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Wednesday, 17 September 2008
Page: 7665

Mr HAYES (10:44 AM) —The Offshore Petroleum (Annual Fees) Amendment (Greenhouse Gas Storage) Bill 2008, the Offshore Petroleum (Registration Fees) Amendment (Greenhouse Gas Storage) Bill 2008, the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 and the Offshore Petroleum (Safety Levies) Amendment (Greenhouse Gas Storage) Bill 2008 before the House essentially deal with the new range of offshore titles for the transportation by pipeline and injection and storage in geological formations of carbon dioxide, at this stage being defined as a greenhouse gas. The proposed legislation deals primarily with the provision of access and property rights for greenhouse gas injection and storage activities in Commonwealth offshore waters and provides a management system for ensuring that the storage is safe and secure while balancing the rights of the new industry with those of the petroleum industry in a manner that encourages participation and, moreover, investment in both industries. The proposed legislation recognises, firstly, the need to provide greenhouse gas injection and storage proponents with the certainty they need to bring those projects forward. Secondly, it preserves the pre-existing rights of the petroleum industry as far as practicable to minimise the sovereign risk to the existing titleholders’ investment in this country and their resources and the potential resource being extracted from those leases. Finally, it is to provide insurance to the community that the CO2, the liquefied—in most cases—carbon dioxide, will be stored in a safe and secure manner.

I will turn to what the bill actually does a little later. This is an important piece of legislation for the House. You have just heard the shadow minister indicate the opposition’s approach. I understand, and it is true, that when minister he was also working on this as one of the technologies to be developed into the future. Geosequestration, the storage of gases underground, in the main is going to require the liquefication of CO2 that would be voided from the atmosphere and injected sometimes into depleted oil and gas reserves and at other times into saline aquifers where it can be kept subterranean in perpetuity.

I have often been asked—and no doubt you have too, Mr Deputy Speaker—what are the risks associated with this technology? Are we having greenhouse gases stored, whether in gas or liquid form, that could potentially escape and do irreparable damage to the environment? I think that argument was made at some stage when I was on a geosequestration inquiry and a number of conservation groups tried to extrapolate on that very notion. One thing that keeps coming back to me is that when we are talking about the storage of these gases, whether in a saline aquifer or in a depleted oil and gas reserve, we must bear in mind that we have for some time now been drilling and trying to crack various geological structures to produce the hydrocarbons that we need, the energy that we have relied upon for the last hundred years. We have had in this country considerable reserves of both gas and oil, with Bass Strait the largest field. In terms of oil production, it is declining, but it still has significant potential in gas production. And then there are those fields in the North West Shelf. We are tapping into those fields and extracting those hydrocarbons which have been captured in those geological structures for millions of years, and that is effectively what we are trying to replicate in terms of geosequestration. We are attempting to avoid the production of CO2 in the atmosphere by returning CO2 to permanent storage in those geological structures.

So this is certainly groundbreaking, if I could use that term in this respect. It is not a new technology. It is certainly one which is being used in the North Sea at the moment. Only last year I met with a number of delegates from the British parliament who were very interested in what we were doing in developing these technologies over here. They are presently trialling the injection of CO2 into the North Sea down to about 800 metres, and on that basis the pressures keep it there. Our position is that we are attempting to look at and define those areas offshore where we can use existing hydrocarbon reservoirs in order to store the CO2.

I have a bit of a background—many years back now—in working with people in both the oil and gas industries, and injecting into existing oil and gas reservoirs is something that we have been doing for some time. The reason we did it was not to store the gases particularly in places where there were depleted fields such as Barrow Island. The reason for injecting gas there was for oil production, to create gas lift. That technology has been very much front and centre of the Australian oil industry for some time. As we are not inundated with supplies of oil, we have had to use advanced methods in order to extract as best as possible those oil reserves.

It is also a very important step that we take in this legislation, and it is important for a number of different reasons. It is important to our economy. It is important to our ongoing electricity production. Presently 80 per cent of this country’s electricity is generated from coal-fired power stations. If we are going to be serious about our response to climate change—and I know there are many views about that around this House—we cannot proceed without taking steps to clean up coal.

The most polluting aspect of industry at the moment is the generation of electricity to meet Australia’s energy needs. And it is not just this country. Whilst, as I said, 80 per cent of our electricity is produced by coal-fired power stations, the world presently has 40 per cent of its overall electricity needs met by coal-fired power. While coal shares a future in terms of power generation—and must, in this country—there will be a decline in favour of renewable energies as those energies become more commercially viable, which I will go into a little later. But any solution that does not involve clean coal will not be a solution for this country at all. There will be a suite of technologies that we should embrace and encourage. We should assist the commercialisation of those technologies. But our main means of providing electricity in this country will continue to be coal-fired power.

