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Binh, Ho Thai s4281168

Geo-Engineering in Australia: Carbon Capture and Storage

Binh, Ho Thai S4281168

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Introduction ............................................................................................................................................ 3 Geo-engineering in Australia .................................................................................................................. 3 Definition of Geo-engineering ............................................................................................................ 3 Importance of Carbon Capture and Storage (CCS) ............................................................................. 3 Carbon Capture and Storage technologies ............................................................................................. 5 Carbon Capture ................................................................................................................................... 5 Carbon Storage ................................................................................................................................... 6 Market Readiness of CCS ........................................................................................................................ 7 Scenario Analysis..................................................................................................................................... 9 High emission scenario ....................................................................................................................... 9 Low emission scenario ...................................................................................................................... 11 Business Implication ............................................................................................................................. 16 Reference .............................................................................................................................................. 20

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Climate change is the worlds today most pressing issue which results in a quick changing social, business and legislative environment. Many technological solutions have been introduced in order to fight against climate change at different stages of market readiness. Among geoengineering alternatives designed to lessen the impact of climate changes, Carbon Capture and Storage (CCS) is considered to deliver great emission reduction at the same time energy security from fossil-fuel. This report will briefly review the current stages of market readiness of the technology. After that, possible future macro-environment uncertainties in different scenarios will be analysed in order to project different future development paths of CCS. Finally, business strategies will be proposed so that the energy sector could effectively response to technological development and climate-induced changes in macro-environment.

Geo-engineering in Australia
Definition of Geo-engineering
Geo-engineering is the deliberate intervention to Earth's climatic system with the aim of reducing effect of climate change. There are two major approaches for geo-engineering: Carbon Dioxide Removal which attempts to remove greenhouse gas from the atmosphere and Solar Radiation Management which tries to reflect some of sunlight away from the planet in order to cool it (White 2001). The practices range from as simple and inexpensive as painting house's roof white to reflect sunlight or as radical and unproven as fertilizing algal in ocean to absorb CO2 (Paull, 2009). Despite of all the benefits proposed by supporters, Geo-engineering is widely criticized by public and academia. Firstly, it all comes down to our imperfect understanding of how climate behaves in respond to geo-engineering especially when most of interventions are still not proven to be beneficial in longer time scale. Victor and co-author (2013) concerned that quick and cheap engineering messing around with the eco-system which is already stressed by greenhouse gases could end up badly. Secondly, they also expressed a major view that geo-engineering is but a distraction from the urgent effort of greenhouse gases reduction before climate gets out of hand. Among all the techniques of geo-engineering, Carbon Capture and Storage promises a safer approach to ensure major reduction in industrial scales.

Importance of Carbon Capture and Storage (CCS)

According to Energy in Australia 2011 report (Cuevas-Cubria et al. 2011), for the period 2008-2009, 77% electricity was generated using coal for its abundant reserves in the country. Although power generation from coal has been declining steadily since 2009, a study from University of Queensland found that coal power will continue to be a significant part of the country power generation mix for at least another 20 years (Eastley 2013) despite all the determination to reduce greenhouse gases set out by Australian government. The reason is firstly Australian economy is heavily dependent on one energy source-coal; it will take a lot of time for a major transition to a cleaner economy. Secondly, until renewable alternatives mature, coal will remain the only economically feasible and reliable mean for base-load power. As a result, it is undeniable that 3|Page TIMS7328 Strategies for Business Sustainability and Innovation Individual Assignment

Binh, Ho Thai s4281168 renewable energy will not replace coal power in a foreseeable future. Thus reducing emission from coal power has to be dealt with simultaneously with raising contribution of cleaner sources. On the other hand, coal is responsible for 75% of Australia's greenhouse gases from energy (Department of Climate Change and Energy Efficiency, 2013). Therefore, any major advancement in reducing coal emissions will contribute significantly to the national emission target or 80% reduction by 2050. To address such problem, CCS promises a sound solution for generating power from coal at the same time mitigating emission issue. CCS is the process of removing carbon dioxide from flue gases typically from fossil-fuel power station then storing them in underground reservoir. CCS technologies are claimed by developers to remove 80% to 90% of CO2 from flue gases under certain conditions (DAlessandro, Smit and Jeffrey, 2010). Despite its current limitation on efficiency and power consumption, CCS is the only technology available for maintaining power security and achieving significant reduction in CO2 in medium-term future. Especially, CCS removes CO2 from the sources rather than intervening in eco-system, hence, can be considered safer than other large-scale geo-engineering alternatives. From life cycle assessment of Kadam (2002), the traditional process of generating energy from coal start from Coal Production to Coal Transports and ends at Coal firing which produces electricity and CO2. Uncaptured by-product CO2 results in external costs for environment and society. Coal Production

