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Wednesday, 17 September 2008
Page: 7701


Mr MARLES (1:33 PM) —I rise to speak in support of the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008. This bill seeks to amend the Offshore Petroleum Act 2006. Before I go into the substance of what I want to say about this bill, can I first acknowledge the presence here today of pupils from Glenbrook Public School and Martin Luther Primary School, who are on visits to Canberra to see how our parliament works. I welcome them to this chamber and I hope they are having a very educative, interesting and fun time in our nation’s capital and in this great building. This is an important debate for those children to listen to because it goes to the whole issue of climate change and the future they will inherit.

This bill is part of a suite of legislation that the government has introduced to establish a carbon capture and storage framework. This suite of legislation also includes the Offshore Petroleum (Annual Fees) Amendment (Greenhouse Gas Storage) Bill 2008, the Offshore Petroleum (Registration Fees) Amendment (Greenhouse Gas Storage) Bill 2008 and the Offshore Petroleum (Safety Levies) Amendment (Greenhouse Gas Storage) Bill 2008. The net effect of all of these bills will be to create a carbon capture and storage system in Australia that will ensure the long-term viability of our nation’s coal industry—and I want to come back to that in a little more detail in a moment. This suite of measures will also drive new technologies in our nation that will aid in reducing greenhouse gas emissions.

The principal bill relates to access and property rights for greenhouse gas injection and storage in Australia’s offshore waters. It also provides for a management system to ensure the safety and security of the greenhouse gas storage scheme. This legislation was put together acknowledging the need to balance the rights of the carbon capture and storage industry and those of the existing petroleum industry. It will also provide certainty to this fledgling industry, the carbon capture and storage industry. In providing that security, most importantly it will provide for a framework which encourages investment in that new industry. It will also assure the community that the techniques used for the capture and storage of carbon dioxide are safe and secure.

The process of carbon capture and storage involves capturing greenhouse gas emissions before they are released into the atmosphere and storing them in geological formations which, in broad terms, are similar to the kinds of geological formations which have stored oil and gas for millions of years. This process, which is known as carbon dioxide geosequestration, is not new. For example, in Canada and Poland carbon dioxide injection systems are currently being used to enhance oil recovery and assist with coal extraction. In Algeria, naturally occurring carbon dioxide is being extracted from natural gas and then reinjected into gas reservoirs. For over 10 years carbon dioxide has been safely stored 900 metres under the North Sea in a deep saline formation. The monitoring of that project in particular has demonstrated the overall successful dispersion and trapping of gas within that formation and the safe means of doing that.

As well, in our country we have afoot a pilot program of injecting carbon dioxide into geological formations of the type I have described. That is occurring not far from my electorate, in the Otway Basin. This is a project that was conceived in 2006, and the injection of carbon dioxide into that formation commenced in April this year. The project is being managed by the Cooperative Research Centre for Greenhouse Gas Technologies. What it seeks to prove, in a sense, is that there can be the safe transportation and injection of up to 100,000 tonnes of carbon dioxide into the depleted Waarre reservoir at a depth of approximately 2,000 metres. This project is principally about trying to prove the concept, so from that point of view it will involve a comprehensive monitoring regime to provide valuable information on how this technique can be applied and on the additional further development of this technology. The International Energy Agency predicts that carbon capture and storage will ultimately become the second most important means by which we can significantly cut greenhouse gas emissions globally. It will rank behind improved energy efficiency. So it is a critically important technology that we have to develop in this country to not only provide for the viability of the coal industry but to take our country into a postcarbon world.

This bill forms part of the government’s overall climate change policy response. It is important that is placed on the record in the context of this bill. The Rudd government, unlike how the opposition has flipped and flopped on this issue whilst in government and then in opposition, clearly accepts that our climate is being changed as a result of human causes. For that reason, the first act of this government was to sign the Kyoto protocol. We have introduced water-saving measures, we have put in place emissions targets and we have announced a Carbon Pollution Reduction Scheme through the green paper which was announced a month or two ago. That scheme, which has now been outlined in some detail as a government proposition, is the subject of a very extensive consultative process with the community and business.

This is a very difficult debate but it is a debate that our nation needs to have. I agree very much with the comments of the member for Gippsland when he said this is a particular issue affecting regional Australia. I think it is indeed right that in industrial regional Australia we find ourselves at the front line of the greenhouse and climate change debate. Industrial regional Australia is principally located around the coast of our country. In that sense, it stands to feel absolutely the effects of climate change in rising sea levels and a changing coastline.

We in the south-east corner of this country are in a part of Australia—and indeed a part of the globe—where rainfall is predicted to decline as a result of climate change. While we are very much on the front line in that sense, we who live in industrial centres also feel the responsibility to contribute to any future emissions trading scheme. That is very much the case with the city of Geelong, in which there are very many carbon dependent businesses. We have refineries, aluminium smelters, cement works and car plants. All of these are carbon based industries and they would feel absolutely the effects of contributing to an emissions trading scheme. What flows from that is an acute understanding that we as a country must do something about climate change and that we must orientate our economy to a postcarbon world. But there is also a significant awareness that the way in which we do that has to be very careful, with a great deal of consultation, and that we must get it right. It is for that reason that I feel very secure over the path that has been taken by this government in outlining a proposed scheme and engaging in very significant consultation—and it has—with industry and community groups to take us to that point.

