Energy usage (fuel and electricity consumption and costs, energy intensity, energy efficiency initiatives), climate action and greenhouse gas emissions (greenhouse gas emissions, other gas emissions and ozone-depleting substances)
terajoules energy reduction since our baseline year of 2011.
Energy reduction projects ranged from optimizing blasting efficiency for increased grinding efficiency to using more energy-efficient lighting.
kilotonnes of greenhouse gas emissions reduced to the end of 2015, including the continued
displacement of coal in our dryers by natural gas and the piloting of LNG as a dual fuel source in haul trucks.
of alternative energery generated as of the end of 2015.
Recent efforts included investing in solar power near our Quebrada Blanca Operations.
Reduce energy consumption and greenhouse gas emissions, support alternative energy generation and engage and advocate for effective carbon pricing.
In 2010, we proactively established company-wide short- and long-term energy and GHG reduction targets to drive improvements in energy efficiency and to reduce our GHG emissions at our operations. We implement energy and GHG reduction projects, we share best practices in energy management among our operations to achieve our goals and we contribute to global efforts to reduce emissions by advocating for carbon pricing. We have also set goals that drive investment in lower-carbon and alternative energy generation, including investments that ultimately contribute to the transition to a low-carbon economy.
We are taking action to minimize our contribution to global GHG emissions and to support broader efforts to combat climate change. We have set ambitious targets to reduce GHG emissions and improve energy efficiency at our operations and we are making significant progress towards achieving them. We implemented several energy and GHG reduction projects that contributed to our energy goals in 2015. We also identified reduction projects that were successful at a number of our sites, and worked to implement them at our other operations. These included optimizing blasting efficiency to increase grinding efficiency, the continued installation of lightweight truck boxes, installing variable-speed drive technology on ventilation and dryer fan motors, using more efficient fan designs, and using more energy-efficient lighting, among other projects.
Collectively, projects implemented in 2015 have reduced annual energy consumption at our operations by 40 gigawatt hours (150 terajoules) – enough power for 1,400 homes. Since 2011, our efforts have resulted in reduction projects totalling 1,200 terajoules (TJ) exceeding our 2015 goal of implementing reduction projects that reduce energy consumption by 1,000 TJ. We have also surpassed our 2015 GHG reduction target of 75,000 tonnes of CO2-equivalent (CO2e) emissions, with reductions estimated at approximately 200,000 tonnes of CO2e emissions at the end of 2015. Moreover, this has also produced savings for our bottom line. For example, a recommendation, made through our employee energy reduction engagement campaign at Highland Valley Copper Operations to replace a pump will save an estimated 6.5 terajoules (TJ) in energy and $150,000 in energy costs when implemented in 2016. Learn more in this case study.
At Teck, we are committed to supporting society’s move towards a lower-carbon future. That is why we are implementing initiatives to reduce our emissions and actively advocating through industry organizations and directly with governments for effective and efficient carbon pricing, which we believe can materially reduce emissions.
Teck supports an effective and efficient price on carbon emissions. An effective price on carbon is one that reduces emissions and ensures that all emitters and all jurisdictions are contributing to solutions. By applying a carbon price for all emitters, all sectors of the economy are incentivized to play their part in solving a challenge to which we are all contributors. Carbon policies must be implemented in a manner that is reasonably consistent between jurisdictions so that the risk of creating a competitive disadvantage for some emitters does not induce carbon leakage – the transfer of production and associated emissions to countries with limited or no GHG regulations –are avoided. This approach is critical to the long-term success of emissions reductions. Broad-based pricing of carbon is the most effective way to incentivize emission reductions while also ensuring that all emitters and jurisdictions are contributing to the solution. Further, it will level the playing field for companies like Teck who have already had to adapt existing carbon pricing into their business as outlined in the Carbon Pricing and Regulation section.
