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Emissions trading and reducing carbon pollution

CHAIR —Welcome, Professor Shea.

Prof. Shea —Mr Burgess is leading our delegation.

CHAIR —Welcome, Mr Burgess and Mr Stanley. I invite you to make a brief opening statement as we only have about 30 minutes for this element of the inquiry.

Mr Peter Burgess —I am a self-employed metallurgical engineer with a long background as a senior executive in the aluminium industry, both here in Australia and in several other countries. In 2006, I undertook a review of what Australia would do once we did move into a low carbon regime and started to look at what our mitigation options would be. I looked at those large-scale mitigation options that we could implement that would be low cost, permanent and measurable, sustainable and environmentally beneficial. As a consequence, in 2007 Professor Shea, Mr Stanley and I initiated this project, which is a biochar and renewable energy project called Project Rainbow Bee Eater. We have recently completed a 12-month pre-feasibility study where we have looked worldwide at all of the technologies that are available. We conducted some very large field trials in Western Australia sponsored by Alumina Limited. We have come to the belief that this is actually the lowest cost, large scale and fast to implement method of sequestration that is currently available for Australia. We also believe that this is the lowest cost renewable energy opportunity that Australia has. Professor Shea will now make a short presentation on those points.

CHAIR —Thank you.

Prof. Shea —Mr Stanley could give a background.

Mr Stanley —Thank you again for the opportunity to present here today. I am a wheat and sheep producer/farmer in Western Australia, and my interest in this whole project revolves around repopulating regional centres and maintaining the standard of living in small rural communities. I believe there is a stranded resource at the moment that we can take huge advantage of for the benefit of those regional centres and also the environment generally.

Prof. Shea —I will just give you my background, which is as a professional forester, and my postgraduate work is in forest ecology in Canada. I was a research scientist in forestry for 15 years. I headed up the Department of Conservation and Land Management in Western Australia for 15 years. I am now a professor at the University of Notre Dame, Environmental Management, and also a member of Project Rainbow Bee Eater as their scientist.

I appreciate that you are tight for time so I will move through this pretty quickly. To us, this is a little bit different and very significant, so thank you for the opportunity to discuss this. The whole purpose is to advise you of the potential of biochar to capture large amounts of carbon, potentially 100 million tonnes per year, and for less than $20. We want to tell you about Rainbow Bee Eater and the way we operate, and we would like advice and assistance to achieve at least accreditation of biochar as a carbon offset in Australia and particularly in Copenhagen.

We believe and have allowed for the fact that we have worked for a long time and are a bit obsessed with it, but we think this could make a major contribution to resolving the current conflict, which is obviously before us today, in terms of getting along the road. As a scientist, I am always a sceptic, but the balance of probabilities is that we are going to run into trouble with climate change. We are not betting on a country racehorse where we can only lose $20. We may be wrong, but we cannot afford the risks. We need to take measures that are low cost and have lots of additional values, and that is what Project Rainbow Bee Eater is about. Firstly, what is biochar? My dad called it charcoal when we made it on a poultry farm 50 years ago. It is a fine-grade high coarse charcoal. It is special charcoal that helps retain water emissions. The interesting thing about this, which is very important, is that it persists in the soil for long periods. We are talking about thousands of years, which is a lot of election cycles.

CHAIR —Now you are talking in language we all understand.

Prof. Shea —It also has some very interesting properties in terms of its ability to stimulate increased productivity of a whole range of crops. We will show you some of the work that we have done in Western Australia. This is in single pipe trial work. As a scientist, I have never seen this sort of a soil additive, and I have worked with many. It has worked in so many different climates and on so many different crops consistently. This is the first project in the world, of which I am aware, that is looking at applications in broad-scale agriculture.

Field trials, as you know, are very hard. I am down at Mr Stanley’s farm doing some on mine. This is the work that Mr Burgess referred to. We are getting a very significant increase of wheat productivity/wheat grain. We think we can get between 20 per cent and 30 per cent. The decline there is an artefact of the fact that we ground biochar made from wheat straw and we got clumping. We have results from other biochar showing that the increase—for example Mallee biochar—is larger. Collectively, as scientists, we do not know the reason. We think it is a combination of reasons.

I brought some along, because I thought you might be interested in seeing it. This is charcoal. It retains all the structure of plants, whatever plant it is, and we think from some work by a colleague from Japan, Professor Ogawa, that one of the effects is increasing the activity of beneficial microorganisms. This is a fantastic shot. You can see a fungus under very high magnification. We think those little halls provide beautiful habitat for microorganisms, and not only fungi; you could pull out phosphate, as you know Senator Heffernan, but also nitrogen. We can significantly increase nitrogen nodulation. We have shown that.

