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Energy and Climate Change

Energy use and efficiency initiatives, climate change-related risks, carbon pricing and greenhouse gas emissions, climate policies and regulations.

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Energy and Climate Change

Climate change is an increasingly important global challenge for businesses and communities, and is addressed in the United Nations Sustainable Development Goal 13 on climate action. In 2017, the World Economic Forum again rated “failure of climate-change mitigation and adaptation” as the number five risk in terms of global impacts4. Addressing this challenge and supporting the transition to a lower-carbon economy will require change in how energy is produced and consumed, and how greenhouse gas emissions are managed. Businesses are increasingly taking a role in climate action and advocating for fair and broad-based climate-related regulation, including carbon pricing.

Demand for commodities is likely to shift in response to a lower-carbon environment, and certain commodities may be more significantly affected than others. The metals and minerals we produce are essential to building the technologies and infrastructure necessary to reduce GHGs and adapt to the effects of climate change. For example, renewable energy systems can require up to 12 times more copper compared to traditional energy systems; steel, and the steelmaking coal required to make it, is necessary for infrastructure that reduces emissions, such as rapid transit and wind turbines. 

In response to the Paris Agreement and United Nations SDG 13, a number of major mining jurisdictions announced climate change commitments. In 2017, the Government of Canada advanced the Pan-Canadian Framework on Clean Growth and Climate Change. This plan was developed with Canadian provinces and territories and in consultation with Indigenous Peoples to meet emissions reduction targets, grow the economy and build resilience to a changing climate. 

As mining operations require large amounts of energy to produce and transport their products, energy is one of their most material costs. As large energy consumers, mines also produce significant GHG emissions, which exposes them to potential new costs, both as a carbon price is introduced, and as additional costs when the price increases. We recognize that our activities consume energy and generate significant GHG emissions. This is why Teck has set ambitious targets to reduce our carbon footprint and why we advocate for policies that support the world’s transition to a lower-carbon economy. In early 2018, we released a Climate Action and Portfolio Resilience report, where we summarize Teck’s climate action strategy, goals and performance; discuss key climate-related risks and opportunities for our businesses; and consider the potential implications for Teck of two commonly used climate-related scenarios. While not forecasts, these scenarios describe two possible futures looking forward to 2040.


(4) The Global Risks Report 2017. World Economic Forum.

Teck’s Approach to Energy and Climate Change

At Teck, we believe climate change is directly influenced by human activity and it requires decisive global action to address it. The metals and minerals we produce are essential to building the technologies and infrastructure needed to reduce greenhouse gas (GHG) emissions. We have a responsibility to help tackle this global challenge by reducing our own emissions and advocating for policies that support the transition to a low-carbon economy.

At the same time, there are significant costs involved as a large consumer of energy. There is the existing cost of energy, as well as potential new costs, such as a carbon price and the possibility of subsequent increases to it. These factors contribute to the importance for Teck to manage its energy consumption and GHG emissions as efficiently as possible.

 

The management of energy and greenhouse gas emissions is overseen by the Board of Directors through its Safety and Sustainability Committee. This includes incorporating climate-related considerations into corporate-level strategies and capital investment decisions. Climate-related risks and opportunities are identified using risk management tools internal to Teck, and rely on both internal and external expertise on climate change. These risks and opportunities are then prioritized based on their likelihood of impacting our business and the severity of impact, and are considered in our overall corporate governance and strategic planning. The Safety and Sustainability Committee of the Board broadly oversees health, safety, environment and community policies, systems, performance and auditing, including implementation of our Health, Safety, Environment and Community (HSEC) Management Standards.

The following senior leaders are involved in implementing the management of energy and greenhouse gas emissions:

  • The Senior Vice President, Sustainability and External Affairs reports directly to our CEO and is responsible for sustainability, health and safety, environment and community affairs, including energy and greenhouse gas emissions
  • The Vice President, Environment oversees compliance with environmental standards for projects, operations and our legacy properties, and regularly reviews environmental performance risks and strategic issues
  • The Vice President, Community and Government Relations is involved in engaging provincial and federal governments on climate policy
  • The Manager of Sustainability Implementation and Carbon Strategy coordinates the risk and opportunity management for climate-related risks and the implementation of our climate action strategy and energy and GHG reduction goals
     

HSEC performance is a factor in Teck’s bonus structure and affects from 15% to 20% of each department’s bonuses for all executives. In addition, the personal component of executive bonus ratings may include specific objectives related to HSEC matters, including energy and climate change management. 

