Performance standards to reduce energy emissions

14 January 2011

Anita Talberg
Science, Technology, Environment and Resources Section

Leslie Nielson
Economics Section


Australian coal-fired power: an emissions reduction opportunity
Current Australian emissions from power generation
EPS proposals for Australia
EPS benchmarks
The United States of America
The European Union
Choosing the right EPS to drive change
  Raising the bar
  Picking winners
  Reducing absolute emissions



Commonly referred to as baseload demand, this is the minimum amount of power that a utility or distribution company must make available to its customers, or the amount of power required to meet minimum demands based on reasonable expectations of customer requirements.


Carbon capture and storage, where carbon dioxide emitted through power generation is stored indefinitely.


Carbon dioxide


Carbon dioxide equivalent. This is calculated for non–CO2 greenhouse gases by their global warming potential (GWP). The six greenhouse gases controlled under the Kyoto Protocol are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs, a class of gases containing carbon, hydrogen and fluorine), perfluorocarbons (PFCs, a class of gases containing carbon and fluorine), and sulphur hexafluoride (SF6). A gas’ GWP is defined as the relative ability of one kilogram of that gas, compared with one kilogram of CO2, to warm the atmosphere over a 100–year time horizon (or other defined timeframe). Thus, each gas is assigned a multiplier, ranging from one for CO2 to as high as 22 200 for SF6.


Emissions performance standard


Greenhouse gas


US pounds. One metric tonne is equivalent to 2204 lbs.


Megawatt-hour. One megawatt-hour is one million watt-hours, and expresses an amount of electricity generated (or consumed) for one hour.


The sum of the gases nitrous oxide (NO) and nitrogen dioxide (NO2)


Particulate matter


Sulphur dioxide



At global climate change negotiations in December 2010, developed nations including Australia pledged once again to reduce domestic greenhouse gas (GHG) emissions by whatever means appropriate to national circumstances.[1] The Australian Government has yet to determine how this challenge is to be met. The issue is being examined by both the Government and the newly established Multi-Party Climate Change Committee. This Committee, established following the 2010 election, is tasked with exploring options for implementing a carbon price and is intended to help build a consensus on how Australia will address climate change.[2]

Although a price on carbon is considered by many to be crucial to Australia meeting its international emissions reduction commitment, it may not be sufficient on its own.[3] One of many policy instruments at the Government’s disposal to complement a carbon price is regulation, in particular, standardisation of the emissions performance of power generation.[4] This background note concentrates on this particular option.

An emissions performance standard (EPS) is a specific limit to the amount of pollutants that can be released into the environment, usually per unit of production. An EPS can regulate pollutants released by automobiles and other powered vehicles, and small equipment such as lawn mowers and diesel generators, but they can also regulate emissions from industry and power plants.

Australian coal-fired power: an emissions reduction opportunity

Current Australian emissions from power generation

Depending on the fuel and technology type, Australian power stations emit between 0.37 and 1.38 tonnes of carbon dioxide equivalent (CO2e) per megawatt-hour (tCO2e/MWh).[5] These emissions would decrease significantly if reliable carbon capture and storage (CCS) technologies were in place. Table 1 provides estimated typical CO2e emissions per MWh for most types of power stations for brown and/or black coal. The burning of brown coal produces far higher GHG emissions per unit of extracted energy than burning black coal or natural gas. This is due to brown coal’s high moisture and lower energy content. Both Victoria and South Australia have substantial brown coal deposits, and these are exploited for power generation. The potential of power stations using brown coal to meet any proposed EPS is an important issue for those states.

Table 1: Estimated emissions of CO2e tonnes per MWh by generating technology and fuel type


Typical emissions (tCO2e/MWh)

PC (pulverised coal): traditional coal plants in which coal is ground to the consistency of flour and blown into a boiler for rapid combustion to create superheated steam used by a steam turbine to generate power. Most coal fired power plants are of this type. PC plants can be categorized into three types (supercritical, ultra-supercritical and subcritical) based on the thermodynamic state of the steam entering the first turbine.


•        SCPC (supercritical pulverised coal): typically employ a ‘main steam’ (i.e., high‐pressure turbine inlet) with a temperature of 565‐595°C. The ‘reheat steam’ (i.e., intermediate‐pressure turbine inlet) temperature usually is the same as, or slightly higher than, the main steam temperature.


