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Thursday, 18 September 2008
Page: 7866


Ms LIVERMORE (10:38 AM) —The Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 aims to provide the regulatory framework for greenhouse gas storage activities and the further investment in carbon capture and storage technologies that we hope to see in this country in the near future. The purpose of the bill itself is to enable carbon dioxide to be stored safely and securely in geological storage formations deep underground in Australian offshore waters under Commonwealth jurisdiction.

Specifically, the bill seeks to provide greenhouse gas injection and storage proponents with the certainty needed to bring forward investment; to preserve pre-existing rights of the petroleum industry as far as is practicable to minimise sovereign risk to existing titleholders’ investment in Australia’s offshore resources; and to provide assurance to the community that carbon dioxide is stored in a safe and secure manner. The bill is the first of its kind in the world and it is hoped and expected that it will act as a model for other jurisdictions both here and overseas as they develop and apply CCS technologies as part of their greenhouse gas reduction strategies.

This bill is significant, and I know that the Minister for Resources and Energy has made it one of his priorities to complete the consultation process with industry and other stakeholders and bring it before the House for debate. I had the pleasure of working with my colleagues on the House of Representatives Standing Committee on Primary Industries and Resources a couple of months ago as we worked through the issues raised in the inquiry into the bill. The inquiry was a great opportunity to talk to those involved in both the oil and gas industries and carbon dioxide injection operations. Through that process committee members gained a very good insight into what is needed to facilitate investment in carbon capture and storage at the same time as recognising that our national interest is served by ensuring that existing oil and gas operators have certainty with respect to their considerable investments in those other important resources: oil and natural gas. I am very pleased to see that the minister has accepted 17 of the 19 recommendations made by the committee. Some of those recommendations have been incorporated into the amendments that will be moved later in the third reading of the bill.

As I said in the debate on the committee report a few weeks ago, the committee sought to provide common-sense recommendations based on the evidence received—common-sense recommendations to facilitate the uptake of carbon capture and storage technologies and to encourage cooperation between oil and gas producers and prospective greenhouse gas storage operators. As we have heard from the speakers in this debate—and certainly from the Prime Minister in his contribution earlier this morning—there is a great deal of support within the government for Australia to continue to lead the way in the development and widespread application of carbon capture and storage technologies. This bill and the priority it has been given by the minister is another indication of that support. We recognise that carbon capture and storage is a necessary part of this country’s response to climate change and the urgent need to reduce our carbon emissions.

In dealing with the challenges presented by climate change and the imperative to act, we have to face the reality of the role that coal and other fossil fuels play in our economy. No serious response to climate change can ignore the need to clean up coal. To start with, as we have heard from other speakers in this debate, 80 per cent of Australia’s electricity is generated from coal. In addition, Australia is the largest exporter of coal in the world, something that I and my colleague the member for Dawson know only too well as representatives of a very large coal producing area. Black coal accounts for over $25 billion of Australian exports annually. The coal industry is also the lifeblood of many regional communities, employing over 30,000 people. Low-cost coal supports Australia’s high living standards and is the foundation for Australia’s energy intensive industries, many of which are also major exporters and of course major employers in our country.

While coal’s share of future power generation in Australia will decline in favour of renewable energy and less greenhouse intensive fossil fuels such as gas, we have to acknowledge that coal will continue to provide much of Australia’s electricity generation requirements well into the future. It is just not realistic or responsible to advocate the shutting down of the coal industry. Instead, the government is providing funding and support for initiatives to develop low-emission technologies. We believe that the answer for Australia is to perfect the technology that will allow us to benefit from our coal reserves while reducing our carbon emissions. The success of carbon capture and storage technology will guarantee the long-term future of the coal industry and job security for those thousands of Australians employed in the coal and energy sectors.

Of course, whenever you talk about the challenge of climate change you have to acknowledge that this is a problem on a global scale. While we take steps here in Australia to reduce our emissions we also have to be mindful of the global perspective. And when you are you realise that the need for a breakthrough on CCS technologies is even more urgent. You also realise that the opportunities for Australia are even more valuable. The Centre for Low Emission Technology submission to the inquiry of the House of Representatives Standing Committee on Science and Innovation a couple of years ago tells us that, internationally, carbon dioxide emissions are expected to grow by over 50 per cent, from 24 billion to 37 billion tonnes per year in 2030.

