Discussing Emissions at the Energy and Mines Conference 2019

Umwelt Principal Environmental Consultant, Emma Molloy, recently attended the Hydrogen and Mines Conference, as well as the Energy and Mines Conference in Perth. The 2019 conferences were timely, coinciding with the re-release of draft Greenhouse Gas Emission Guidelines from the Western Australian Environmental Protection Authority (EPA), supported by a discussion paper explaining the positioning behind the guidelines. Many of the points raised in the EPA discussion paper were mirrored and emphasized at the conference, and Emma has summarised key points from the conferences below.

Investment Drivers for Decarbonization

Representatives from banks and investors pointed to the many corporate and investment drivers for decarbonization.

When the Paris Agreement formally commences in 2021, countries will be looking at the embedded carbon content of imported products and seeking to reduce carbon imports. The change is likely to create a preferential market for “green” products, e.g.: anything (coal, metals, etc.) with a reduced carbon footprint, products created using a high percentage of renewable power, or those with built-in carbon offsets.

Even if Australia doesn’t have a carbon emissions trading scheme, our large export markets like China are moving towards implementing carbon trading. Therefore, products that are exported to these markets will be scrutinised for the embedded carbon content – again this is likely to lead to a preferential market for green products.

There is pressure from investors and shareholders to reduce carbon emissions and reduce exposure to risk associated with fossil-fuel intensive industries. The bank representatives explained that it is much harder to sell investors on a fossil fuel project, whereas renewable energy generation projects are over-subscribed and in demand.

Maintaining a social licence to operate requires meeting public expectations for reduced or net-zero carbon emissions, to align with the Paris Agreement and urgent need to cut greenhouse gas emissions to limit global temperature rise to 1.5 degrees C.

Operational mining companies are seeking to reduce carbon emissions for the above reasons, as well as:

  • Reduced exposure to volatile, and likely increasing, fossil fuel costs
  • Increased reliability (and self-sufficiency) of supply of fuel/energy
  • Better health and safety outcomes due to the displacement of diesel (no diesel particulate matter, less noise, less heat – especially applicable to underground operations)
  • Reduced maintenance and increased uptime, leading to increased operational time – with significant cost benefits
  • Pricing of renewable energy is competitive with fossil fuels, with payback periods typically within five years All representatives from mining companies, large and small, are targeting displacement of diesel and the electrification of mines, which provides options for renewable energy.

Investor Expectations

Representatives from banks and investors encourage potential projects to implement the framework recommended by the Task Force on Climate-related Financial Disclosures (TCFD).

The TCFD framework requires climate-related risks to be managed via corporate governance, risk assessment, strategies for managing risks & opportunities, and the development of relevant metrics and targets. This includes consideration of climate- change-related risks (e.g. impacts of extreme weather events) as well as risks and opportunities relating to a low-carbon economy.

Quantifying the business risks in a low-carbon economy typically requires financial modelling of different carbon-price scenarios. The is undertaken already by many companies, applying a range of internal carbon prices. The current price of carbon in most global jurisdictions is less than $US 25/tonne (World Bank, 2019); however, most models forecast that this cost needs to rise to $US 75-125/tonne to achieve the reductions in carbon emissions that are required under the Paris Agreement.

The Potential of Hydrogen

Hydrogen is being considered as an option to decarbonize mining transport and mining power systems.

One option to head towards de-carbonization is “green hydrogen” i.e. hydrogen generated from renewable power. Several large mining companies are seriously looking at generating green hydrogen for both internal use and export. However, there are considerable technical challenges associated with hydrogen, including:

  • Significant technical and safety issues associated with the transport of hydrogen, due to the extreme cold temperature needed for liquid hydrogen.
  • Inefficiencies in the conversion of energy into hydrogen, and significant costs involved in transport and storage.
  • There are currently no hydrogen-powered mine vehicles available.
  • The availability of parts and service personnel is currently incredibly restrictive and can lead to months-long delays.

Nevertheless, there is strong Western Australian State government support for the “hydrogen economy” and CSIRO (2018) have developed a Hydrogen Road Map for Australia.

Hydrogen is already relatively cost-competitive, but the challenge is infrastructure – transport, storage and getting trucks that are hydrogen-powered – as well as the significant and real safety stigma.

The current status of the hydrogen market is one of Research and Development for the next 5+ years. The indicative timeframe for hydrogen-powered mine vehicles is 2040. Several alternatives to diesel-fuelled mine vehicles and transport were discussed.

Opportunities to Reduce Carbon Emissions in Mining Transport

Similarly to hydrogen-powered mining fleet, there are no currently available full battery-electric mine trucks. We’re looking at a similar timeframe – around 2040 – before these are likely to be widely available.

There are current carbon reduction options that can be applied to mining and transport, which are feasible in the short term, such as:

  • Electric buses for transport of personnel – currently available
  • Electric light vehicles (i.e. mine-suitable 4WDs) – currently in trials
  • Electric underground loader-dumpers (40t) – have been developed by one specific mine, this is a feasible technology but will require significant scaling up and collaboration to implement in wider applications
  • Minimise or replace haul vehicles with non-vehicle transport, e.g. relocatable conveyor, permanent conveyor or rail, which can be electrified and therefore renewable energy-powered – currently available
  • Use of trolley-assist, a hybrid diesel-electric haul truck powered by electrical overhead wires up a haul ramp, significantly reducing diesel use – currently available
  • Design of haul routes to minimise vehicle load, transport distance, and diesel use

Renewable Energy in Power Generation

Renewable energy in power generation is now becoming cost-competitive, and several real-world mining installations were discussed at the conference, including in Australia and Western Australia.

The “best” site-specific option needs modelling of solar and wind potential as well as available fossil fuel sources and power demand, which will generate numerous options. The options can then be selected based on company priorities – e.g. lowest cost of energy, achieving a particular renewable energy “penetration” (i.e. percentage renewable mix), payback period, etc.

Typical recent applications have achieved at least 60% renewable energy with a mix of wind, solar, battery storage, and fossil fuels (gas or diesel, depending on availability).

There are many hybrid energy providers and different contract arrangements. Whether a mine opts to install and operate their own equipment or signs up to a power purchase agreement for a provider to build/own/operate the power equipment, will depend on their financial and business priorities.

Conclusion and Implications

With the world rapidly shifting toward renewables and decarbonisation for various reasons, any organisation wishing to position themselves to succeed in a low-carbon economy needs to consider a few questions:

  • Do you have a sustainability policy that references climate risks and carbon emissions?
  • Do you know what climate-change risks your business may be exposed to?
  • What is the embedded carbon in your supply and product chain?
  • How would your product be placed if you had to offset carbon emissions, at a range of different carbon price points? How does this look for Scope 1, Scope 2 and Scope 3 emissions?
  • Do you know your major sources of carbon emissions? This involves looking at your operations with a critical eye to quantify the emissions sources and possible scenarios to reduce emissions.
  • What is the payback period, and do these initiatives become viable if there is a price on carbon or a market drive towards green products?

For more information on positioning your business for the low-carbon economy, and reduction opportunities, speak with Umwelt.