APPENDIX 11
Memorandum from Rio Tinto Plc
EXECUTIVE SUMMARY
As a significant thermal coal producer, Rio
Tinto is keenly interested and involved in the development of
technologies which can make a significant contribution to reducing
global greenhouse gas emissions, particularly in the energy sector.
With the right policy conditions, Carbon Capture and Storage (CCS)
technology can fulfil this role. The main barriers which must
be overcome are not technological but rather relate to funding
and investment. The immediate priority is to accelerate the development
and deployment of CCS via a number of international demonstrations
under varied conditions. This will both bring down the cost of
the technology and provide confidence in operation to secure public
acceptance for CCS.
INTRODUCTION
1. Rio Tinto is a significant energy producer,
providing low-sulphur thermal coal to power stations that supply
homes, businesses and industries in the US, Australia and the
Asia Pacific region, and metallurgical coking coal to iron and
steel mills in Asia and Europe. In light of the global nature
of these interests, this memorandum concentrates on the international
aspects of Carbon Capture and Storage (CCS) technology.
2. Rio Tinto believes that emissions of
greenhouse gases (GHG's) resulting from human activities are contributing
to climate change. Avoiding human caused changes to the climate
is an important international goal. Rio Tinto shares the priority
of the UK Government to reduce emissions of greenhouse gases to
achieve this goal (refer to Rio Tinto's Climate Change Position
in Annex 1).
3. Rio Tinto recognises that addressing
the challenge of climate change will impose costs for GHG abatement
and necessitate a change in the way the world uses energy. A full
and comprehensive portfolio of policy and technology options will
be required to achieve the highest benefit and lowest overall
cost for society.[3]
4. Rio Tinto continues to be involved in
a range of activities designed to reduce CO2 emissions. The most
recent of these is the group's involvement with a major carbon
sequestration project in the USA (For further information, see
Annex 2).
CCS TECHNOLOGY AND
CLIMATE CHANGE
5. Carbon capture and storage technologies
can make a significant contribution to reducing GHG emissions.
The IPCC Special Report on CO2 Capture and Storage[4]
approved by governments (including the UK), and a number of recent
studies by the IEA, Battelle and EPRI have concluded that CCS
will reduce the global cost of emissions reductions and allow
for a greater reduction of emissions. Further, Carbon Capture
and Storage is the key enabling technology for reducing CO2 emissions
from coal (which accounted for 38% of global CO2 emissions in
2002).[5]
6. CCS is only one technology in a broad
portfolio of options, including energy efficiency, demand side
management, advanced conventional pulverised coal technologies,
and renewable technologies. Wherever they are viable, each of
these options should be pursued across all sectors of the economy.
7. Further, it is clear that both the developed
and the developing nations (and noting the rapid growth of coal
fired power in China and India in particular) will continue to
meet much of their electricity generation needs from coal for
the foreseeable future. Action is required by developed and developing
economies to accelerate the development and deployment of advanced
coal technologies.
THE VIABILITY
OF CCS TECHNOLOGIES
8. The widespread application and ultimate
success of CCS will depend on reducing its cost; which will require
significant investment in research, demonstration and deployment.
The recently released IPCC report suggests the major contribution
of CCS to climate change mitigation would come from deployment
in the electricity sector. Application of CCS to electricity production,
under 2002 conditions, is estimated to increase electricity generation
costs by about 0.01-0.05 US dollars per kilowatt hour (US$/kWh),
depending on the fuel, the specific technology, the location,
and the national circumstances.[6]
The IPCC Special Report also concludes:
(a) The global geological storage capacity
for captured CO2 has been estimated to be sufficient so that CCS
could contribute up to 55% of the cumulative mitigation effort
worldwide until 2100.[7]
(b) The health, safety and environment risks
of CO2 pipeline transport and subsequent geological storage are
comparable to existing hydrocarbon operations and practices.[8]
(c) The risk of potential leakage of geologically
sequestered CO2 is very low. Observations and models have shown
that fractions retained in well chosen reservoirs are likely to
exceed 99% over 1000 years.[9]
9. Rio Tinto's view is that the immediate
priority is to accelerate the development and deployment of CCS
and to gain wider public acceptance for CCS. This will require
numerous international demonstrations under varied conditions.
THE UK GOVERNMENT'S
ROLE
10. As identified in the DTI's report "Strategy
for Developing Carbon Abatement Technologies for Fossil Fuel Use",
there is significant potential for under-investment in carbon
abatement technologies due to the very high costs of initial demonstration
plant and the long time frames likely to be involved before commercial
returns can be reasonably expected. Additionally inconsistent
national approaches and the need for collaboration across nations
require governments to intervene. Spill-over of benefits to competitors
and regulatory uncertainty are also of concern to industry and
could delay the required investment in CCS technologies.
11. Everyone, including future generations,
will benefit from a stable climate. Industry on its own cannot
be expected to bear the full cost of developing and demonstrating
new technologies.
12. For both the above reasons, the UK Government
has an important role to play, both within the UK, the EU, and
in collaboration with other governments internationally.
13. The main imperatives for CO2 capture
technology development relate to funding and investment issues.
However, the storage of captured CO2 requires a suitable regulatory
regime to ensure safety and reliability. These key factors require
in-depth research and demonstration programs to assure the public
that CCS is safe and not a major risk to the environment.
14. In order to accelerate the momentum
for development of these technologies, public and private investment
will need to be coordinated. Most importantly, a strong core of
nations (including the large developing economies) will need to
collaborate and share costs and knowledge in order to accelerate
development and particularly to demonstrate the potential of CCS.
