INVESTING IN GREEN TECHNOLOGIES TO INCREASE MINING’S SUSTAINABILITY AND COMPETITIVENESS Q&A interview with Martin Vroegh, Senior Director of Greenhouse Gas Reduction Technologies, Ontario Centers of Excellence (OCE)

Having introduced carbon pricing to facili-tate a reduction in greenhouse gas (GHG) emissions, the Canadian province of Ontario is now providing funding to prompt the ad-vancement of green technologies. “Many of the mines that we have in Canada are mas-sive multinational corporations which are either Canadian or foreign-owned,” points out Martin Vroegh, Senior Director of Green-house Gas Reduction Technologies at the Ontario Centers of Excellence. “Unfortunate-ly, many of the greenhouse gas reduction projects that they would like to move forward with are restricted by international competi-tion and limited, finite capital.”

To overcome these competitive and finan-cial hurdles, the OCE has introduced the in-novative TargetGHG programme to provide funding opportunities to companies and de-velopers looking to pursue projects and tech-nologies with the potential to reduce GHG emissions. The TargetGHG program works hand in hand with Ontario’s cap and trade program, which allows companies who ex-ceed their emission limit to purchase carbon

credits from companies who have success-fully reduced their GHG emissions.

Energy and Mines spoke with Vroegh about the effect carbon pricing has had on energy choices for the mining industry and how the funding available from the OCE has stimu-lated the development of renewable tech-nologies. Vroegh is speaking on a panel dis-cussion at the upcoming Energy and Mines World Congress on November 28-29 at the Toronto Hilton. Visit: www.worldcongress.energyandmines.com

Synergy is vital in Vroegh’s opinion; emis-sions-capping should be combined with fi-nancial backing being made available for those looking to invest in renewables. “This funding for reduced emissions projects sig-nificantly improves the return on investment (ROI) and increases the financial viability of projects, which allows solution development companies to compete for the finite capital that’s available to these multinational mines,” comments Vroegh. “I think the combination of carbon pricing and the cap and trade pro-

gram work in tandem to provide incentives and tangible benefits; it’s a carrot and stick policy.”

Energy and Mines: What role does OCE play in Ontario in assisting mining companies and suppliers in funding low carbon initiatives?

Martin Vroegh: The OCE on behalf of the province of Ontario, runs the TargetGHG pro-gram which helps Ontario industry reduce their greenhouse gas emissions. Additionally, the mining sector and other heavy sectors can apply to the Ontario Centers of Excel-

INVESTING IN GREEN TECHNOLOGIES TO INCREASE MINING’S SUSTAINABILITY AND COMPETITIVENESSQ&A interview with Martin Vroegh, Senior Director of Greenhouse Gas Reduction Technologies, ONTARIO CENTERS OF EXCELLENCE (OCE)

Martin Vroegh Senior Director of Greenhouse

Gas Reduction TechnologiesONTARIO CENTERS OF

EXCELLENCE (OCE)

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INVESTING IN GREEN TECHNOLOGIES TO INCREASE MINING’S SUSTAINABILITY AND COMPETITIVENESS

“WE’RE SEEING A LOT MORE MINING COMPANIES LOOKING AT OPTIONS TO IMPROVE THEIR GREENHOUSE GAS EMISSIONS, AND I THINK THAT IN MANY CASES IT’S A FUNCTION OF SUSTAINABILITY AND COMPETITIVENESS.”

lence for project funding for greenhouse gas reduction.

The way our program works is it’s a reim-bursement-based funding program covering up to 50% of a project with a cap at $5 mil-lion. For example, If the cost of the proposed project is $10 million or more, then the devel-opers can receive up to $5 million towards a project that would reduce greenhouse gas emissions. This program is also open to min-ing applicants, and we have already received applications and expressions of interest from mining companies.

E&M: Can you give us an example of a recent project for which the OCE provided support?

MV: A good example would be the NRG CO-SIA Carbon X-Prize competition. The Carbon X-prize is a contest that looks for companies and applicants whose projects can add value to CO2 emissions. We provided support for Ontario semifinalists in this program, and there have been three Ontario semifinalists so far. Those three companies received a split of $2.5 million, so $833 thousand each, to-wards their projects.

To give you more detail on those three semi-finalists, Pond Technologies has an algal-carbon conversion project using algae to convert greenhouse gas emissions into algal biomass use for pharmaceuticals and nutra-ceutical type products. CERT is a company who are attempting to manufacture formic

acid from greenhouse gas emissions, and Tandem Technical’s project creates industrial minerals from greenhouse gas emissions. These three companies are good examples of companies whose exciting projects are adding value to CO2.

E&M: Ontario is one of the first mining jurisdiction to introduce carbon pricing --- how is this impacting energy choices for mines?

MV: We’re seeing a lot more mining companies looking at options to improve their greenhouse gas emissions, and I think that in many cases it’s a function of sustainability and competitiveness.

Many of the mines that we have in Canada are massive multinational corporations which are either Canadian or foreign-owned. Unfortunately, many of the greenhouse gas reduction projects that they would like to move forward with are restricted by interna-tional competition and limited, finite capital.

Ontario does have carbon pricing, but also a cap and trade program that generates rev-enue. This cap and trade program allows rev-enue to be redirected towards greenhouse gas reduction projects.