Coal Transport

CO2 Coal Firing Electricity Successful deployment of CCS will isolate greatly impact of the energy production to external environment.

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Coal Production Carbon Storage

Coal Transport

Carbon Capture CO2 Coal Firing Electricity

Carbon Capture and Storage technologies

Carbon Capture
There are 3 major CCS technologies under development which are at different stages of market readiness and have different implications. Post combustion capture (PCC): this technology removes CO2 after combustion of fossil fuel. CO2 is often scrubbed from flue gases using chemically active agents (solvents) which are then regenerated by heat to release CO2 for collection. The major challenge for this technique is that CO2 concentration in flue gases is low (about 15%) and has to be separated from other component gases such as N2 and SO2. Besides, degradation of solvents because of by-products also contributes to efficiency reduction and increased costs. Especially, the current energy penalty for the PCC facility is still high, could account for 25%-40% of energy generated by a power plant for solvent regeneration and CO2 compression. On the other hand, this technology is commercially mature and well-understood and has already been used in other industrial applications. PPC can be economically retrofitted into existing power plants or provided as a feature for new ones. There have already been several pilot-scale demonstrations in Australia and overseas at Lake Munmoral (New South Wales) by Delta Electricity, Tarong power station (Queensland) by Stanwell Power, Loy Yang Power Station (Victoria). The demonstrations' results are being used for technology selection for commercial-scale PCC, assessing performance and trial of new solvents and configurations. There have been clear R&D objectives by 2015 such as development of new solvents, reduce thermal energy consumption to 2Gj/tonne CO2, efficiency loss of less than 5% at 90% recovery (Wall, 2007).

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Binh, Ho Thai s4281168 Pre-combustion capture (IGCC-CCS) involves Integrated Gasification Combined Cycle (IGCC) which uses gasifier to turn coal and other carbon based fuels into synthesis gases (CO, CO2, H2). A water-gas shift reactor converse CO to CO2 and H2. CO2 is then removed prior to combustion and elevated to high pressure. Removal and high pressure of CO2 reduce CCS energy penalty to 10% to 16% which is more efficient than PCC. Some configurations of this technology can be suited for low rank coal which is commonly used in Victoria. Besides, the process also generates hydrogen-rich fuel which can be used as chemical feedstock in fuel cell or power generation. However, this technology can't be retrofitted to existing power plants. Moreover, components for such technology are not readily available from suppliers. The coal reaction mechanism itself is reasonably developed but far from complete. There has not been any IGCC-CCS demonstration in Australia but there are a few commercial IGCC plan with CCS in operation in U.S (FutureGen Plant) and China (GreenGen). Oxyfuel combustion: generates energy from combustion of fossil fuel in oxygen and recycled exhaust gases rather than air. The process produces concentrated stream of CO2 rich gases to be cooled and compressed in subsequent processes. Similar technologies have been used in glass and steel industries for a long time. However, because combusting in pure oxygen would get boiler hot enough to melt, flue gases are recycled to maintain temperature at acceptable level. The technology is the basis for Zero Emission Cycle plants (Wall, 2007). Oxyfuel combustion is being demonstrated at the scale of one hundredth of the size of Callide project. The technology is said to be retrofitted to existing coal-fired power stations, however, it requires redesign of turbines. As the result, new installation is more economical than retrofitting existing plans.