SCPC (Brown)

0.93 – 0.99


SCPC (Black)

0.84 – 0.88


•        USCPC (ultra‐supercritical pulverised coal): plants with a main steam temperature greater than 595°C. These highly-efficient plants have been built commercially in Europe and Asia, but not in North America or Australia.          


USCPC (Brown)

0.83 – 0.86


USCPC (Black)

0.69 – 0.71


•        Subcritical: coal-fired power plants that do not fall into the other two categories. These plants generally operate at lower steam temperatures and boiler pressures.


Subcritical (Brown)

0.90 – 1.38


Subcritical (Black)

0.81 – 1.07

IGCC (integrated gasification combined cycle): only 5 operational in the world; plant consists of a gasifier to convert coal to a fuel gas, which is cleaned up in a series of chemical processing stages. A gas turbine burns the cleaned gas followed by a steam turbine heat recovery unit to raise steam to turn a second turbine.


IGCC (Black)


IDGCC (integrated drying gasification combined cycle): uses brown coal, which is dried and then put through a gasification process; the generation process is then the same as an IGCC power station (this technology is at the experimental stage and is particular to Australia)[6]


IDGCC (Brown)


OCGT (open cycle - gas turbine): built around one or more combustion turbines (essentially the same technology used in jet engines); the combustion turbine is fired by natural gas to rotate a turbine and produce electricity.


OCGT (Natural gas)


CCGT (combined cycle - gas turbine): the exhaust gas from the gas turbine is fed to a heat recovery boiler to raise steam to drive additional steam turbines; electricity is generated from both turbines.[7]


CCGT (Natural gas)


Oxy-combustion: the fuel is burned in oxygen instead of air; the flue gas consists of mainly CO2 and water vapour, the latter being condensed through cooling. The almost pure CO2 stream can be transported to a CCS site.


Oxy combustion (Black)


All of the above technologies may theoretically be combined with CCS equipment. [8] However, while several commercial scale trials are underway in Australia and elsewhere, CCS equipment has not yet been commercially deployed as part of an operating power station.


USCPC (Black) with CCS






USCPC (Brown) with CCS


Note: The emissions performance ranges depend on whether the steam in subcritical, SCPC and USCPS plants is air-cooled or water-cooled. The water-cooled method generally produces lower emissions. The very low emissions figure for USCPC with CCS is for air-cooled facilities but the figure is so low because of CCS.

Source: Department of Resources, Energy and Tourism (DRET), A cleaner future for power stations, Discussion paper, DRET, Canberra, 2010, p. 6, viewed 21 December 2010,

EPS proposals for Australia

In the June quarter of 2010, electricity generation was the largest single source of Australia’s greenhouse gas emissions at 37 per cent.[9] As part of a drive for further development of CCS technologies capable of reducing emissions, Australian policy-makers on both the federal and state level are looking to tighten regulations on coal-based power generation.

Queensland has a requirement that all new coal-fired power stations must deploy ‘newly emerging clean coal technologies, which provide for carbon capture and storage, and efficient water practices’.[10] Western Australia has similar requirements. The South Australian Government has proposed an EPS of 0.7 t CO2e/MWh for all new power generation plants.[11] Before losing office in November 2010, the Brumby Government in Victoria announced its intention to impose an EPS of 0.8 tonnes of CO2 per megawatt-hour. It is not clear whether or not the new Baillieu Government plans to implement the former Government’s proposed EPS.[12]

Currently, the Federal Government does not impose an EPS on existing or new coal-fired power stations. As part of its 2010 election campaign, the Australian Labor Party announced its intention to impose an EPS on all newly constructed coal-fired power stations. The Department of Resources, Energy and Tourism, following the re-election of the Gillard Government, issued a discussion paper on this matter.[13] The paper puts forward for discussion a power station EPS ‘below the level’ of 0.86 tCO2e/MWh.

EPS benchmarks

A number of industrialised countries have been debating the introduction of an EPS for a number of years, and some such standards have already been established in those countries at a sub-national level. These are outlined below.

