Why%20the%20Mining%20Industry%20is%20Critical%20to%20Sustainable%20Development:%20Greenhouse%20Gas%20Emissions%20Policy,%20A%20Case%20Study

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• Why the Mining Industry is Critical to
  Sustainable Development Greenhouse Gas
  Emissions Policy,A Case Study

Monika Sarder Senior Policy Research
Coordinator, The AusIMM New Leaders Conference,
Kalgoorlie, April 2006
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1990s Industry Image Takes a Beating

• Growing up in 1990s (era of Captain Planet)
  prevailing message was that industry was opposed
  to wellbeing, existing solely for personal profit
  of unscrupulous fat cats indifferent to the fates
  of whatever stood in its way.
• Did not arise in a vacuum horrible incidents
  arising from lack of transparency, faulty chains
  of accountability and occasional dodgy director
  (eg Thalidomide babies, Bhopal disaster in
  Bangladesh)
• Human globalisation experiment has no precedent
  in human history.
• As industry increases in scale and rewards,
  regulations and systems of accountability
  continually evolve alongside it.
• Ongoing challenge balance material wellbeing and
  risks.

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Sustainable Development A Necessary By-Product
of Globalisation

• Theoretically, tension between advancement and
  risks resolved by principle of sustainable
  development.
• Bruntland Report defined as meeting the needs of
  the present without compromising the future
  generations to meet their own needs.
• Mining epitomizes challenge of sustainable
  development few sectors have as direct impact on
  natural environment, yet are more important to
  economic and social health of every region on the
  globe.

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Resolving Sustainable Development and Global
Competitiveness

• In a global industry need to resolve sustainable
  development international competitivess.
• Federal and State Govt policies on key
  sustainable development issues will have
  fundamental impact on our competitiveness.
• Dangerous fatalism about state of science led to
  dangerous stop production attitude.
• It is not fully appreciated that for many of
  these issues technology drives the solution.
• As technical institute, The AusIMM sees one of
  its roles as being to highlight the way in which
  industry innovation can and must be part of the
  solution to government.

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Case Study Greenhouse Gas Emissions Policy

• The AusIMM advocacy initiatives
• policy settings which encourage RD to raise our
  prospectivity
• greater funding for minerals related tertiary
  courses
• more rational policy around uranium related
  activities
• Evolving position on GHG emissions policy.
• Shows the way in which limits to growth
  policies can have a negative impact on
  sustainability of the sector.
• Highlights the importance of technology based
  solution, and what minerals sector professionals
  can contribute.

6
World Community on Climate Change

• Risk that hastily implemented GHG emissions
  policies will adversely impact industry
• Carbon trading between Kyoto ratified countries
  coming online in 2008
• States proposing national emissions trading
  scheme
• World Govts accepted IPCC findings that human
  activities increased GHGs and If no abatement
  measures taken avg surface temperatures could
  increase by 1.4 to 5.8 degrees.
• Possibly increased temperatures, more frequent
  droughts, sea level rise, more frequent extreme
  weather events and wider distribution of certain
  insect borne diseases.
• IPCC estimates that reduction of at least 60 of
  1990 levels of GHGs necessary to stabilise
  climate.

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Australia and the Kyoto Protocol

• Stabilising GHG emissions needs global solution.
• Kyoto Protocol most famous multilateral measure.
• Came into force February 2005 after Russia
  ratified.
• Seeks to lower emissions by seeking commitment of
  some developed countries to reduce GHG emissions
  between 2008-2012.
• We did not ratify it. Flawed measure that would
  deliver negligible GHG reductions (less than 1).
• Would have devastating consequences for an energy
  intensive, coal dependent economy such as ours.
• We only account for 1.6 emissions worldwide
  but high per capita emissions.

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Coal Our Achilles Heel Could be our Greatest
Strength

• Coal accounts for 75 of our stationary power
  generation 35 of our GHG emissions.
• Energy prices in Australia some of the cheapest
  in the developed world.
• Major exporter of energy resources 24.2
  billion coal 11.9 billion
• Major exporter of energy intensive resources
  largest exporter of alumina 5th largest exporter
  of aluminium
• Knee jerk measures such as emissions caps would
  drive up energy prices and hurt major exports.
• Result carbon leakage as major industries go to
  developing countries.
• Net emissions increase if country is less energy
  efficient and lower capacity for technological
  innovation than us.

