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Strategy: Work with Loy Yang Power to reduce its greenhouse gas emission intensity.

AGL is a minority investor in the largest brown coal fired power station in Victoria, the 2,200 MW Loy Yang A power station. Our 32.5% equity investment is structured through the Greater Energy Alliance Corporation (GEAC) which owns Loy Yang Power which owns and operates both the power station and an adjacent coal mine.

Due to its fuel source and substantial size, Loy Yang A is one of the largest point source emitters of carbon dioxide in Australia, accounting for about 7% of national stationary sector emissions.

The Loy Yang A power station is the most efficient of all the existing brown coal fired generators in Australia. However, while the power station is relatively efficient, AGL is working hard with Loy Yang Power to consider potential emission reductions. AGL is represented on the environmental sub-committee of the GEAC Board.

Initiatives underway at Loy Yang include:

• A commercial agreement with MBD Energy Limited on a pilot project to utilise carbon dioxide in a bio-sequestration process. The pilot project at the Loy Yang Power station will be constructed in two stages over the next 18 months. The MBD CO2 bio-sequestration process is unique because captured flue gasses, including CO2, are recycled with waste water to produce valuable commodities and clean water. The MBD technology is ideally suited to coal fired power stations because it utilises adjoining buffer land, consumes flue emissions, waste water and sunlight to produce oil suitable for energy and plastics production (and other derivatives) as well as nutritious stock feed, clean water and oxygen.
• Continued operation of the Mechanical Thermal Expression plant which was launched in November 2007 by the Hon Peter Batchelor, Minister for Energy in Victoria. The plant has been funded jointly by Loy Yang Power, other industry participants and the Australian and Victorian Governments. The plant demonstrates how greenhouse emissions can be reduced if the moisture content of brown coal is lowered.