The United States of America

The US has no federal EPS at this stage, although other pollutants emitted from power stations, such as SO2, NOx and PM, have been controlled under the federal Clean Air Act for several decades.[14] In December 2010, the US Environmental Protection Agency (EPA) announced its intention to establish new GHG emissions standards under the Clean Air Act in 2011, specifically targeting coal power plants and petroleum refineries.[15]

A number of US states already have an EPS for power plants within their jurisdiction:

  • Oregon: The State of Oregon has had an EPS since 1997. It was set at ‘17 percent below the most efficient baseload plant in the United States’ equivalent to 675 lbs of CO2 per MWh (or 0.3 tonnes of CO2 per MWh). However, this was applied only to baseload natural gas-fired plants. Newer legislation was signed in 2009 and expanded the coverage to all baseload power plants, including coal, and set the new standard at 1100 lbs per MWh (about 0.5 tonnes per MWh). The earlier scheme allowed offsetting emissions; however, the new scheme does not. [16]
  • California: Since 2006, the State of California has had legislation limiting long-term investments in baseload generation by the State's utilities to power plants that meet an EPS. Californian Senate Bill 1368 was signed into law by the then Governor, Arnold Schwarzenegger, on 29 September 2006.[17] Through regulations, the EPS is currently set at 1100 lbs CO2 per MWh.[18]
  • Washington: Washington has followed suit with California. Since 2007, it has had in place an EPS of 1100 lbs per MWh for new projects, and new and renewed power contracts. The EPS is to be reviewed every five years.[19]
  • Montana: In May 2007, Montana Governor Brian Schweitzer signed House Bill 25.[20] This legislation ‘prohibits the Montana Public Utilities Commission from approving electric generating units constructed after January 2007 that are primarily fuelled by coal unless the facility captures and sequesters at least 50 per cent of its carbon dioxide’.[21]
  • Illinois: Illinois has an EPS in the form of the ‘clean coal portfolio standard’. This requires that a new coal power plant:

... captures and sequesters carbon emissions at the following levels: at least 50 per cent of the total carbon emissions that the facility would otherwise emit if, at the time construction commences, the facility is scheduled to commence operation before 2016, at least 70 per cent of the total carbon emissions that the facility would otherwise emit if, at the time construction commences, the facility is scheduled to commence operation during 2016 or 2017, and at least 90 per cent of the total carbon emissions that the facility would otherwise emit if, at the time construction commences, the facility is scheduled to commence operation after 2017 ...[22]

The European Union

On 7 October 2008, members of the European Parliament Environment Committee voted in support of a European EPS of 500g of CO2 per kWh (0.5 tCO2/MWh) to start in 2015. However, this was not included in the final climate policy, known as the EU Climate Package. The question of introducing a Europe-wide EPS has arisen again recently in light of some discussions surrounding the development of CCS, and the feasibility of retrofitting CCS technologies to existing plants. There has been some debate as to whether individual member states may establish their own EPS. The United Kingdom (UK) seems to be a strong proponent of the idea that member states should have autonomy when it comes to setting EPS.[23]

The UK Coalition Government has expressed an intention to introduce an EPS for coal power plants. The proposal is for it to be included in the Energy Bill 2010. The EPS is anticipated to work in conjunction with CCS-ready requirements and to form part of an overall decarbonisation strategy. For now, a parliamentary inquiry is being undertaken by the House of Commons Select Committee on Climate Change.[24]


On 23 June 2010, the Canadian Minister for Environment announced the intention to introduce an EPS in Canada. The EPS would apply to new plants and those reaching the end of their economic lives. According to the Minister’s announcement, draft regulations are expected in early 2011 and final regulations later in the year. These are not scheduled to come into effect before 2015 to allow adequate time for consultations with stakeholders.[25]

The Province of Alberta has had a ‘Specified Gas Emitters Regulation’ since 2007.[26] This is an emissions intensity trading scheme that applies to all facilities emitting more than 100 000 tonnes of CO2e in one year. Such a facility must reduce its emissions intensity to 88 per cent of the baseline for existing facilities. The trading of offsets and credits is permitted as a means to meet the imposed targets. Coal-fired power stations are covered by such regulations with rulings that differ depending on whether the facility is new or existing.[27] Parts of the Specified Gas Emitters Regulation may be discontinued if a national EPS is established.

The following table summarises the EPS cases detailed above.