At Teck, carbon pricing is integrated at multiple levels of decision-making, ranging from annual operating budgets developed at the site level to corporate decision-making for large capital investments. We incorporate a carbon price into our capital and risk decision processes where material, and calculate and consider our carbon exposure in terms of absolute costs incurred on an annual basis and projected out to at least 2020. Where a clear and certain carbon price is present, we incorporate that price and any known and/or planned changes to the carbon price. Where uncertainty exists, we may conduct sensitivity analyses to better understand what our exposure and risks are under different carbon pricing and regulatory scenarios.
The physical risks of climate change can include rising sea levels, rising temperatures and changes in precipitation. These can result in the increased intensity and duration of extreme weather events such as storms, drought and flooding. These all have the potential to impact our activities. Consequently, climate variables (e.g., precipitation, temperature, water runoff) are integrated into the design and operation of our business.
In 2010, we began working with technical experts in the field of climate modelling and forecasting to better understand potential future changes in climate-related variables. This project is serving to assess the utility of climate modelling as a tool while developing data that is integrated into our decision-making and risk management practices. For example, we take into consideration climate modelling in project development, mine planning and closure planning and have for many years. For example, trends in permafrost advance and retreat, precipitation patterns, tidal variations and storm intensity impacts on operations/transport are all evaluated using simulated scenarios. The results of these scenarios are used to set the design criteria for new projects and existing operation upgrades so that our business decisions today are appropriately risk managed for the potential eventualities of the conditions of tomorrow.
Over the past decade, carbon regulations have emerged across the globe. We recognize that current and future regulations may affect our business by placing direct costs on our operations and increase the costs of production. We already incur carbon costs in Canada as a result of provincial regulations in B.C. and Alberta. Our expectation is that this trend will continue, with new regulations being implemented and carbon costs increasing over time.
The Province of B.C. introduced a carbon tax on fossil fuels in 2008. The tax is imposed on various fossil fuels used in B.C. For 2015, our seven B.C.-based operations incurred $52.6 million in provincial carbon tax, primarily from our use of coal, diesel fuel and natural gas. Our Cardinal River Operations (CRO) meets Alberta GHG compliance requirements through efficiency improvements and the use of offsets generated from our interest in our Wintering Hills Wind Power Facility. In 2015, we expect that CRO will be below the performance threshold, and will therefore not require offsets to meet the compliance obligations.
In 2015, governments in both B.C. and Alberta initiated engagement processes to review, analyze and determine climate change policies that will apply starting in 2018. Teck is actively engaged in the consultation processes, and we will refine our forecast cost estimates once each government provides further detail as to the design of their future climate change policies.
Prior to these announcements, forecasting using a variety of scenarios demonstrates an exposure in 2020 ranging from $30 million to $60 million for our B.C. operations. In Alberta, based on scenarios that include reduction requirements ranging from 12% to 40%, and carbon costs ranging from $15 to $40 per tonne of CO2e emissions, we estimated that our compliance costs could be $0.5 million to $4.5 million per year for our Cardinal River Operations. Assessing the same scenarios for our Fort Hills and Frontier projects, compliance costs could range from $10 million to $75 million per year if and when both of these projects start operations.
One of our key goals is to minimize the amount of GHG emissions created while producing our products. Based on data reported by ICMM, our coal business unit has among the lowest carbon intensities in the world for our production of steelmaking coal.
At between 60 and 70 kilograms of CO2 per tonne, it is less than half the industry average of over 150 kilograms/CO2 per tonne. Furthermore, our copper production averages 3 tonnes of CO2 per tonne of copper – 25% below the industry average of 4 tonnes.
In addition to projects we have implemented to reduce our energy consumption and GHG emissions, we also enjoy access to low-carbon sources of electricity.
In B.C., where seven of our operations are located, 92% of grid electricity is clean and renewable energy, and is almost entirely generated from hydro.
