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Wednesday, 24 September 2008
Page: 5466

Senator MILNE (11:56 AM) —I rise today to make some comments on the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 and associated bills, which provide for the capture and storage of carbon dioxide in underground cavities offshore. Carbon capture and storage is an integrated process made up of three distinct parts: carbon capture, the transport of the CO2 and the storage, including the measurement, the monitoring and the verification. It aims to produce a concentrated stream of CO2 that can be compressed, transported and stored. The transport of the captured CO2 is likely to be via pipelines. Storage of the CO2 is the final part of the process, and the majority of storage is expected to occur in geological sites on land or below the seabed. Disposing of waste CO2 in the ocean has also been proposed, but this method has been discounted due to the significant impacts that CO2 would have on the ocean ecosystem and to legal constraints around the world that effectively prohibit it under the London sea-dumping convention.

However, the urgency of the climate crisis means that we must have large-scale solutions for reducing carbon dioxide as soon as possible, and the fact of the matter is that carbon capture and storage cannot deliver in time. We have an urgent crisis with climate change. The Intergovernmental Panel on Climate Change says that global emissions must peak and start reducing by 2015. There is no prospect whatsoever of large-scale carbon capture and storage, with its associated coal plants, being on track anywhere until 2030. The first issue we have, then, is the urgency of the climate crisis and the question of the likelihood that carbon capture and storage could meet the deadline, and the answer is ‘failure’; it cannot meet the deadline.

The second issue is: what is the target that we are aiming for? What nobody is acknowledging here is that the coal fired power generation associated with carbon capture and storage is described as ‘low-emission technology’, not ‘zero-emission technology’, because it is still a significant emitter. The fact of the matter is that, because of the loss of efficiency at the coal fired power station in order to capture the carbon dioxide, you have to mine more coal in the first place. So you are actually mining more coal in order to get the same levels of output from your power station, and then you have these ridiculous costs associated with the transport of that CO2 by pipeline and the costs of injection underground. Thirdly, there is the issue of the liability and risk associated with who actually pays in the longer term. So whether or not this technology is ever proven remains to be seen, but the fact is that if you have a stringent target—and the Greens believe we need to get 40 per cent below 1990 levels by 2020 and get net carbon to zero as soon as feasible, and certainly before 2050—then there is no way that this technology plays into the arena of the nature of the cuts required at the price. Everybody talks about ‘at the best price’ and I will get to that in a moment, because carbon capture and storage is extremely expensive.

You have to ask the question: why is Australia—with the best solar radiation in the world, with some of the best wind resources in the world and with fantastic geothermal resources—choosing to pick a winner, in terms of where we put public money, and go with the coal industry as opposed to looking at the whole range of options. We get told all the time that the government does not want to pick winners when it comes to renewable energy, but the government has already picked its winner with so-called clean coal. Why do I say that? It is pretty obvious: we have a $500 million low-emission technology fund—that is code for clean coal. Last week, in an interesting twist, the Prime Minister announced $100 million for his new knowledge hub for so-called clean coal. Usually when good news announcements are made the government announces how much it is going to spend over the quadrennial period so that it maximises the amount of dollars. Last week they announced $100 million for this clean coal facility and then said, coughing behind the hand, that that amount was for every year. So they are actually giving $400 million to this clean coal knowledge hub on top of $500 million for its low emissions technology.

I am still waiting for the announcement, in relation to the promise that was made in the election campaign, of the $100 million for the centre of excellence in solar research. I think the $100 million for solar research just got rebadged into $100 million for this knowledge hub. Why did we have the announcement last week? That was because the Prime Minister is going to New York this week and his address at the United Nations will focus on the leadership role that Australia wants to play in clean coal technology around the world, and the Prime Minister needed to have made an announcement before he left the country, before he got to the UN. This legislation that we have just heard about from Senator Bishop is the first legislation on this in the world. So the Prime Minister can tell the United Nations that Australia is moving to have a legislative framework for the storage of carbon dioxide. The fact that the liability issue has not been addressed is going to result in another cough behind the hand, because that is the one issue that the whole of the coal industry want to know about—because they want certainty in terms of investment.

