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Thursday, 16 October 2008
Page: 6270

Senator PRATT (5:39 PM) —I rise to speak on theOffshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008. In speaking to this bill it is important to recognise that Australia needs to move towards a cleaner, greener future—an energy future with a greater dependence on renewable energy and energy efficiency. We cannot overlook the fact, though, that Australia obtains 80 per cent of its electricity from coal-fired power stations and exports somewhere in the vicinity of 30 per cent of the world’s coal. This is somewhat of a major contribution to global warming. We need to look not only at the footprint of our own country but also at that of our exports.

If we continue to think of this as a viable proposition without reducing the CO2 we emit and that others emit from coal-fired power then I think we are kidding ourselves. It is therefore incumbent on Australia to reduce the amount of CO2 it releases into the atmosphere. Carbon capture and storage—CCS or geosequestration—may prove an effective mechanism for contributing to the reduction of Australia’s greenhouse gas emissions. As highlighted by the Senate Standing Committee on Economics, a clearly set out competitive framework for CCS will potentially lower the cost of addressing the climate change challenge.

Ultimately this should translate into a smaller increase in household electricity bills to achieve the goal of limiting climate change. However, I do recognise that CCS is not a silver bullet for our greenhouse problems. There are indeed some serious technological and economic challenges to its viability. As Senator Bob Brown pointed out, it is indeed unclear as to the viability and at which point in the future this technology will be able to make a contribution. To highlight this point, the committee was concerned about the location of geologically suitable storage sites, as many existing power stations are a long way from sites of capture. We can see that this is the case with the Hunter Valley.

There are also those against geosequestration as a means of reducing emissions. I can understand those concerns; they are real concerns. There were those who questioned the safety of CCS technology, including both Greenpeace and the Australian Network of Environmental Defenders offices. There was no evidence from the Department of Resources, Energy and Tourism or Geoscience Australia to suggest that the technology is inherently unsafe. However, it is important to note that in our committee we thought it appropriate that the onus of proof should lie with the proponents to demonstrate that the technology is safe. Other concerns arise because those concerned about climate change do not want to see this technology used as a free ticket for carbon polluting industries to continue to pollute. They do not want to see the fact that we are working on CCS used as a way of maintaining a ‘business as usual’ attitude.

Encouraging reliance on this technology as an answer to our problems could divert the investment from the transition to cleaner fuels and renewable energy. It is indeed an expensive and somewhat unproven technology. So we do need to look seriously at how CCS will interact with and affect the drive towards greater use of renewable energy. There is no reason for the government to favour carbon capture and storage techniques over other ways of reducing emissions. It is notable that, for this reason, the committee was not convinced by arguments that the government should be subsidising users or providers of CCS by actively taking over long-term liabilities from them either for demonstration or commercial projects.

It is indeed the government’s position that that long-term liability is to be treated in the same way that petroleum production activities are currently treated. The legislation treats liability for offshore injection and storage activities in the same manner as existing offshore petroleum production activities have been treated under the Offshore Petroleum Act—that is, the OPA will not immunise greenhouse gas titleholders or other participants in GHG projects from common-law liability to persons who suffer injury or loss as a result of their actions. This nonintervention will extend to all forms of common-law liability, including long-term liability. Greenhouse gas industry participants will therefore need to make their own arrangements to deal with the potential common-law liability as an ordinary cost of doing business, as must members of any other industry. The Commonwealth will not take over any long-term liability if for some reason, such as the passage of time, the damages are irrecoverable in the long term. The community in those circumstances would, effectively, bear the cost of any damage.

The committee was concerned and, as such, recommended that the government reject calls from some people for the government to assume explicitly long-term liability for any leakage from carbon storage projects. We will need robust arrangements, as companies may not still exist to accept liability for stored CO2 over the decades or centuries. On this basis, the government will need to work with companies undertaking such projects so that they contribute to the future costs of coping with any such leakage. Notwithstanding that, the evidence presented to the committee demonstrated that, when sites are assessed and managed properly, CO2 can be made stable in geological formations and that the prospect of such leakage does not appear to be a significant risk. We also need to be aware that CCS may not be capable of sequestering enough CO2 in the future or be commercially operational to mitigate climate change in optimal time. On that basis, carbon capture and storage, or CCS, should not really be considered the only answer to reducing our CO2 emissions; rather, it should be developed along with other technologies capable of reducing the impact of climate change.

