Sky Business: ECT Produces Cleaner Coal

Sky BusinessECT Chief Executive Kos Galtos appeared on Sky Business’ ‘Summer Money’ program last night.

The topic: ECT Produces ‘Cleaner’ Coal.

The interview, which ran for several minutes, highlighted the potential for significant, cost-effective CO2 abatement for Victoria’s brown coal-based electricity industry.

We’ve been focused on our export project with TinCom for some time now. While discussions with the previous Brumby Labor Government in Victoria were consistently positive, there lacked broad industry traction around real, deliverable CO2 abatement initiatives due to various factors including carbon price uncertainty. This meant Coldry was in limbo as far as local deployment was concerned.

The election of a new Liberal Government committed to least-cost achievement of Victoria’s 20% CO2 reduction target is a new opportunity to present the case for a Coldry-driven CO2 solution for Victoria that can deliver on that target at 27% less cost than gas-fired power and 46% cheaper than wind.

Costly abatement measures risk real CO2 action

While we fully support the ongoing development of renewables, like most environmentally conscious Australian’s we don’t believe a blank cheque paid for by households is a sustainable approach. In fact this will have the opposite effect, building resentment and diminishing community support for real CO2 action.

We released a report on 25th November titled ‘CO2 Reduction in Victoria – Dogma or Delivery?‘ outlining how the cost of delivering CO2 reduction in the State of Victoria via a Coldry based solution is cheaper than alternative approaches involving wind and gas.

The report focused on the replacement of 1600 of Victoria’s 6000 MW of existing brown coal fired power capacity. It shows how Coldry could deliver the desired outcomes much cheaper than a wind and gas combination.

In the ‘Age’ newspaper on 22 December 2010, Business journalist Mat Murphy ran an article on our claim that Coldry can deliver cheaper CO2 reductions than other solutions being considered – click here to read the article – in the context of Victoria’s legislated 20% CO2 reduction target.

The Age OnlineEarlier that week (20 Dec 2010) ‘Age’ Environment journalist Tom Arup reported on issues at Federal Government level around the high cost of CO2 abatement solutions currently being funded or considered – click here to read the article.

On Tuesday 21 December The Australian’s Andrew Fraser reported on the departure of world renowned scientist Dr. Thambimuthu, head of the Queensland Governments clean coal research, in a move apparently motivated by Government inaction on delivering clean coal technologies for Queensland’s black coal-fired power industry. The Government’s reason for not pursuing the zero-gen clean coal project? It just cost too much!

This all comes back to an extremely crucial principle:

Public support for CO2 abatement measures will diminish in proportion to the financial pain experienced by households.

Getting there…

Below, we expand on the points covered in the ‘Age’ article to explain how Coldry can lead the emissions reduction revolution and how it fits into a broader national solution that wont ‘break the bank’.

In the discussion and assessment about which path to take to achieve emissions reductions we’ve found ‘extreme green’ advocates focus on how much CO2 a particular technology emits rather than how it can deliver a cost effective outcome. Cost is almost always ignored. For example, wind emits no CO2. Gas emits around 0.4 tonnes per MWh. Brown coal between 1.3 and 1.5 tonnes per MWh. A Coldry based solution emits 0.75t per MWh. This absolute value, while important, only offers a technical, isolated comparison, disconnected from the delivered cost of achieving the legislated CO2 reduction target of 20%.

A techno-economic investigation that accounts for the cost of delivering on the target, paints a very different picture.

Abatement Cost is the key

Abatement cost. How much will it cost for every tonne of CO2 we avoid? What will that mean to the size of your electricity bill?

Beginning with the CO2 reduction target in mind, a suite of options that can technically deliver that target can be assessed.

Once the technically capable solutions are identified, we then look at how much each one costs to avoid each tonne of CO2… the business case.

From there a strategy can be formulated for least-cost achievement of the target. A step-wise deployment of these technically capable solutions can then be executed. Policy measures aimed at subsidising the more expensive options would be transparent, holding policy makers accountable to households.

In terms of the Victorian target, all technologies contending to contribute toward the 20% reduction achieve the same reduction… 20%. Some achieve 100% less CO2/MWh (wind, solar, nuclear) compared to brown coal ‘business as usual’. Gas is 70% to 80% less than brown coal. Coldry is 42% to 50% less than ‘business as usual’. The variable is therefore deployment capacity; how much wind, gas, solar, wave, geothermal, Coldry or combination thereof is required to hit the 20% target? How much will each cost per tonne of CO2 avoided? How much will each multi-technology scenario cost per tonne of CO2 avoided?

The Case for Coldry in Victoria

“Coldry can achieve the 20%  CO2 reduction target for 27% less cost than gas and 46% less cost than wind per tonne of CO2 saved”

Victoria emits around 66 million tonnes a year from its brown coal fired power sector. This is equivalent to around 33% of Australia’s emissions from coal fired electricity production. As a state we generate around 13% of Australia’s electricity. Clearly over represented.

A 20% reduction means Victoria needs to eliminate 13 million tonnes a year of CO2 from its power sector. This would deliver a 6% reduction for Australia.

How can the target be achieved? By taking publicly available information on the cost to build and operate wind and gas power generation we’ve arrived at the following snap-shot (click to enlarge):

Table 20 percent options

What is the bottom line for households when viewed from this perspective?

The 13 million tonnes of CO2 saved, when factored simply across all 2 million Victorian households, equals a saving of 6.5 tonnes per household (we refer to households because business will pass on electricity cost increases).

Now, we all expect to have to pay something extra to meet the 20% reduction target, but Victorian’s don’t yet fully appreciate they have an new (Coldry-based) choice that can deliver the target for less.

If given the option, how much extra would you choose to pay on your electricity bill each year?

  1. $268
  2. $200
  3. $145

Rhetorical question, we know! However, if you chose number 3, then you’ve just selected the Coldry-USC solution and we’ve achieved a 20% reduction in CO2. Target delivered!

The issue

What fails to register with many ‘extreme green’ advocates is that public support for action on climate change will vary depending on how hard it hits their hip-pocket.

Real action costs. Real people pay.

If support is lost, politicians will cease to push unpopular emissions reduction initiatives and the very thing the ‘extreme green’ advocates want will stall.

Unfortunately there has been a dogmatic approach to selecting, funding and supporting CO2 reduction technologies. Bureaucrats have ‘chosen’ costly technologies like CCS. The abatement cost in many cases is prohibitive as seen with the Queensland Government’s withdrawal from the Zero-Gen project. CCS is a solution of sorts, but at an estimated cost of between $72 and $112 a tonne, its financially questionable and a solution of last resort.

Solutions need to be supported by Government on an incremental, least-cost basis, in line with policy and public expectations to ensure we achieve real CO2 action.

Coldry can deliver real CO2 reduction at minimum cost.