Green Steel / DRI Feasibility Study

CarbonTP was engaged in 2024 by Green Steel of WA [GSWA] to project manage a major study of the viability of a Green Steel / DRI project in the mid-west of Western Australia. This represented a joint study between GSWA and a major international energy company. The study also considered the viability of substituting natural gas with green hydrogen as the DRI process reductant, including partial substitution.

This complex project integrated renewable energy [wind / solar / battery], gas fired power generation, desalinated water supply, port and road infrastructure, hydrogen production and storage, magnetite concentrate supply, iron pelletisation, DRI processing and steel production into a multi-building block financial model.

CarbonTP’s responsibilities included ensuring the technical consistency across contributing entities, building a financial model of the project and authoring the Final Report. The Final Report also included a review of the global iron and steel market, the WA gas market and availability and maturity of magnetite iron ore resources in the mid-west of Western Australia.

CarbonTP coordinated the contributions of other entities, including OEM, consulting engineers and techno-economic modelling consultants, and managed the scheduling and integrity of assumptions fed to the CarbonTP financial model.

The complex financial model enabled the economic contributions of each component of the project to be analysed both separately and together to better understand their individual contributions to overall project viability.

CarbonTP owns a 45% equity interest in GSWA.

Geothermal / Renewable Energy integration in new Housing Estate

Melbourne property developer, Crystal Group, engaged CarbonTP in 2022 to undertake a study to support a grant application to ARENA for funding a ground-sourced heat pump pilot project at their proposed 5,500 home residential estate north of Melbourne. The pilot phase involved 290 homes.

The Crystal Group sought support from the ARENA to develop one of Australia’s most energy efficient residential estates, St Hilaire, at Wallan located 60km north of Melbourne CBD. CarbonTP also assisted in the preparation of the ARENA grant application.

The project proposed to integrate a geothermal ground sourced heat exchange system in the common areas of the estate with Ground Sourced Heat Pumps [GSHPs] within the homeowners’ property boundary. This would augment household solar PV power supply with behind the meter battery storage to create an energy efficient estate powered almost entirely by renewables and without the need for reticulated gas.

The study demonstrated that geothermal GSHPs can play a meaningful role in addressing the power grid’s Duck-Curve challenge. If geothermal GSHP systems are integrated with household solar PV and battery systems in a planned manner when designing new housing estates this portfolio approach can significantly reduce the impact of the new housing stock on the power grid. The proposed development would be operated as an all electric housing estate.

The study concluded that geothermal ground sourced heat exchange system combined with GSHPs represents an established and proven technology that has the potential to make a major contribution to managing the increasing penetration of renewable energy.

Energy Transition Briefing Paper

CarbonTP was engaged by Cooper Energy in 2021 to prepare a memorandum for their Board on “Financial Risk and Decarbonisation” in the oil and gas sector.

The financial sector perceives their greatest financial risk over the next decade is the potential erosion of value if investments are not resilient to the impacts of climate change. This is expected to translate into restrictions on the availability and access to debt, equity finance or insurance at commercial terms.

The memorandum focused on the following key topics as they relate to the Energy Transition:

  • Clarification of the new financial risks facing oil and gas asset investments as a result of the climate change-initiated energy transition.
  • Change being driven by the providers of debt, equity and insurance.
  • The rising pressure from organisations such as TCFD, CA100+ and TPI
  • Recognition of the speed of change
  • What the oil and gas sector should expect next
  • Science Based Targets for emissions
  • Possible impact on the Australian oil and gas sector

Energy Transition Briefing Paper

CarbonTP was engaged by Buru Energy in 2021 to prepare a briefing paper for their Board on the impact of the energy transition on the future of the oil and gas sector.

As the level of attention focused on carbon emissions by governments, investors, lenders and emitting corporations increases exponentially, companies must navigate the financial, commercial and technical complexities of transitioning to a low carbon future.

The Briefing Paper addressed the key aspects of the energy transition and discusses the implications for companies operating in the Australian oil and gas sector together with their carbon management strategies. The paper focused on the following key topics as they relate to the Energy Transition:

  • Future access to finance [debt & equity] and insurance
  • Emissions target setting and intensity trajectories
  • Stakeholder pressure as the catalyst for change
  • Integrating emissions considerations into future investments and portfolio considerations
  • The increasing complexity of Capital Allocation in growth scenarios

Bharat Petroleum Decarbonisation

CarbonTP was engaged in 2022 by a major international management consulting firm to provide technical expertise to support delivery of an energy transition strategy for an oil refining and supply company.

CarbonTP was engaged to provide SME support on the following scopes of work:

  • Review the current emissions footprint
  • Application of GHG Protocol and other standards
  • Review emissions baseline setting
  • Review emissions tracking tools and dashboard
  • Identify GHG emissions reduction projects and efficiency improvements incorporating
    • Steam systems
    • Power generation
    • Compressors
    • Pumps
    • Heat Exchanger networks
    • Fired heaters
    • …
  • Identify long term strategic initiatives to transition the business away from fossil fuels
  • Prioritisation of favourable abatement levers for further assessment
  • A detailed review of fired heaters abatement options as the largest collective source of emissions

Climate Change Related Risk Analysis

CarbonTP was engaged in 2021 by a medium sized Australasian oil and gas producer to undertake a climate change related risk assessment of the existing operations.

Together with our specialist ESG partner, Adaptus, CarbonTP planned and facilitated an energy transition risk workshop for the client based on the TCFD framework and involving the following steps:

  • Context setting – Providing the most relevant background literature regarding investor sentiment and guidance for oil & gas companies
  • Risk framing – Reframing two high level risks into four separate risks covering:
  • License to operate,
  • broad ESG risks,
  • Loss of revenue and Increased costs.
  • We also identified the additional risk of physical impacts of climate change.