By the way, in terms of looking at the world view, that is also the position which has been indicated by the International Energy Agency, which monitors the forecast of global energy supply and demand. The IEA estimates that the world’s future needs will primarily be met by fossil fuels, and it forecasts that coal will be, increasingly, the predominant fuel, with 44 per cent of the world’s needs being produced by coal-fired power in the year 2030. That is an increase on coal’s current share. While we, and other countries, are looking for alternatives, it is simply a fact that we do and will continue to rely on our coal industry to provide the bulk of our energy needs in this country. Therefore, it is vitally important to us, both domestically and internationally, that greenhouse gas abatement solutions go hand in hand with that reliance.

Our policy position in terms of the development and deployment of low-emission coal technologies is absolutely critical. I know the view has been made out, with all the hype that goes with elections, by one of the minor parties that we should be closing down our coal industry within a period of three years. But I—no doubt like you, Mr Deputy Speaker—do not have an ambition that my children, or my grandchildren for that matter, will have earthen floors and thatched roofs. I have the ambition that my kids will enjoy a standard of living if not equal to that which I have enjoyed then better. Simply to close down what is Australia’s biggest export industry would be ludicrous. The economic value of coal in this country is some $24 billion a year in export earnings. Coal, as I said, is Australia’s largest export earner. The coal industry itself is also the lifeblood of many of our rural and regional areas. It employs in the vicinity of 30,000 people directly, and, downstream from that, many thousands who work in related industries. Therefore coal is essential to our economic wellbeing. Low-cost coal is responsible for our standard of living and is the foundation of Australia’s energy initiatives in various industries. The success of geosequestration technology will guarantee the long-term future of the coal industry in this country, the preservation of those jobs and, more importantly, the provision of low-cost power to the Australian community.

If we were to stop exporting coal, or if we were to simply move away from coal as a technology, then countries like China and India—and no-one in this place doubts that we are relying on their trade to ensure the standard of living in this country—would simply meet their demands elsewhere. Therefore, any response to climate change pressures must take account of the need to maintain reliable energy supplies not only by making fossil fuels cleaner but also by embracing our ability to explore for new coal reserves and by developing our new coal technology industries.

The government recognises that clean coal technologies are not simply going to be the answer. We know the value of coal and the contribution it makes to our economy. But we know we have to move to embrace, more and more, the renewable energy technologies, such as wind, solar, wave—and I visited, not all that long ago, a very innovative wave technology plant at Fremantle—and geothermal. I was very pleased to see, the other day, the minister contribute $50 million to the drilling program for geothermal or hot rocks technology. That was the first grant made under the Renewable Energy Fund. That is indicative of this government’s commitment to develop these technologies. They will provide, together with coal, a suite of technologies designed to lower Australia’s greenhouse gas footprint without damaging our economy.

I know a lot has been said and will continue to be said about the price of a barrel of oil. I do not think anyone seriously thinks that the price is going to decline rapidly, as world oil supplies are in decline. Many academics have laid out the argument that we have already hit peak oil and that, therefore, it is going to take more time and expense to recover remaining reserves. Having said all that, this country is still an energy-rich nation. We have 800 years supply of brown coal in known reserves. We have 350 years supply of black coal. If we do not drill another hole out there, we have, we know, 130 years supply of natural gas at our current usage. That is taking into account the gas that we are sending to China, India, Japan and now South Korea, as well as our domestic use. We have 130 years if we do not find any more.

We are an energy-rich nation but, for us to benefit from that, we must be able to develop those technologies that make that energy clean in terms of our greenhouse gas emissions. Those technologies need to be encouraged, but we do know what we can do with geosequestration. We can now start taking the carbon, we can liquefy that carbon and we can inject that carbon into permanent storage underground. This is a new and emerging industry that this government is proud to be a part of. Geosequestration is a key part of the effort to establish our climate change credentials and maintain our position in the industry and in trade.

I was particularly proud of Senator Wong’s green paper on the Carbon Pollution Reduction Scheme, which developed a scheme to be implemented by 2010. That will place a cost on carbon and will encourage industries such as those that are generating electricity to develop and deploy low-emission technologies over time. They are things which are going to be crucial for developing this industry because there will be a cost imperative. If people think there is no cost, they will just continue polluting. There is a cost, and it will be a real cost. That will be the incentive for carbon-generating industries to look at how those industries can be developed with a view to lowering their greenhouse emissions.

It was also encouraging to go into the last election with Labor’s $500 million National Low Emissions Coal Fund. That was backed by the industry in the COAL21 initiative, which produced another $1 billion from the industry to also look at developing clean coal technologies. That is a very worthy coalition between government and the industry in looking at development of these technologies. While I have indicated that we are the world leader in coal exports, at the moment we are not the world leader in developing technologies for clean coal. If we are going to maintain our position in trade, we need to have that hand-in-hand with our development of technology itself. Therefore, the Carbon Pollution Reduction Scheme will be the incentive to establish mechanisms to ensure that these new coal abatement schemes are developed in this country. We should be the world leader in that.

I congratulate the minister on this piece of legislation and on the leadership that he has shown in this industry. I, too, join in supporting the report on greenhouse gas emissions brought down by the Standing Committee on Primary Industries and Resources. I also note that in this bill the minister has accepted the views of the committee on 16 out of 19 recommendations. (Time expired)