Carbon Storage
Progressing along with Carbon Capture, Carbon Storage technologies have to be proven options by the time Carbon Capture is applied on industrial scale. Although methods of estimating actual global storage capacity are controversial, it appears to be sufficient for decades to come. Carbon Storage has been widely tested in many countries with many aspects being well-understood (Jenkins et al. 2011). Some of projects have made to industrial-scale experiments which will validate concern of long-term leakage, engineering feasibility and scale of deployment.

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Source: IEA and NEA (2010)

Market Readiness of CCS

CCS has not yet been demonstrated on commercial-scale in Australia, until realistic demonstration plants are in operation, costs of CCS will remain uncertain (NEA an IEA, 2010). There has been a road map for CCS to be available on large scale by 2015 earliest (Wagner and Foster 2011). The two authors emphasized that inability to deploy CCS rapidly on large scale will make the technology lose its competitive advantages against low emission alternatives as Australia moves towards renewable. Currently, CCS is receiving several Australian Government funding for its demonstration (Calder, 2012): CCS Flagship program ($1.7b) National Low Emissions Coal Initiative ($370 million) National CO2 Infrastructure Plan ($61m) Global CCS Institute ($315m)

CCS demonstration has been deployed at various sites at different stages of readiness Projects CCS Demonstration Stages 7|Page TIMS7328 Strategies for Business Sustainability and Innovation Individual Assignment

Binh, Ho Thai s4281168 Callide Oxyfuel Tarong Munmorah H3 Hazelwood UNO Mk3 Loy Yang Mulgrave Wandoan CabonNet Otway South West Hub Gordon Capture Advanced Capture Operational Capture Completed Capture Completed Capture Operational Capture Operational Capture Operational Capture Completed Storage Feasibility Storage Hub Feasibility Storage Operational Storage Hub Feasibility Storage Advanced (Hardistym et al 2011)

CCS still has to overcome its weakness of energy penalties and costs. Firstly, CCS greatly impairs performance of power plants, to capture CO2, more coal must be burned to compensate for additional energy requirement. CCS is expected to increase production cost for stationary power by between 39% and 78% depending on power generation technologies, however, the penalty is only about 1% for natural gas plants as the technology inherently capture CO2 in its design (Hardistym et al. 2011). CCS cost is also expected to fall when the technology is more widely deployed worldwide. Cost for CCS retrofit on existing coal power station is predicted to be about $71 to $90/ t CO2e for Preferred scenario (shared infrastructure, low estimate of costs and optimal reservoir performance) and about $120 to $145 for Least-preferred scenario (dedicated infrastructure, high estimate of cost and poor reservoir performance). Among these aggregated costs, 80% is for capture, 10% is for transport and 10% for sequestration. Sequestration cost is the most uncertain cost component (Hardistym et al.2011). Taking into account the social costs of carbon emission is about $50-$100/t CO2e, CCS for natural gas plants and retrofitted CCS under preferred scenario settings can be considered economic in societys perspective. However, there are many criticisms about feasibility of CCS Rochon (2008) criticized CCS for not being feasibly deployed before 2030 while the global greenhouse emission has to start falling after 2015. The criticisms are also about energy waste, high electricity price and unclear risks on health, ecosystems and climate. Tsouris and Aaron (2010) shared the same opinion that instead of spending astronomical amount in the CCS, such cost would be avoided in the first place by largescale implementation of renewable sources which emit nothing at all. Moreover, the same amount investing in wind-turbine would save much of carbon price over its lifetime. On the other hand, Gluyas and Daniels (2010) believe it best to develop CCS and renewable side-by-side as complementary rather than either/or selection. They argued that the shift from fossil energy will require a transition period instead of disruptively scaling up solar and wind energy at the same time total removal of fossil energy. Pacala and Socolow (2004) asserted that no single technology is capable of delivering all necessary reduction but by many available technologies simultaneously.

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Scenario Analysis
The scenario analysis will be based on modelling outcome of Graham (et al., 2008) in order to discuss different future possibility for CCS. The analysis took into account not only policy settings at 2007 but also Australia's first period of Kyoto commitment and emission trading scheme which was introduced in 2012. Thus, the report can be considered a relevant proxy to current development of energy market. This paper will employ High Emission Scenario and Low Emission Scenario as two extreme situations in order to define a range of future possibilities that CCS will face. Future actual outcome is predicted to be within the range depending occurrences and interplay of future critical events (Courtney, 1997).

