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Wednesday, 24 September 2008
Page: 5456

Senator SHERRY (Minister for Superannuation and Corporate Law) (11:17 AM) —I table a revised explanatory memorandum relating to the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 and move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—


The amendments to the Offshore Petroleum Act 2006 which I am introducing today in this bill will enable carbon dioxide to be stored safely and securely in geological storage formations deep underground, in Australian offshore waters under Commonwealth jurisdiction.

This government is committed to comprehensive action to tackle climate change, whilst maintaining Australian jobs and economic prosperity. We are committed to a portfolio of responses, including development of renewable energy sources and a focus on improving efficiency in energy consumption.

Carbon dioxide capture and geological storage, or CCS, holds great potential as a method of avoiding emissions of carbon dioxide and other greenhouse gases into the atmosphere. Geological surveys have indicated that the storage formations in offshore waters made available by these amendments have the potential to securely store hundreds of millions of tonnes of carbon dioxide for many thousands of years. These quantities represent a significant proportion of Australia’s greenhouse gas emissions, and CCS has the potential to substantially reduce Australia’s emissions.

On Friday 19 September, the Prime Minister announced a major initiative to accelerate the development of carbon capture and storage technology to pave the way for its commercial deployment across the world by the end of the next decade. The initiative will involve the establishment of a new Global Institute to help deliver the Group of Eight’s (G8) goal to commit to at least 20 fully integrated carbon capture and storage projects by 2020. The Institute will help deliver this goal by acting as a catalyst to accelerate projects by facilitating demonstration projects, identifying and supporting the necessary research, including regulatory settings and frameworks. In the Prime Minister’s announcement, Australia offered to establish and host the Institute in Australia and to contribute up to $100 million per annum towards its operation. Consultation with other key countries concerning Australia’s proposal have already begun.

The amendments I am introducing today enable a key component of the CCS process, geological storage, to be actively developed by industry proponents. Companies are keen to identify suitable storage sites to match their parallel development of carbon dioxide capture from coal or gas powered electricity generation and from other industrial and extractive processes.

The bill focuses on 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 storage is safe and secure.

The types of geological formations that have stored oil and gas, and in some cases carbon dioxide, for millions of years, are the same or similar to the storage formations proposed for greenhouse gas storage. Petroleum and greenhouse gas operations are therefore likely to operate in similar regions. The amendments seek to balance the rights of this new storage industry with the rights of the petroleum industry in a manner that encourages investment in both industries. The bill recognises the need to:

  • provide greenhouse gas storage proponents with the certainty needed to bring forward investment; and
  • preserve pre-existing rights of the petroleum industry as far as is practicable to minimise sovereign risk to existing title-holders’ investment in Australia’s offshore resources.

In 2005, the Ministerial Council on Mineral and Petroleum Resources, or MCMPR, endorsed high-level regulatory guiding principles for carbon dioxide capture and geological storage in Australia. Following consultation with relevant Commonwealth agencies, the Offshore Petroleum Act 2006 was identified as the most appropriate vehicle for implementation of a greenhouse gas injection and storage regime in Commonwealth waters. This was consistent with the MCMPR principle that “existing legislation and regulation relating to assessment and approval processes for CCS be identified and modified and augmented where necessary”. The MCMPR agreed that use of the Offshore Petroleum Act allows for the establishment of a consistent, longstanding and effective regulatory framework for greenhouse gas injection and storage activities, to ensure both the existing petroleum industry and the newly emerging injection and storage industry can co-exist in Commonwealth offshore waters. Both industries apply similar technology for access to the subsurface pore space where their interests will sometimes overlap. Use of the Offshore Petroleum Act 2006 allows the use of existing regulatory frameworks for the many activities that both industries will have in common, such as conducting seismic surveys and drilling wells. It also covers regulation relating to health and safety, and environmental management (other than greenhouse gas monitoring) through the Offshore Petroleum Act Management of the Environment regulations.

