The Asia Miner

JAN-MAR 2016

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

Issue link: https://asiaminer.epubxp.com/i/632337

Contents of this Issue

Navigation

Page 47 of 59

46 | ASIA Miner | Volume 13 • Issue 1 | 2016 After months of lead-up and two weeks of negotiations, the COP21 talks resulted in the 'Paris Agree- ment', which is being proclaimed as an historic deal and one that could herald a massive shift to a low carbon future. CLIMATE sceptics still abound but there now seems near uni- versal agreement that mitigation and abatement are appropriate insurance policies for future gen- erations, regardless of the current science. With that in mind 190 countries and 40,000 delegates gathered from November 30 to December 11 in Paris to reach agreement on the most far reaching emissions abatement targets ever set. Scientists may still question whether the proposed targets will pro- tect the planet from the 2 degree threshold that may signal no re- turn, but they cannot question that the world is now frmly focused on practical and pragmatic steps to achieve a lower carbon econo- my. Here are some takeaways for mining and resources frms: 1. Will global policies move toward abatement of supply or demand? If supply, then resources frms will have to prepare for a new thicket of regulations that will make new production more challenging; if de- mand, then subsidies and other consumer driven policies will likely be abandoned. As the issue is not settled, the global resources community has an opportunity to make its views heard. One might think that there would be greater beneft if consumer subsidies were reallocated into climate mitigation mechanisms, rather than leaving subsidies for consumption in place while placing hurdles on new supply. 2. Funding the poor to minimize economic conse- quences of lower carbon intensity One of the greatest questions of COP21 was whether a mooted US$100bb per year (until 2020) grant funding mechanism will be mandatory or voluntary. In the end, the target was placed in the non-binding pre-amble but not in any binding aspect of the accord. This is more than a charity exercise. India and China are among the world's largest carbon emitters, and are set to expand emissions signifcantly. If they are expected to reduce emissions on a propor- tionate basis greater than later stage service sector economies in Europe for example, then a question of fairness, equity, and more importantly probable success are brought into question. Resources frms have a stake in this outcome. US$500bb over the next fve years can go to cleaner fuel, carbon capture and stor- age, and delivery of clean gas fred cooking units for the tens of millions around the world who still combust frewood for heat and cooking. Moving from 'dirty' to 'clean' energy, in part supported by the COP21 fnancing mandate for poor countries, can provide an opportunity for the resources sector to add value through what it does best - extract quality resources and transport them effciently to where they are needed most. 3. Innovation In Australia, innovation has become the word of the moment. The mining industry may have an enormous growth opportunity concerning the interaction of carbon dioxide and minerals such as magnesium silicates (to form solid carbonates). Mineralization can occur naturally between the atmosphere and rocks and can remain stable for long periods of time. The trick is to accelerate this process. It appears, for example, that processing ammonium salts and magnesium silicate serpentine rocks can capture signifcant amounts of carbon. Further, it appears that some of the by-prod- ucts of these reactions can produce useable iron oxide for steel. The extractives industry could have a monumental new industry to extract minerals that can interact and solidify atmospheric carbon. This research should be among the highest priorities of struggling resource frms. 4. Reputation One clear lesson from COP21 is that the extractives sector has an enormous political relations problem. This is no longer a question of corporate social responsibility reputation - it now comes to the very essence of the core of the extractives sector. If the world community begins to see mining in the same light as, for example, the tobacco industry, then the challenges for con- tinuing in business and making positive contributions to society will be severely threatened. By many accounts COP21 showed that extractives frms rapidly lost ground in Paris and it will help no-one if extractives sectors are essentially silenced. The fossil fuel divestment movement has already gained speed but the counter argument that climate friendly investors need to be at the table in the extractives in- dustries to drive the change they see as positive, may ultimately prove counterproductive (from the perspective of the divestiture movement). If clean coal, for example, remains in the ground while brown coal and peat is burnt instead then there will be a very material deterioration in climate abatement achievement. This story does not seem to be told clearly, and the extractives frms have an opportunity and arguably a responsibility, to clarify the value options the community is presented with. 5. Alternatives COP21 is not the end and it confrmed that the current targets may not be enough to stop irreversible change. Accordingly, further and regular meetings with increasingly stringent obligations will be required. How can the extractives industry respond? It must make clear the trade-offs between where fossil fuels come from and which are most cost effcient. For example, cheap thermal coal may leave 'excess funds' available for more valuable environmental protection efforts of global rainforest environments that could have a great- er impact than eliminating fossil fuel consumption altogether. One does not preclude the other. In addition, extractives frms must make clear that everything on earth comes from mining/petroleum or agriculture. If we want a cleaner world, we cannot achieve it by stopping the industry that feeds our cars, wind turbines, homes and solar panels. We must integrate the industry into the solution as a valuable, respected and integral participant. COP21 - lessons from the Paris Convention By Robert Milbourne, Partner, Registered Foreign Lawyer at K&L; Gates Robert Milbourne.

Articles in this issue

Archives of this issue

view archives of The Asia Miner - JAN-MAR 2016