The cap and trade program allows the mining companies to make decisions about where they can offset some of their capital through funding available from the Ontario Centres of Excellence. This encourages greenhouse gas

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INVESTING IN GREEN TECHNOLOGIES TO INCREASE MINING’S SUSTAINABILITY AND COMPETITIVENESS

“RATHER THAN SPECIFICALLY TAXING AN INDUSTRY, LIKE MINING, AND THEREBY MAKING THEM LESS COMPETITIVE, YOU CAN INCREASE THE MINES’ COMPETITIVENESS BY ALLEVIATING THE FINANCIAL BURDEN OF INTRODUCING GREENHOUSE GAS REDUCTION PROJECTS AND MODERNIZING EQUIPMENT.”

reduction projects because the OCE is poten-tially paying 50 percent of the project cost.

This funding for reduced emissions projects significantly improves the return on invest-ment (ROI) and increases the financial viabil-ity of projects, which allows solution devel-opment companies to compete for the finite capital that’s available to these multinational mines. I think the combination of carbon pric-ing and the cap and trade program work in tandem to provide incentives and tangible benefits; it’s a carrot and stick policy.

E&M: What do you see as the main challenges for mining companies participating in Ontario’s cap and trade program?

MV: I think one of the major of the challeng-es is that mines, like many of the big indus-tries, have large capital turnover rates. Mines are very capitally intensive operations and adopting a new greenhouse gas reduction projects can involve the retirement of equip-ment before it’s capital cycle is complete.

Another challenge is that the indirect emis-sions that are generated by the mining sector are sometimes more nebulous and difficult to quantify. The cap and trade program is very heavily regulated and based explicitly on the verification of emissions. Sometimes it is dif-ficult to calculate those emissions in a way that allows mines to easily take advantage of cap and trade program, and work to improve their emissions. The OCE Business Develop-

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INVESTING IN GREEN TECHNOLOGIES TO INCREASE MINING’S SUSTAINABILITY AND COMPETITIVENESS

ment team works with companies to help overcome some of these hurdles.

E&M: What technologies and innovative solutions are Ontario companies exploring to reduce their carbon exposure?

MV: There have been several exciting projects so far. One of the most interesting and obvi-ous ones that we see in sectors that involve logistics and conveyance of materials which is electrification. We know a lot of mines, and consortiums of mines, are trying to advance projects that would electrify systems which would otherwise be diesel powered. One of the significant benefits of mine electrification with underground heavy diesel equipment is the fact that you would need fewer air turno-vers in the mining operation to provide proper ventilation.

In places like Canada, where you have cold winters, these mines also get the added ben-efit of not just reduced horsepower for venti-lation, but they would have reduced heating demands based on the reduced ventilation required. So electrification is one of one of the biggest things right now that mining compa-nies are considering.

We’re also seeing a lot of mature mining op-erations coming up with ways to deploy mod-ernizations. In heavy industry sectors that have up to 40-year capital cycles, there’s now an opportunity now to retire existing old equipment and replace it with more modern, energy efficient, alternatives. Using variable

speed drives and modern high-efficiency fans on ventilation equipment is a good example.

E&M: What key lessons from the Ontario experience can inform mining’s response to carbon pricing in other sectors?

MV: Well I think one of one of the most sig-nificant benefits that we see is the revenue from the cap and trade program and from the carbon pricing going directly back into industries that create the emissions. This revenue reinvestment incentivizes the min-ing industry to focus capital towards green-house gas reduction. It’s another example of the carrot and stick philosophy. Rather than explicitly taxing an industry, like mining, and thereby making them less competitive, you can increase the mines competitiveness by alleviating the financial burden of introducing greenhouse gas reduction projects and mod-ernizing equipment.

E&M: What would you say are the next steps for Ontario companies looking to reduce their carbon exposure.

MV: I think that clear next steps for compa-nies looking to reduce their carbon exposure are to review all the additional programs available to them. It’s important to remem-ber this is the first year of the carbon cap and trade revenue program. We’re still only on auction number three, and the fourth auction is scheduled for November.

There will be four auctions every year, and

this is set to continue for the next few years or longer. This represents a lot of revenue, be-tween $1.5 and $2 billion a year of revenue, of which large portions of that revenue can go directly back into the industry, like the min-ing sector. That revenue can then be used to improve emissions and competitiveness. So I think the next steps are for industry to again look for future programs, like those at the Ontario Centres of Excellence, at which point they can apply for funding and opportunities.

E&M: What are you looking forward to at the Energy and Mines World Congress on Nov 27-28?

MV: I’m looking forward to discussing all of the great work the mining industry is do-ing and talking about the projects that OCE has been able to support, hopefully includ-ing those in the mining sector specifically. I’m also hoping to be able to discuss potential fu-ture programs that could be available for the mining sectors to apply, but that is very much subject to announcement at this point.

“ONTARIO DOES HAVE CARBON PRICING, BUT ALSO A CAP AND TRADE PROGRAM THAT GENERATES REVENUE. THIS CAP AND TRADE PROGRAM ALLOWS REVENUE TO BE REDIRECTED TOWARDS GREENHOUSE GAS REDUCTION PROJECTS.”

“ONE OF THE MAJOR CHALLENGES IS THAT MINES, LIKE MANY OF THE BIG INDUSTRIES, HAVE LARGE CAPITAL TURNOVER RATES. MINES ARE VERY CAPITALLY INTENSIVE OPERATIONS AND ADOPTING NEW GREENHOUSE GAS REDUCTION PROJECTS CAN INVOLVE THE RETIREMENT OF EQUIPMENT BEFORE IT’S CAPITAL CYCLE IS COMPLETE.”

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