The International Energy Agency, which monitors and forecasts global energy supply and demand, also estimates that the world’s future energy needs will be met primarily by fossil fuels, forecasting that coal will provide around 44 per cent of world electricity needs in 2030—an increase on its current share. It is clear from those figures that the work we do in Australia to perfect and commercialise carbon capture and storage technology has enormous potential to reduce global emissions if it can be exported to other countries, especially developing countries like India and China. Demand for our coal and other resources will continue to grow. If we can continue to take the lead on clean energy technologies, we can also export those technologies and play a crucial role in reducing not only our own but also global carbon emissions.

As this bill demonstrates, the Labor government is getting behind efforts to develop and commercialise clean energy. We have established the National Clean Coal Initiative, backed up by a $500 million Clean Coal Fund. This will be matched by $1 billion from industry through its COAL21 initiative. All in all, that is an available investment of $1½ billion to go towards the development and deployment of clean coal technologies.

Much of the work on clean energy to date has been in the area of carbon capture. This bill enables work to proceed in the important area of carbon dioxide injection and storage. The government is also supporting that work through the recent establishment of a carbon storage task force. One of the first jobs of that body is to develop a national carbon mapping and infrastructure plan. This recognises that we are now at the point where we need to identify storage sites for carbon dioxide. We particularly need to find potential storage sites that match up with significant new energy projects, such as coal to liquids and gas to liquids.

As we learned in the House of Representatives Standing Committee on Science and Innovation inquiry into geosequestration technology, some of the sites with the most valuable storage potential are located in areas, like the Gippsland Basin, that are already under petroleum titles. The focus of this bill, therefore, is to provide access and property rights for greenhouse gas injection and storage activities and, very importantly, to balance the potential conflict of interest between the offshore petroleum and gas industries and an emerging greenhouse gas storage industry in a way that encourages investment in both industries.

Another important aspect of the bill is the sections dealing with the regulation of this new industry to ensure that the government and the public can have confidence that carbon dioxide once injected is safely and permanently stored. It is easy for us to forget, when we have been engaged in discussions and debates about emissions trading, geosequestration and carbon capture and storage, that these are very new concepts for most of the community. The terminology is unfamiliar, and we are asking people to accept technology that is completely alien to most of them. It is important, therefore, that the public is informed about the science involved and that we can point to very strong and effective legislation to say that this emerging industry will be properly managed and regulated.

A lot of people I have spoken to about this technology have been surprised to learn that the science surrounding the injection and storage of carbon dioxide in geological formations is actually well established and widely employed in the oil and gas industries. In fact, the Intergovernmental Panel on Climate Change, in its 2005 Special report on carbon dioxide capture and storage, confirmed that the injection of CO2 in deep geological formations involves many of the same technologies that have been developed in the oil and gas exploration and production industry. Well-drilling technology, injection technology, computer simulation of storage reservoir dynamics and monitoring methods from existing applications are being developed further for the design and operation of geological storage.

I note that in the report by the science and innovation committee, Between a rock and a hard place, BP estimated that currently there are around 35 million tonnes of carbon dioxide each year injected into geological formations around the world, mainly for the purposes of enhanced oil recovery. For example, there are around 150 sites in the United States already using that process. The Sleipner project in the Norwegian North Sea strips methane from natural gas and re-injects it into a deep saline formation 900 metres beneath the sea floor for storage. This project has been running now for 10 years, and one million tonnes of CO2 has been injected each year. Over that time, seismic techniques have monitored the successful dispersion and trapping of the gas within the geological formation. We heard during the course of our inquiry into the bill that in that project the greenhouse gas is behaving as predicted in those models.

Here in Australia, the Otway project conducted by the CO2CRC has this year begun injecting CO2 into the Naylor gas field. The project includes extensive monitoring of the CO2’s behaviour, and new monitoring and verification technology will be developed with the aim of demonstrating that the injection and storage is safe and that any leakage of CO2 can be detected. The committee heard from the head of the CO2CRC, Dr Peter Cook, that the Otway Basin is the most comprehensive monitoring verification system anywhere in the world. So, once again, Australia is leading the way in this vital technology. It is expected that the results of the Otway project will confirm the IPCC’s findings that the risks associated with CO2 capture and storage are low. The IPCC has stated that well-selected geological formations are likely to retain over 99 per cent of their storage over a period of 1,000 years. Overall, the risks of CO2 storage are comparable to the risks in similar existing industrial operations, such as underground natural gas storage and enhanced oil recovery. The existing science and experience in industry gives us confidence that it is indeed safe to proceed with the development of this technology and to encourage industry to deploy CCS technology on a commercial scale. The bill and supporting regulations will make sure that companies know what standards are expected of them and give the government powers to oversee and enforce these strict standards.