Our commitment to efficient energy and climate change management is outlined in our Strategy for Climate Action. Our Code of Sustainable Conduct describes our commitment to promote the efficient use of energy and material resources in all aspects of our business and outlines our support of sustainable development and willingness to accept our obligation to constantly improve our methods of extracting the world’s resources to the benefit of our stakeholders. Our HSEC Management Standards stipulate that all of Teck’s major capital projects will include the identification and evaluation of opportunities for improving energy efficiency.

We work with various local, national and international organizations and programs to support climate action:

  • Carbon Disclosure Project (CDP): We annually report our global GHG emissions data to the CDP, an independent not-for-profit organization working to drive GHG emissions reduction by businesses and cities

  • Greenhouse Gas (GHG) Protocol for Calculating Emissions: Our energy and carbon accounting practices follow rigorous standards from the World Resources Institute and the World Business Council for Sustainable Development

  • The Paris Pledge for Action: Teck is a signatory to the Paris Pledge for Action in support of reducing emissions and achieving the objectives of the Paris Agreement

  • Carbon Pricing Leadership Coalition: A partnership of national and sub-national governments, businesses and organizations working toward integrating carbon pricing into the global economy

  • Council for Clean Capitalism: A group of forward-thinking companies working together to ensure sufficient financing and transparency to smooth our transition to a low-carbon economy

  • Canada’s Oil Sands Innovation Alliance (COSIA): An alliance of oil sands producers focused on accelerating improvement in environmental performance in Canada’s oil sands through collaborative action and innovation

  • Climate Solutions and Clean Growth Advisory Council: This council provides strategic advice to government on climate action and clean economic growth. Teck’s Senior Vice President, Sustainability & External Affairs is currently a council co-chair.

As the world transitions to a lower-carbon economy, there will naturally be shifts in demand for certain commodities; demand for those requiring low-carbon technologies may increase, while others may decrease. Our diversified mix of products all have a role to play in the low-carbon economy of the future. 

The minerals and metals we produce — including steelmaking coal, copper and zinc — are some of the basic building blocks of low-carbon technology and infrastructure. We are developing a cost- and carbon-competitive energy business, based in Alberta, Canada, which is home to some of the most progressive climate action policies of any oil-producing jurisdiction globally. One of these projects, Fort Hills, will have one of the lowest carbon intensities among North American oil sands producers. 

Our approach to ensuring Teck remains competitive throughout the shift to a low-carbon economy also focuses on ensuring our operations remain efficient and low cost. This gives us increased ability to weather potential carbon-related costs and shifts in demand while remaining competitive. 

 

Based on analysis of publicly available information, we believe Teck is one of the lowest GHG emission-intensity miners in the world. For example, according to the International Council of Mining and Metals (ICMM), our steelmaking coal and copper production rank among the lowest for carbon intensity, compared to the global mining industry. 

Carbon intensity is a measure of the GHG emissions generated during production of a given unit of a commodity, e.g., the amount of carbon dioxide (CO2) generated per tonne of copper or steelmaking coal produced. According to the ICMM, at 60 kilograms of CO2-equivalent per tonne of steelmaking coal produced, the emissions intensity of our steelmaking coal is less than half the industry average of more than 150 kilograms. 

Similarly, our copper production averages 2.6 tonnes of CO2-equivalent per tonne of copper produced, which is 35% below the industry average of 4 tonnes. Moving forward, our goal is to continue to improve the carbon intensity of our operations and future projects.

Low-Carbon Energy

Many of our operations access 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. 

Teck’s 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. 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. 

