2009 Summer Seminar The Future of Coal: The …mydocs.epri.com/docs/SummerSeminar09/4bChiaro.pdf• Demonstration of commercial plant viability (‘bankability’) • Cost reductions

2009 Summer Seminar

The Future of Coal:The Australian Experience

Preston ChiaroChief Executive – Energy & Minerals Rio Tinto plc2009 Summer SeminarAugust 3-4, 2009

2© 2009 Electric Power Research Institute, Inc. All rights reserved.

Bauxite

TiO2

Uranium

Alumina

Talc

Diamonds

TiO2 / Iron

Borates

Copper /Gold /

Molybdenum

Coal

TalcCoal

Talc

Borates

Copper

Aluminium

Talc

Uranium

TiO2

Copper

Copper / Gold

DiamondsSalt

Iron ore

Aluminium

Coal

BauxiteCoalAluminaAluminium

Coal

Iron Ore

Copper/gold

Talc

Diamonds

TiO2

Iron

Nickel

Copper

Rio Tinto is a large, geographically diverse international mining house

Feasibility & developmentExisting operation

Copper

Copper

AluminiumAluminium

Aluminium

Aluminium

Aluminium

Bauxite

Alumina

Bauxite & alumina

Iron ore

Aluminium

Aluminium

Aluminium

Alumina

Source: Rio Tinto


AluminiumAluminium Copper and DiamondsCopper and Diamonds

IronIron Energy and MineralsEnergy and Minerals

TechnologyTechnology ExplorationExploration

Rio Tinto – How we are organized


Rio Tinto – a leader in safety

0

1

2

3

4

5

6

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

LTIF

R p

er 2

00 0

00 H

ours

Wor

ked

Rio Tinto Managed Operations USA (MSHA) Australian Minerals Council *

*Australian data normalised to include restricted w ork days by a factor of 1.7.

Rio Tinto is a leader in safety


Rio Tinto is a major supplier, user and generator of energy

• 2008 energy consumption – 531 PJ (148 billion kilowatt-hours)• Indicative 2008 energy expenditure ~US$6bn

– Electricity Self generated and purchasedGrid connected and remote sites Hydro – fossil fuel fired – nuclear

– Diesel Remote powerTransport

– Natural Gas Power & process heat– Carbon reductants Metal production

• Energy fuel supplier (Rio Tinto share)– Coal 153 million tonnes per annum – Uranium 14 million lbs per annum U3O8


• A price on carbon is the most important element of any policy approach, despite the political difficulties of implementation

• Any effective carbon price system must be comprehensive, must provide for technology deployment, and must prevent “leakage”

• Rio Tinto is a member of USCAP, which advocates for a market-based approach to carbon price setting

Rio Tinto accepts the urgent need for climate change action and recognises the issue as being one of our greatest challenges


Carbon capture and storage (CCS) will play a critical role in decarbonising the power sector

Source: Rio Tinto

Carbon capture and storage processRole and importance of CCS

• The recent UN IPCC report recognised that technologies such as CCS will have a key role in reducing emissions

• The key hurdles to industrial scale deployment are not so much technological as commercial and building the necessary confidence

• CCS requires broad support and a regulatory framework that recognizes its higher costs compared with those of a conventional higher emitting plant

All credible modelling shows that all carbon reduction options will be required, and the availability of CCS reduces overall costs


The nature of the challenge (i)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

Existin

g

Natural

Gas

O-C

Natural

Gas

C-C

Nuclear

Biomass I

GCCWind

Hydro

GG

E (t

CO

2-e

/ MW

h)

Photovolta

ic

Gas Renewables Nuclear

Advance

d

Coal fired power

CCS

CCS

Source: CISS, 2002

IntermittencyTechnology

maturityPublic

approval

Resource availability

Future prices

Future carbon

risk

All generation technologies have issues


PC Bituminous

PCBrown Coal

PC Bit+ CCS

IGCCIGCC + CCS

OCGT

CCGT

CCGT +CCS

Nuclear

Onshore Wind

OffshoreWind

Biomass

Geothermal (Volcanic)

HDR

Solar Thermal

Solar PV

LCOE(USD/MWh)

Paid off coal fired generators

Cost of electricity from new plantsNo carbon cost

9

New conventional fossil fuel plants

Low emission technologies

The nature of the challenge (ii) The cost of power

10© 2009 Electric Power Research Institute, Inc. All rights reserved. 10

PC Bituminous

PCBrown Coal

PC Bit+ CCSIGCC

IGCC + CCS

OCGT

CCGT

CCGT +CCS

Nuclear

Onshore Wind

OffshoreWind

Biomass

Geothermal (Volcanic)

HDR

Solar Thermal

Solar PV

LCOE(USD/MWh)

Paid off coal fired generators

Cost of electricity from new plantsCarbon cost $100/tonne

The nature of the challenge (ii) The cost of power


Australian CCS Activities

Collaborative Research (Academia/Industry/Government) Eg CO2CRC

Pilot Scale Demonstration Funding Eg Low Emission Technology Development Fund (AU$500M)