CarbonTP lead a semi-quantitative risk assessment gaining consensus on likely magnitude and likelihood of risks and identifying key mitigating actions for the client to implement

Emission Forecasting – Oil & Gas Operations

CarbonTP was engaged in 2021 by a medium sized Australasian oil and gas producer to produce an updated emissions forecast for each of its operated assets based on the latest production forecast. The client sought an explanation of the substantial variation between the prior emissions forecasts and actual emissions measured.

CarbonTP performed a detailed gap analysis on the previous emissions forecast for the company’s operated assets, identifying underlying issues with the forecasting methodology which explained the gap between the forecast and observed emissions.

CarbonTP then provided the client the client with an updated emissions model based on our own bottom-up analysis approach which fully accounts for interdependencies and non-linearities, ensuring the client had a more representative forecast of their emissions over the next decade.

In late 2022, the client confirmed that the CarbonTP emissions forecast had been robust based on a comparison between forecast and actual emissions.

Pilbara Hydrogen Hub Evaluation

CarbonTP was engaged by an international consulting firm in 2022 to provide technical and commercial support on their evaluation of the Pilbara Hydrogen Hub [PHH] pipeline in WA.

The project involved evaluating a potential WA government investment in a hydrogen or ammonia pipeline, as common user infrastructure to help catalyse development of a green hydrogen export  industry.  The proposed PHH pipeline would connect the Maitland SIA to the Burrup SIA providing a route for export of green hydrogen or ammonia produced in the Maitland SIA.

CarbonTP provided the following to support decision making:

  • An analysis of options including refrigerated liquid ammonia, compressed liquid ammonia, compressed hydrogen and liquid hydrogen
  • Establishment of the potential maximum capacity required in terms of export limitations and likely upstream manufacturing capacity
  • An analysis of relative costs between the different options, both in terms of pipeline costs and costs of supporting infrastructure and the trade-offs
  • An assessment of the likelihood, timing and scale of announced hydrogen manufacturing projects
  • Independent evaluation of relative costs of clean hydrogen/ammonia production
  • A high-level evaluation of the potential risk factors associated with each option

Dampier Bunbury Pipeline – Energy Transition Scenario Mapping

A WA gas pipeline operator wanted to understand the future potential utilisation of their asset in the context of the Energy Transition

Complication

Future utilisation depends on a highly complex set of interacting influences with multiple feedback loops including:

  • Electricity generation and usage patterns which in turn depend on;
    • Electrification rate of industrial gas consumers
    • Deployment of new grid scale renewable generation and storage capacity
    • Uptake of EV’s
    • Uptake of rooftop solar and home batteries
    • …
  • Future CCS potential for industrial consumers
  • Policy decisions around renewables, gas and electricity network
  • Techno-economics of industrial decarbonisation

Solution

Identify key variables

  • The key input variables required for the modelling work were identified
  • The different influences on those variables were then traced
  • Variables were categorised as discrete and continuous
  • Influences were assigned a level of priority based on their impact on the key input variables

Scenario development

  • Internally  consistent scenarios were developed to limit the number of variables in the model and eliminate unnecessary feedback loops
  • E.g., Gas price impacts electricity price but does not have a short-term impact on electricity demand or generation capacity.
  • Therefore, scenarios were developed for different gas price ranges.  For example: a higher gas price is consistent with a weak or absent domestic gas reservation policy, coupled with higher renewables penetration

Modelling and sensitivity analysis

  • Electricity supply and cost were modelled under a range of scenarios based on assumed discrete variable outcomes to determine likely generation mix and cost of supply
  • Gas supply and cost were modelled under the same discrete variable outcomes to ensure internal consistency in the model
  • These inputs were used to understand the likelihood of industrial electrification based on the commercial viability of the different potential solutions under different gas, electricity and carbon price scenarios.

Outcome

Insights included:

  • Likely changes in patterns of gas usage by industrial consumers and gas power generators
  • Risks of disruption due to technological developments, infrastructure bottle necks and global macro-economic conditions
  • Potential for new industries wishing to use gas to decarbonise, e.g., DRI Steel making using gas before transitioning to hydrogen
  • Required cost of electricity to break even with gas across a range of technologies with varying gas and carbon prices

Aboitiz Carbon Farming Initiatives

CarbonTP was engaged in 2023 by Aboitiz Group [Aboitiz], one the largest corporate conglomerates in the Philippines, to guide it through the early stages of developing a carbon farming business for the generation of carbon offsets in the Philippines.

Early scopes of work involved navigating Aboitiz through the various regulated compliance programmes and non-governmental voluntary programmes for the certification of carbon offsets [credits]. This extended to eligibility criteria, the applicability of grouped projects and their relevance to the carbon farming opportunities being considered by Aboitiz.

Aboitiz retained CarbonTP to assist it in reviewing the following Aboitiz initiatives:

  • Corn and Cassava farming opportunity
  • Cagayan Forest / A-Parks opportunities

CarbonTP made recommendations as to whether these projects had the potential to support carbon offset projects under established methods and if so, develop the Scope of Work for the Feasibility Study for each project.

Through this process CarbonTP recognized the need for Aboitiz to find an experienced local partner in the Philippines to assist with the implementation of these initiatives on the ground. CarbonTP then identified a suitable local partner and managed a smooth transition for that partner to take over the future scopes of work for Aboitiz.

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