Professional Documents
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Submission 29 - Attachment 1
NOVEMBER 2016
Retirement of coal fired power stations
Submission 29 - Attachment 1
CONTENTS
EXECUTIVE SUMMARY
Key points
The demand for coal is set to continue for decades
- Australia continues to benefit from growing demand for affordable energy in India, China
and SE Asia and their collective need for Australian high quality coals.
Low cost electricity, built on coal-fired power generation, was an essential element of
th
Australias comparative advantage during the 20 century and modern coal technology can
deliver the same benefit this century.
This economic edge has been lost over the last decade due to costly policy interventions
including the carbon tax, the expensive Renewable Energy Target, a lack of a national energy
plan and deep uncertainty about future electricity prices, reliability and security.
Australia does not have to choose between coal and a low emissions future. New coal
generation technologies are reducing CO2 emissions by up to 40 to 50 per cent and carbon
capture and geological storage offers the prospect of reducing emissions by up to 90 per cent.
There are 725 HELE units in place in Asia alone, with another 1150 planned or under
construction.
An informed debate is crucial
- There is limited understating of the nature of electricity, where it comes from and the
complementary roles that renewables and fossil fuels can and do play.
The announcement of the closure of the Hazelwood power station, and the recovery issues in
South Australia after its blackout are a reminder that Australia must work to maintain its long-
held competitive advantage in low cost electricity.
Under a technology-neutral approach to Australias energy needs, the Latrobe Valley and
other areas where there is a geographic concentration of coal-fired power generation or heavy
industry, and skilled employees still have a big future.
As part of a medium term plan to keep domestic energy costs down and CO2 emissions levels lower,
Australia should seek to capitalise fully on its rich natural endowment in all baseload energy sources.
1
See, for example, Productivity Commission (2005), Review of National Competition Policy Reforms, No 33, February;
Morgan Stanley, Expert Report 3 to the NSW Governments 2007 (Owen) Inquiry into Electricity Supply in NSW, p.49; and
Australian Energy Market Commission (2011) Discussion Paper on Strategic Priorities for Energy Market Development.
2
Bureau of Resources and Energy Economics, Australian Energy Projections to 2049-50, November 2014, Canberra, pp 8-9.
MCA Submission to the Senate Environment and Communications References Committee 2
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Submission 29 - Attachment 1
Box 1: Some history about the leadership role NSW and Victoria have played in the
development of electricity markets
1863 display of electric arc light at Observatory Hill, Sydney to mark the marriage of the Prince of Wales.
The first recorded increase in labour productivity attributable to electricity occurred in 1879, at the Garden
Palace, Botanic Gardens where arc lighting was installed at the urging of Premier Sir Henry Parkes to
allow construction work to continue at night.
1888 Tamworth switched on electric street lighting and in 1889 Young commissioned electric street
lighting and sent power to nearby shops, businesses and homes the first time in the Empire.
1949 the Snowy Mountains Scheme commenced it continues to perform an integral role in serving peak
electricity requirements and in 1967 was nominated as one of the seven civil engineering wonders of the
world
The 1970s and 1980s saw large scale thermal coal fire power stations expansion and this continues to
underpin NSW electricity generation today. The supply certainty also helped sustain prolonged economic
growth in the 1990s to today
In 1900, NSW met all of Victorias coal needs for trains, town gas and electricity generation from the
NSW coal fields.
Victoria:
Victoria turned to brown coal from the Latrobe Valley after World War 1. It imported new technologies
from Germany that made it economic to consider using Latrobe Valley brown coal for power generation
1924 the first electricity from the Latrobe Valley brown coal fields was sent to Melbourne
- Victoria was developing a large manufacturing base and could not risk a lack of reliable electricity
supply due to an interruption of NSW coal imports
- The provision of affordable electricity was a foundation stone of Victorias manufacturing-led prosperity
th
in the 20 century
1956 the Morwell brown coal gasification plant opened using the German-imported Lurgi process to
supply coal-derived town gas to Melbourne via pipeline.
In each of the above milestones politicians, engineers and their advisers understood providing electricity was all
about raising living standards and enhancing economic opportunity.
Conversely narrowing energy choices, reducing reliability and raising prices (such as in South Australia) is
detrimental to economic growth and productivity.