Our Trail Operations, also located in B.C., includes one of the largest fully integrated zinc and lead smelting and refining complexes in the world, and is our largest consumer of electricity, accounting for 44% of our company’s total electricity consumption. The electricity consumed at Trail Operations is provided by the Waneta hydroelectric dam and transmission system, in which Teck holds a two-thirds interest. This enables Trail Operations to produce refined zinc and lead at a lower GHG intensity compared to producers powered by fossil-fuel based electricity grids.
In the past several years, approximately 25% of our energy requirements (i.e., electricity and fuels) were supplied by non-carbon-emitting sources, primarily hydroelectricity. Of our total electricity consumption in 2015, 80%, or 10,984 TJ, was hydroelectricity.
In some of the other jurisdictions where we operate – such as Alberta and Chile – the electricity grids are more heavily based on fossil fuels. Recognizing this, one of our sustainability goals is to commit to 100 megawatts of alternative energy generation by 2030.
Teck is also investing in research and building alternative power generation technology. We are partners in a large-scale wind power facility in Alberta, and a community solar farm in B.C., and we are assessing other opportunities to build and source alternative power generation for our other sites. Our investment in Wintering Hills has provided an opportunity to develop our understanding of wind power generation, which facilitates evaluation of other opportunities to develop wind farms around our operations.
In January 2015, we increased our interest in Wintering Hills to 49%, with TransAlta Corporation, the current project operator, holding the remaining 51%. Our 49% share of power generation from Wintering Hills in 2015 was 136 GWh, enough power to provide 85,000 tonnes of CO2-equivalent credits. Our share of expected power generation in 2016 is 135 GWh, although actual generation will depend on weather conditions and other factors.
We set a 2015 goal of 30 megawatts (MW) of alternative energy generation, and set a 2030 goal to expand that portfolio to 100 MW. To meet our targets, we have been exploring opportunities for the procurement of alternative energy sources. As of the end of 2015, 30.7 MW of alternative energy generation is in operation, which meets and exceeds our 2015 goal of generating 30 MW.
Progress Against Our 2015 Goals
Our operations require energy for the production and transportation of our products, and energy is one of our most significant expenses. We are focused on continually identifying opportunities to improve our energy efficiency and reduce greenhouse gas emissions in order to reduce costs and minimize our carbon footprint.
In 2015, we consumed a total of 42,521 TJ of energy (i.e., electricity and fuels), as compared to 45,336 TJ in 2014. Trends in fuel (diesel, gasoline, coal, natural gas, coke, petroleum coke and other fuels) and electricity consumption for the past three years are shown in Figure 19. In 2015, 10 of our operations reduced their absolute energy consumption from 2014.
Figure 19: Energy Consumption by Type 2013–2015 1
(1) Other includes propane, waste oil, fuel oils and other process fuels.
Table 26: Primary Uses of Energy at our Operations
Powers processing at our metal mines (e.g., milling) and the smelter facility at Trail Operations
Coke, petroleum coke, natural Gas and coal
Provides the primary process and combustion fuels at Trail Operations
Natural gas and coal
Used primarily for drying our coal product
Fuels haul trucks to move material
Fuel in LNG form for haul trucks to move material
In Figures 20 to 22, we outline our energy intensity, or the amount of energy used per tonne of product, which is a measure of efficiency that helps us to better manage our performance. The variability found in the data for these figures falls within the normal parameters of mining operations.
Energy and carbon intensity for the production of steelmaking coal continued to decrease (improve) in 2015 (Figure 20). This change is due to a continued focus on productivity improvements in mining, maintenance and processing operations, as well as the increased use of natural gas to displace coal in the product dewatering process.
Figure 20: Energy and Carbon Intensity for Steelmaking Coal Production 2013–2015
In 2015, both Trail and Red Dog saw reductions in their energy and carbon intensities as a result of continued focus on operational efficiency. Overall, however, energy intensity increased, as a greater proportion of our zinc production came from Trail Operations relative to previous years.
Figure 21: Energy and Carbon Intensity for Zinc and Lead Production 2013–2015
In 2015, both our energy and emissions intensities for copper decreased (Figure 22). The decrease in intensities is the result of a large decrease (improvement) in intensity at Highland Valley Copper due in part to higher ore grades and the increased proportion of our total copper production coming from Highland Valley Copper, our lowest GHG-intensity copper operation.
