Sustainable options for Victorian Brown in a constrained world

• Regional Partnerships Overview • Sustainable Prosperity: The 5-P’s • Energy Policy Perspectives & Statistics • Australia’s Energy Resources • Energy Evolution & Innovation • Brown Coal Characteristics • Product Pathways & the Size of the Prize • Solid Fuel Process Overview • Carbon Capture Utilisation & Storage • Science & Innovation

Victorian Government – JOGMEC Investment Seminar Roland Davies 10 May 2019 Victoria’s nine Regional Partnerships were established by the Victorian Government in 2016 recognising that local communities are in the best position to understand the challenges and opportunities faced by their region

› Resource rich Gippsland is one of the most diverse regions in Australia with abundant Natural Resources, leading to Energy Gippsland Shires Generation, Agriculture, Forestry, Tourism and Manufacturing Bass Coast Baw Baw › Population of ~260,000 people East Gippsland › Gross Regional Product of ~$15.8 Bn Latrobe City › Land area of around ~33,000 square kilometres South Gippsland Wellington › Hub of Victoria’s Energy Production (Electricity & Natural Gas)

› An area of great Natural Beauty spanning from the Coast to the Mountains

The global shift towards a low-carbon economy has created new opportunities and challenges for Gippsland

Victorian Government – JOGMEC Investment Seminar 10 May 2019 2 Achieving Sustainable Prosperity through Innovation

Global Sustainability Business Drivers Profit Progress › People – Quality of Life Purpose › Planet – Sustainable Ecosystems

Planet › Purpose – Raison d'être › Progress – Adaptive Innovation People › Profit – Competitive Productivity

Victoria’s Energy Resources can deliver Sustainable Prosperity through Innovation

Victorian Government – JOGMEC Investment Seminar 10 May 2019 3 Global Climate Initiatives, Recent Climate Events and Supply Shortfalls are shaping Australia’s current Energy & Emissions Policies. There is still some divergence between Federal and State Government Policies on the Scope, Timing & Quantum of future Emission Reduction targets.

There is Bi-Partisan Support for “Australia transitioning to a new energy future” with current focus on Energy Affordability, Energy Security & Renewables Share Victorian Government – JOGMEC Investment Seminar 10 May 2019 4 Including changes from previous years

Victorian Government – JOGMEC Investment Seminar 10 May 2019 5 Coal Statement - Key Policy Objectives: › Using brown coal resources in a manner that maximises its long term value for Victorians and is consistent with our economic, social and environmental priorities, while promoting jobs and investment. › Fully implementing recommendations from the Hazelwood Mine Fire Inquiry › Setting new emissions standards for future brown coal projects: » Projects with Coal usage >27Ktpa » Offset Emissions and use available CCUS options » Initial Target: 0.3 t CO2-e / t coal or 0.45 t CO2-e / MWh › Preference is to source brown coal from existing mines where practicable › Adopting an ‘open for business’ approach to supporting new investment and research opportunities in projects using brown coal › Completing the CarbonNet Project is a key priority

Victorian Government – JOGMEC Investment Seminar 10 May 2019 6 Personal View:

› Australia is moving into a carbon constrained future, which provides a pathway for the gradual decarbonisation of energy by 2050 › Fossil Fuel and Renewable energy resources will continue to make a significant contribution to Australia’s Energy mix in the intervening period

› The community expects safe, reliable, affordable and sustainable energy options to be available › The energy industry has a key role to play in gradually reducing emissions while continuing to provide secure and affordable energy for Australian households and businesses

› Innovation through Research and International Collaboration will be essential to achieve these objectives

Victoria has abundant natural energy resources that can be leveraged in a sustainable way, to bring significant economic value, employment and prosperity to the Gippsland Region

Victorian Government – JOGMEC Investment Seminar 10 May 2019 7 Economic Demonstrated Resources

ENERGY RESOURCES Crude oil - 3,286 PJ Condensate - 7,421 PJ LPG - 2,633 PJ Conv Gas - 77,253 PJ CSG - 45,895 PJ Black Coal - 1,916,697 PJ Brown Coal - 754,855 PJ Uranium - 711,076 PJ

BROWN COAL Australia’s 2nd Most Abundant Energy Resource!

Victorian Government – JOGMEC Investment Seminar 10 May 2019 8 Economically Winnable Resources

1900’s – 1970’s 1970’s – 2000’s 2000’s – 2050’s

› Fossil Fuel and Renewable energy technologies have been evolving for over 100 years to meet the worlds energy needs › Japan and Australia have been valuable contributors to global energy innovation, with many successful partnerships forged › The future outlook for coal is for a broader range of energy products with greater focus on the environmental impact and sustainability of projects

› Cost Effective CCS (CarbonNet) and CCU is a key future enabler!