I will show you this really boring flow diagram, which my engineer son says we always have to do, and also my colleague Peter Burgess. This is basically the system. We take energy from the sun, capture carbon in photosynthesis, pyrolise it and make charcoal out it. We get significant renewable energy and biochar. We put it in the soil as a long-term sink, but biochar also increases the crops, which feeds back into greater biomass material. That is pretty broad. I thought I would spend a few hours and demonstrate my capacity to use a Mac. This is, of course, what is happening in photosynthesis. We are sucking carbon dioxide out of the atmosphere. Of course, this is the most efficient energy capture of all—the leaves and trees you see out there. I am sorry Senator Milne is not here. I wanted to assure her that we are talking about biomass, waste products, stranded biomass—from wheat crops, from plantations, and in this case, Mallee eucalypts, which were also used to produce eucalyptus oil. This is the first part of the process.

How do you collect it? The biggest problem that you have when you try to use biomass is collection. It has to be efficient. This is Mr Stanley’s $5 million worth of capital equipment that he uses to run the most efficient farm in the world. He insists on a long shot here, too.

Senator HEFFERNAN —Did you say the ‘most efficient farm in the world’?

Prof. Shea —Australia has the most efficient farms in the world. I think Western Australian farms are better. This is a by-product that we are harvesting. It is on the ground. It is in fact a problem because it has weeds in it, which are getting more and more resistant. That is our biomass. All you have to do, instead of putting it on the ground, is put equipment behind it and bale it. We have overcome that problem. There are other techniques. This is, again, Mr Stanley’s group. They built this machine, which occasionally gobbles 44-gallon drums, to harvest Mallee. A lot of work and personal money from these farmers has gone into this. It is to harvest Mallee to get leaves for oil production, but a by-product right alongside there is all of that residue. One of the biggest costs of producing oil is diesel. When we looked at this we said, ‘We can get the energy from that residue.’ Of course, something that I have been associated with is the blue gum industry. There are massive amounts of forest waste from plantations all across southern Australia. Tragically, in Albany they are burning some of it. It is just crazy.

How do you get it into the soil? All of this is wonderful, but again we have a technology. We have got to do more work on this, but this is a minimum till system that we have in Australian agriculture. We deliver fertiliser and seed, but in this case we can also deliver charcoal in a band underneath the crop. We are capitalising on the efficiency of the machinery that is already in place. This is not our work, it is the work of Crucible Carbon. They call it Romulus. I am not an engineer, but my son is and Peter is. We believe this is a very significant breakthrough.

One of our great problems in that research level is to get charcoal produced cheaply and under the right conditions. This has a very low capital and operating cost. It is clean and safe, not like the charcoal we made on the poultry farm, when the whole street complained when it burnt up. It is modular, which is a tremendous advantage. Instead of having a great big plant here where you have to draw biomass along the way, you can actually scale up your plant simply in a modular system to meet your biomass distribution problems. It is efficient.

Senator FEENEY —Are you saying it is a portable plant?

Prof. Shea —It is not portable, but it is capable of being modulised. Instead of having a huge power station, this will be a bigger structure, but you can repeat that. I call it the Gatling gun approach or a six-gun approach. Instead of being committed to a big factory we can adjust the number of modules. It could be portable, but there are all sorts of safety problems with it.

One of the breakthroughs here is that in all the other systems that we are aware of—and Mr Burgess has looked around the world and I have seen a number of them in Japan and North America—the water exits and you lose all the latent heat to vapourisation. The great breakthrough these guys have had is that you keep that latent energy inside that cylinder and the exiting biogas is scrubbed. Our latest results, as I learnt this morning coming from Newcastle where this factory is located, is that it is sweet; it looks like it is going to be very easy to put into gas generators. Two-thirds of the energy in the pyrolysis project is renewable energy. This is the most efficient way that we can see to produce renewable energy in Australia.

I would like to put this before you because people are saying, ‘What is this process?’ I never make a practice of criticising any other alternative to addressing the problem we have with carbon dioxide reductions. You have heard today, even by the strongest advocates, that carbon capture and storage is 15 years away, and we may be talking about $50 to $100 a tonne. We are doing carbon capture and storage—without the $400 million grant. You will see that the tree is capturing the carbon and we are putting it underground. The difference also, apart from being a much lower cost, both capital and operating, is that we can do this in the next eight years. We could easily put into the system 20 million tonnes of CO2. If we pushed it, we could get 100 million tonnes. That is a number of times greater than the target of 20 per cent.

Senator CAMERON —How many years?

