The outlook for coal exports and domestic electricity demand/supply Presentation to the Hunter Business Chamber quarterly Hunter Business Mining lunch Greg Evans Executive Director - Coal, Minerals Council of Australia and Greg Evans Chief Executive, ACA Low Emissions Technologies Ltd (the COAL21 Fund) 23 February 2018
• The economic contribution of the coal industry to Australia • Global coal market trends and outlook • Low emissions coal technologies – Role of HELE • Australian coal industry funding for CCS development
Australia and black coal 95% of Australia’s coal exports are from $57 billion of export revenue in 2017. A new the Sydney & Bowen basins record and Australia’s second largest source of export income 200 million tonnes of thermal coal and 172 million tonnes of metallurgical coal exported in 2017 51,500 people employed across Australia & 120,000 related jobs $6 billion in wages paid to Australian workers, particularly in regional areas $5 billion in royalties paid in 2016-17 Source of 75% of Australia’s National Energy Market electricity
Australia’s export coal infrastructure Billion tonnes recoverable black coal resource: Abbot Point Australia >42, Bowen Basin >15, Sydney Basin >13.5 2017 Capacity – 50 Mtpa 2017 Throughput – 27.8 Mtpa Hay Point and Dalrymple Bay 2017 Capacity – 130 Mtpa 2017 Throughput – 86Mtpa Gladstone & WICET 2017 Capacity – 102 Mtpa 2017 Throughput – 82 Mtpa Brisbane 2017 Capacity – .10 Mtpa 2017 Throughput – 7.2 Mtpa Newcastle (PWCS & NCIS) 2017 Capacity – 198 Mtpa 2017 Throughput – 160 Mtpa Port Kembla 2017 Capacity – 18 Mtpa 2017 Throughput – 5.5 Mtpa 4 Note: Mining includes minerals, petroleum and refined metals.
Australia’s merchandise export revenue By industry, 2017 Source: ABS Cat No. 5368 International Trade in Goods and Services 70 Coal exports were a record high $57 billion in 2017. 60 Coal was one of Australia’s 50 largest sources of export revenue in 2017. 40 A$ billion 30 Coal exports exceeded exports of both rural goods 20 and manufactured items. 10 0 5 Note: Mining includes minerals, petroleum and refined metals.
Australia’s coal exports Value and volume Source: ABS Cat No. 5368 International Trade in Goods and Services; Department of Industry, Innovation and Science; Resources and Energy Quarterly – December 2017 450 60 Despite a drop in metallurgical coal export 400 volumes in 2017 due to the impact of Tropical Cyclone 50 350 Debbie, coal export values reached a new record high. Export value, A$ billion 300 40 Export volume, Mt Australia exported 172 250 million tonnes of 30 metallurgical coal worth 200 $36 billion in 2017. 150 20 Australia exported 200 million tonnes of thermal 100 coal worth $21 billion in 10 2017. 50 0 0 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Thermal Volume Metallurgical Volume Total Value 6
Australia’s key coal export markets 2016-17 Source: Department of Industry, Innovation and Science; Resources and Energy Quarterly – December 2017 Thermal Coal Metallurgical Coal 9,000 9,000 8,000 8,000 7,000 7,000 6,000 6,000 A$ million 5,000 A$ million 5,000 4,000 4,000 3,000 3,000 2,000 2,000 1,000 1,000 0 0 7
Australia’s thermal coal export volumes by state Source: Department of Industry, Innovation and Science 160 In 2016 Australia exported 202 Mt of thermal coal. 140 This included: 120 1. 143 Mt from New South 100 Wales 2. 58 Mt from Queensland 80 60 These exports were valued at $15.8 billion. 40 20 0 2013 2014 2015 2016 New South Wales Queensland 8
• The economic contribution of the coal industry to Australia • Global coal market trends and outlook • Low emissions coal technologies – Role of HELE • Australian coal industry funding for CCS development
Main thermal coal trade flows in 2016 (Mt) Source: IEA, COAL 2017: Analysis and Forecasts to 2O22, December 2017 10
World coal-fired electricity generation IEA New Policies Scenario Source: International Energy Agency, World Energy Outlook 2017 The International Energy Agency 9,000 (IEA) forecast low growth in world coal consumption out to 8,000 2040 in its 2017 World Energy Outlook . 7,000 But their were very different Electricity Generation TWh 6,000 outlooks for OECD and non- OECD countries. 5,000 4,000 Declining coal consumption in OECD Europe and North 3,000 America will be offset by growth in highly populated Asian economies. 2,000 1,000 Australia is well positioned to supply the growing coal demand 0 in the non-OECD countries of Asia. OECD Non-OECD 2016 2030 2040 11