Australia is the worlds largest exporter of coal. These exports have a strong positive impact on the
countrys economy. In addition, other countries benefit from the huge export potential of Australias
high quality thermal and metallurgical coals. This supply contributes to energy security in many
countries, which import coal from Australia.
The increased exports of coal have widened and deepened Australias economic integration with Asia.
Its exports of coal for use in both power generation and as a key input for iron, steel and cement
manufacture have helped underpin Asias ongoing industrialization. Australias coal has an important
role to play in securing the energy supply of long-established trading partners, including Japan, South
Korea and Taiwan, as well as China, India, SE Asia and other industrialising economies.
The coal industry has a long association with innovation and Australia is a centre for world leading
research covering a wide range of important areas. This includes all aspects of the production and
utilisation of coal including health, safety and the environment.
It would be unwise to foreclose on the possibility of new, low emissions solutions by locking away an
important reserve now. That would disqualify generations to come from using Australias abundant
coal resources in a way that suits the economy in the future.
Indeed, research and technology will remain critical in sustaining future competitiveness in an industry
faced with technical, operational and human resource challenges as mines became deeper and where
quality deposits are still sought. (See Box 2).
Instead of thinking black and brown coals day has passed and focussing on the structural adjustment
pressures resulting regionally from closure of generators and industrial plant, the Inquiry needs to bear
in mind coals potential to support new industries and jobs in those same communities well into the
future. More widely across the across the entire economy access to affordable and reliable energy is
an essential underpinning of growth and our standard of living.
An ore-body does not develop itself. Resources only become technically viable to develop when innovation-
driven supply-side opportunity meets the right demand-side driven pricing. Moreover, they only become
economically viable in an environment that positively encourages investment and growth. For example:
Broken Hills zinc ores were largely worthless until flotation enabled separation of the ores from the
tailings
Mt Isa was thought a marginal (though large) zinc-lead orebody until the secrets of its giant adjoining
copper orebody were unlocked
Brown coal in Victoria had little value until technology and social developments combined to make it a
valuable resource
Cadias copper (NSW) and McArthur Rivers zinc (Northern Territory) were unwinnable for decades until
new technologies were developed.
From the perspective of energy security theres little scope at least at present for economies to
replace a significant fraction of their fossil fuel energy. 4
Most of the benefits of modern life, including transport, industry, heating and cooling, require a secure,
affordable and uninterrupted supply of energy.
Emerging renewable energy technologies offer other, complementary benefits. At present, renewables
contribute around 15 per cent to Australian electricity generation for public consumption, with 7 per
cent sourced from hydroelectricity. Wind energy has experienced strong growth over recent years and
now represents 4.9 per cent of total electricity generation. Emerging renewable energy technologies
include large-scale solar energy plants, geothermal, wave, and tidal generation technologies.
Renewables will soon make up more of our energy mix as a result of the Governments Renewable
Energy Target, which requires that a fixed quantum of Australias electricity (33,500 Gwh per year,
2030, or about 23 per cent on present forecasts) must come from renewable sources by 2020, and
this quantum is guaranteed to 2030. However, the remaining 75 per cent or more will continue to
come from fossil fuel sources, primarily coal.
2.2 There is limited understating of the nature of electricity
3
Energy security is defined by the Energy Security Office as encompassing adequacy (the provision of sufficient energy to
support economic and social activity), reliability (the provision of energy with minimal disruptions to supply) and
competitiveness (the provision of energy at an affordable price). Factors affecting the supply of energy include issues such as
short-term disruptions to supplies as a result of human and natural hazards, or longer-term impacts resulting from inadequate
energy sector investment. There is also a growing recognition of the importance of building resilience against hazards and
balancing reliable energy supplies and environmental impacts. See https://www.environment.gov.au/energy/energy-security-
office
4
Australian Strategic Policy Institute, Keeping the home fires burning: Australias energy security, December 2011, p 16.
5
Australian Energy Regulator, State of the Energy Market 2015, pp 27-29.
6
Utilisation factors typically range between 80-95 per cent for lignite generators and 50-85 per cent for hard coal generators.
Gas plant and renewables operate at much lower utilisation levels. This aligns with the position of the plant in the merit order of
the NEM, which is determined by fuel cost.
MCA Submission to the Senate Environment and Communications References Committee 5
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Submission 29 - Attachment 1
Demand for electricity is dominated by the industrial and commercial sectors, with very
different needs to household.