Victorian Government – JOGMEC Investment Seminar 10 May 2019 9 A Low Rank Lignitic Coal, with low levels of impurities

Ultimate Raw Proximate Fly-Ash Analysis Coal Analysis Analysis Ash ~3% Ash ~3% CaO N+S ~1%

Dry Na2O Coal Fixed ~39% Carbon SO3 Carbon ~47% ~67.5% MgO

Al2O3 Fe O Water 2 3 Volatile Hydrogen ~61% Matter ~4.7% ~50% SiO2 Oxygen ~23.8% Other

Victorian Government – JOGMEC Investment Seminar 10 May 2019 10 Majority of Processes require Brown Coal to be dried › Victorian Brown () have moderate to high moisture contents, and the majority of utilization processes requires the moisture to be removed › Moisture contents range from 53% to 67%, as received (AR%), considering in an alternate way, there is 1x – 2x more water than coal “Water you can Walk on” › Energy efficient coal drying or dewatering is therefore critical for use in any thermal based processes. › Numerous technology options have been developed to achieve effective drying, which can be configured as Separate or Integrated processes. › Drying/Dewatering processes are normally categorised as Thermal, Mechanical, Chemical, Electrical (Electromagnetic Wave), Biological, or combinations.

Steam Rotary Dryer Superheated Steam Dryer Fluidised Bed Dryer

Flash Heat Dryer Brown Coal Densification High Velocity Air

Mechanical Expression Hydrothermal Dewatering Microbial Hydrolysis Victorian Government – JOGMEC Investment Seminar 10 May 2019 11 Drying Technology Vendors represented at JOGMEC Seminar

Victorian Government – JOGMEC Investment Seminar 10 May 2019 12 Many pathways are available to leverage brown coal

Raw Brown Direct Ammonia Urea

Methanol DME Victorian Gasifier Brown Coal (CO – H2) Chemical Hydrogen Coal Fuel Cell Drying Methane SNG ~13% Briquette MC Tar - Oil - Gas Char – AC Victorian Government – JOGMEC Investment Seminar 10 May 2019 13 , Pyrolysis & Torrefaction Thermo-chemical Processes have been undertaken since the 1800’s to derive energy from coal and other organic material into a form that can be utilised directly as a gas or processed into other products; thermo-chemical processes include: » Gasification - Uses heat and pressure to break coal fuel down into base chemical constituents and oxygenated compounds, leaving a small amount of solid residue; » Pyrolysis - Decomposes coal at elevated temperatures in a depleted oxygen environment which results in a large amount of solid residue (Char); and » Torrefaction – Lower temperature process used on biomass, and other high moisture feedstocks to remove light volatiles as gas. › Brown Coal is particularly suitable for Thermo-chemical processes due to its high Volatile content (~50%) and resultant reactivity NSE ECOPRO 20t/day Pilot

Victorian Government – JOGMEC Investment Seminar 10 May 2019 14 BasicIntegrateUtilise Process availableBy-Products W2EBiomass Process CCUS tointo as reduce Fuel Optionstothe enhance ProcessSource CO2 to Emissionsreduce Flexibility & Product CO2 &Footprint Performance

H2O BRIQUETTES CCUS RAW COAL COAL PRESS Vertical COAL DRYER (Briquetter) Kilns LUMP CHAR

Rotary GROUND Kilns CHAR Crushing and

Screening CCUS Carbon ACTIVATED CARBON BIOMASS Grus Kilns CCUS Steam for drying Gas Kiln GENSETBIOMASS

Fine WASTE Gas/LiquidsSYNGAS STEAM GASIFIERCarbon ELECTRICITY MSW CombustorProcess BOILER Processing Process

CCUS Victorian Government – JOGMEC Investment Seminar 10 May 2019 15 Carbonisation Processes can yield a wide range of products

Raw Coal Briquettes Char AC Products Tar & Liquid Products 10.4 Kt • Methane • Penatnone-Hydrox-Methyl 17.5 Kt ] ~30% • Phenol 36.5 Kt • Hydrogen Activated • P-Cresol 39.3 Kt • Ethylene Carbon • Napthalene Liquids • Ethane Gas • Carbon Dioxide • Carbon Monoxide ~33%

