Australias Coal and Clean Coal Industries Josh Cosgrave A/g - - PowerPoint PPT Presentation

Australia’s Coal and Clean Coal Industries

Josh Cosgrave A/g General Manager Coal and Minerals Productivity Branch

7 September 2016

Australia’s coal industry

• Major global producer and exporter
• f coal: largest exporter and 5th

largest producer in 2015.

• Challenging market conditions:

Resulting from a excess supply capacity and lower prices.

• Cost cutting has improved project

viability: Largely achieved through wage and staffing reductions.

• Industry wide asset consolidation:

Resulted in a number of sales and acquisitions.

• Prices have stabilised: Global

production cuts have eased pressure

• n the market.

Australia’s thermal coal costs (energy adjusted)

Source: AME Group.

• Weak growth in demand:

However, coal will remain the dominant energy source for electricity generation to 2040.

• Slowing growth in production:

Driven by mine closures and production curtailments.

• Few projects in development:

Projects are more likely to be expansions of existing

• perations over greenfields.

Global Coal Industry Outlook

5 10 15 20 25 30 35 40 45 Coal Oil Gas Nuclear Hydro

• ther

renewable

%

World electricity generation, by fuel

2013 2040

Source: IEA (2015) World Energy Outlook.

• Limited growth in volumes:

Closure of operations expected to offset new capacity.

• Export earnings to remain

low over medium term: There has been subdued production growth over the last 5 years and this is reflected in the export profile.

Australian Export Outlook

10 20 30 40 50 40 80 120 160 200 2001–02 2004–05 2007–08 2010–11 2013–14 2016–17 2015–16 A$ billion Million tonnes Volume Value (rhs) 5 10 15 20 25 50 100 150 200 250 2001–02 2004–05 2007–08 2010–11 2013–14 2016–17 2015–16 A$ billion Million tonnes Volume Value (rhs)

Australia’s thermal coal exports Australia’s metallurgical coal exports

Source: Department of Industry, Innovation and Science.

20 40 60 80 100 120 1976 1982 1988 1994 2000 2006 2012 Gt

Black Coal Brown coal

Australia has large coal resources.

Australia’s recoverable coal resources are large and high quality

The large increase in coal resources since 2008 was the result of increased exploration and reclassification of resources Australian coal typically has high energy content; low sulphur and low-medium ash Highly suitable for modern, high efficiency coal power plants

Market Conditions

• Prices
• Environmental and climate policies
• Import demand
• Non-tariff barriers

Opposition to coal mine developments

• Localised project protests
• Larger environmental campaigns

Finance

• Difficulty obtaining finance – broader

industry issue

• The fossil-fuel divestment campaign

Challenges facing Australian coal projects

• Positive signs in the market
• Working with jurisdictions
• Regulatory Reform
• Improving social licence

conditions

• Climate change policy toolkit

Addressing the challenges

More new plants are planning to use HELE technology

• Improving thermal efficiency will help achieve meaningful reductions in

emissions

• Many new plants being developed worldwide are based on supercritical

technologies or better

• These plants will be better placed to integrate CCS when conditions are

appropriate

• There are also options to retrofit or prepare existing plants for retrofitting for

advanced low emission technologies

• New financing arrangements within the OECD encourage HELE while

addressing the energy requirements of countries like India and Indonesia Australia’s coal is well suited to use in HELE plants

The development of low emission options may create opportunities for Australian coal

• Australia’s Strategic Policy: Energy White Paper
• Australia’s policy focus for low emissions technologies:

– Improving knowledge base of Australia’s CCS resources – Demonstrate domestic LET capacities and capabilities – Strategic Partnering – Building Australian skills and capacity

• Australian Government commitment of approximately AUD 600 million to a

range of low emission technology activities.

Australia’s policy focus for low emissions technologies

• CarbonNet:

– Feasibility of commercial scale CCS; project investigating full end-to-end CCS chain – Kawasaki Heavy Industries have noted interest in partnering with CCS projects such as CarbonNet.

• Callide:

– Government of Japan – Australian industry collaboration – World first oxyfuel combustion pairing with carbon capture in March 2015 – J-POWER significant project partner.

• Gorgon:

– Set to be world’s largest commercial scale CCS project; Reduce Gorgon’s GHG by 40% – JV includes Osaka Gas, Tokyo Gas and Chubu Electric Power.

• Otway:

– World class CO2 injection testing facility – Internationally significant contribution to CO2 storage science and engineering

• CCS RD&D:

– New AUD 25 million Programme supporting CO2 storage and RD&D.

Australia: Selection of Key Low Emission Technology Projects & Key Research Initiatives

CarbonNet Otway Gorgon Callide

• Australia is a long-term dependable supplier of coal and other resources to the

world.

• The industry will face short term challenges, but longer term prospects are

promising.

• The Australian Government is working closely with jurisdictions and citizens to

address industry challenges.

• The large-scale investment undertaken in Australia’s coal sector over the last

decade has increased our productive capacity.

• Australia’s supply capacity, geographical location and coal quality ensures we

are well positioned to meet future increases in coal demand in the region.

• Australia is home to a number of low emission technology projects of

international significance and opportunities for further international collaboration are welcomed.

Key messages

Department of Industry, Innovation and Science

Industry House 10 Binara Street Canberra City, ACT 2601, Australia Telephone +61 2 6213 6000 Email: LowEmissions@industry.gov.au