- Industry makes up about 50 per cent of Australian electricity demand, (with the
commercial sector and household sector accounting for 25 per cent each), according
to the Office of the Chief Economist. Further, the Australian Bureau of Statistics (Cat
No. 4660) shows that mining accounts for 15 per cent of electricity consumption and 7
per cent of gas demand.
- As users, the importance of stable, reliable, and internationally cost competitive
electricity at scale to our sector cannot be underestimated. Large scale capital
equipment is expensive and is configured for 24 hour operations to ensure return on
investment and competitiveness. Technical requirements mean that in key processes,
disruption must be avoided to ensure there is no damage to equipment.
- Over 50 per cent of our national export income depends on baseload power.
The increased cost of the intermittency of supply is only now being understood.
- Based on a range of international studies, BAEconomics has estimated that when
wind penetration reaches 30 to 40 per cent, the additional economic cost of frequency
and load management as well as distribution costs is as high as $45 a Mw/h. At 100
per cent this system security cost rises to 200 Mw/h.
- Renewable technologies tend to produce disproportionately during times when the
electricity price is low. This means that despite increased volume of generation
7
Department of Industry, Innovation and Science, Energy in Australia, 2015, Table 4.4, p 46.
8
Australian Energy Market Operator (2011), Electricity Statement of Opportunities Executive Briefing, p 12.
9
Australian Strategic Policy Institute, Keeping the home fires burning: Australias energy security, December, p 17.
MCA Submission to the Senate Environment and Communications References Committee 6
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Submission 29 - Attachment 1
output, returns are lower, undermining the technologys market value and investment
potential this is known as the self-cannibalisation effect.10
Simple solutions often seem attractive but bear further scrutiny so that the right
choices are made. Electricity markets are extremely complex technically and commercially. A
current key challenge is to try to make the integration of renewables and new technologies
work efficiently while not compromising the integrity of power system security, affordability and
reliability.
The benefits of improving energy understanding in the community are likely to include:
Improving energy demand side efficiency by making more information accessible to
households and businesses on the nature of energy costs and the options available to
manage those costs.
Better appreciation of the trade-offs and relative costs involved in choosing different
fuels and technologies in the mix.
Improved understanding of the intersection of and potential conflicts between energy
security and climate change goals to help reduce the risks of adopting high cost solutions
that have costly, dysfunctional consequences.
10
B. S. Fisher, S. Schnittger, Implications of Australian Renewable Energy Mandates for the Electricity Sector, A report for the
Minerals Council of Australia, August, 2016. http://www.baeconomics.com.au/bae-assesses-power-systems-and-renewable-
energy
MCA Submission to the Senate Environment and Communications References Committee 7
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Submission 29 - Attachment 1
Low emission energy technologies also face their own unique challenges.
Carbon Capture and Storage needs to gain greater public acceptance and understanding.
Geothermal is yet to be proven and would require significant new transmission investments
and addressing environmental challenges like fracking. Although energy has been produced
from hot aquifers, deep rock geothermal is yet to be proven at commercial scale.
Wind faces more stringent approval requirements, scale and public acceptance issues as well
as the cost of additional investment in back-up generation to address intermittency concerns.
Consistent with solar it is weather dependent, at times highly variable and has a low inherent
utilisation factor.
Solar also faces intermittency, scale and cost challenges. Consistent with wind options.
Thus all existing and proposed energy technologies face challenges. Some are technical in nature,
some are commercial and many involve social and regulatory challenges.
Australias dependence on fossil fuels means that we have, in Professor Garnauts words, a strong
comparative advantage and a strong national interest in applying carbon capture and storage,
11
biofuels and biosequestration technologies.
The distinctive character of Australias abatement challenge heightens the importance of a balanced
debate on the energy choices available. All forms of energy highlight environmental and commercial
issues that must be considered and appropriately balanced in any fuel choice made. Thus it is
important to demand consistency in the arguments used for and against energy sources and work
against these evolving into a good versus bad argument, where renewables are perceived as
inherently good and fossil fuels as inherently bad Such an approach recognises the true long term
role of fossil fuels (gas and coal with carbon capture and storage) as a vital underpinning to support a
world that seeks to increase the amount of renewable but intermittent energy.
3.2 HELE coal-fired technology
The roadmap to a low emissions coal future is increasingly clear and is set out in Appendix 2:
Step 1: Improve power plant thermal efficiency while providing meaningful reductions in CO2
emissions
11
Ross Garnaut (2011), The Garnaut Review 2011: Australia in the global response to climate change, Final Report, 31 May,
p 122.