IEA outlook for electricity generation New Policies Scenario Source: International Energy Agency, World Energy Outlook 2017 12,000 Coal is expected to remain the largest source of 10,000 electricity generation in the long-term. Electricity Generation TWh 8,000 Wind and solar are forecast to grow, but are 6,000 expected to supply less than half the electricity 4,000 provided by coal in 2040. 2,000 0 2016e 2030 2040 12
New generation capacity under development As at June 2017 Source: Enerdata Over 300 GW of new coal 1400 fired capacity is currently under construction. 1200 1000 There are plans to develop another 950 GW. Capacity (GW) 800 600 Some of this will replace retiring older plants, but there 400 will still be a net increase in capacity – and coal demand. 200 In comparison, only 47 GW of 0 wind and 17 GW of solar capacity are currently under construction around the world. Under Construction Approved & Planned 13
Asian countries constructing & planning coal-fired units As at December 2017 Source: Platts Number of Coal-fired Units in Construction and Planned in Asia (Total = 857) 300 250 200 150 100 50 0 Construction Planned 14
Main coking coal trade flows in 2016 (Mt) Source: IEA, COAL 2017: Analysis and Forecasts to 2O22, December 2017 15
Australian coal trade share rises over the period to 2040 Source: International Energy Agency, Coal 2017 and World Energy Outlook , 2016 (New Policies Scenario) Major exporters of coal by type • Australia is forecast to export 198 Mtce of metallurgical coal in 2022, dominating the market with a trading share of 72% • Thermal coal exports are projected to increase from 177 Mtce in 2016 to 187 Mtce by 2022. • Out to 2040, the IEA projects Australia’s share of the coal trade to increase from 34% in 2016 to 36% 16
• The economic contribution of the coal industry to Australia • Global coal market trends and outlook • Low emissions coal technologies – Role of HELE • Australian coal industry funding for CCS development
State-Of-The-Art HELE Power Generation Facility Isogo USC Power Plant - Japan • Commenced commercial operations in 2009. • The two USC black coal-fired generation units have a combined capacity of 1200MW and a thermal efficiency of 45%. • An advanced treatment system removes such pollutants as SOx, NOx and soot/dust from flue gas, using almost no water. • The No. 2 Unit has achieved the following environmental performance: • SOx – 10 ppm • NOx – 13 ppm Source: Power Engineering International • Soot and dust – 5 mg/Nm 3 18
Communications Focus Getting the facts out to the community: • To those interested in the nation’s economic future, trading opportunities in Asia and technological improvements making coal cleaner and more efficient • To politicians and voters looking for reasoned arguments • To address some anti-mining and anti-coal groups. 19
Australia can reduce generation sector emissions and improve energy security with new coal generation 1600 1500 1400 1200 Up to 40 to 50% CO2 emissions per kW emissions reduction 1000 920 Further 80% by switching to USC emissions reduction from CCS 760 800 600 400 200 120 0 Hazelwood Supercritical plant Ultra-supercritical plant With CCS 22
What is CCS? Boundary Dam CCS generation, Canada • Carbon Capture and Storage (CCS) is a process whereby carbon dioxide (CO 2 ) emitted from the use of carbon- based fuels or from industrial Photo courtesy of SaskPower processes is: Petra Nova, CCS generation USA – Captured, – Compressed, and – Permanently stored in suitable geological structures at least 800m below the surface • CCS can reduce CO 2 emissions from Photo courtesy of Global CCS Institute coal use by 90% Abu Dhabi CCS from iron manufacture • CCS is not science fiction it has been undertaken around the world for over 20 years Photo courtesy of Global CCS Institute 23
Australian household electricity prices Historical trends Source: ABS Cat No. 6401 Consumer Price Index, December 2016 MRET: 9.5 TWh Until the year 2000 Carbon tax 900 RET: 45 TWh repealed Australia’s electricity prices 800 increased in line with inflation. 700 Since the year 2000 RET: 600 Index, Dec 1980 = 100 33 TWh electricity prices have Carbon tax 500 starts increased much faster than inflation. 400 Renewable energy targets 300 and carbon taxes have 200 been key drivers of changes in electricity price 100 growth . 0 Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 CPI Electricity price index 24
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