Prof. Shea —Eight years for the 20 million tonnes. If you pulled your finger out you could do it better. I hope they do it before then because I will probably have carked.

Senator CAMERON —That is pessimistic.

Prof. Shea —I work in regional Australia, and the reason I like it is that people are great out there. Also, my family and I come from regional Australia. As many senators know, regional Australia is having some tough times. The other thing that we have in regional Australia is incredible skills, capital equipment and lots of stranded biomass. Our whole approach is not to set up here as a power company and build a big factory. It is to integrate into the existing highly efficient system. That has huge social and efficiency benefits. We can talk about six to eight million tonnes of CO2 sequestered annually in Western Australia and 12,000 gigawatts of low-cost distributed energy. That is a third of Australia’s 35,000 gigawatts per year at the 2020 renewable energy target. Mr Chairman, I declare an interest because I have six kids and I want them all to be employed. There would be about 1,000 direct jobs.

The reason we started this project was we were looking at growing trees mainly to address major environmental problems in the bush, particularly salinity. I do not believe you can solve these problems unless you can make a profit out of it. We see from this project that we can introduce significant conservation/rejuvenation of dozens of towns, both socially in terms of more jobs, and also improve soil and biodiversity. The other key to it, as I said, is that we can implement this very rapidly. Twenty million tonnes of CO2 is easily achievable by 2020.

You can see that we are very keen on this, yet it has not received a lot of publicity. We really appreciate the time that you are giving us. Through my life I have had various associations with politics. I know it is the nature of the beast that it is partisan, but I think this is one issue where we could possibly draw the partisan streams together to be bipartisan, because the stakes are pretty great.

CHAIR —Thank you. Senator Boswell, I know you have some interest in this.

Senator BOSWELL —This would be the answer to a maiden’s prayer if it worked. I know you can make things work, but can you make it work economically? Let us go through the process. You have the wheat and then you make another pass over the ground?

Mr Peter Burgess —No, one pass.

Senator BOSWELL —You head the wheat and then take the straw out, too?

Mr Peter Burgess —Yes.

Senator BOSWELL —Then you bale the straw?

Mr Stanley —At the moment we harvest the crop to get the grain, and the straw is spread out on the paddock as a waste product. There is technology now available that is being used locally at home. Straw is not used. Straw is being collected all over the world and baled into square bails. There is technology available now that will bale that straw as you harvest the crop.

Senator HEFFERNAN —This is peculiar to this, because that is peculiar to Western Australia and low straw yields in crop. If you have a five-hectare crop you leave two-thirds of the straw that does not go through the header would you propose to cut that straw off at the ground?

Mr Stanley —That is not quite accurate. As people turn more and more to no till and are not burning straw, the way they manage that is they cut it low, anyway. Yes, we would have to cut lower and there would be a cost associated with that. But it is insignificant.

Senator HEFFERNAN —It would double the harvest time for a five-hectare—

Mr Stanley —Five tonne to the hectare?

Senator HEFFERNAN —Yes.

Mr Stanley —No, I do not think so.

Senator BOSWELL —You would cut the wheat off under the head and then would you make another cut?

Mr Stanley —No, you do it in one pass.

Senator BOSWELL —Then that straw goes out the back of the harvester and gets baled?

Mr Stanley —That is right.

Senator BOSWELL —You then take it somewhere?

Mr Stanley —A node or a processing facility.

Senator BOSWELL —How far away is the processing facility?

Mr Stanley —That will vary a little bit depending on the area that you are working. We anticipate that this thing would probably service a radius of about 50 to 60 kilometres.

Senator BOSWELL —You will need an awful lot of them—

Mr Stanley —You do.

Senator BOSWELL —an awful lot of processing plants.

Mr Stanley —You do. That is the advantage.

Prof. Shea —That is the difference and that is the benefit of this machine that has been invented. We do not have to go to huge plants to achieve efficiency. Biomass does not travel well, I agree, but what we can do is keep that distance small.

Senator BOSWELL —How much are these plants going to cost?

Mr Peter Burgess —The numbers that we are talking about at the moment are that one node would produce about 100,000 tonnes a year of biomass. So, Mr Stanley’s 50 to 60 kilometre radius or something like that. We think that will be $12 million to $14 million in capital, something of that order. We will lease the generator sets. The $12 million to $14 million includes an assumption about the cost of connecting to the grid, which we have not properly checked yet.

Senator BOSWELL —If you are going to have to spend $14 million every 50 to 60 kilometre radius, then you are going to need an awful lot of $14 million.

Senator FEENEY —You are talking about $10 million, are you not, in Western Australia?