MCA Submission to the Senate Environment and Communications References Committee 8
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Submission 29 - Attachment 1
Step 2: Adopt carbon capture and geological storage (CCS) technologies at required scale in
Australia.
New technology coal plants, including ultra-supercritical coal plants, are achieving CO2 emissions
12
reductions of up to 40 to 50 per cent compared with the existing fleet of mostly subcritical plants.
An important relationship between plant efficiency and the need for CCS needs to be emphasised.
Compared to a subcritical plant with an efficiency of 35 per cent, an ultra-supercritical coal plant of the
same size with an efficiency of 45 per cent requires about 25 per cent less CO2 capture. Consequently,
for the same net electrical output, higher-efficiency plants require CCS units with smaller capacity;
hence, high efficiency plants have lower operating costs for CCS.
It follows that Step 1 involving deploying high-efficiency, low emissions (or HELE) technologies to
increase plant efficiency is important to reduce the eventual cost of CO2 abatement in Step 2.
In addition to the deployment of CCS, HELE technology is a prerequisite for achieving the goals of the
Paris Agreement. Roughly half of new coal-fired power plants being built employ HELE technology,
such as supercritical (SC), ultra-supercritical (USC) and integrated gasification combined cycles
(IGCC) technologies coupled with advanced emission controls.
HELE coal- and gas-fired power plants are operating around the world (see Boxes 3-5). In addition,
supercritical and ultra-supercritical coal-fired power plants that equate to more than 32 times
Australias coal-fired generation capacity are planned or under construction across Asia.
Improving the global average efficiency rate of coalfired power plants from 33 per cent to 40 per cent
with HELE technology would reduce CO2 emissions by 2 gigatonnes a year the equivalent of Indias
current emissions.
12
Department of Resources, Energy and Tourism, A cleaner future for power stations, Interdepartmental Task Group
Discussion Paper, 2010, p 5. Supercritical and ultra-supercritical plants operate at much higher temperatures than
conventional (subcritical) plants.
MCA Submission to the Senate Environment and Communications References Committee 9
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Submission 29 - Attachment 1
The last decade of energy policy interventions has yielded a grim dividend for energy intensive
industries, especially the manufacturing sector. A decade ago Australia had the lowest cost energy in
13
the OECD. Now it has the 27th lowest. The consequences for energy intensive sectors have been
as inevitable as they were predictable (Chart 1)
120
100
80
60
The 3 November 2016 announcement of the closure of the Hazelwood power station iand the recovery
issues in South Australia after its blackout are a reminder that Australia must work to maintain its long-
held competitive advantage in low cost electricity..
With a technology-neutral approach to Australias energy needs, the Latrobe Valley still has a big
future.
The Latrobe Valley resource is well defined: 33 billion tonnes of lignite has been identified as
14
economically recoverable. This represents a massive resource able to meet Victorias, and indeed
Australias energy needs into the future while also providing for the potential development of the coal
resource for non-energy uses. Current estimates of Victorias recoverable lignite resources are
15
approximately 465 years of production.
Victorias brown coal contains low ash and sulphur and is readily mined at low cost. While the future
for lignite in Victoria will remain firmly rooted in electricity production for many decades, opportunities
exist and are underway to further develop Victorias massive endowment of lignite.
Lignite can be converted to a range of products including diesel, methanol, ammonia, urea, coal char,
dried coal and hydrogen to name a few applications in addition to electricity generation. Chars and
cokes can be derived from brown coal for pyrometallugical applications, to produce reductants and
carburising chemicals and can also be used as a general carbon source for other applications.
Calcium loaded char has applications in water & waste treatment and as an ion-exchange medium. In
the future, brown coal may even be refined into a purer form of carbon for use in production of a
myriad of carbon products including carbon fibres, carbon anodes, activated carbons, filter aids,
13
Stadler, A., Jutsen, J., Pears, A., & Smith, M. 2xEP: Australia's energy productivity opportunity, Draft Version 1.2. Sydney,
Australian Alliance to Save Energy, 2014, pp 35 and 36.