We supported the development of a community solar farm in Kimberley, B.C., which was built on the fully reclaimed Sullivan Mine site and supplies enough electricity to the BC Hydro grid to power about 200 homes. At Quebrada Blanca Operations in Chile, we are currently sourcing 30% of our total energy needs from solar power.

Teck is exploring opportunities for solar, wind and other low-carbon technologies across our portfolio. We are prioritizing these opportunities based on proximity to areas where we operate or have operated, where we may be able to gain expertise in renewables, further exploration of specific technologies of interest to Teck and the ability of projects to provide other sustainability benefits such as for local communities.

Teck advocates for broad-based carbon pricing and we build carbon pricing into our business planning, capital planning and risk-decision processes. Currently, all of our steelmaking coal operations are covered by carbon pricing, as is half of our copper business and all of our metals refining business. While there is uncertainty in determining the future financial implications of carbon costs, we start with the assumptions that carbon prices will be continuously adopted around the globe, and that they will increase over time.

Carbon pricing is integrated into a variety of decision-making processes, ranging from annual operating budgets developed at the site level to corporate decision-making for large capital investments. We also calculate and consider our carbon exposure in terms of absolute costs incurred on an annual basis and projected out for at least five years. 

Where a clear and certain carbon price is present, we incorporate that price as well as any known or planned changes to the carbon price. Where uncertainty exists, we typically conduct sensitivity analyses to better understand what our exposures and risks are under different carbon pricing and regulatory scenarios.

In addition, we continue to advocate for carbon pricing policies that maintain the global competitiveness of trade-exposed industries to prevent carbon leakage, which is when GHG emissions move from one jurisdiction to another as a result of differences in carbon prices. 

We are taking steps to guard against the future impacts of climate change, as we recognize that ongoing changes to climate could pose a potential physical risk to our mining operations and to related infrastructure. In response, we are incorporating a range of climate parameters into our project designs and ongoing mine planning processes — including closure and reclamation planning — to minimize our vulnerability to climate variability and to ensure robustness.

We work with technical experts in the field of climate modelling and forecasting to better understand potential changes in climate-related conditions at some of our sites in British Columbia. This project has helped us to assess how climate change modelling could be integrated into our decision-making and risk management practices. We typically take climate modelling into consideration in project development, mine planning and closure planning. For example, trends in permafrost advance and retreat, precipitation patterns, and tidal variations and storm intensity impacts on operations and transportation are all evaluated using climate analysis and modelling.

Table 1: Energy and Climate Change Internal and External Audits

Type

Organization

Items Audited

External

Mining Association of Canada: Towards Sustainable Mining audit

Energy use and GHG emissions management systems
Energy use and GHG emissions reporting systems
Energy use and GHG emissions performance targets

External

International Council on Mining and Metals: Sustainability Report assurance

GHG emissions — direct scope 1
GHG emissions — indirect scope 2
GHG emissions — indirect scope 3 (use of sold products)
Principle 6: Pursue continual improvement in environmental performance issues, such as water stewardship, energy use and climate change

External

GHG Regulation Assurance

Validation of GHG data reported and quantification of methodologies

External

ISO 14001 external audits

Components of the environmental management system at each site

Internal

ISO 14001 internal audits

Components of the environmental management system at each site

Internal

Risk-based Health, Safety and Environment audits at each site

Adherence to regulatory and permit requirements; effectiveness of controls based on risk profile

Following each of these audits, applicable management teams use the results to inform future actions and Teck’s five-year planning process.

Our Performance in Energy and Climate Change in 2017

Positioning Teck to Thrive in the Low-Carbon Economy

Energy Use and Reduction

In 2017, we consumed a total of 43,899 TJ of energy (i.e., electricity and fuels), as compared to 42,538 TJ in 2016. Trends in fuel and electricity consumption for the past four years are shown in Figure 12. In 2017, six of our operations (Cardinal River, Coal Mountain, Carmen de Andacollo, Highland Valley Copper, Quebrada Blanca and Trail Operations) reduced their absolute energy consumption from 2016. 

Collectively, projects implemented in 2017 have reduced annual energy consumption at our operations by 582 TJ — enough to power 5,404 homes for a year. Since 2011, our efforts have resulted in reduction projects totalling 2,132 TJ.