15. The 10 areas for action identified by
the DTI's "Strategy for Developing Carbon Abatement Technologies
for Fossil Fuel Use" are, therefore, a useful starting
point for determining policy direction and taking action.
16. Rio Tinto also applauds the role the
UK has played as a foundation member of the Carbon Sequestration
Leadership Forum (CSLF). It welcomes the leadership of the UK
government in initiating the agreement between the EU and China
to construct a CCS demonstration projects in China. In its own
right and as part of the CSLF, the Government can further assist
in the reduction of greenhouse gases by:
(a) Increasing the number, pace and scope
of CCS projects;
(b) Adequately resourcing and providing incentives
for CCS projects;
(c) Raising the profile of CCS within the
domestic and international community;
(d) Increasing the involvement of stakeholders'
representatives;
(e) Supporting attempts to increase global
acceptance of CCS; and
(f) Developing the policies and frameworks
to enable rapid development, commercialisation and deployment
of CCS.
September 2005
Annex 1
RIO TINTO
CLIMATE CHANGE
POSITION
Rio Tinto believes that emissions of greenhouse
gases (GHG's) resulting from human activities are contributing
to climate change. Avoiding human caused changes to the climate
is an important international goal. In order to achieve this goal
the world needs reductions in emissions of greenhouse gases.
Actions are required to improve our understanding
of the problem and provide solutions for both adaptation and GHG
emissions abatement. Rio Tinto recognises that addressing the
challenge of climate change will impose costs for GHG abatement
and necessitate a change in the way the world uses energy. A full
and comprehensive portfolio of policy and technology options will
be required to achieve the highest benefit and lowest overall
cost for society.
Rio Tinto's climate change programme will undertake
initiatives in three key areas:
1. BUILDING SUPPORT
FOR GOVERNMENT
ACTION
Rio Tinto will engage with stakeholders to advocate
for domestic and international government policies that:
Encourage leadership from developed economies
while enabling all countries to contribute to effective management
of GHG emissions.
Set credible limits for future emissions that
recognise the scale and long-term nature of the climate change
challenge.
Support technology development and deployment
to change the way we use energy.
Utilise broad-based market mechanisms that increase
flexibility and reduce the cost of abating GHG emissions. As a
tool to achieve a specific emissions reduction target, emissions
trading is preferred over carbon taxes or inflexible on-site reduction
requirements.
Rio Tinto recognises that domestic and international
policies and measures to address climate change present business
risks and opportunities that will affect shareholder value. We
will continue to address climate change challenges by minimising
the business risks, capturing the opportunities, and taking actions
that fully consider social, environmental, and economic values.
2. DEVELOPING
LOW EMISSION
PATHWAYS FOR
OUR PRODUCTS
Rio Tinto is committed to helping develop low
GHG emissions pathways that will allow our products to continue
to meet the needs of society. Our businesses will contribute to
this goal in meaningful ways, notably:
Aluminium: We are promoting energy efficiency
by providing lightweight transportation components and encouraging
increased recycling. We are also working to increase the GHG efficiency
of aluminium smelting.
Borates, talc, titanium, and salt: Our industrial
minerals are used to improve the energy efficiency of buildings,
transportation, and certain industrial processes. Our solar-evaporated
salt uses a fraction of the energy of the alternative process
for making high purity salt.
Coal: We are working to accelerate development
and deployment of near "zero emissions" power generation
and hydrogen production from coal.
Copper: We are promoting the use of copper in
high efficiency electrical motors, and supporting increased electrification
as a cost effective contributor to GHG emissions abatement.
Iron Ore: We are reducing steel industry GHG
emissions through development of our carbon efficient HIsmelt
(R) iron making process and production of flux pellets.
Uranium: We produce fuel for low carbon emissions
nuclear electricity generation and hydrogen production.
3. TAKING A
PROACTIVE STANCE
AT OUR
OPERATIONS TO
REDUCE GHG EMISSIONS
Rio Tinto will take a proactive, pragmatic,
and transparent approach to achieve GHG emissions reductions from
our operations and the use of our products. Our operations will
adapt to the physical impacts of a changing climate. We will accomplish
this by:
Setting and achieving progressive targets to
reduce GHG emissions per unit of production either through direct
reductions or by offsets. We will report our progress annually.
Undertaking and encouraging research and development
projects designed to reduce GHG emissions from our operations
and from the use of our products.
Working with our customers and suppliers to help
them and us reduce GHG emissions.
Considering the physical impacts of a changing
climate as a part of our normal planning process and having appropriate
contingency plans in place to adapt to potential impacts.
Annex 2
2 Cooperative Research Centre: Researches the logistical,
technical, financial and environmental issues of capturing and
storing industrial CO2 emissions in deep geological formations.
http://www.co2crc.com.au/
3 The International Energy Agency (IEA) predicts world
energy demand will grow by nearly 70% over the next 30 years,
most of it in the emerging economies. Without corrective action
CO2 emissions will continue to follow this same trend. Back
4
IPCC "Special Report on Carbon Dioxide Capture &
Storage" Sept 25th 2005, Montreal Canada. Back
5
IEA-CIAB "Road mapping Coal's Future" 2005. Back
6
IPCC "Special Report on Carbon Dioxide Capture &
Storage" Sept 25th 2005, Montreal Canada point 14. Back
7
Ibid point 19. Back
8
Ibid point 21. Back
9
Ibid point 25. Back
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