Table 2: Emissions performance standards






Currently none

Proposed starting point of 0.86 tCO2e/MWh on all new coal-fired power stations. All new stations to be capable of deploying CCS and other emissions reduction technology, as they become commercially available. Standards to commence in 2011.


Currently none

Former Government proposed 0.8 tCO2/MWh


Currently none

Announced EPS of 0.7 tCO2/MWh

QLD and WA

Currently none

All new coal fired power stations must use world’s best technology and be CCS ready.



Currently none

The EPA has issued a plan for establishing an EPS in 2011. It is open to public comment.[28]



0.5 tCO2/MWh

In place since 2006.



0.5 tCO2/MWh

In place since 2009.



0.5 tCO2/MWh

In place since 2007.



Must sequester 50%

Applies to plants built after 2007.



Must sequester 50, 70 or 90%.

•        50% for new plants operating before 2016
•        70% for plants beginning operation between 2016 and 2017
•        90% for plants beginning operation after 2017


All states

Currently none

Considered in 2008 at 0.5 tCO2/MWh.



Currently none

Proposed EPS between 0.45 and 0.6 t CO2/MWh.



Being drafted - operational in 2015

Details unconfirmed.



88% reduction

This is an emissions intensity scheme.

Choosing the right EPS to drive change

As highlighted above, when compared to current and proposed EPS globally, Australia’s proposed 0.86 tCO2/MWh standard appears relatively lax. The leniency of Australia’s proposed EPS may be further illustrated by comparing it to relevant (estimated) actual emissions of coal power plants (see Figure 1).

Figure 1: Estimated emissions CO2e t/MWh by generation technology and fuel type

Figure 1: Estimated emissions CO2e t/MWh by generation technology and fuel type

Source: Parliamentary Library estimates using data from Tables 1 and 2

In Figure 1, the red portion of the bars separates the different emissions performance of technologies depending on whether the steam is air- or water-cooled, because, as noted previously, water-cooled plants tend to have better emissions performance. Both subcritical and SCPC brown coal plants will be confronted with a challenge in meeting the Commonwealth’s starting point for an Australian EPS of 0.86 tCO2e/MWh. Even switching from brown to black coal would result in only a small and insufficient improvement in emissions performance. The key point highlighted by Figure 1 is that there is a substantial difference between the various Australian standards and some of those proposed and currently applied overseas.

Raising the bar

There are risks associated with Australia implementing an EPS that is less stringent than any being considered by the US and Europe. In terms of international trade, a lax Australian EPS may give grounds for other countries to impose border measures against processed and manufactured Australian exports.[29] A lax Australian EPS is also likely to send a strong and unfavourable message to the international climate change community. By contrast, a tight EPS would suggest that Australia is serious about reducing its GHG emissions and add credibility to Australia’s negotiating stance at international climate change discussions.

Any Australian EPS also raises concerns about potential ‘carbon leakage’ (this refers to increased investment in high-emission industries in countries with less stringent environmental regulations). An EPS may drive investment in some sectors away from Australia towards countries with more generous emissions standards. This would simply transfer the emissions from one country to another with no net emissions reduction.[30] This was certainly a consideration during the recent Australian emissions trading scheme discussions and more recently in measures undertaken within the European emissions trading scheme after 2013.[31]

Picking winners

The ultimate aim of an EPS is to drive and promote the development and deployment of new technologies that would help reduce GHG emissions, especially CCS. The reality is that setting an Australian EPS at any level will favour some power station combustion methods over others. If the standard is too lenient, older style methods will continue to be built but with minor modifications, locking emissions in for the lifetime of the equipment. If the standard is too tough it may result in a rapid and costly wholesale replacement of generating capacity, at a stage when newer emissions abatement technologies may not be ready for deployment.

Another limitation associated with setting an Australian EPS is that this provides electricity producers with no incentive to improve their performance beyond the set benchmark. As can be noted from Table 1, dramatic improvements in emissions performance may be achieved by the deployment of CCS. It has been suggested that a new CCS-equipped USCPC brown coal power station could achieve emissions performance of 0.04 tCO2e/MWh. However, it is likely that such CCS equipment will be costly to acquire and, more importantly, costly to run. If an Australia-wide EPS is set at any level above this, say 0.7, or even 0.5 tCO2e/MWh, the CCS equipment will be required to operate only part of the time to achieve the standard. This results in an inefficient use of costly capital investment. An effective EPS would need to be flexible, perhaps through a combination of legislation and regulations, so as to allow for innovation and changes in technology.

