Australia’s Mining Monthly
June, 2007 Page: 14
Rio Tinto Aluminium is looking to shed its greenhouse mafia tag and make an environmental difference.
Aluminium is seen as one of the bad guys of the greenhouse debate, a member of the so-called greenhouse mafia that has lobbied long and loud against aggressive action to combat global warming. Rio Tinto Aluminium (previously Comalco) is looking to radically alter that image.
In 2004, it opposed a national renewable energy target, telling a Senate committee that under the Mandatory Renewable Energy Target of 2% of 2001 demand levels (9500 gigawatt hours), its "direct liability... over the 20 years of operation is expected to be nearly $200 million". Three years later, Rio Tinto has just joined the Business Council for Sustainable Energy (BCSE) and in recent its aluminium business has been spruiking its climate change strategy.
Its first heresy: global warming is real and immediate. Its second: an emissions trading scheme in Australia is essential. Best of course would be an international cap-and-trade scheme roping in the US, Japan, China and the rest of the developing world, however, Rio Tinto Aluminium (RTA) has accepted the need for a domestic scheme in the short term.
RTA climate change manager Rick Humphries: "Seeking a carbon haven is not an intelligent view of the world because the price on carbon will catch up with you. We believe there will be a price everywhere in time." The company already puts an internal price on carbon, with all projects required to account for potential carbon-tax costs of their CO2 emissions as a part of financial forecasting. Humphries would not reveal this internal "guesstimate", but the BCSE annual conference in May heard a realistic trading figure was $7-8.50 per tonne of carbon. This will depend on the reduction target set next year by whoever is in power. Humphries shied away from naming a target, but told the BCSE audience it would have to balance the need for action with the economy's ability to absorb the cost and develop low emissions technology.
An instructive way to look behind a firm's rhetoric to gauge its perspective on an issue is to check its company structure. Humphries, a former lobbyist, strategic director with the Wilderness Society and sustainability consultant, is in an unusual position. "You don't meet many [dedicated climate change managers] around," he told LTO. "I work under the chief financial officer, which is symptomatic of how we see this. It is core business, it is risk management. We don't see it as an environmental issue and so we sought very actively to bring it into the centre." RTA has the largest carbon footprint in the Rio Tinto Group, last year emitting 12 million tonnes of CO2 from its sites and purchased electricity in Queensland, Tasmania, New Zealand and Wales. To put that in perspective, total emissions from the Australian aluminium sector in 2006 were 48Mt, while the national account stood at 560Mt.
The company has adopted a portfolio approach to tackling carbon and Humphries' job is to operationalise this five-pronged climate change strategy, which consists of onsite efficiencies, input into public policy, developing zero and low emission technologies, engaging staff and carbon offsets. In fact, RTA has just unveiled Australia's largest purchase of certified carbon credits from avoided deforestation, a 1Mt deal with southeast Queensland farmers.
The technology pathway
Making primary aluminium is inherently resource- and energy-intensive, and mining, refining and smelting produce large quantities of greenhouse gases. Most are attributable to the final process, with electricity accounting for about 40% of the total smelting cost. Smelting technology has changed little over the past 100 years and Humphries said there was only perhaps 5% extra efficiency from fine-tuning. A step change is needed.
The company has just created a chief technologist position to coordinate research and development, with a particular focus on smelting and renewable energy. One of the most promising technologies under development at the RTA Technology unit in Melbourne is called drained cathode cell smelting. By reducing the distance between the anode and cathode in the electrolytic cell, it hopes to lower the electrical resistance of the electrolyte. A demonstration project is underway at the Bell Bay smelter in Tasmania "This could improve energy efficiency by 10-15%," said Humphries.
Another area of interest is in developing an inert anode rather than a carbon-based one, which could potentially knock 60-70% of carbon out of the cycle. At base, Humphries is "agnostic" about what technologies to pursue, but argues on a national scale any comprehensive response to climate change must including the development of a "technology pathway".
"[RTA supports] increased R&D for new technologies and a technology commercialisation and deployment strategy coupled with an emissions trading scheme or some other market mechanism that determines a price on carbon," he told the BCSE crowd.
Efficiency gains
RTA's climate change unit has one other full-time employee, who works directly with operations staff to improve energy and greenhouse performance at each of the company's sites. Energy audits were conducted on three facilities last year and climate change teams were in place at all operations, with the exception of the Yarwun refinery at Gladstone.
The teams develop and drive operational improvements and eliminate waste using the Lean Six Sigma business improvement program. For example, last year its Weipa bauxite mine identified opportunities to reduce energy consumption by 5%, which is expected to reduce the electrical output of the power station in 2007 and save 2,520 tonnes of CO2- Next year, it plans to commission a specialist to retrofit homes in the far north Queensland town to install renewable energy and demand management technologies.
It's also partnering New Zealand's Energy Efficiency Conservation Authority on a similar scheme in the town of Bluff, near its New Zealand Aluminium Smelters operation. Such efficiency gains since 2002 have seen the energy used in smelting a tonne of aluminium fall from 73.2 gigajoules to 72.4GJ, though net use has climbed 16% on the back of output almost doubling.
Commercial realities and the limits on energy efficiency opportunities mean CO2 cannot be fully eliminated and carbon offsets are required. This prompted RTA to pursue what it calls "Minding the Carbon Store", a project with offset specialist The Carbon Pool to pay Queensland landholders not to clear - and to protect - native vegetation on their properties for at least 120 years.
"Given that RTA's smelter at Boyne Island is the group's single largest point source of greenhouse gas emissions and Boyne is locked in to a longer term contract for power from the coal-fired Gladstone Power Station, offsets such as those offered by the Minding the Carbon Store project will be important in managing the emissions," Humphries said.
The scheme is based on Queensland law to control large scale land clearing by allocating a limited number of permits to clear. The Carbon Pool purchased a bundle of permits to aggregate into a single offset scheme and approached RTA. It had not been done before but the company bought in as a foundation member after detailed study and certification of the credits under the Australian Greenhouse Office's Greenhouse Friendly scheme.
"Other schemes fell down on two grounds: certainty and risk management," said Humphries, who hopes the project could set a precedent for other minerals industries. "We have an appetite for more of these sorts of things. We have to be innovative, we have to start building partnerships with other players, with all parts of society as we talk about reinventing the economy" LZO
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