Senator PRATT —That is quite cheap compared with other big power infrastructure. In fact, there might be some benefits to the grid, because these are reasonably low scale and therefore can be located across the energy network.

Mr Peter Burgess —We have not done it yet. We need to do it over the next 12 months. We do not have anything to show you. We will show you something in 12 months. We believe each node will be about 12 or 14 megawatts, and to get to 20 million tonnes we will have 120 nodes.

Senator PRATT —With that amount of megawatts you could be quite flexible in terms of where you distribute it. You can distribute your generation around the grid, which as I understand it is a good thing.

Senator HEFFERNAN —Is this peculiar to Western Australia?

Mr Peter Burgess —No.

Senator HEFFERNAN —Given that we have six-tonne wheat crops and we leave at least half the straw, if you knocked that off at the bottom it would slow down your harvest by at least half. What sorts of crop yields are you blokes on?

Mr Stanley —It varies.

Senator HEFFERNAN —Eight bags to a tonne?

Mr Stanley —Are you talking—

Senator HEFFERNAN —Across the—

Mr Stanley —In tonnes and hectares, it varies from one to five tonnes to the hectare.

Senator HEFFERNAN —You would appreciate, as a farmer, and as I am, who has driven a header for 40 years that if you knock the crop off at the ground—

Mr Stanley —If you’re getting paid for that wouldn’t that be a good thing?

Senator HEFFERNAN —Have you modelled the cost? Those crops there look like about eight or nine bag crops. If you whack them off at the ground in a drought year there is nothing left. If you have the bulk of the straw that you do not need to put through the header, it is a hell of a thumping job to put it through the header.

Mr Stanley —If you are getting paid for that does that matter?

Senator HEFFERNAN —I would like to see the figures on how you are getting paid for it, because you would wear out the header in no time.

Mr Stanley —I am happy to show the economics. We think the economics are very stable.

Senator HEFFERNAN —Have you done the economics on doubling the amount of stuff going through the header?

Mr Stanley —We specifically looked at the Western Australian situation. We have modelled that a lot.

Senator HEFFERNAN —That is exactly what I told my mate here. Have a look at the east. But it is a great idea.

Mr Stanley —That seems to me to be a completely negative attitude.

Senator HEFFERNAN —No.

Mr Stanley —If you are growing a biomass that has value, surely the more you grow of it the better it will be.

Senator HEFFERNAN —It is a great idea.

Mr Stanley —I can’t see that as a negative at all.

CHAIR —Senator Heffernan, you have had a reasonable go. Senator Boswell.

Senator BOSWELL —I think this has some promise, if I could understand how it works. You have one of these nodes or one of these plants every 50 or 60 kilometres and then you bring them in. The worst you can be out is about 50 kilometres. That would require a huge number of nodes or plants, would it not?

Mr Peter Burgess —Yes. To get to the 20 million tonnes, as I said, I think that is going to be 120 or 150 nodes.

Senator BOSWELL —So, 150 nodes at $10 million a node?

Mr Peter Burgess —It is cheaper than a coal-fired power station.

Senator PRATT —Yes, much.

Senator BOSWELL —You then take it back and turn it into charcoal. You then put it on a truck, take it back and then replant it again in your plantings.

Mr Peter Burgess —Yes. There are two things we can do with that biochar. One is that we can put it back in the same ground or in that same region, which is our ideal. The other thing you could do, if some farmers do not want it back there, is you can burn it in a coal-fired power station. It is only carbon. It is also a form of biocoal.

Senator BOSWELL —It would require a lot of money to do that.

Mr Peter Burgess —That is my background. I spent two years modelling this. I think that the economics are very persuasive.

Prof. Shea —I like the idea of it being distributed. I am not criticising the pilot plant that Western Power established for $23 million in Narrogin. That is a really small one, and I know they can scheme up. It is in mothballs now. The problem is that you have to go 100 kilometres. I know, as a forester, you just cannot do it.

Senator HEFFERNAN —You have to have a decent harvest.

Prof. Shea —The other point that I am sure Senator Heffernan appreciates is that we see this as farmer driven. We are not at war with farmers. We are integrating into their farming system.

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Senator BOSWELL —How many farms would a node feed into?

Senator HEFFERNAN —That is a question of how long is a piece of string, because a farm could be 1,000 acres, 10,000 acres or 30,000 acres.

CHAIR —Senator Pratt.

Senator PRATT —I wanted to ask about the carbon accounting challenges. I know that we want to make a push internationally to get recognition for soil carbon. Clearly there are some challenges that need to be overcome in order to get that recognition. How are we going in relation to that and what do we need to do to get there?