Reducing absolute emissions

Although more than one third of Australian emissions are due to the generation of electricity, an EPS, especially a lenient one, may have minimal net effects on emissions. An EPS is essentially an emissions intensity standard. It limits the amount of emissions per production unit, but does nothing to control the number of units. Should Australia’s demand for power continue to grow, and coal-fired power stations remain the most cost efficient way of satisfying the additional demand, it is likely that the proposed EPS would not lead to any reduction in Australia’s absolute GHG emissions from electricity generation. The reduction in emissions per megawatt-hour will be more than compensated for by the increase in electricity generated by these stations. This highlights the need for complementary policies that could help to reduce Australia’s demand for power and increase investment in renewable energy sources.


The power generation sector is a major source of Australia’s GHG emissions and as such it presents a real opportunity for reducing domestic emissions. Proposals for an Australian EPS have been a long time coming, but the proposed standard pales in comparison to those existing or proposed in North America and Europe. Australia may be putting itself at a disadvantage by setting an EPS at the wrong level. One that is too lax will not generate the intended technology development, but one that is too stringent may compel the power sector to commit to as yet unproven technologies.

Regardless, an EPS on power station emissions deals with only part of Australia’s emissions. Certainly this sector has a major role to play. However, the power generation sector is not the only source of Australian emissions. To rely on a coal-fired power station EPS alone in order to reduce overall emissions would be to impose an unfair burden on this sector. Complementary measures applied to the broader economy will be required to effectively address any overall emissions reduction targets. Alone, an EPS on coal-based power plants is a second-best option for dealing with the overall problem of reducing Australia’s GHG emissions.

[1].       United Nations Framework Convention on Climate Change, Sixteenth conference of contracting parties to the convention, Outcome of the work of the ad hoc working group on long term cooperative action under the convention, Draft Decision, Cancun, Mexico, 29 November to 10 December 2010, pp 7-8, viewed 12 December 2010,

[2].       Department of Climate Change and Energy Efficiency (DCCEE), ‘Multi-party climate change committee’, DCCEE website, viewed 12 December 2010,

[3].       International Energy Agency (IEA), Energy technology perspectives 2010—scenarios & strategies to 2050, , Paris, 2010, p. 462.

[4].       Organisation for Economic Cooperation and Development (OECD), OECD environmental outlook to 2030, OECD, Paris, 2008, pp. 434–435. For some discussion on the advantages and disadvantages of these approaches see L Nielson, Emissions control: your policy choices, Background note, 2009–10, Parliamentary Library, Canberra, 2010, viewed 10 December 2010, 

[5].       DCCEE, Australian national greenhouse accounts—quarterly update of Australia’s national greenhouse gas inventory— June Quarter 2010, DCCEE, Canberra, November 2010, p. 6, viewed 12 December 2010,

[6].       Victorian Department of Primary Industries, ‘HRL’s new technology to lower carbon dioxide emissions intensity’, Fact sheet, Victorian Department of Primary Industries, Melbourne, 18 October 2010, viewed 22 December 2010,

[7].       International Electricity Partnership, Roadmap for a low carbon power sector by 2050, Electricity Supply Association of Australia, 2009, p. 48, viewed 21 December 2010,; see also, S Kaplan, Power plants: characteristics and costs, Congressional Research Service (CRS) Report, CRS, Washington D.C., 13 November 2008, p. 8, viewed 21 December 2010,

[8].        Worley Parsons, Schlumberger, Baker & McKenzie and Electric Power Research Institute, Strategic analysis of global status of carbon capture and storage: Report 5–synthesis report, Global CCS Institute,  2009, pp. 5–38, viewed 22 December 2010,

[9].       DCCEE, Australian national greenhouse accounts—quarterly update of Australia’s national greenhouse gas inventory—June Quarter 2010, op. cit., p. 6.

