Rio Tinto’s energy boss said coal will remain the number one energy source for decades to come but said the technology needed to be cleaned up to help fight climate change.
Speaking at a business lunch in Sydney, Harry Kenyon-Slaney said energy security was a top priority for countries and ranked as high as water and food security in the priority list.
Like others working in the coal sector, Kenyon-Slaney said coal would continue to help modernise areas in nations such as China and India where “having once experienced a modern industrial economy, they will not surrender it”.
“All these people – and the world still has a couple of billion more who aspire to it too – now have the same expectation as you or I that when they press that switch by the door, their lights will come on,” Kenyon-Slaney said.
And with this demand, coal is set to “light up” darkened parts up the world for decades to come.
“The world needs to generate enough energy in coming decades to support modernisation and equitable progress for all nations. The alternative is economic stagnation with the social and political unravelling that always follows.
"Put simply, that all-important requirement – for large-scale, reliable, affordable energy – means one thing only. A great deal of it will be generated from coal.
“That’s because coal is abundant – with estimated global reserves plentiful for more than another century”
However, Kenyon-Slaney was upfront about the need to tackle climate change which has said “is real, is upon us and must be addressed”.
He said while there was no “silver bullet” answer, developments in Carbon Capture and Storage technologies were showing promising signs of ramp-up to commercialisation.
“By the end of last year there were 12 projects demonstrating CCS internationally, that can permanently store 25 million tonnes of CO2 annually,” Kenyon-Slaney explained.
“This has the same effect on global emissions as installing 13.6 GW of photovoltaic solar panels.
“To underline the scale of this, that’s the solar power capacity of the USA, the UK and France, combined. From 12 demonstration projects. The potency of CCS becomes clear.”
He said the challenge of comercialisng CCS is one the world needs to tackle, but doesn't think it is realistic for Australia to launch into a huge process to try and commercialise it.
“It has to take place in areas where capital costs a low and where there’s a significant growth in energy demand.
“The challenge here in Australia is to make sure we are ready to utilise it when it has been commercialised and that really means focusing on the geological storage aspect of CCS and there’s plenty of work going on in that field.”
The Rio executive said all forms of energy sources would be important contributors to the mix going forward, including wind, power, solar power and hydro power – but coal will remain the number one contributor.
“Wind has its place and solar has its place. But it’s my contention that the base-load, the heavy lifting of supplying that reliable power and making sure that everybody around the world can turn on their light switch reliably will be founded on coal and we must clean up coal and there is a way of doing so.”
While he wouldn’t be drawn on price estimates for thermal coal, Kenyon-Slaney said an oversupply had led to a very challenging industry.
“Producers here and around the world have taken an axe to their costs and they’re fighting to survive,” he said.
However Kenyon-Slaney remained optimistic about the future of the sector and said the demand for thermal coal continues to rise and the orders continue to come in.
“We believe that over the long-term there is a bright future for thermal coal.”