Queensland including CTSCo injection trial, UQSDAAP data acquisition

– Advanced the understanding of how to deploy Ventilation Air Methane (VAM) abatement technology safely, and

– Contributing to the international R&D effort.

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Oxyfuel demonstration (pictured at left) at the Callide Power Station, Queensland, CSEnergy

Otway project injection, Victoria

Project portfolio over the next 10 years

COMMITTED A FURTHER AUS$255 MILLION OUT TO 2027

ONGOING PRIORITIES• Post Combustion Capture at a commercial operation in

Queensland• Demonstrated storage in Surat Basin• Abatement of fugitive emissions from coal mines

ONGOING PROJECTS• Queensland Surat Basin CCUS Hub• NSW Storage – Coal Innovation NSW• Ongoing R&D through:

– CO2CRC– ANLEC R&D

21Glencore’s CTSCo well in the Surat Basin

Methane explosions in coal mining studies at Newcastle Institute for Energy and Resources , University of Newcastle, NSW

We are also exploring new project options• Support the development of prospective emerging capture technologies

– Prospective technologies include:• NOx and SOx tolerant solvents • Allam Cycle

• Carbon capture and utilisation:– Study the possibilities for enhanced oil recovery in Australia– Specific consideration of EOR associated with the Surat Basin Hub– Utilisation and Recycling of Carbon for other purposes

• Other– Black coal to hydrogen with CCUS – cost effective method of producing H2

– Support the development of low emissions technologies using metallurgical coal– Education to increase understanding and awareness of:

• Low emissions coal power technologies and

• Their role in supporting increased renewable electricity supplied into grid electricity.22

New Deep Storage Carbon Huband Enhanced Oil Recovery Potential

Surat Basin

Queensland Surat Basin CCUS Hub - Why?

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1. CO2 Sources in the region:• 3 supercritical coal power stations and CCGT

• LNG and ethanol production with CO2 separation

• Potential Coal to Liquids (CTL) production facilities

2. Transport System:• Extensive existing pipeline easements

3. CO2 Users:• Various end of life oil fields – EOR potential

4. Storage Geology:• Has highly prospective geology for CO2 storage,

• Has exploration permits for GHG (EPQ’s 7 – 14),

• Has enabling legislation for CO2 storage – Qld Greenhouse Gas Act 2009,

Strategic context of Capture Demonstration & the Queensland Carbon Hub

Coal Power Carbon Capture Demonstration

National EOR

Enhanced Oil

Recovery

Remove existing

emissions

QLD Carbon

HubNew HELE

Hydrogen

HENE

Enhanced Oil Recovery• COAL21 commissioned a study for potential

enhanced oil recovery in Australia through Geoscience Australia

– Specific consideration of EOR associated with the Surat Basin Queensland Carbon Hub

– Utilisation of CO2 for other purposes (e.g. food and beverage production)

– CO2-EOR can be optimized to store 1t of CO2 per 1.1bbls of oil produced.

– Results in a net negative emission of 0.52t of CO2 per bbl of oil produced through CO2-EOR.

– Increases fuel security, employment, royalties, federal taxes and lowers emissions.

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Queensland Surat Basin CCUS Hub - Why?

27

Contribution of Hub• Emissions solution

• Energy security and grid stability

• Continued value from mining

• Affordable power

• Direct expenditure by project contractors

• Jobs and lifting local skills base

• Government royalties

USC + CCUS, Hydrogen

Estimated long run marginal cost of new generation (2017)

0

100

200

300

400

500

600

700

800

900

1000

USCblackcoal

Variablewind

USCblack

coal withCCS

CCGT Variablesolar PV

Wind &CCGT

CCGTwithCCS

Solar &CCGT

Wind &CCGTwithCCS

Solar &CCGTwithCCS

OCGT Wind &battery

Solar &battery

A$/M

Wh

Source: Solstice Development Services, Prospects for a HELE USC coal-fired power station, 2017

Australia’s National Energy Market - Retirements

30

Liddell Power Plant announced as closing in 2022

Gladstone Power Plant 50 years old in 2026

Yallourn Power Plant 50 years old in 2032

Locations for future USC + CCUS

31

Oaklands Basin

Surat Basin

Gunnedah Basin

Latrobe Valley

Surat, 700MW, Air cooled $47-52MWh (LRMC)

Surat + 45% CCUS $70-76/MWh

Surat + 90% CCUS $95-102/MWh

Oaklands 1400MW, Air cooled $60/MWh

Oaklands + 90% CCUS $126/MWh

Gunnedah , 1400MW, Air cooled $66/MWh

Gunnedah + 90% CCUS $134/MWh

Latrobe 1400MW Wet cooled $67/MWh

Latrobe + 90% CCUS $151/MWh

Hydrogen from coal• Passenger vehicles = 10% of Aust emissions, road transport over 15%. • Hydrogen vehicles only emit water, while hydrogen reduces emissions from

electricity generation, heating and chemicals production.• Hydrogen from black coal with CCUS: 3 times cheaper than grid-connected

electricity and 13 times cheaper than renewable energy.• A significant new export opportunity to Japan, China, Korea and EU.

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Technology Levelised Cost of Hydrogen - $/kg H2

Base Case Polymer Electrolyte Membrane (PEM)

6.08-7.43

Base Case Alkaline Electrolyser 4.78-5.84

Base Case SMR + CCUS 2.27-2.77Base Case Black Coal Gasification + CCUS

2.57-3.14

Best Case Black Coal Gasification + CCUS

2.02-2.47

Best Case Brown Coal Gasification + CCUS

2.14-2.74

Note: Figures sourced from National Hydrogen Roadmap – Pathways to an economically sustainable hydrogen industry in Australia, CSIRO, 2018, pp 78-83

Research & Development

Australian National Low Emissions Coal (ANLEC) R&DObjective• Broad based applied R&D program

covering key CO2 capture and geological storage technologies in support of demonstration projects

CO2CRCObjective• To develop CCUS as a socially, technically

and commercially viable option

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Pathway and Policy – sustainable developmentMacroMore holistic approach - industry policy approach includes:• Energy• Emissions reduction• Industrial Processes

– Coal, gas, hydrogen , EOR, cement, steel, chemicals…

• Regional and national benefits– Royalties– Continued employment– New industries (eg hydrogen)– New skills base

34

Micro2017 Roadmap recommended: • CO2 storage characterisation • Legal and regulatory capacity • Monitoring international CCUS deployment• Techno-economic assessments • Engagement to achieve public acceptance. 2019 policy advocacy themes• Utilisation – EOR• Alternative uses – eg hydrogen• Technology neutral approach to emissions• Employment

COAL21 – a small part of reaching SDGs

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• Industry collaboration model to deliver low emission technology

• Builds on many companies’ knowledge and strengths

• Leverages support from governments• Link between sustainability and long term

company value• Demonstration of technology builds

confidence in industry• Education and awareness from technological

demonstration• Coal seen as a sustainable building block of

society

Hydrogen from coal• Passenger vehicles = 10% of Aust emissions, road transport over 15%. • Hydrogen vehicles only emit water, while hydrogen reduces emissions

from electricity generation, heating and chemicals production.• Hydrogen from black coal with CCUS: 3 times cheaper than grid-

connected electricity and 13 times cheaper than renewable energy.• A significant new export opportunity to Japan, China, Korea and EU.

36

Note: Figures sourced from National Hydrogen Roadmap – Pathways to an economically sustainable hydrogen industry in Australia, CSIRO, 2018, pp 78-83