Our stance on climate change is clear: we know it is happening, we need to change our economy and we need to orientate our economy to a postcarbon world—and we are walking down that path. By contrast, the opposition’s current stance on this issue is anything but clear. They have been flip-flopping on this issue for the better part of 12 years. There are still many on the other side of the House who are sceptical, firstly, about whether or not the climate is actually changing as a result of human causes and, secondly—if it is—about whether there are any consequences of that. They have no clear policy on whether or not an emissions trading scheme should be put in place and on when it should be put in place. We are all waiting with bated breath to see whether or not that policy is going to change again as a result of the recent change in the leadership of the Liberal Party—and they are still flip-flopping on the issue of nuclear power.

The legacy from the time when they were in government is not much better. Over the last 12 years the Howard government did little to meet the challenges of climate change. They did virtually nothing to save our nation’s waterways. They did nothing to assist industry to transition to carbon-neutral technology and to a postcarbon world.

Last year the then shadow minister for national development, resources and energy, Senator Chris Evans, asked the Department of Industry, Tourism and Resources about the total funding that had been provided between 2004 and 2007 for the purpose of research, development and demonstration of clean coal technologies. What he found in answer to that question was that a measly total of $3.4 million had been spent to that date on research, development and demonstration of clean coal technologies and that a further $2.27 million, to be spent by the end of this year, had been allocated for Commercial Ready projects. That stands in stark contrast to the half a billion dollar commitment that the Rudd government has made to put in place clean coal technologies. And that commitment has been made because the Rudd government understands the need for industry to meet the challenge of climate change and the transition to a postcarbon world.

In terms of providing our energy in a postcarbon world, coal will inevitably play a critical part in Australia’s future energy needs and will be a key contributor to our nation’s future prosperity. The coal industry is Australia’s largest exporter, generating $22½ billion in export income in the financial year 2006-2007. In 2005 there were 105 coalmines in Australia; in 2006 there were 118 coalmines. In 2006 the coal industry employed at its peak 32,259 Australians, and new coal projects and expansions as of October 2007 in Australia are forecast to have capital expenditure of around $23 billion. Coal provides 80 per cent of Australia’s electricity, and coal generators globally provide 40 per cent of the globe’s energy needs. Indeed, the International Energy Agency forecasts that the global use of coal will increase by 44 per cent through to the year 2030. As I said, in Geelong we very much feel the significance that coal plays in our economy, particularly if we look at, say, the Alcoa smelter at Point Henry, which in large measure seeks energy from its own coal-fired power station at Anglesea.

To ensure the continued viability of this industry in a postcarbon world it is essential that this industry comes to terms with carbon capture and storage. For that reason, the government has already established a $500 million National Low Emissions Coal Fund to support development of clean coal technologies, and in combination with that the coal industry itself has already funded a similar fund of $1 billion known as the COAL21 initiative. By developing emissions reduction techniques such as carbon capture and storage our country will ensure the future of the Australian coal industry.

In relation to that, this bill provides for new offshore titles, which in turn provide for the transportation and storage of carbon dioxide and potentially other greenhouse gases in offshore geological formations. These titles will be located between the outer limits of Australia’s coastal waters; that is, three nautical miles off the coast and the Australian continental shelf. The legislation sets up a regime of precommencement titles and postcommencement titles. The commencement that is being referred to in those terms is of course the commencement of this bill. Precommencement titles, therefore, by definition will be only existing petroleum titles. Postcommencement titles will be both petroleum titles and titles for companies which are seeking to put greenhouse gases into these geological formations.

The way the regime will work is that if, when a postcommencement greenhouse title is provided to a new developer to inject carbon dioxide into these geological formations, there is a significant risk or a significant adverse impact on an existing precommencement petroleum title, this will not be able to go ahead without the holder of the precommencement petroleum title’s consent. So in that sense the rights of existing holders of petroleum titles will be protected. In terms of postcommencement titles for both petroleum and greenhouse injection, before a licence is granted the minister will need to look at the potential impact of that licence and whether or not it might impact on the other kind of licence—that is to say, whether a greenhouse gas licence has a potential impact on a future petroleum licence or vice versa—and that will form part of the assessment by which the licence is ultimately given. In that sense the bill protects and balances the rights of existing licence holders with those of future licence holders.

The bill also puts in place powers for the minister in the event that there are any future issues associated with the capture and storage of carbon dioxide and other greenhouse gases. It does this by defining the term ‘serious situations’. ‘Serious situations’ is where there is a leakage of greenhouse gas substances from an identified geological formation or where the injected greenhouse gases are not behaving in the way which was predicted or where the injection of those gases is compromising the geotechnical integrity of the geological formation. When that occurs, the minister is given a range of powers, in essence, to deal with that serious situation. Those powers include ceasing or suspending the injection of carbon dioxide into the formation, or indeed requiring that it be injected into another formation, and any other orders or directions which are required of the licence holder to deal with that serious situation. Liability for any future issues which might arise out of this technology will be dealt with in the same way as liability is dealt with throughout our society—that is, through the common law.

The suite of provisions within this bill does balance the rights of new carbon capture and storage industry licence holders with those of existing petroleum industry licence holders. It will provide some certainty to this new industry, which in turn ought to encourage investment, and it will assure the community that these techniques are safe and that the capture and storage of carbon dioxide in these formations is an appropriate and safe technique to use.

As the Minister for Resources and Energy noted in his second reading speech on this bill, there are already businesses out there which are readying themselves to use this technology, and indeed they have been for some time. That highlights the importance one can attach to the seriousness of the Rudd government in assisting our nation’s industries in their transition to a postcarbon world. Now is the time for action on climate change, not the flip-flopping or half measures that we have seen for the last 12 years, and that is what this bill will do. There is a moral aspect to climate change but there is also a smartness about it. Putting in place carbon capture and storage is not only the moral thing to do but the smart thing to do. If we can reduce coal’s footprint in the long term then we will go a long way to securing out nation’s economy in a postcarbon world.