[10].     Queensland Government, Climate-Smart 2050–Queensland climate change strategy 2007: a low climate future, Queensland Government, Brisbane, 2007, p. ix, viewed 22 December 2010,
and Queensland Office of Climate Change, ‘Appendix 4: Progress report of initiatives in Climate-Smart 2050 and Climate-Smart adaption 2007–2012’, ClimateQ: toward a greener Queensland, Queensland Office of Climate Change, Brisbane, 2009, p. 5, viewed 22 December 2010,

[11].     M Rann (Premier of South Australia), Carbon limit for new electricity production, media release, Cancun, Mexico, 6 December 2010, viewed 12 December 2010, per cent20carbon per cent20limit.pdf

[12].     A Morton, ‘Emissions Standards lead to power station redesign’, The Age, 6 August 2010, p. 5, viewed 12 December 2010,
search= per cent22emissions per cent20standards per cent22

[13].     Australian Labor Party (ALP), ‘Tough emissions standards on all new coal fired power stations’, ALP website, 23 July 2010, viewed 12 December 2010,  See also, DRET, op. cit.

[14].     The US Environmental Protection Agency administers the Acid Rain Program to control these emissions. However, it is a cap and trade scheme, not an EPS.

[15].     US Environmental Protection Agency (EPA), ‘Addressing greenhouse gas emissions’, EPA website,  viewed 4 January 2011,

[16].     D Till and A Moir, ‘New Oregon climate change laws expand emission performance standards, renewable portfolio standards, GHG reporting, and energy efficiency programs’, Marten Law website, 26 August 2009, viewed 12 December 2010,

[17].     Electricity: emissions of greenhouse gases, Senate Bill 1368 (California) 2006, viewed 13 January 2010,

[18].     California Energy Commission, ‘Emissions Standards: SB1368 Emission Performance Standards’, California Energy Commission website, viewed 13 December 2010,

[19].     Mitigating the impacts of climate change, Senate Bill 6001 (Washington) 2007, viewed 13 January 2010,

[20].     Generally revise electric industry restructuring laws, House Bill 25 (Montana) 2007, viewed 13 January 2010,

[21].     EPA, ‘State and Local Climate and Energy Program – Montana’, EPA website, viewed 12 December 2010,

[22].     Clean Coal Portfolio Standard Law SB1987 (Illinois, US), viewed 12 December 2010,

[23].     European Parliament, Equipping power plants to store CO2 underground, media release, 7 October 2008, viewed 12 December 2010, and House of Commons Select Committee on Energy and Climate Change, Emissions Performance Standards Memorandum, submitted by E3G (EPS 04), House of Commons, London, 18 October 2010, viewed 12 December 2010,

[24].     House of Commons Select Committee on Climate Change website, viewed 12 December 2010,
; UK Department of Climate Change and Energy, Electricity market reform - consultation document, Command Paper 7983, Department of Climate Change and Energy, December 2010, p. 70, viewed 20 December 2010,

[25].     Environment Canada, Government of Canada to Regulate Emissions from Electricity Sector, media release, 23 June 2010, Ottawa, viewed 12 November 2010,

[26].     Province of Alberta, Specified Gas Emitters Regulation (Climate Change and Emissions Management Act), Alberta Regulation 139/2007, viewed 13 December 2010,

[27].     Alberta Environment, Technical guidance for completing baseline emissions intensity applications, Alberta Environment, January 2009, viewed 12 November 2010,

[28].     EPA, EPA to Set Modest Pace for Greenhouse Gas Standards / Agency stresses flexibility and public input in developing cost-effective and protective GHG standards for largest emitters, media release, 23 December 2010, viewed 4 January 2011,

[29].     S Naira, ‘Unilateral carbon border measures: effectiveness and alternatives’, Rising non-tariff protectionism and crises recovery, Chapter VII, United Nations Economic and Social Commission for Asia and the Pacific (ST/ESCAP/2587), 29 November 2010, p. 172, viewed 6 January 2011,

[30].     The carbon leakage issue is somewhat more complex. In practice, in Europe it has not yet occurred to any great extent. E Tvinnereim and K Røine,, Carbon 2010 – return of the sovereign, Point Carbon, Amsterdam, 2 March 2010, p. 7, viewed 7 January 2011,

[31].     European Commission, ‘Emissions Trading System: Carbon Leakage’, European Commission website, viewed 6 January 2011,;  L Parker and J Grimmett, Climate change: EU and proposed US approaches to carbon leakage, Congressional Research Service (CRS) Report R40914, CRS, Washington D.C., 4 November 2009, viewed 7 January 2010,

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