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Coal Our Achilles Heel Could be our Greatest
Strength (contd)

• Rather than putting rapid downward pressure on
  emissions, we should tap into our natural
  advantages to develop leading edge technologies
  that can deliver long term abatement for the
  future.
• Total world energy consumption to increase by
  140 in next 50 years, developing countries
  account for 80.
• Developing countries will note accept binding
  target.
• Meaningful emissions reduction only if cost
  effective low emissions technologies deployed to
  these countries, and more efficient processes for
  producing key commodities for them brought on
  line.
• As major producer and supplier with knowledge
  intensive industries and RD links, Australia can
  be part of a long term technology based solution.

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Low Emissions Energy Technologies

• In the recent Energy White Paper, the Govt
  identified areas where we can be market
  leaders, fast followers and build reserve
  capacity
• Electricity breakdown 75 coal, 14.2 natural
  gas, 6.7 hydro, lt1 wind, biomas, biogas.
• Market leaders advanced coal, geosequestration,
  photovoltaics, hot dry rocks
• Fast followers natural gas, wind, biomass

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Carbon Geosequestration

• Geosequestration of CO2 capture and storage of
  CO2 in deep geological reservoirs is most
  favourable.
• Greatest opportunity for retrofit.
• Already used in oil industry as a means of
  enhancing recovery from oil fields and disposing
  of CO2 (eg Sliepner Vest Gas Field)
• Potential for Australia has shown 65 sites are
  environmentally sustainable for CO2 injection.
• Otway Basin Trial commencing this year.
• Need to bring down associated costs.

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Nuclear Energy and Renewables

• Australia is the worlds second largest uranium
  exporter and has 40 of known low cost uranium
  reserves.
• Nuclear power stations produce less than 40kg/MWh
  cf. 760/kWh from coal fired power stations.
• Dearth of discussion around nuclear options in
  Australia.
• Renewables - two major projects underway hot
  dry rocks and Solar Cities Trial.
• So far, used to supplement fossil fuels during
  peak generation times, too intermittment for base
  load.

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Improving Energy Efficiency

• Manufacturing and mining largest energy users
  (49 and 11 end use fuel consumption).
• Iron and steel, cement and aluminium production
  particularly energy intensive.
• With ramp up in production, estimated that iron
  and steel production will account for 50 of new
  emissions.
• Tapping into industrys desire to reduce cost of
  this input is an important challenge for
  policymakers.

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Current and Future Directions for Emissions
Reductions in Minerals Sector

• Coke consumption in blast furnace ironmaking a
  third of what it was 80 years ago.
• Next generation of ironmaking furnaces likely to
  be operated without coke, using 100 directly
  injected non coking coals (eg HIsmelt process at
  Kwinana).
• Projected energy efficiency improvements through
• continuous smelting technologies for treatment of
  nickel and copper
• direct smelting for primary lead production
• commercialisation of inert anodes and wetted
  cathodes for aluminium production, by eliminating
  the need for carbon based anodes.
• Also, underground coal mines capture fugitive
  methane and use it to generate electricity, while
  others capture and flare (87 reduction)

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Current GHG Emissions PolicyA Mish Mash of Push
and Pull

• A technology based solution will require both
  push policies for low emissions technology RD
  and pull policies to encourage technology
  uptake.
• Currently polices ad hoc and not complimentary
• Push Policies
• Usual channels such as university funding, ARC
  grants, RD tax concessions, CRCs, CSIRO.
• Low Emission Technology Development Fund 100
  million per year Competitive Grants for
  Renewables
• Pull policies (hard)
• Mandatory Renewable Energy Target (9500 GWh by
  2010)
• Qld 13 Natural Gas
• NSW GGAS retailers to meet mandatory emissions
  intensity benchmarks
• Pull policies (soft)
• Australian Greenhouse Challenge eg Normandy
  Mining Ltd Pajingo Gold Mine achieved a 27
  reduction in CO2 per tonne of ore processed as a
  result of efficiency upgrades.
• Mandatory Energy Efficiency Opportunity
  Assessment