In 2017, approximately 27% of our energy requirements (i.e., electricity and fuels) were supplied by non-carbon-emitting sources, primarily hydroelectricity, compared to 28% in 2016. Of our total electricity consumption in 2017, 81%, or 11,719 TJ, was from renewable energy sources, the majority of which is hydroelectricity. 

Teck is exploring opportunities for solar, wind and other low-carbon technologies across our portfolio. We are prioritizing these opportunities based on proximity to areas where we operate or have operated, opportunities where we may be able to gain expertise in renewables, opportunities to further explore specific technologies of interest to Teck, and the ability of projects to provide other sustainability benefits, such as for local communities. 

Figure 12: Energy Consumption by Type

Energy Intensity

In Figures 13 to 15, we outline our energy intensity, or the amount of energy used per tonne of product. This is a measure of efficiency that helps us to better manage our performance. 

Figure 13: Steelmaking Coal Production Intensity

Figure 14: Zinc and Lead Production Intensity

Figure 15: Copper Production Intensity

Energy and carbon intensity for the production of steelmaking coal increased in 2017 (Figure 13). This change is due to an increase in strip ratios at our steelmaking coal operations, where energy use and the associated emissions were focused on moving non-product materials to a greater degree than in previous years. It is natural for strip ratios to vary over time, so while the emissions intensity of coal has increased in 2017 and may increase again in the future, the intensity will conversely decrease in the future when strip ratios decrease.

Carbon intensity is a measure of the GHG emissions(6) generated during production of a given unit of a commodity, e.g., the amount of carbon dioxide (CO2) generated per tonne of copper or steelmaking coal produced. According to data from the International Council of Mining and Metals (ICMM), at 67 kilograms of CO2-equivalent per tonne of steelmaking coal produced, the emissions intensity of our steelmaking coal is less than half the industry average of more than 150 kilograms. Similarly, our copper production averages 2.6 tonnes of CO2-equivalent per tonne of copper produced, which is 35% below the industry average of 4 tonnes. Our goal is to continue to improve the carbon intensity of our operations and future projects.

Reducing Our Carbon Footprint(5)

In 2017, our total GHG emissions (Scope 1 and Scope 2), as CO2e, were 3,010 kilotonnes (kt), compared to 2,931 kt in 2016. Of those totals, our direct (Scope 1) GHG emissions were 2,682 kt in 2017, compared to 2,552 kt in 2016. Figure 16 shows a breakdown of our emissions by fuel type. We estimate our indirect (Scope 2) GHG emissions associated with electricity use for 2017 to be 328 kt, or approximately 11% of our total emissions. These emissions are associated primarily with our Cardinal River, 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. and Washington state obtain a significant proportion of their electricity from hydroelectric generation.

We implemented several energy and GHG reduction projects that contributed to our energy goals in 2017 and six of our operations reduced their GHG emissions. We met our 2020 GHG reduction goal of 275 kt of CO2e emissions early, with reductions already estimated at approximately 281 kt of CO2e emissions at the end of 2017. One of the largest contributors to our progress to date has been the sourcing of solar power at our Quebrada Blanca Operations in northern Chile. The amount of solar energy sources is equivalent to 30% of the total electricity consumed at Quebrada Blanca, and avoids approximately 39,000 tonnes of GHG emissions per year.

Figure 16: Scope 1 and Scope 2 GHG Emissions by Fuel Type(1),(2)

Scope 3 Emissions 

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 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 2017 sales volumes, Scope 3 emissions from the use of our steelmaking coal are approximately 78,438 kt of CO2e, compared to 79,053 kt of CO2e in 2016.

Carbon Pricing and Advocating for Climate Action

We believe that broad-based pricing of carbon is one of the most effective ways to incentivize real reductions in GHG emissions by ensuring that all emitters contribute to the solution. As such, Teck advocates for broad-based carbon pricing, and we integrate it into a variety of decision-making processes, ranging from annual operating budgets developed at the site level, to corporate decision-making for large capital investments. We also calculate and consider our carbon exposure in terms of absolute costs incurred on an annual basis and projected out for at least five years. Teck has used an internal price on carbon for a decade. Currently, all of our steelmaking coal operations are covered by carbon pricing, as is half of our copper business and all of our metals refining business. While there is uncertainty in determining the future financial implications of carbon costs, we start with the assumptions that carbon prices will be continuously adopted around the globe, and will increase over time. 