High emission scenario

Business As Usual (BAU) or unconstrained scenario: the modelling for this scenario assumed policy settings at 2007 including: Greenhouse Gas Abatement Scheme (NGACS), Victorian Renewable Energy Target (VRET), NSW Renewable Energy Target (NRET), Photovoltaic Rebate Program (PVRP) and Queensland's 13% natural gas target. However, it didn't considered Clean Energy Future and other legislations by the ALP after 2007. As a result, this could be considered the future scenario when future events have negating effect on policies setting progress made after 2007.

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Binh, Ho Thai s4281168 Events Tony Abbott promises to overthrown the Emission Trading Scheme if they are to win the election. Although LNP will face a lot of opposition about such approach, the current politic view of LNP (Berill, 2012) will likely adversely affect the transition to clean energy: - Little acceptance of Global Warming Science - No Renewable Energy (RE) and Energy Efficiency (EE) target - No GHG target - Little consideration on EE - CCS is not mentioned Assuming that there will be no change in current climate policies, the effect of such policy will be very uncertain and add more risk to the future of clean energy as well as CCS. The transition from carbon tax to ETS will be commenced by 2015 with one-way link to EU ETS and full link to EU ETS by 2018. From 2015 onward, Carbon permit price will be directly influenced by EU carbon market. However, with the recent crash in EU ETS market due to large oversupply of permit (Carrington, 2013), the future price of Australia carbon market will rely on how Europe resolves its problem. There has been a call to revise the Treasury's forecast on carbon price and its impact to recent developments. Long-term resource demand in Asia resulted in 42.3% increase in investment in coal project. Recovery of the world economy (Queensland Government, 2012). Impacts Cheap carbon price will damage competitiveness of CCS and other renewable energy against coals without CCS. Uncertainty and revised carbon tax and projection of future carbon price adds more uncertainty and cost to CCS



Social Technological

Growing population without significant energy efficiency improvement. CCS will not be available before 2015 (Wall, 2008) The feasibility of CCS is questionable. The $188million CCS project ZeroGen failed, the implemented CCS technology proved to be too expensive and had high energy penalty.

A surge in coal demand will attract more private investment and government subsidies. As a result, coal will remain more abundant and cheap. Pressure on energy supply In short-term to medium there will not be any affordable CCS. Chances that other CCS projects may also fail. Increasing dependence on coal will make opportunity cost of foregoing committed infrastructures in order to switch to new technologies more and more expensive.

Environmental Negligible effect. Legal - Coal industry is heavily subsidized in various forms: Coal industry is heavily subsidized: over the past 5 years, Australian government has spent over $6.92 billion subsidies in forms of infrastructure projects compared to about $913 million for renewable energy and energy efficiency (Berill, 2012). Another $13 billion is projected to be spent in the future because of rapid expansion for export purpose. Many resources have already been committed and these projects will not likely to be stopped in the future as it will damage long-term governments and investors revenue.

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The overall result of these critical events is either an absence of explicit carbon price or not effective enough carbon price to tip the competitiveness of CCS (Graham, 2008). There would be no economic incentive for adopting more expensive new power plants with CCS features or to retrofit CCS to existing power plants. CCS will not be financially feasible if an adequate market mechanism is not in place for a high enough price on emission. This scenario is characterized by the dominance of pulverized coal-fired power plants throughout the time horizon. The proportion of electricity generated from coal will rapidly expand to play a larger role in the electricity mix. In longer-term, after 2030 the current pulverized coal-fired power plants are predicted not to expand anymore, more advanced brown coal IGCC will be deployed in order to meet increasing electricity demand.

Source: Graham, Reedman and Coombes, 2008 This scenario is characterized by the dominance of pulverized coal-fired power plants throughout the time horizon. The proportion of electricity generated from coal will rapidly expand to play a larger role in the electricity mix. In longer-term, after 2030 the current pulverized coal-fired power plants are predicted not to expand anymore, more advanced brown coal IGCC will be deployed in order to meet increasing electricity demand. Electricity sector emissions are projected to rise from around 200Mt in 2005 to around 450Mt by 2050.

