A$300 million fund for clean coal

Australia's 20 leading coal producers including Rio Tinto have agreed to form a fund to help commercialise clean coal technologies.

The industry will provide A$300 million over the next five years (from 2006) to work with the electricity generating industry to demonstrate a number of promising technologies, including coal gasification and the underground storage of carbon dioxide, which can reduce emissions of the gases blamed for climate change. Funding will come from a voluntary levy on members, based on coal production levels.

The establishment of the COAL21 Fund is regarded as a world first, marking the first time a whole industry has acted together to help bring about the abatement of greenhouse gases. "While most of the technological solutions for reducing and eliminating emissions are known, demonstration is necessary to accelerate their implementation," said Mark O'Neill, executive director of the Australian Coal Association. "A number of potential demonstration projects are being assessed for funding support."

The technologies being targeted are those that allow energy use to grow in a sustainable way and are part of a transition to new energy systems. The ultimate prize is to achieve substantial reductions in greenhouse gas emissions while maintaining a secure, reliable and affordable energy supply.

The Monash Energy project in Victoria could be among the first round projects. This project hopes to build a demonstration plant to produce electricity from brown coal while storing the carbon dioxide emissions in the Bass Strait gas field. At full scale, the project would also produce low emission diesel.

The fund could also back projects that would exploit synergies between clean coal and renewable energies, such as co-generation with biomass and solar thermal technology.

Rio Tinto's involvement in the fund bears out its commitment to work to reduce greenhouse gas emissions from its processes and the use of its products. The Group has five year targets to reduce these emissions by four per cent per tonne of product and improve energy efficiency by five per cent per tonne of product by 2008, compared to a 2003 baseline.

Positive engagement with governments and stakeholders who are also trying to find solutions to climate change is an important element of the Group's work and Rio Tinto is currently participating in ten such initiatives.