14
State Government of Victoria, Lignite/Brown Coal, 2015
15
A. F. Britt et al., Australia's Identified Mineral Resources 2014, Geoscience Australia, Canberra, p.4
MCA Submission to the Senate Environment and Communications References Committee 10
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Submission 29 - Attachment 1
pigments, graphite lubricants and conductors and formed carbon materials. Carbon, in the form of a
lignite based fertiliser, as a soil conditioner is also highly prospective.
Gasification of coal can also produce synthesis gas (syngas, a mixture of predominantly carbon
monoxide, carbon dioxide and hydrogen). This syngas can be used in the development of a range of
products.
Technologies that develop these derivatives from coal will require value-adding onshore thus creating
new industrial hubs that would likely be developed in close proximity to the coal resource in the
regions and will require access to a highly skilled workforce and infrastructure development.
There are a number of national and international companies actively working on developing large-
16
scale activity based on coal resources under the Advanced Lignite Demonstration Program. The
success of the lignite projects as well as the CarbonNETproject will play an important role in
demonstrating the future use of brown coal as both an energy and a non-energy resource.
As noted above, deploying new technologies, coal can deliver low cost, reliable energy with up to 40 to
50 per cent reduction in CO2 emissions. New super-efficient black coal plants are commercially
available and operating throughout the world. (Some examples are shown in Box 3). Super-efficient
brown coal plants are also planned or already delivering low cost, baseload energy around the world,
including in Germany, Poland, the United States and Thailand. With a bold vision NSW, Queensland
and Victoria and other jurisdictions can invest in Australias future by building ultra-supercritical black
and brown coal base load plants here too (Boxes 4 and 5).
Ignoring new coal generation will lead to higher prices and unreliable supply. Households and
industrial users throughout the NEM will be affected and future investment plans put at risk. Modelling
conducted for the Victorian Government already shows that the Hazelwood closure will mean Victorian
households can expect an annual price increase of up to $100 with larger increases for small
businesses. In addition, Australia will be wasting the talent of skills of thousands of workers from the
Latrobe Valley as well as the rich resource that lies beneath it.
16
State Government of Victoria, Advanced Lignite Demonstration Program
MCA Submission to the Senate Environment and Communications References Committee 11
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High efficiency, low emission or HELE technologies (the SC and USC Plants), which are illustrated
here and are commercially available throughout the world. These plants include technologies to
address SOx, NOx and particulates. Japans Isogo and Chinas Waigaoqiao No 3 are world leaders in
dealing with these emissions; their effectiveness means they do not contribute to local airborne
pollution.
The coal industry has made the development and demonstration of low emissions coal technologies
the central focus of its approach to dealing with climate change. For many years the industry has been
proactive in addressing environmental issues including greenhouse gas emissions in the extraction
and use of coal.
In order to drive this demonstration program the black coal industry established the COAL21 Fund in
2006. The Fund is a voluntary levy on coal production and has so far committed over $300 million in
Australia (see Box 6). The Commonwealth and State governments are also providing substantial
funding to the demonstration program.
These contributions represent a cooperative approach with industry to develop and demonstrate low
emissions coal technologies. The approach covers R&D, pilot plants, demonstration projects and
commercial scale projects. Industry is actively engaged on the projects listed in Table B. Those
projects are among a number of major carbon capture and storage technology ventures currently at
various stages of development in Australia.
Other Australian initiatives include the Cooperative Research Centre for Greenhouse Gas
Technologies (CO2CRC), Geoscience Australias National CO2 Infrastructure Plan, CSIROs Low
Emission Coal Technology R&D program, CSIROs National Geosequestration Laboratory, Brown
Coal Innovation Australia, Coal Innovation NSW and the Global CCS Institute. Australia has also led
the world in developing legal and regulatory frameworks for the permanent underground storage of
CO2.
The MCA recognises that meeting Australias emissions reduction targets will require a fundamental
and unprecedented transformation of our energy sector. With $10 billion at its disposal, the Clean
Energy Finance Corporation (CEFC) has the potential to play a role in delivering these solutions and
thereby contribute to the broader objectives of the Governments Clean Energy Future Plan. The
success of the CEFC in realising this potential will be enhanced only if it has the flexibility to invest in
all low emission technologies, including CCS and Bio-energy with carbon capture and storage
(BECCS).
The decision to exclude CCS from accessing the CEFC is inconsistent with the potential of CCS to
contribute to Australias domestic abatement efforts and potentially contrary to Australias strategic and
economic interests as the worlds largest exporter of coal and a major exporter of liquefied natural gas
(LNG).