Low emission scenario

This scenario assumes commitment of the government to reduce carbon emission at more substantial level with an introduction of explicit and effective carbon price. In this case, CCS can be commercialized at different extents and different time frame. If CCS is possible, there is only one available choice for Carbon Storage which is geological storage in deep saline formations. However,

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Binh, Ho Thai s4281168 choices of technology for Carbon Capture depend largely on levels of possible emission reduction target and future market conditions.

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Events Carbon tax has been implemented by the Australian Prime Minister Julia Gillard from July 2012 and there is a road map for Emission Trading Scheme for the period 2015 onward. The government may make conditional target of 80% of emission reduction by 2050 binding. There has been a trend of decreasing electricity demand since 2011. Electricity generated by black coal has decreased by about 17% since 2008; there is a slight decrease in brown coal and considerable increase in gas generated electricity (Department of Climate Change and Energy Efficiency, 2012). The trend will likely to continue thanks to improved energy efficiency, carbon pricing and increasing supply for natural gas. Financial Institutions who market themselves as socially responsible will be reluctant in financing dirty coal projects due to reputational risk and public objections. Possible future economic recessions and slow recovery of world economy Further appreciation of Australia dollars Tighter emission regulations from overseas, especially in large market like China Increasing public concern about climate changes CCS is receiving large government funding support (about $2.5 billion) and is making significant progress on large scale pilot and medium scale demonstration (Department of Mines and Petroleum,WA, 2012). CCS technologies will be matured quicker for increasing investment in R&D and commercial-scale demonstrations as a result of more commitment from Political and Legal factors. Negligible effect. Currently, CCS is receiving funding support from Australian Government (Department of Mines and Petroleum,WA, 2012): - CCS Flagships program: $1.7 billion - National Low Emissions coal Initiative: $370 million - National CO2 infrastructure Plan: $61 million - Global CCS Institute ($315 million)

Impacts Create opportunity costs for big polluters to reduce pollution and incentives to invest in clean energy and CCS. Stop construction of new power plants. Continue the trend of reducing generation capacity of existing coal power pants.

Limit funding sources for conventional coal projects. Financing for coal projects is made expensive Lower demand for coal mining and export

Social Technological

Pressure on political and legal changes Coal with CCS will be more competitive than coals considering carbon price effect.

Environmental Legal

Accelerate time to market of CCS Make coal and natural with CCS more available and competitive compared to coal and natural gas without CCS

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Binh, Ho Thai s4281168 The funding is expected to increase as the consequence of future commitment for 80% emission reduction by 2050 target. In order to achieve deeper emission cut set out by the target, Hohne (et al. 2013) suggested significant changes in legislative environment will be required including ones that affect development of CCS: - $1.7 billion for construction and demonstration of large-scale of CCS - Construction of coal power plants will be stopped in the future - 2000 MW brown coal will be replaced by highly efficient gas power plant - Clean Energy Finance Cooperation will invest $10 billion in innovative clean energy and technologies.

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Binh, Ho Thai s4281168 This paper will employ result from Graham (et al., 2008) model under assumption of carbon target of 60% under 1990 baseline in 2050 to analyse the outcomes of this scenario. Even though there is a slight different between 60% under 1990 baseline target in 2050 and the current 80% under 2010 target in 2050, the results can be still employed as a proxy to well illustrate the outcomes of the later. From the modelling of Graham (et al., 2008), the characteristic of this scenario is the uptake of CCS at different levels varying on price of natural gas in medium-term and long-term. In shortterm, CCS will not be available. Natural gas price will also contribute considerable effect on development of CCS. 2013-2020 According to objectives of CCS development, CCS will not be available before 2015. Moreover, there has not been any commercial-scale demonstration. 2020-2030 Investment in Natural Gas with Combined Cycle (NGCC) without CCS will immediately stop. 2020: NGCC with CCS will dominate 2024-2029: Black and brown coal with CCS will be employed 2020: black and brown coal and NGCC with CCS will all increase. NG will be initially dominant but coal will catch up and exceed when NG becomes more expensive than coal 2030-2050 NGCC with CCS will be dominant Coal with CCS will be reduced