One of the key mechanisms in the bill when it comes to reassuring the government and also the community about the long-term safety of these processes, and of storing CO2 in these sites, is the site closing process. When a greenhouse gas operator has finished injecting CO2 into their site, they apply to the minister for a site closing certificate. As part of that application, they must set out the modelling that they have already done—and we are talking about timelines of 30, 40 or 50 years when it comes to the point of applying for a closing certificate, so by then there would have been a very good opportunity for the proponent to know exactly what had been going on and the behaviour of the CO2 in the subsurface.

So the application to the minister must set out the modelling that the proponent has developed for the behaviour of the greenhouse gas. It must also set out the expected migration pathways—so what the CO2 is doing and is expected to do—in the geological formation. And it must also include suggestions for post-site-closing monitoring and verification by the Commonwealth. So, at the point where the minister is satisfied that it is appropriate and safe to award a site closing certificate to the greenhouse gas operator, there are also negotiations around an amount of security to be paid by the company to the Commonwealth to cover the costs of long-term monitoring undertaken by the government. So it is a very rigorous process that greenhouse gas storage operators must go through.

One of the things that the committee suggested in our recommendations to give the community an extra bit of reassurance about this process is contained in recommendation 18:

The Committee recommends consideration be given to making monitoring data associated with GHG storage project publicly available.

I am pleased to see that the minister has indeed accepted that recommendation, and that is reflected in the amendments that will be moved later on in the debate.

As I have said, public confidence in this technology is crucial. We have heard from speaker after speaker that both the economic interests of Australia and the future of our environment depend on getting this technology operating very soon and operating effectively. Part of that is going to be the public having confidence in this process. So what we do not need is for members of this House to be out there running scare campaigns about this technology, like the one that the member for Herbert has been conducting. And in his contribution to the debate yesterday he continued to perpetuate the myth that this is somehow going to impact on the Great Barrier Reef, when he well knows—or, if he does not know, then he should know, if he is serious about doing his job in this place—that in fact the government moved amendments to the Great Barrier Reef Marine Park Act a couple of months ago to explicitly and absolutely rule out any greenhouse gas storage operations on the Great Barrier Reef. That is consistent with the government’s policy and the provisions of that same act, which rule out mining and drilling operations on the Great Barrier Reef.

So, as I say, public confidence in this technology is important, and our task as a government and as members of this place in supporting this technology is not helped when members put their own political interests first and run around with very irresponsible and completely inaccurate scare campaigns. So I encourage the member for Herbert to try and keep up with legislation which goes through this House and to understand that the amendments to the Great Barrier Reef Marine Park Act explicitly rule out any kind of greenhouse gas storage operations on the Great Barrier Reef. Of course, as a member whose electorate is adjacent to the Great Barrier Reef, I completely support the government’s moves in that way to protect that beautiful natural icon.

Mr Acting Deputy Speaker, in closing, I commend the government for this bill. I commend the minister for making this bill such a priority so that we can get carbon capture and storage beyond the R&D stage that it is currently at, and really start being able to commercialise this technology and make it a widespread part of our energy sector in Australia. As someone who represents an electorate that has a great reliance on the coal industry, I understand that this is absolutely vital for the future of that industry and that Australia can take the lead and can continue to maintain the lead that we have in developing this technology to secure the future of the coal industry, to do that in a way that acknowledges the need for reduced emissions, and to create opportunities for Australia to export this technology to the rest of the world.


The DEPUTY SPEAKER (Hon. Peter Slipper)—Before I call the honourable the minister, I would just like to remind the member for Capricornia that the correct means of reference to the occupant of the chair is ‘Mr Deputy Speaker’, or ‘Madam Deputy Speaker’—unless of course Mr Speaker himself is here. The terminology ‘Acting Deputy Speaker’ is inappropriate. To sum up I call the honourable the minister.