The bill includes consequential amendments to a range of other bills, almost all of a technical nature, involving changes to the name of the Act and to numbering references. The fees and levies Acts associated with the Offshore Petroleum Act will be amended in separate bills to include greenhouse gas activities. Specifically, these bills address annual fees, registration fees and safety levies.

The bill introduces amendments that provide the underlying framework from which detailed Regulations specific to greenhouse gas injection and storage will be developed. Work on these regulations and guidelines has already commenced. It is anticipated that development of the regulations and guidelines will involve further consultation with stakeholders.

On 19 May 2008, the exposure draft of the bill was referred to the House of Representatives Standing Committee on Primary Industries and Resources for inquiry and comment. The Committee received submissions and heard testimony from a broad range of stakeholders, including the petroleum industry, coal producers, government and environmental non-Government organisations. The Committee publicly released its final report, titled Down Under: Greenhouse Gas Storage on 15 August 2008 which contained 19 recommendations.

On 17 September the Government’s response to the Committee’s report was tabled in the House of Representatives and I am pleased to note that the Government supported 15 of the Committee’s 19 recommendations and a further two of the recommendations were partially supported. The bill was amended in the House of Representatives to reflect the recommendations adopted. A highlight of these amendments is the ability of the responsible Commonwealth Minister to establish expert advisory Committees, on a needs basis, to inform the decision making process on a range of critical decision making elements of the bill.

The bill provides for the release of areas for exploration in Commonwealth offshore waters. Decisions to offer exploration areas for greenhouse gas injection and storage activities will take into account possible impacts on other users of the area. Key users aside from petroleum activity include the fishing industry, shipping, defence and submarine telecommunication cables. The concerns of these other users will be considered in the same manner as they currently are for petroleum activity under the Offshore Petroleum Act. That is, special notices concerning the title holder’s obligations and the rights and interests of others are provided as part of the acreage release package. These notices identify other users and the nature of their activities, and the actions that the title holder will need to take so that offshore operations are carried out in a manner that does not unduly interfere with other rights and interests. Native title will also be dealt with as required by the Native Title Act 1993.

Environmental matters will continue to be covered through legislation such as the Environment Protection and Biodiversity Conservation Act 1999 and the Offshore Petroleum Act Management of the Environment Regulations.

The proposed legislation will allow exploration for greenhouse gas injection and storage sites. If the proponent is able to satisfy the responsible Commonwealth Minister that an identified site is safe and secure, the legislation provides for injection and storage of a greenhouse gas substance at a rate and total volume agreed by the responsible Commonwealth Minister. Initially, the greenhouse gas substance will be prescribed to consist overwhelmingly of carbon dioxide so as to be consistent with the Environment Protection (Sea Dumping) Act 1981. The act provides for the meaning of a greenhouse gas substance to be extended in the future should the injection and storage of other greenhouse gases be permitted under that Act.

International developments in carbon capture and geological storage are being closely tracked through Australia’s involvement with international bodies such as the Carbon Sequestration Leadership Forum and the International Energy Agency. While Australia is very much at the forefront of developing comprehensive legislation, these bodies have been used to inform the development of the proposed regime. Australia’s experience is also being shared with other countries. Indeed, successful demonstration of CCS technology in Australia will greatly enhance the prospects for the application of CCS in other countries that emit much greater quantities of greenhouse gases, and thereby provide an opportunity for globally significant reductions in greenhouse gas emissions.

In closing, may I refer to the need for urgent action in addressing climate change, and the significant role that these amendments may play in developing one of the available methods for reducing greenhouse gas emissions. Large scale projects for capturing and concentrating greenhouse gases involve investments of many hundreds of millions, or billions, of dollars. Several large scale projects have already been considering their requirements for geological storage for some years. While recognising the complexities needing to be addressed by this bill, the proponents are also eager to gain access to areas so that they can commence detailed assessment of storage formations.

This bill provides that access, and will play a key role in accelerating the development of carbon capture and geological storage industry. In so doing, it provides a significant opportunity to tackle climate change in a way that protects Australian jobs and maintains our economic prosperity. I commend this bill to the Senate.

Debate (on motion by Senator Sherry) adjourned.