COAL DEMAND RAW COAL BRIQUETTE CHAR LIQUID GAS AC Char (Dry Ash-Free) Carbon Content (%Db) 68% 68% 91% 76% 44% 91% 99% Ratio 100% 42% 19% 4% 7% 10% 60.7 Product 100.0 Kt 41.8 Kt 18.5 Kt 4.0 Kt 6.5 Kt 10.4 Kt Raw Coal:Char Ratio Moisture 60.7 Kt 5.2 Kt 1.0 Kt 540% Kt Base Mass [inc Ash] 39.3 Kt 36.5 Kt 17.5 Kt 4.0 Kt 6.5 Kt 10.4 Kt Carbon 67.5% 26.5 Kt 24.7 Kt 16.0 Kt 3.05 Kt 2.83 Kt Surface Area Raw Coal:Briq Ratio Hydrogen 4.7% 1.8 Kt 1.7 Kt .08 Kt .30 Kt .91 Kt 500-2,000m3 239% Oxygen 23.8% 9.4 Kt 8.7 Kt .01 Kt .65 Kt 2.72 Kt per Gram Briq Moisture ULTIMATE Ash & Inorganics 4.0% 1.56 Kt 1.45 Kt 1.45 Kt .00 Kt .00 Kt 12.50% Moisture Loss 98.4% 55.5 Kt 4.2 Kt Moisture Excluded LOSS

Victorian Government – JOGMEC Investment Seminar 10 May 2019 16 Brown Coal is an excellent feedstock for a range of solid carbon product options; key steps in the process can include: » Moisture Removal (Drying – Dewatering); » Volatile Content Removal(Torrefaction – Pyrolysis – Gasification); and » Product Preparation (Form - Size - Densification)

GLOBAL ACTIVATED Briquettes Char Activated Carbon CARBON MARKET* › Industrial boilers › Re-carburising › Pollution control 2015 Actual: US $2.7 Bn 2022 Predicted: US $6.2 Bn › Char Feedstock › Magnesium › Water treatment › Power Station Fuel › Ferro alloys › Gas Clean-up › Domestic fuel › Silicon and FeSi › Gold processing › BBQ fuel Feedstock › Mercury Removal › Metallurgical Apps › Food and Medical *Research & Market: Activated › Calcium Carbide › Pharmaceutical Carbon Global Market Overview

Victorian Government – JOGMEC Investment Seminar 10 May 2019 17 Diverse Range of Energy Products are possible

INVESTMENT Capex : GSP 1 Mtpa Coal GSP $/t-coal GATE PRICE PRODUCTION GSP @1Mtpa Rate Ratio Raw Coal $ 13/t-coal $ 13/t 1.00 Mt/a $ 13 M $ 50 M 392% Briquette $ 73/t-coal $ 175/t 418 Kt/a $ 73 M $ 50 M 68% Char $ 83/t-coal $ 475/t 175.38 Mt/a $ 83 M $ 145 M 174% Activated Carbon $ 141/t-coal $ 1,350/t 104 Kt/a $ 141 M $ 260 M 184% Electricity $ 100/t-coal $ 100/MWh 1 TWh/a $ 100 M $ 400 M 399% SNG $ 72/t-coal $ 8.00/GJ 9.0 PJ/a $ 72 M $ 335 M 467% Diesel $ 98/t-coal $ 0.63/Litre 156 ML/a $ 98 M $ 500 M 513% UREA $ 110/t-coal $ 275/t 400 Kt/a $ 110 M $ 400 M 364% Hydrogen $ 159/t-coal $ 3.30/Kg 48 Kt/a $ 159 M $ 2,000 M 1260% Average $ 104/t-coal * (Excl Raw Coal) $ 104 M * $ 511 M * 320% Total Average GSP value of Victoria's 33Bt of coal = $ 3,446 Bn

* With Raw Coal included - Average Yield = $94.25/t, Total Avg GSP = $3,111 Bn

Victorian Government – JOGMEC Investment Seminar 10 May 2019 18 Very Low CO2 Emissions

Extremely High Energy Density

Flexible Energy Carrier

Flexible Feedstock for D/S Products

Source: Department of Energy (USA), IEA North American Roadmap Workshop, 2014 Victorian Government – JOGMEC Investment Seminar 10 May 2019 19 › Some Victorian Lignites are highly suited to manufacturing agricultural products such as slow release fertilisers and soil amendments.

