Thank you for inviting me to the event. I apologise for not speaking up at the conference because other delegates were lining up and I had to leave at 2:30pm. I certainly appreciate the opportunity and would have liked to pass on a few messages as a member of the resource sector.

We, in the resource sector, are deeply committed to issues of energy efficiency, water management, environment protection, climate change. As a company, Rio Tinto has publicly communicated company policies and targets for each of these issues in our annual corporate social responsibility report. We believe that our right to operate is granted to us by the community at large based on how well Rio Tinto performs all the dimensions of corporate social responsibility.

Please allow me to tell you of a new endeavour that may be of interest on this subject. This is a potential private-public sector initiative where China government policy is required to shape private industry to deploy cutting edge technology to deliver clean energy to support future growth.

Rio Tinto and BP today announced the formation of a new jointly-owned company, Hydrogen Energy, which will develop decarbonised energy projects around the world. The venture will initially focus on hydrogen-fuelled power generation, using fossil fuels and carbon capture and storage (CCS) technology to produce new large-scale supplies of clean electricity.

Rio Tinto and BP believe they can identify realistic projects which can make significant contributions towards country and global targets for CO2 emissions reductions, providing clean energy and maximising domestic energy security

Hydrogen power and CCS technologies need to be deployed extensively and it is hoped that governments will create policy and regulatory regimes that enable many different companies to compete for the business so that it can be deployed extensively around the world. Some 90 per cent of the carbon in the fuel which would otherwise be emitted to the atmosphere will be captured and stored. The fossil fuel is first gasified to produce hydrogen and CO2 gases. The hydrogen is used as a clean source of energy and the carbon dioxide is then captured and sent for permanent storage in a geological formation deep beneath the earth's surface.

However, these projects involve additional capital expenditure and additional work to remove, capture and permanently store the carbon dioxide contained in the fuel - generating large scale supplies of electricity while capturing 90% of the carbon in the fuel used at the power station. Compared with conventional power plants, these developments require extra processing plant - to separate the carbon from the hydrogen, to capture and transport the CO2 and to store it in deep geological formations. This means the cost will be higher than conventional plants.

To make this economic, there needs to be a fiscal policy framework that reflects the benefits these projects bring. Many governments already provide policy support and incentives to forms of alternative, or renewable, energies. These hydrogen power plants with CCS will currently need support at an equivalent level to that which some governments are already providing to other forms of clean energy.

Governments recognise the need to manage carbon dioxide emissions and should realise this is more expensive than traditional power generation. There are many forms of government support and we are confident that acceptable support will be provided given the consequences of inaction
in combating climate change. In the longer term, as society attaches a higher value to the removal of carbon from the atmosphere, these projects may need no more support. Like all forms of new technology we would expect costs to come down substantially as we learn from the first generation of projects.

We are ready to build industrial scale plants and are keen to see governments moving ahead with the processes they need to go through to decide how they might support projects like ours.

By Anthony Loo

(Managing Director, China and Asia, Rio Tinto )