Carbon pricing is integrated into a variety of decision-making processes, ranging from annual operating budgets developed at the site level, to corporate decision-making for large capital investments. We also calculate and consider our carbon exposure in terms of absolute costs incurred on an annual basis and projected out for at least five years. Where a clear and certain carbon price is present, we incorporate that price and any known or planned changes to the carbon price. Where uncertainty exists, we typically conduct sensitivity analyses to better understand what our exposures and risks are under different carbon pricing and regulatory scenarios. In addition, we continue to advocate for carbon pricing policies that maintain the global competitiveness of trade-exposed industries to prevent carbon leakage, which is when GHG emissions move from one jurisdiction to another as a result of differences in carbon prices. 

Following the adoption of the Paris Agreement in 2015, the Provinces of B.C. and Alberta completed reviews of their climate change plans, including a re-examination of their primary carbon price policies, the carbon tax in B.C. and the Specified Gas Emitters Regulation in Alberta. In 2017, the Province of B.C. announced a planned increase to the carbon tax beginning in 2018, increasing by $5 per tonne of CO2-equivalent (CO2e) per year until reaching $50 per tonne of CO2e. At the same time, the B.C. Government made a commitment to addressing impacts on emissions-intensive, trade-exposed industries to ensure that B.C. operations maintain their competitiveness and to minimize carbon leakage. In 2017, the Province of Alberta also consulted on the Carbon Competitiveness Incentive Regulation, the industry-specific carbon pricing policy set to replace the previous Specified Gas Emitters Regulation, which concluded in 2017. 

In 2017, the Government of Canada continued its consultation on the national Pan-Canadian Framework that includes a national floor price on carbon. Canadian provinces have until 2018 to implement a carbon price, starting with a minimum price of $10 per tonne in 2018, increasing $10 per year to $50 per tonne by 2022. 

We will continue to assess the potential implications of the updated policies on our operations and projects. In 2017, our most material carbon pricing policy impacts were related to B.C.’s carbon tax. For 2017, our seven B.C.-based operations incurred $52 million in provincial carbon tax, primarily from our use of coal, diesel fuel and natural gas.

Adapting to Physical Impacts 

We are taking steps to guard against the future impacts of climate change, as we recognize that ongoing changes to climate could pose a potential physical risk to our mining operations and to related infrastructure. In response, we are incorporating a range of climate parameters into our project designs and ongoing mine planning processes — including closure and reclamation planning — to minimize our vulnerability to climate variability and to ensure robustness. In 2017, we participated in the Pacific Climate Impacts Consortium as members of the Program Advisory Committee, and in the Sustainable Water Management in the Athabasca River Basin Initiative as members of the Working Group that includes a focus on addressing climate variability and climate change in a watershed management context.


(5) In 2016, we updated the Global Warming Potential values for all of our GHG accounting to align with regulatory requirements; therefore, historical values have been restated. Global Warming Potentials are the factors that convert greenhouse gases — like methane (CH4) — to a carbon dioxide equivalent (CO2e), thereby standardizing the quantification of GHG emissions. 
(6) Fugitive emissions from our coal operations (i.e., estimated methane release) are captured as direct emissions.

Outlook for Energy and Climate Change

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 reducing our greenhouse gas emissions. In 2018, we will continue to advocate for broad-based, effective carbon pricing, reduce our emissions and support the development of alternative energy technologies: efforts that support United Nations Sustainable Development Goal 13, to take urgent action to combat climate change and its impacts. We will continue to evaluate opportunities for alternative energy at our operations, major projects and legacy properties and to advance our Climate Action and Portfolio Resilience report.

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Teck is a diversified resource company committed to responsible mining and mineral development with business units focused on copper, zinc, steelmaking coal and energy.