› Leonardite coal, sometimes referred to as weathered coal has very high levels of humic acid, very high cation exchange capacity, high sulphur content, higher pH than thermal brown coals and high labile carbon content. › A number of companies have undertaken successful farm-based trials of various soil enhancement and fertiliser products. › Key outcomes from testing programs include reduced: » Requirement for the use of inorganic fertiliser (urea) to maintain or increase crop yields; » Harmful environmental effects of nutrient run-off to waterways; » Emissions of potent greenhouse gasses from urea volatilization; and » Loss of Soil Carbon by acting as a “catalyst” to permanently sequester atmospheric CO2 as fixed soil carbon

Coal based Agricultural Products have been shown to improve soil health, fertility, beneficial soil microbial communities and soil carbon content – all of which will potentially lead to further reduced use of inorganic fertilisers Victorian Government – JOGMEC Investment Seminar 10 May 2019 20 Japan & Australia are investing in CCUS Developments › The Victorian Government established a long-term target for net zero greenhouse gas emissions by 2050, which requires most industrial sectors to achieve significant emission reductions into the future. › The Energy Industry, as large contributors to national CO2-e emissions have, for more than a decade, been pursuing options to mitigate emissions from production processes; these include: » Post Capture (PCC); » Beneficial CO2 reuse; » Process Improvements; » CO2 Mineralisation; » Bio-Sequestration; » Pre Combustion Capture. › Victoria has excellent Geosequestration potential in Sandstone Formations and Deep Saline Aquifiers, which are being advanced to commercial status through the CarbonNet Project. › Several trials are being undertaken to improve the natural performance of Plants to Terrestrially Bio-sequester CO2 as a Carbon Bridging Technology and leads to improved cropping performance and soil condition. › Options for Beneficial Carbon Recycling are also being pursued.

Victorian Government – JOGMEC Investment Seminar 10 May 2019 21 CO2 Utilisation Pathways (Carbon Recycling)

Victorian Government – JOGMEC Investment Seminar 10 May 2019 22 Evolving Market Demand › The world is experiencing issues in achieving cost-effective and sustainable waste management that meets contemporary community expectations › Waste to Energy (W2E) utilizing Municipal Solid Waste (MSW) is not new, having first been undertaken in the late 19th Century. › The drivers for MSW based W2E have strengthened considerably over the past few years due to a range of factors: » Population Growth & Density; » Increased Waste Management Costs; » Recycling Pathway Challenges; » W2E Technology Improvements; » Evolving Community Expectations & » Electricity Market Changes: Gas Regulatory Standards for Landfill; Pricing, Impact of Renewables › The integration of Brown Coal, Biomass and utilisation of targeted Waste Streams, such as non-recyclable Plastics & Tyres strengthens both the W2E & Resource projects

Victorian Government – JOGMEC Investment Seminar 10 May 2019 23 Industry is collaborating with leading Research Institutes and Universities to find new ways of harnessing Energy & Carbon from brown coal in a sustainable way Key Research Areas include: › High Value Carbon Production – Graphene & Allotropes of Carbon , Graphene Oxide- based Supercapacitors & Batteries, Carbon-Fibre materials

› Hydrogen Production - Low cost CO2- free Hydrogen (Pyrolysis, Gasification, Membrane, Renewables including Integration of Renewable Technologies › CCUS Opportunities: Advancing practical and cost-effective Carbon Sequestration and Utilisation opportunities for commercial application (Carbon Net) › Carbon Enrichment of Soil – Improving the Agricultural Productivity and Carbon Content of Soils, and associated Carbon Sequestration › Carbon/Hydrocarbon Gas & Liquids - Production of Methanol, Diesel, SNG, DME, Tars/Pyroils, Acetic Acid, Naptha and other Petroleum Products › New Carbon Feedstock – Biomass Integration, Tyre Pyrolysis, MSW Processing (W2E)

Victorian Government – JOGMEC Investment Seminar 10 May 2019 24 With Focus on Sustainable Prosperity (5-P’s) › Gippsland (Latrobe Valley has abundant Coal Resources able to underpin coal based projects for decades (33 Bt). › The Economic Value or Potential Value Add available from Brown Coal resources exceeds $3,000 Bn ($3 Trillion) “Profit”. › Substantial knowledge already exists on Brown Coal and its Utilisation, but new Research & Development will underpin future Adaptive Innovation “Progress”. › Government Policy Objectives and Resources Availability provides Clear Direction reflecting contemporary community expectations for Carbon Utilisation & Energy Production “Purpose” › Sustainable Developments will deliver Investment and Jobs Outcomes for the Region “People”; and › Government Sustainability standards protect the future environment “Planet”

Many Commercial Pathway’s and Investment opportunities are available to achieve “Sustainable Prosperity” from Victorian Brown Coal

Victorian Government – JOGMEC Investment Seminar 10 May 2019 25