Development of National CCS Strategy & R&D Programme

Commercial Scale Demonstrations

Global CCS Institute

Australian Coal Industry Billion Dollar Coal21 F ndu

Development of Geosequestration Legislation

Fundamental CCS Research Eg CSIRO, Research Grants

FuturePast

Participation in Multilateral CCS Organisations , eg CSLF, APP

National C Storage Taskforce


Australian CCS Activities

National Low Emission Coal Council

Australian National Low Emission Coal R&D

National Carbon Storage Taskforce

National CCS Strategy

CCS R&D Program to support Strategy

National Carbon Mapping & Infrastructure Plan

Funding for Demonstrations

Commonwealth Government : AU$2 Billion

Coal Industry: AU$1Billion

State Governments: AU$0.5 Billion


Australian activities on project siting and infrastructure development

Source: Australian Carbon Sequestration Task Force


Galilee

Eromanga

Surat Demo

Surat

Gippsland Off.

GippslandDemo

Bass

Otway West

Perth On.

Canning On.

Carnarvon

Bonaparte

Denison Demo.

2010 2015 2020 2024

Pre‐exploration/gazettal Exploration Appraisal & development Construct

RFSU2018RFSU2018

RFSU2020

RFSU2021

RFSU2021RFSU2022

RFSU2022

RFSU2023

RFSU2024

Perth Demo

RFSU2024

RFSU2024

RFSU2020

RFSU=Ready For Start Up

Source: Australian Carbon Storage Task Force

Timeline for storage development in Australia


Indicative Australian CO2 transmissionand storage costs

Source: Australian Carbon Storage Task Force


Australian low emission projects

Callide

Zerogen

TarongMoomba

Munmorah

Loy Yang

Monash CTL

H3Hazelwood

Mulgrave

Otway

FuturGas

Coolimba

Gorgon

Capture

Efficiency

Storage

HRL IDGCC

Cool Energy

Fairview

Source: CO2CRC, 2009


• CCS is a necessary part of any rational plan of action to reduce emissions

• Commercial CCS projects will require:

• A workable legislative framework Public acceptance

• Suitable and accessible disposal geology

• Demonstration of commercial plant viability (‘bankability’)

• Cost reductions through design optimisation

• Demonstrations at scale are the only way this will happen

• Australia has developed a strategic approach

• Line of sight to demonstration funding

• Systematic approach to geological and infrastructure

• Development of legislation

• International co-operation through the Global Carbon Capture & Storage Initiative

• Key lessons: start early on geology, and aligning on cost estimates

Summary

2009 Summer Seminar

The Future of Coal

Preston ChiaroChief Executive – Energy & Minerals Rio Tinto plc2009 Summer SeminarAugust 3-4, 2009


Rio Tinto is highly active in promoting the demonstration of CCS technology

• Rio Tinto is a member of this public-private partnership to build a first-of-its-kind coal-fuelled, near-zero emissions power plant

Otway Basin Pilot Project

Global CCS Institute • Rio Tinto is a founding member of the Global CCS Institute

• We sponsor one of the most comprehensive subsurface monitoring programmes in Australia, the Otway project, to demonstrate the feasibility of CCS

• Formed in 2007 as a joint venture between Rio Tinto and BP to develop low-carbon hydrogen with CCS as a fuel for electricity generation

http://www.co2crc.com.au/images/imagelibrary/otway_diag/OBPP_locationmap_media2.jpg


Project type DemonstrationProject focus StorageProject status OperationalCommenced 2008Capture N/AStorage GeologicalScale, CO2 tpa 50,000Scale, MWe equiv. 8Cost $A 40 MillionPartners CO2CRC,

industry, government

Australian low emission projects - storageOtway Project, CO2CRC, Victoria

Demonstration of the technical feasibility of long term CO2 geological storage; monitoring options; verification of geological models; public outreach

CommentsSchematic diagram of Otway Project

Source: CO2CRC


Project type Commercial scaleProject focus Capture, storageProject status FeasibilityCommencing date 2016Capture Pre-combustionStorage Deep saline formation Scale, CO2 tpa 2,000,000Scale, MWe 400 nettCost ($ 2008) $ 4.3 BPartners Queensland

Government, coal industry, Stanwell, MHI

Australian low emission projects –capture & storage -ZeroGen, Stanwell, Queensland

Coal based 400 MW IGCC + CCS power plant

CommentsZeroGen power plant

Source: CO2CRC


Project type Commercial scale Project focus CO2/NG separation,

storageProject status FeasibilityStart date 2012 (projected)Capture CO2/NG separation Storage GeologicalScale, CO2 tpa 3,000,0000 – 4,000,000Cost ($ 2008) Over $A11 billionPartners Chevron, Esso,

Shell

Australian low emission projects –capture & storage Gorgon, Chevron, Western Australia

CO2 capture from natural gas and storage

CommentsGorgon Gas fields

Source: CO2CRC

Documents

2009 Summer Seminar The Future of Coal: The …mydocs.epri.com/docs/SummerSeminar09/4bChiaro.pdf• Demonstration of commercial plant viability (‘bankability’) • Cost reductions