Given the enormous potential of CCS in Australia, it is concerning that it has received considerably
less funding support than other low emission technologies. Renewable technologies have access to
the multi-billion dollar funding managed by the Australian Renewable Energy Agency as well as a
(conservatively) estimated $20 billion in support provided by the mandatory Renewable Energy Target.
In contrast, CCS is receiving less than $1 billion although it is forecast to deliver a potential 30 per cent
of the electricity mix by 2049-50. The exclusion of CCS from the CEFC exacerbates the current
funding imbalance and handicaps the development of a key low emission solution.
Table B: COAL21 project and related funding commitments, 31 October 2016 (Am)
COAL21 Funding Funding
Project (a)
Commitment other
Queensland
ZeroGen IGCC with CCS Stage 1 Feasibility Study and subsequent Large
41.4 140.9
Scale Pre-Feasibility Study
Wandoan IGCC with CCS Pre-feasibility study 15.5 20.2
Callide Oxyfuel Project Construction and Operation 76.9 168.0
Qld Carbon Geostorage Initiative Scoping and Delivery 10.7 7.7
CTSCo 15.2 8.8
New South Wales
Delta PCC Project Scoping and Delivery 0.7 1.3
NSW Storage 13.3 28.1
National/Other
Australian National Low Emissions Coal R&D 75.0 75.0
CO2CRC and Otway Project Delivery (c) 12.5 86.3
Fugitive Methane Abatement 29.9 39.0
Business case studies and other expenses 11.5 0
TOTAL 302.6 555.3
Note: The above commitments were as at 31 October 2016 and may change from time to time.
Given the challenges to the economics of future electricity generation, CCS offers a cost-competitive
option for Australia to meet electricity demand growth in an environmentally sustainable way while
continuing to utilise Australias abundant fossil fuel reserves.
Source: Dr Julio Friedmann, CCUS Viability: Technology, Policy, and Finance post Paris, Lawrence Livermore National
Laboratory, California, presentation Canberra, 18 October 2016.
As illustrated in Chart 1 CCS is among the lowest cost portfolio options. Retrofit CCS is already cost
competitive with some of the other low emissions options that are being deployed now. Australian
LCOE studies have usually assumed new build with CCS. Nevertheless, Dr Friedmann suggests
retrofit of CCS may be viable and cheaper than new build options for some Australian power stations,
with CO2 avoided costs lower than some currently deployed renewable technologies.
Dr Friedmann reported that costs of retrofit at Petra Nova in the USA indicate a cost of US $100 a ton
of CO2 avoided, with the next retrofit expected to come in at US$70 a ton and with version 4-5 coming
in at an expected US $50 a ton.
This technology is at early commercial stage of development. The key project in Australia
demonstrating this technology is the Callide Oxyfuel Project (QLD).
Integrated Gasification Combined Cycle (IGCC) Technology is applied to a new plant. In the IGCC
process, coal is converted into a synthetic gas (syngas), which is cooled and cleaned to remove
particulates and sulphur compounds and passed through a shift reactor (to convert more of the
syngas to hydrogen and CO2). The CO2 is then separated and the hydrogen is burned in a combined
cycle gas turbine unit. Coal gasification technology can also be adapted for coal to liquids production.
The main components are a coal gasification facility, an air separation unit (oxygen instead of air is
typically used in the gasification process), a gas cleaning facility, syngas shift reactor, CO2 separator
and a combined-cycle gas turbine (CCGT) power plant. As concentrated CO2 is one of the by-
products of the gasification process this technology is highly suited to carbon capture and storage.
This technology integrated with carbon capture and storage is currently at the pilot and demonstration
stage of development.
Geological Storage
The carbon capture technology options outlined above can be combined with geological storage to
provide a full Carbon Capture and Storage (CCS) system. While many components of the techniques
and technologies are well-established in other industrial applications, their adaptation to power
generation systems is currently at the demonstration stage. The type of capture technology that is
most suitable will depend on site specific factors such as fuel type and ambient conditions.
Carbon dioxide can then be transported using high pressure pipelines a technique that has already
been proven for use in enhanced oil recovery (EOR) projects since the 1980s. It could also be
transported in tankers similar to those used to transport LPG. Transportation costs will vary greatly
depending on volume, distance, geography and method. Captured CO2 has the potential to be stored
in a variety of onshore and offshore geological sites including active and depleted oil and gas reserves
and saline aquifers.
