Navigating the pathway to emissions reductions

With the reformed Safeguard Mechanism’s first year kicking off this month, emissions reductions opportunities, particularly at coal mines, come into the spotlight. The details are trickling out from the Clean Energy Regulator, but what is certain is that emissions will need to come down annually. When it comes to opportunities to reducing emissions on site, it can be difficult to know where to start. Our experience is organisations are in one of three scenarios:

1. Corporate has developed a decarbonisation strategy and the operations are responsible for implementing this. The key barrier for operations in this scenario is translating the strategy into projects ready for implementation.
2. Corporate and operations have had a crack at some decarb projects but it’s a bit of a scatter-gun approach. There’s no clear strategy or framework so no way of understanding if the projects are reducing emissions at least-cost.
3. There’s nothing happening at corporate or on the ground and the time has come for a mad scramble to beat the Safeguard liability.

None of these scenarios are better or worse – they’re starting points. Baselining where the organisation is at and moving forward is the first step. An emissions base case is required, which includes mapping emissions on site across fuel, electricity and fugitive emission sources. The more granularity, the better. Some organisations have detailed data and forecasts down to the asset, but most require some level of assumptions to apportion diesel or electricity consumption and develop a LOM emissions forecast.

The people on the ground at the operations will ultimately be the team that owns the project, so their ideas on what would work and what would flop are essential before running off with an idea. Emissions reductions projects will only be successful if they are owned by sites. The best way to capture these ideas is to go to site and spend time listening to each department. The ideas will flow out of this process ready to be shaped into potential projects. Abatement potential of a project – how much a project can reduce emissions – and costs are defined in this process.

The Safeguard Mechanism requires annual reductions, meaning the delivery of emissions reductions from a project is time critical. Project time horizons need to be determined for each potential project. The short-term horizon (less than 2 years) refers to projects that work within the current operations, often associated with optimisation and incremental improvements. The medium-term horizon (5-10 years) is often when asset upgrades or capital expenses will be incurred. The technology required for the mid-term horizon is already commercially available. The long-term horizon (10+ years) looks to future technologies to incorporate into the operation and new ways of mine planning and design.

To determine which project to start first, the options need to be prioritised. This is done via marginal abatement cost (MAC) curves. This process allows the upside to be determined in projects. Some will save money, while others will cost. Some will reduce large amounts of CO2e, while others will deliver quick wins. Along with time horizons, MAC curves allow the organisation to build a strategic pathway to emissions reduction and compliance. From here, the projects selected to go forward are kicked off by study teams to further define and implement.

If your organisation needs assistance in starting or aligning your decarbonisation journey, get in touch with us at Talisman.