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Australia: A coal-based model with low energy prices

04/30/2012

Australia is another leadingmining country, but its energy supply problems differ to those of Chile. Electricity prices are low and supply is not at risk. However, regulations have been in place for some time now that set out to provide a boost for renewables solutions aimed at reducing GHG emissions country-wide.

Australia is another leadingmining country, but its energy supply problems differ to those of Chile. Electricity prices are low and supply is not at risk. However, regulations have been in place for some time now that set out to provide a boost for renewables solutions aimed at reducing GHG emissions country-wide.

In Australia 75% of electricity generation is coal-based, 15% comes from gas and 1% from oil, which means that more than 90% of the country's electricity system relies on fossil fuels. As a result, the country has a large carbon footprint and the Australian authorities have set their sights on a significant reduction in emissions levels. However, renewables-based energy production in Australia, mainly hydro, still meets only 8% of the country's energy demand.

A carbon emission tax

In an effort to advance towards a less coal-dependent energy model, the Australian authorities have set a renewables-based electricity target of 20% of total electricity production in 2020 and have set up a range of support mechanisms such as the trading of green energy credits or a carbon emission tax slated for July 2012. The tax is expected to run for three to five years and will be accompanied by the introduction of an emissions trading scheme similar to the European Union's.

There's no doubt that the carbon emission tax will hit the mining companies energy costs given that most of them rely on fuel-oil or gas for independent off-grid systems.

The upward trend in fossil fuel prices, aggravated by the carbon emission tax, is in marked contrast to the trend in the costs of renewables technologies, which are expected to compete with traditional energies shortly and, in some cases, are already doing so.

Similarly, the modular character of renewable energies makes them even more suitable for mining activities given that they allow companies to scale the installed potential according to an operation's needs with independent, off-grid solutions.

Renewables alternatives for Australia's mining industry

Technology offers many possibilities of bringing clean energy solutions to Australia's mining industry, all of which are grid-connectable and adaptable to the availability of renewable resources in each region, namely wind in southern parts of Australia and solar in most of the country.

Along with wind power generation for grid-connected systems, there are other innovative options for independent systems such as thermal electric plants with molten salt storage devices; hybrid solar solutions (combined) with gas-fired generating plants (more than 5,000 MW's worth have come into service in high solar radiation areas); and, finally, the possibility of combining thermal solar facilities with newgeneration plants that run on coal seam gas (around 2,550 MW's worth of projects are currently registered).

All of these are ways of bringing technological solutions to Australia's mining industry which is particularly important in the states of Western Australia and Queensland and also relevant in New South Wales and South Australia.

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