Abundant and cheap natural gas

Natural gas becomes expensive

Coal with full CCS will be equipped for both coal and NG plants

Source: Graham, Reedman and Coombes, 2008

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Business Implication
Base on Harts (2011) Sustainable Value Framework, CCS and fossil dependant energy sector can be considered as a today Typical Corporate Portfolio which focuses on existing elements and immediate time horizon rather than more disruptive revolutionary approach to capture future opportunities. This approach is characterized by incremental and continuous improvements which rationalize industry (Heart, 2011). There are typically two strategies for immediate focus: Pollution Prevention: this strategy is driven by cost and risk reduction incentives. The energy sector has been shifting towards efficiency improvement by construction of more efficient coal and natural gas power plants. This shift is helping the sector to comply with strengthening legislative and public pressure. Efficiency improvement and emission reduction are helping the sector to reduce cost and exposure from the current carbon tax. Although CCS is designed for deep emission reduction in the future, it only provides incremental improvement to the existing fossil energy business instead of fundamental shift to more sustainable zero-emission future like non-hydro renewable energy does. Thus, CCS may lie well within the boundary of immediate focus approach. Product Stewardship: this strategy integrates stakeholders concern in to the business process. As carbon emission and climate change consequences become unequivocal, energy sector has to consider environmental consequences on its stakeholders from its carbon emission in balance with their future energy consumption demand. As a result, the sector has to assume responsibility for the products entire life cycle (Hart, 1997). CCS is regarded as a way to effectively isolate externality of fossil energy production life cycle from the environment.

Sustainable Value Framework Hart (2010) suggested that an unbalanced portfolio indicates missed opportunity and vulnerability. The Typical Corporate Portfolio suggests good position for today but vulnerabilities for tomorrow. Energy sector needs to extent itself to the 2 other quadrants of the framework.

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Binh, Ho Thai s4281168 With the same opinion, Metzger (2012) asserted that many businesses now considered mitigation as emission reduction rather than building competencies for future adaptation. Considering the results of scenarios analysis, the 2 extreme forecasts present significantly different energy contribution landscapes. The possible changes in composition of energy mix alone indicate considerable risk for any business decision today. Stay on the track of Business As Usual without adaptation capacities will expose the business to the risk of any critical events that may happen in Low Emission Scenario. Especially in the case of energy sector, heavy capital commitment and longterm horizon of investment weaken agility of the sectors to response to extreme events. The scenario model of Graham (et al. 2008) assumed a gradual and orderly shift from BAU to Low Emission Scenario resulted from long-term government commitment without taking into account other disruptive critical events. For example, today an energy corporation locks their investment solely in coal without CCS today with assumption of BAU. If in 2015, the carbon market soars at the same time domestic electricity demand and overseas coal demand drops, the business will not only bear all the burden of carbon prices but also revenue losses from overseas demand. In fact, many low emission scenario critical events have already taken root and possibly will possibly gain momentum in near future. As a result, shifting corporate strategy toward the upper quadrants will help the sectors to adapt and build up resilience against future unfavourable events: Clean technology: this strategy builds up future shareholders value by innovation and repositioning. By diversifying the sectors portfolio towards clean energy, its position will be less vulnerable to legal and economic shocks happening in Low Emission Scenario. As a result, these risks will be incorporated in increasing cost of funding for the sectors, especially when major financial institutions market themselves as sustainable and socially responsible. By making CCS feasible, the sector can maximize its shareholders value in several ways: Energy sector will emit less thus become less susceptible to any future movement of carbon price. If the EU carbon market recovers quickly enough and CCS can be rapidly deployed to reach optimal efficiency, there is an immerse business opportunity for domestic carbon permits sale to European market. Major importers of Australias coal are tightening regulatory framework for coal sector near future. China has recently announced its plan for energy consumption to peak at 4 billion tonnes of coal equivalent within 5 years (Sussams et al., 2013). The overseas legislative changes will threaten demand for Australia coal as well as profitability of shareholders investment. Instead of considering such development as a risk, the sector should also exploit the climate-induced demand (Porter and Reinhardt, 2007). Successful deployment of CCS also represent several opportunities: o Technology transfer to help the importers to solve their problem of carbon emission. Thus they can rely on coal for cleaner energy for population and economic growth. o New revenue stream from technology transfer and construction of clean coal infrastructure overseas will compensate the falling trend in coal demand. Australian coal reserves owned by listed companies are equivalent to 15-25% of the global coal carbon budget to 2050 while currently Australia only produces 11% of the worlds annual coal output (Sussams et al., 2013). o Maintain overseas demand for Australias coal. o Continuance of large coal export revenue.

