Issue 4 April 2005

Greenhouse challenge

This month's Coal21 conference in Sydney, organised by the Australian Coal Association, has brought home the important fact that worldwide greenhouse gas emissions are still rising fast and that the task of stabilising greenhouse gas concentrations in the atmosphere at 550ppm by 2100 is likely to be made much harder by investment in conventional fossil fuel power stations over the next 10-15 years.

Ken Humphreys of the US Battelle Memorial Institute points out that global energy demand will rise by between double and five times present levels over the course of the century -- with the IEA predicting that fossil fuels will account for 85 percent of the increase -- and that one of the critical tasks is to ensure that the emissions peak from which the desired decline must be driven is kept as low as possible. For coal, he adds, in a carbon-constrained world sequestration is the linch-pin technology.

Notwithstanding the growth opportunities for renewable power, it is clear from the Coal21 conference debate that the principal commercial contest over the next decade is going to be between the proponents of gas-fired electricity production and "clean coal" technology as a bridge to whatever industrial revolution will address mitigation strategy beyond 2030.

Mining the IEA, UN and American Department of Energy data throws up a good idea of the extra-ordinary prizes for the successful technologies over the period to 2030: about 4,800 GW of new plant worth $US330 billion a year needs to be developed to meet a doubling in global power needs.

Driving down the costs of integrated gasified combined cycle (IGCC) coal plants to make them competitive with natural gas CC while rapidly developing commercially viable capture and storage arrangements for carbon dioxide would seem to be the optimum path forward for the coal industry, and it is likely to be aided in its efforts by what seems to be an inevitable large increase in the delivered price of natural gas.

The immediate strategy for government and the coal industry was summed up by Kelly Thambimuthu, new CEO of the Centre for Low Emission Technology in Queensland. Given, he told the conference, that carbon dioxide can be captured at large point sources in power generation and other major industries and that technologies for capture are currently available, the drivers for success need to be:

In this context John O'Brien, CEO of the US Vista Energy Group, an industry analysis and advisory services company, made an interesting observation to the conference: one of the hurdles to be overcome in driving forward adoption of IGCC is the cultural problem in the utility/generation engineering community, which is still jibbing at operating chemical plants rather than power stations. Only four of the 90 coal-fuelled power station projects currently under development in the US, he pointed out, is planned to be an IGCC operation. To which Battelle's Ken Humphreys added the comment: "Timidity in goal-setting inevitably leads to mediocrity in outcomes."

Looking at the Australian situation, Stanwell Corporation chief economist Paul Simshauser points out that, if sufficient confidence can be gained from a demonstration plant, the case here for an IGCC subsidy by government is sound. Stanwell is looking at establishing a 190 MWe IGCC plant alongside its existing 1400 MW coal-fired power station in central Queensland and constructing a 205 kilometre pipeline to the Denison Trough for injection of carbon dioxide in to sandstone reservoirs.

Simshauser highlights the opportunity for investors in new coal-fired technology in the Australian national electricity market, saying that the NEM needs to be augmented through development of more than 9,000 MW of new generating capacity by 2014-15.

From a national greenhouse policy point of view, he adds, substantial environmental gains can be made from establishing an IGCC plus carbon capture and storage program in the next decade -- pointing out that this would not be in competition with a renewable energy development program, but complementing it.

This was a theme also taken up by Federal Industry Minister Ian Macfarlane, who rejected critics' claims that the Government is sacrificing the renewable industry's future on the altar of fossil fuel development. The Government, he told the conference, saw the promotion of new coal technology and of renewables as complementary and had allocated more than $700 million in its energy white paper to pursuing both goals. Interestingly, given the emphasis on carbon dioxide capture and storage, Macfarlane added that the big innovation funding opportunity available to the wind farm developers lies in pursuing energy storage to get wind generation to a 24/7 capability.

Gas technology strategy

Coincidental with the Coal21 conference, the CSIRO Petroleum Resources division in Melbourne has released an update of its "AusGas" technology development strategy. Commercial adviser James Pullar says that talks with industry associations and government have revealed that, while there is general acceptance of the need for technological development to aid the supply and use of Australia's gas resources, there is no single stand-out issue or barrier that can be addressed to ensure delivery of an enhanced future for gas suppliers. Rather, he says, there is a wide range of issues and barriers stretching from sub-surface offshore to the metropolitan retail markets in eastern Australia.

CSIRO Petroleum Resources is developing a matrix of key strategic outcomes and priority activities needed to address them including such areas as lower cost development and production, cost-effective processing and conversion and increasing gas use while lowering emissions.

CSIRO is now seeking feedback from gas industry stakeholders on its "AusGas" development program.

"Sheer amazement" over ET proposal

Federal Industry Minister Ian Macfarlane says his reaction to the State and Territory Labor governments' proposal to pursue an emissions trading scheme is "sheer amazement." Macfarlane says he doesn't know how such a scheme could work and how the governments think they can impose the costs of a carbon charge on energy-intensive industry without losing development. "It's just political opportunism" is his verdict.

Long-term view and will

Xstrata Coal chief executive Peter Coates has summed up what appears to be a growing body of opinion in the leadership of the Australian energy sector in his contribution to the Coal21 conference: "If we are to meet energy demand, help developing nations realise their aspirations, alleviate poverty in a carbon-constrained world and work towards a near zero emissions future," he says, "the science and technology alone is not enough. There needs to be a long-term view and political will. We must insist that there is significant investment in research and development by both government and industry leading to the commercialisation of new technologies and carbon capture and storage. Industry is often seen as the villain in the climate change debate, but it needs to be recognised that industry is taking the lead in many ways, encouraging and participating in a rational and sensible public debate. There is hardly an industry or a company in the world that is not beginning to factor future carbon constraints in to its thinking and planning. We are not going to get to a low-emissions future if the debate is polarised, if interest groups advocate single-technology solutions and demonise particular options, or without some serious commitment to development of all pillars of the energy mix."

Keith Orchison

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