Energy conservation is a low-cost strategy to eliminate energy waste, which can account for up to 15 per cent of a mine’s greenhouse gas (GHG) emissions. If you have set a decarbonization objective to reduce your baseline GHG emissions by 30 per cent by the year 2030, this means that you can achieve 50 per cent of that objective through energy conservation. In our current capital-constrained environment, is this low-cost strategy to eliminate a significant percentage of your GHG emissions being seriously considered?
A tool being used to assess decarbonization opportunities is the Marginal Abatement Cost Curve (MACC), which presents the relative cost of GHG emissions reduction opportunities, as well as the potential volume of GHG emissions reduced for each opportunity. Opportunities with a lower cost per tonne of GHGs reduced are to the left of the curve, with the higher cost per tonne opportunities to the right.
Looking at a few MACCs recently, one consistent fact stood out. Many of the low-cost opportunities to the left of the curve were linked to energy conservation and process efficiency. Yet looking at a number of sustainability reports from mining companies, I did not see “energy conservation” as a decarbonization strategy.
From a cost and GHG emissions reduction perspective, here’s why it makes sense for energy conservation to be one of your decarbonization strategies: One battery electric loader for your underground operation is going to set you back north of $2 million. For that $2 million investment, you are going to see an annual GHG emissions reduction of about 350 to 500 tonnes of carbon dioxide equivalent (TCO2e), depending on operating hours and the electrical grid emissions factor. That means you are spending between $4,000 to $5,570 per TCO2e reduced.
What if you invest that same $2 million in a company-wide energy conservation strategy, focused on the elimination of energy waste, with a conservative target of a 10 per cent reduction in GHG emissions? If your company’s annual GHG emissions are 100,000 TCO2e, that 10 per cent reduction is worth 10,000 TCO2e, which means you are spending $200 per TCO2e reduced.
In addition, the energy conservation strategy will give you a conservative five to eight per cent decrease in energy expense, which is typically a mining company’s second biggest operational expense after employee- and contractor-related expenses. If your annual energy expense is $100 million per year, that is a $5 million to $8 million increase in net income, which will more than sustain the energy conservation strategy.
The economics and the GHG emissions reductions speak for themselves.
Despite the common misconception that “there is no more low hanging fruit,” there are abundant low- or no-cost opportunities to improve efficiency and eliminate energy waste, which are far more cost effective than many technology improvement opportunities.
As an example: A company has an opportunity to utilize new technology to improve the energy performance of a piece of equipment that is a relatively big energy user. A feasibility study indicated energy savings of one gigawatt hour of electricity per year. The project is going to cost $200,000 and will last 10 years. It has a positive net present value, a 39 per cent internal rate of return and a 2.5-year payback.
At the same operation, a group of operators decided to shut down a 5,200 horsepower conveyor system when they were not running ore from underground. Same annual energy savings, zero cost, infinite IRR. Which is better?
There is so much we can do easily and cost effectively if, like these operators, we make a decision: a decision to be efficient and conserve energy in everything we do, on a day-to-day basis, then act on that decision.
Accessing these opportunities also starts with a decision to implement a company-wide energy conservation strategy, ideally supported by an energy management system like ISO 50001, or the Mining Association of Canada’s Towards Sustainable Mining Climate Change Protocol.
These systems are a set of interrelated processes, built into your existing operational and business systems, to allow you to effectively manage your energy use, to continually improve your energy performance each year and to engage and empower your employees in the process. Not only do they help you to eliminate energy waste and reduce operating costs, but, like safety, energy conservation becomes something everyone does on a day-to-day basis.
If done properly, the system will be self-sustaining. The (low- or no-cost) opportunities identified will start to save money and reduce GHG emissions from year one. You will reduce the capital cost to achieve your decarbonization objectives and the energy conservation framework will support future decarbonization initiatives.
Energy conservation as a decarbonization strategy just makes sense.
Andrew Cooper is a strategic energy management specialist.