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Room for Improvement

• Push measures starting to be more focused.
• Measures aimed at leveraging business investment
  in RD need to be more strategic across
  industries, not just aimed at the stationary
  energy sector.
• Eg. Mandate in California that, by 2030, 10 of
  the cars sold by the 7 largest automobile
  manufactures must be zero emission or near zero
  emission vehicles
• Pull measures are entirely scattered and are not
  linked in with push initiatives.
• Need an overarching vision of where we are going.

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A States Based National Emissions Trading Scheme
A Flawed Proposal

• September 2005 States released background paper
  for consultation.
• Covers stationary energy sector only, cap and
  trade as opposed to a baseline and credit
  system.
• Cap and trade there is an absolute emissions
  cap cf. baseline and credit businesses are
  ascribed a baseline of emissions per unit of
  output (emissions intensity)
• Baseline and credit more appropriate for
  Australia given anticipated ramp up in
  production.
• Focusing on stationary energy sector only does
  not take into account how product contributes to
  emissions mitigation across its entire life
  cycle
• Aluminium
• LNG

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The Pitfalls of a Hastily Implemented Scheme

• In Australia, getting the settings around
  emissions trading wrong could be disastrous.
• Economic models show that 10 increase in
  electricity costs would result in ve
  profitability of steel, nickel, copper, gold,
  uranium, paper and cement.
• Creating shallow illiquid market only likely to
  create abatement at the margins and increase
  energy costs.
• Learn from overseas experience
• EU Emissions Trading windfall for power
  generation
• Kyoto Protocol Russia signing on net emissions
  increase

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AP6 and Technology Based Solutions

• If we are to reduce GHG emissions whilst
  maintaining standards of living in developed
  countries, and without compromising developing
  countries right to improve theirs, a technology
  based solution is required.
• Necessary technologies will not be developed by
  us alone, but in collaboration with other
  countries.
• We are already involved in a number of
  international research groupings
• Asia Pacific Partnership on Clean Development and
  Climate Change (AP6) is the major framework for
  collaboration
• Major emitter countries and industry BHP
  Billiton, Rio Tinto, Exxon Mobil attended first
  meeting in Sydney.
• Will create multi million fund to encourage
  mining and power industries to develop and use
  cleaner energy 445 million pledged.
• International policy frameworks for development
  and diffusion.

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We Need an Overarching Vision

• At the domestic level, need to target push
  policies towards RD that will make the
  difference, and which are reasonable given
  geography, resources and industries
• Improving energy efficiency indispensable.
  Research that encourages whole of life cycle
  approach (3 Rs).
• Pull polices to stimulate technology uptake
  necessary to overcome conservative culture and
  perceived risks.
• Only justifiable if they can encourage adoption
  of commercially viable low emissions technologies
  or assist in averting high emission technological
  lock in.
• Policies must be coherent and informed by long
  term strategic vision.
• Needs to be developed at the Federal level.

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What role for The AusIMM?

• Challenge of reducing GHG does not need to be a
  limit to growth
• Policy paper from The AusIMM will form basis of
  press releases and submissions.
• On sustainable development issues, crucial that
  govt work with industry, not against it.
• Need to continually highlight how science and
  technology can contribute to solving political
  problems.
• The AusIMM will make best efforts to channel
  knowledge of our members across geology, minerals
  processing and mining engineering in research and
  industry into policy positions on key issues.
• We look forward to your contribution in the
  coming years!

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Contacts

• Discussion paper of GHG emissions policy in next
  Bulletin.
• Advocacy around uranium, RD for sustainable
  sector etc.
• Contact through WIR, The Bulletin, Task Forces.
• Email msarder_at_ausimm.com.au
• Policy web page http//www.ausimm.com/policy/polic
  y.asp