Why is the UN speech so important? It is leading up to Poznan, and in Poznan no doubt the Australian government will be trying to put together—with the Polish government, the South African government and any other government which will join—a global coal plan that Australia wants to take leadership of. So we will become the coal king of the planet. What an appalling scenario for Australians who thought, when they voted for the Rudd government, that they were actually going to get action on climate change! We had that confirmed yesterday in question time, when Senator Carr, who is quite explicit about that—and I am grateful for his honesty in this—said:

This is an absolutely critical program for coal rich countries like Australia. Coal is vital to regional economies and communities around this country. Last year, it earned some $21 billion in export revenue. We cannot turn our backs on this resource, and we do not have to. Committing to a low-carbon future will stimulate the innovation and technological development needed to reduce the greenhouse gas impact of coal.

Well, the first bit is true. The whole focus is on the $21 billion export market and the desire for Australia to keep on mining and exporting coal. That is fundamental to anything we look at here. It is not about moving to a low-carbon economy; it is about protecting, at all costs, the coal industry. The second claim is that committing to the low-carbon future will stimulate the innovation and technological development needed to reduce the greenhouse gas impacts of coal. Well, it will not unless the government pours money into it. Why? Because the industry itself has no confidence whatsoever that this technology is going to work at a price that is reasonable. In fact, John Boshier, from the National Generators Forum, said on television:

I think we all felt a few years ago that clean coal was doable and was a great option for Australia. We’ve got a lot of coal in Australia. We’re now worried about how long it will take and how much it’s going to cost on the scale that we’re talking about.

Quite right. The coal industry gets it. He went on to say:

Well, it certainly is something of a wing and a prayer at the moment for a banker to put any money into clean coal technology. A banker is wanting to see plants that have got a really good prospect of commercial success and we don’t have that at the moment.

When the coal industry does not even have the confidence that it can capture carbon dioxide pre combustion or post combustion and put that onto an existing power station, why should the community stump up the dollars for the coal industry? The fact is that all of Australia’s coal fired power stations are unsuitable for postcombustion capture. So we are talking about having to build new coal fired power stations in order to go with this technology. There is nowhere where they have been able to bolt it on successfully at a reasonable price, because it reduces the efficiency of the power station by at least 30 per cent and then increase the inputs at the other end in terms of the coal that has to be mined.

Let us talk about what has happened despite all the fabulous discussions that have taken place about how good this technology is. Let us start with the US, where they had such faith in carbon capture and storage that they went with their FutureGen project. It was going to be America’s only commercial-scale experiment in carbon capture and storage. It was announced by President George Bush in 2003 and involved building a 275-megawatt coal gasification plant in Illinois. It would produce fewer emissions and so on and so forth. The site had been chosen, technological reports done and the first stage of construction was to start in early 2009 but, oh dear, it fell over. It fell over, with the US government announcing that it was no longer going to put any more money into the project because of cost over-runs, technical difficulties and so on.

Let us go to Western Australia, where, again, we were told about this fabulous project at Kwinana. This was going to be the bee’s knees in terms of a clean coal project—a $2 billion hydrogen power project in Western Australia. And then, oh dear, it fell over. Rio Tinto and BP pulled out. But who paid the cost? And this was not publicised very much either. We discovered that in fact Western Australian taxpayers are now facing a bill approaching $1 million a year to meet the holding costs associated with the site. Essentially, what happened was that Rio Tinto and BP were negotiating with LandCorp to take a long-term lease over 76 hectares of a former petrochemical plant site to build this 500-megawatt power station using clean coal technology, and it fell over. Western Australian taxpayers have been left with paying $1 million a year, but apparently that does not matter. BP and Rio Tinto have just walked off and left the taxpayers with the problem.

On the very day that the Prime Minister announced his fabulous new investment in Australia being a hub, we found that a landmark clean coal technology project funded by the Commonwealth, backed by the Queensland government, to help steer Australia’s economy away from its reliance on coal power had been scrapped. In fact, $75 million had been promised from the Commonwealth Low Emissions Technology Demonstration Fund to that Fairview power project near Roma in Queensland. But it fell over because, and I quote: ‘There is currently no business case to build an industrial-scale project unless the government tips in more financial support.’ So here we go: at every point along this trajectory you find that the coal industry, which has made megaprofits out of polluting the environment for the last 100 years and has been the largest contributor to the greenhouse gas emission problems we are all suffering from, now has its hand out because it wants the government to tip in more money for the research and more money for the technology.