Figure 22: Energy and Carbon Intensity for Copper Production 2013–2015
In 2015, our total GHG emissions, as CO2e, were 2,826 kilotonnes (kt), compared to 3,066 kt in 2014. Of those totals, our direct GHG emissions1 were 2,469 kt in 2015, compared to 2,723 kt in 2014. Figure 23 shows a detailed breakdown of our emissions by fuel type.
The key sources for direct GHG emissions vary significantly by operation. For example, at our steelmaking coal operations, the drying of coal, our mobile equipment, and the methane gas released from coal seams during mining each account for roughly one-third of total emissions. Emissions from Trail Operations are dominated by the use of coal in the furnaces and the use of natural gas to produce steam for heating process solutions. At Red Dog Operations, the diesel used to produce electricity and fuel for mobile equipment is the key source of GHG emissions. The primary source at Highland Valley Copper Operations, which receives electricity from the hydroelectric grid, is the use of diesel for our mobile equipment. As such, the options for reducing emissions vary significantly across our different operations. In 2015, 10 of our operations reduced their GHG emissions.
We estimate our indirect GHG emissions associated with electricity use for 2015 to be 357 kt, or approximately 13% of our total emissions. These emissions are associated primarily with our Cardinal River, Red Dog, Carmen de Andacollo and Quebrada Blanca operations, as their electricity power grids are based heavily on fossil fuels. Elsewhere, our indirect emissions were relatively small, as operations in B.C., Newfoundland and Washington State obtain a significant proportion of their electricity from hydroelectric generation.
In comparison to the broader industry, our GHG emissions per unit of production are significantly lower. ICMM data indicates our steelmaking coal operations have among the lowest carbon intensities in the world when compared to other coal mines. Likewise, emissions associated with our copper production are 25% percent below the industry average. Data is not currently available to assess the relative GHG intensity of our zinc operations.
(1) Fugitive emissions from our coal operations (i.e., estimated methane release) are captured as direct emissions.
Figure 23: GHG Emissions by Fuel Type 2013–2015 1, 2
(1) Scope 1 (Direct) Greenhouse Gas Emissions: Emissions that occur from energy sources that are owned or controlled by the company.
(2) Scope 2 (Indirect) Greenhouse Gas Emissions: Emissions that occur from the generation of purchased electricity consumed by the company. Scope 2 emissions physically occur at the facility where electricity is generated.
While scope 1 (direct) emissions occur from energy sources controlled by the company and scope 2 (indirect) emissions occur from electricity consumed by the company, scope 3 emissions are other emissions that arise from sources owned or controlled by other entities within our value chain. For example, scope 3 emissions include those arising from business travel by employees, the use of our products, and the transportation of materials that we purchase and sell. Consequently, scope 3 emissions cover a wide spectrum. Our approach is to identify and quantify those that are material to Teck.
Our most material scope 3 emissions are from the use of our steelmaking coal product by our customers. Unlike the vast majority of coal, which is burned to generate electricity, steelmaking coal has special properties that make it a suitable input for manufacturing steel. Based on our 2015 sales volumes, scope 3 emissions from the use of our steelmaking coal are approximately 76,000 kt of CO2e.
Achieving the COP21 goal of limiting climate change to 1.5 degrees Celsius or less will likely result in new regulations, policies and changing consumption patterns that could either negatively or positively affect demand for various mining commodities as they come into effect.
Energy will continue to be one of the most significant costs in our business. As such, we will continue to focus on improving our efficiency and, as a result, reducing our greenhouse gas emissions. For example, we will continue our pilot project to test the use of LNG fuel in haul trucks at our operations and work with sites to identify and implement projects to further reduce our energy usage. In 2016, we will continue to advocate for carbon pricing, reduce our emissions and support the development of alternative energy technologies.