Mr Peter Burgess —The carbon accounting is simple with this. This is inorganic carbon. It is not organic carbon. All we need to do is carry out a coal industry analysis called a proximate analysis, which tells you how much fixed carbon is in the biochar, and then measure the tonnes that is going into the ground. That is the carbon accounting. In terms of the Kyoto protocol, as I am sure you are aware that this is not counted currently.

Senator PRATT —As I understand it, there are, for example, weather and soil type variations that will impact on the amount of carbon soil actually retains, and there is a fair bit of climate variability with that.

Prof. Shea —The beauty of this is that, because it is recalcitrant, it does not break down. The soil now has a half-life of 10 years, so you are constantly monitoring it. Once you put this in the ground it is going to last for thousands of years. You know how much you have put in. You cannot pinch it and you cannot burn it down. The actual measurement on the ground is a big advantage, which is one of the problems we have with soil, as you know, and also with farting cows; it is pretty hard to know how we are going to control that and measure it.

Senator FEENEY —Belching cows.

Senator HEFFERNAN —At $40 a tonne, 75 per cent of the production is a tax.

Prof. Shea —Senator Pratt’s question is very important. We have talked long and hard to the Department of Climate Change. I know many of the bureaucrats there. I have worked with them in the past. I think they are doing a fantastic job. They have to wrestle with the complex accounting of Kyoto. We argued that you can get a credit for carbon capture and storage; we are doing the same. They said, ‘Do you know what the difference is?’ The left-hand one is avoiding it. For three or four nanoseconds when that carbon comes down from the atmosphere it is not being avoided. That is the problem with accounting. It is not rocket science to cure that, and I would not like to tell you your job, but this is the sort of thing that legislators are good at. I am serious. This is not a fundamental problem. This is just an accounting problem with international politics.

CHAIR —It is a significant challenge in the context of the current debate going forward towards Copenhagen. We are certainly aware of it and it has been canvassed at this committee.

Prof. Shea —We strongly want this country to go, because we are part of an international collective of people and we are trying to get countries to go to Copenhagen. We hope we might even get Japan. If we can get Australia supporting biochar, that would be a very significant achievement.

CHAIR —What has the response from the Department of Climate Change been on that to this point?

Prof. Shea —We concentrated on the carbon pollution reduction scheme and they certainly gave us lots of time, but they said effectively, for complex reasons, partly because they are excluding agriculture, which I understand, that it did not fit Kyoto. We have also said—and we have to follow it up more; we were concentrating on the pollution scheme—it does not look like this is going to go too far, but at least let us go to Copenhagen. I do not know what their response is going to be there officially. Informally they think it is a great idea.

I am sorry, Senator Milne, I was waiting for you to be here for this presentation. It would be great if Australia went there. The problems, in terms of getting investment in this technology, are that—apart from the global recession—companies want certainty. We are grateful for Alumina Limited, which put money into this without it being recognised. I cannot tell you who it was, but I approached a very large gas company operating in the north of Australia and they said, ‘Look, it is wonderful, but we’re not prepared to take the risk because it is not even accredited.’

CHAIR —Is yours the project that Alumina has been involved with?

Prof. Shea —Yes.

Senator HEFFERNAN —This project will gain a big set of legs if the US does what it is proposing to do and excludes farmers from the emitting side but includes farmers from the credit side, because we will not compete in the global market if that happens and we do not do the same thing here. We will be dead. This thing will be a big time on the credit side.

CHAIR —Finally, did you have a benchmark site of your growing to benchmark against the increase in production?

Mr Peter Burgess —Yes. We are happy to make available a separate report of the field trials that we have done. We made 25 tonnes of biochar, and the Department of Agriculture and Food in Western Australia put that into about 200 plots that are still there, which we will continue to look at year by year. We now have a report on the first year results, which have been summarised for you. I am happy to provide that. That is at Kalannie. It is at Mr Stanley’s wheat farm.

Mr Stanley —There are two sites. One is at Kalannie and one is at the research station that the Department of Agriculture runs at Wongan Hills.

Prof. Shea —Just for the purpose of Hansard and also yourselves, we will provide a coloured copy of this presentation and I will also send a CD. We had one, but we changed it a bit. For Hansard, particularly, I know I spoke quickly and it is hard with the diagrams, but we will send it to every individual member. Senator Milne, any time that I can give you a personal briefing I would like to do so.

Senator MILNE —Thank you.

CHAIR —Thank you very much, gentlemen. We appreciate your presentation. It is certainly one of the issues that we have been interested in as a committee. Thank you for taking the time to come and speak to us today.

Prof. Shea —At great personal cost I have actually brought some samples of biochar, which you might like to put in your pot plants.

[4.35 pm]