But is it all we have got? Isn’t there anything else? Of course there is something else. It is no surprise to me that the CSIRO and the Cooperative Research Centre for Coal in Sustainable Development sat on a report for a very long time and did not make it public because it predicted that the cost of electricity from concentrated solar thermal plants would be competitive with coal-fired power generation in five to seven years. The coal industry certainly would not want that made available to the public, and so those bodies sat on that report for a very long time. But that is the fact of the matter: solar technologies, wind technologies, geothermal technologies, wave power and a whole lot of the renewable energy technologies are coming on much faster than any of this so-called promise when it came to ‘clean coal’. The renewables industry are saying that they can produce the power but they need to be given some help in commercialising the technology. So why is it that we have picked entirely the wrong horse to back and then fixed the race for the wrong horse to win?

This is an appalling situation in terms of the use of public money. Public money should now be being used to bring on those renewable energy technologies which need assistance with commercialisation and which do not have these mega long-term liability costs associated with them, and then these new technologies could be driven by a gross feed-in tariff, which is what has driven that technology to explode as a solar revolution in Germany—and we are seeing that with renewable energy right round the world.

So there is no business case at all for this so-called carbon capture and storage. We cannot modify existing coal fired plants. What the government is not saying is that this is a recipe for Australia to build new coal fired power plants in the future. As the Minister for Resources and Energy, Martin Ferguson, said at the opening of the Otway Basin project:

 … we are a fossil fuel dependent economy and our major export is coal. In my opinion, we’ll see at some point in the future new coal-based power stations in Australia. There is no alternative …

New coal based power generators in Australia—now that is a nonsense. We should not be building new coal fired power stations. And they would be labelled ‘carbon capture and storage ready’ so that they could be retrofitted at some point in the future if the technology is ever proven.

This is exactly what the tobacco industry did. It complained that it was a major industry, that it contributed a great deal to export earnings and that it had to be saved at all costs. In order that that occur, they invented so-called low-tar cigarettes which apparently—according to the tobacco industry—did not have the same problems attached as regular cigarettes. That extended the profit margin of the tobacco industry for a long time by extending its social legitimacy on the basis that, somehow, its new cigarettes were marginally better. Well, that is exactly what carbon capture and storage is: it is trying to give social legitimacy to a technology which is killing the planet and it is trying to do that by suggesting it will go to a low-emissions future—not zero emissions; low emissions.

The costs are huge. As Senator Johnston said earlier, imagine the costs of capturing this carbon in your new power stations, pumping it out there, injecting it underground and then the long-term risk and liability associated with it leaking out. And who is going to pay for that? All that is going to go on people’s power bills. Why would you do that to the Australian community? Why would you lump them with these hideous new costs when you can scale up the renewable energy technologies, where you do not have the liability issues and where the primary source of the energy is free? The sun and the wind are free. Wave power is free. Why wouldn’t you go with those technologies? Why would you want to try and lock Australia into, leg-rope Australia to, the old coal past?

On the matter of liability, there is no way that the Australian taxpayer should bear the liability for leakage from any of these storage sites. While initially you might get some geological formations which hold that carbon dioxide—and that is a maybe—you certainly will not when you are talking about the volumes you would have to capture. The coal industry will be looking for holes in the ground, wherever they can find them, and as soon as they get their closure certificate they will walk away. As they become more and more desperate and the costs of the pipelines become greater, they will go to dodgier and dodgier sites, where the leakage risk is going to be higher and higher. So, if the government wants to pursue this strategy, the coal industry should bear the liability, not the taxpayer. We know there is the potential for liquefied carbon dioxide to leak into surrounding structures or to leak out altogether and gradually make its way into the atmosphere. Somebody will pay; we will pay in making good on the emissions and we will pay in terms of the risks to the environment generally from this technology.

So I am foreshadowing that the Greens will be moving a second reading amendment to say that if the government wants to proceed with this then there should be a bond paid up-front. Just as miners have to pay bonds for what they do for rehabilitation and long-term risk, I am saying that we should make it explicit in this legislation that the total liability rests with the companies that want to dump this stuff in a waste dump strategy. It is an extension of our landfill strategy to the 21st century. They should take liability for it. What is more, before they pump any of it out of their power stations, into these pipelines and into the ground, there should be a bond adequate to the long-term cost and projected price of making right, in the global context of our targets, the carbon that goes to the atmosphere.