B. Low emissions coal technologies used in industrial activities
The challenge for CCS is not to prove the feasibility of its constituent technologies but to deploy
integrated large-scale projects at a cost that is commercially competitive. While the same commercial
challenge faces all low emissions technologies, CCS has the advantage of being applicable to any
large source of CO2 emissions. CCS can be applied to power generation (from coal, gas, diesel, fuel
oil or biomass), production of industrial goods (such as iron and steel, cement and fertiliser), coal to-
liquids processes, oil refining and natural gas processing. CCS also has the advantage of being
independent of the weather.
The technology is being applied at the Abu Dhabi Carbon Capture, Utilisation & Storage Project
through CO2 capture from Direct Reduction Iron facility.
C. Low emissions coal technologies used to reduce fugitive emissions
Methane in air is explosive in concentrations between 5% and 15% so it is imperative that methane
levels in underground mines are kept well below this level (eg less than 1%). Technologies used for
the abatement of these emissions cover two broad areas. The first area covers technologies to deal
with rich methane gas sources from underground mines essentially related to the pre-draining of
underground coal mines ahead of actual mining. There are existing commercial technologies for the
abatement of this methane. The second area covers technologies to deal with ventilation air methane
from underground mines residual gas after pre-drainage is kept below the safety limit by diluting it
with a sufficient volume of ventilation air. This safety measure leads to very large volumes of
ventilation air with extremely low methane content.
Step 1: Improving power plant thermal efficiency while providing meaningful reductions in CO2
emissions
The average thermal efficiency of coal-fuelled power plants is 33 per cent, which is substantially below
the state-of-the-art rate of 42 per cent (Chart A1). This efficiency varies across the major coal using
countries from under 30 per cent to 45 per cent. Such differences arise due to the age of the plant,
coal quality and impurity profiles (e.g. ash, sulphur and moisture content and physical and chemical
rank properties), operating conditions, maintenance practices and application of new and improved
technologies.
Chart A1: Increased thermodynamic efficiency reduces the amount of CO2 generated per unit
of plant output
Source: IEA Insights Series (2013), 21st Century coal: advanced technology and global energy solutions, report for the Coal
Industry Advisory Board, p 20; based on information from RWE AG.
Note: The figure shows CO2 reductions at coal-fuelled stream-electric power plants from higher efficiency / CCS technologies
(hard coal, 26 GJ/kg HHV, North Sea cooling water).
17
World Coal Association, Coal Matters 3: coal and electricity generation, 2012, p 2.
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assembled about the scale-up and application challenges. To maintain momentum during this critical
phase, it is essential that there is a clear pathway to future cost reduction.
Chart A2: Importance of early deployment of advanced coal technologies
Source: IEA Insights Series (2013), 21st Century coal: advanced technology and global energy solutions, report for the Coal
Industry Advisory Board, p 22; based on data from the Electric Power Research Institute.
List of acronyms: A-USC PC is advanced ultra-supercritical pulverised coal; USC PC is ultra-supercritical pulverised coal; SC
PC is supercritical pulverised coal; EOR is enhanced oil recovery aimed at boosting oil recovery above an average of about 40
per cent by injecting CO2.
As deployment picks up pace, learning-by-doing presents an opportunity for substantial cost reductions
over the period to 2040, though deployment will also critically depend on improved information becoming
19
available about CO2 storage opportunities.
The role of CCS becomes more critical under other scenarios for greater emissions reductions such
as the IEAs 450 Scenario, which assumes new policy actions consistent with a 50 per cent chance of
limiting the long-term average increase in global temperature to 2C. The 2C target puts into sharp
focus the need to increase the adoption of technologies such as CCS rapidly and at scale and
estimates that CCS could reduce the cost of decarbonising the power sector by $1 trillion between
20
now and 2035.
18
IEA Clean Coal Centre, HELE perspectives for selected countries, London, September 2015. The 10 Asian countries are
Bangladesh, China, India, Japan, Malaysia, Philippines, South Korea, Taiwan, Thailand and Vietnam.
19
International Energy Agency, World Energy Outlook 2015, p 44.
20
International Energy Agency, World Energy Outlook 2013, pp. 37, 141, 182.
MCA Submission to the Senate Environment and Communications References Committee 21