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Binh, Ho Thai s4281168 o World-wide availability of CCS drives down construction and electricity price.

Despite of all significant advantages of CCS, a clean energy portfolio with CCS may not be well diversified enough as there is also a risk that the technology will not be available at all. Failure in deployment of CCS represents a large loss of shareholder value from fruitless heavy investment for R&D. Gaining more share from Renewable Energy would position the business better. In addition, all available technologies would be needed to achieve significant emission reduction (Pacala and Socolow, 2004). On top of that, because of long-term capital intensive nature of the sector, having limited technological and business options will leave itself vulnerable in dealing with simultaneous extreme events. The sector cant just come up with a new technology or solution as an immediate response. Australian airline industry which shares the same characteristic has heavily suffered when extreme weather events, rising fuel price and increasing competition happened all at once (Qantas, 2011). Hart (2010) suggested that a left skewed portfolio indicates inward focus which may ignore important perspective of external stakeholders. CCS has been criticized for being an improper solution for carbon reduction. Firstly, CCS only minimizes emission from coal and natural gas instead of the whole coal energy supply chain including mining and transportation. Secondly, storing carbon underground indefinitely represents intergenerational risk that none could hold responsible for. Moreover, the sector is also responsible for externalities on other climate-sensitive sectors like agriculture and tourism. In order to achieve total sustainable value, the energy sector has to also spread toward the upper-right quadrant of the model which aims to meet external stakeholders demand in the future. Base of the Pyramid: this strategy directs corporate vision towards addressing social and environmental problem. Voluntary disclosure of carbon emission: business tends to avoid public disclosure of potential risk. However, reporting also opens a communication avenue with stakeholders so that the sector could demonstrate commitment and accurately position itself. The reports also serve as an accountability mechanism which forces the sector to formulate strategies around plan-do-check-act cycle. This also applies to CCS development. Currently, CCS projects also involve participations of public by disclosing their results. Active participation in policy making: any investment in new technologies always faces uncertainty of future market, the investment in CCS or any RE may not be compensated enough if carbon price is too low. However, the shift towards cleaner energy is inevitable. Instead of being a bystander who resists or suffers the impact of such shift, the sector can actively participate in policy-making progress to ensure future profitability of todays investment (Hoffman, 2007). By becoming leaders of the movement, the sector will not only earn public support but also can advise on shaping future regulations towards recommendations in Low Emission Scenario in order to reap larger rewards for investing in clean technologies. Collaboration with other sectors: instead of causing climate change burden of other sectors, with IGCC-CCS, power generation can be integrated with agriculture, transportation and chemical industries to not only reduce waste emissions but also relieve resource burden as a whole. The diagram depicts the process of IGCC-CCS. The system will take by-products of

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Binh, Ho Thai s4281168 agriculture (biomass) and industrial and household wastes together with coal as input. The outputs of the process are: hydrogen for transportation fuel, feedstock for chemical industry, solid waste as components for building materials and captured carbon dioxide. However, in order to deploy such an integrated supply chain of several industry, it will require large infrastructure investment and standardization from various sectors simultaneously in long-term.

Adapted from Diniz Da Costa, Prasad, Pagan (2004)

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Berill, 2012, Clean Energy Pathways? A review of Energy Policy in Queensland with A regional Case Study of the Impacts on Felton Valley. Berrill, T. (2012). Analysis of a Transition to Renewable Energy of the Qld. Electricity Generation Sector. Spreadsheet analysis available from the
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