Carbon capture and storage or no carbon capture and storage? We have to remain committed to diversifying our power sources, including our baseload, to do things within those power sources that will reduce their emissions. Nevertheless, as I stated earlier, we are currently highly reliant on fossil fuels. We will need to look at all possible ways of reducing the carbon intensity of our emissions from the use of fossil fuels. To do otherwise would be very irresponsible. It is time to end the old days of industry and big business being able to freely pollute at the expense of everybody else. Action on climate change will involve costs, but I think the Carbon Pollution Reduction Scheme is the best way of reducing carbon pollution at the lowest possible cost to families, industry and business. If polluting industries want to stay viable into the future then they need to find a way forward. That is why many fossil fuel industries are turning to carbon capture and storage. This is clearly the case with the Western Australia Gorgon project. The Gorgon project in the north-west of WA is one example of a project that plans to reduce greenhouse gas emissions through storing CO2 underground.

It is widely accepted that measures need to be taken to reduce the impact of energy supply on the concentration of CO2 in our atmosphere—and I very much believe that carbon capture and storage is a useful means of reducing atmospheric CO2. It is therefore really significant that we put forward this legislation today so that we provide the framework for these things to be put in place. Industry are looking to make really big investments into carbon capture and storage to lower their emissions, and this investment needs to be facilitated and encouraged. We should be working towards lowering our emissions via all technologies available.

While great advances are being made in renewables, the world is overwhelmingly still reliant on fossil fuels. I really hope that Australia is able to make a contribution by leading the way on a range of technologies—from solar, tidal, wind, solar thermal and geothermal to carbon capture and storage. Carbon capture and storage should be legally provided for so that we have at our disposal all means for reducing emissions. To make a meaningful contribution to tackling global warming we must indeed get on with reducing our emissions. We must facilitate investment through things such as CCS and, following the passing of this legislation, we must get things such as the Carbon Pollution Reduction Scheme up and running. The introduction of the government’s CPRS provides an appropriate price signal for energy consumers to economise on energy and for energy producers to switch emphasis towards providing energy in ways which involve fewer emissions of CO2 into our atmosphere.

Dr Geoffrey Ingram, Regional Manager, Australasia, Schlumberger Carbon Services, told the committee:

As you will no doubt hear from other witnesses, technologically we believe carbon capture and storage is ready to go. What the industry is waiting on is for the legislation and economic drivers to materialise. We believe the federal government’s commitment to a price on carbon in the amended legislation going through Parliament House at the moment is the start of this process. We have previously provided evidence to the House of Representatives inquiry into the same legislation. We recognise its report has a number of key recommendations that would enable large-scale storage projects.

What we know is that fossil fuels currently provide cheap energy. In order to get investment in things like carbon capture and storage, which is going to add a cost to our energy, we really need to get things like the Carbon Pollution Reduction Scheme up and running. We need a price signal to do that, and I hope the CPRS will provide such a price signal.

I know senators will have concerns, in the current economic climate, about taking on responsibilities that cost the economy money. Reputable economists, though, have quantified the future impacts of climate change. They have based this work on what hundreds of reputable scientists have said may happen, has happened and will happen to our environment as a result of carbon pollution and the consequential climate change. We are looking towards the very real impacts of more extreme weather in Australia, including more droughts, water shortages, floods, bushfires, rising sea levels and the loss of biodiversity and habitat. These changes in our environment will have very real impacts on the economy. What they say is that a failure to militate against the causes of climate change and its impacts will be economically disastrous. In this time of multiple economic challenges, the worst thing we can do is put our head in the sand. I think it is a good time to be stimulating growth in new industries and investing in the jobs of the future.

This legislation will see Australia become the first country in the world to establish a specific legislative framework for carbon capture and storage. In its submission to the Senate economics committee inquiry, this is what the Australian Petroleum Production & Exploration Association had to say about the legislation:

… it will make Australia the first jurisdiction to develop a comprehensive framework for greenhouse gas injection activities.

I enjoyed the opportunity, through the Senate committee’s inquiry, to look at the technical side of carbon storage. The evidence presented to me illustrated that it is technically viable. Still unproven are its economic competitiveness and its capacity to sequester meaningful quantities of CO2. But, to my mind, it is technically viable and we may well have a price signal in the future that will facilitate investment in this technology.

I note that significant issues have been raised with regard to who has the right to tenure of geosequestration sites. This is an interesting point. On the one hand we have Woodside, which says:

… the greenhouse gas derived from the extraction and processing of that gas from an integrated petroleum development should be able to be sequestered within that project and without the need to bid for access to the disposal site, regardless of the number of existing petroleum licences involved.

Woodside submitted:

… that, provided the fields are covered by petroleum exploration permits, retention leases or production licences, the opportunity for the commercial entities to agree commercial terms for a real and credible geosequestration activity, including early geological studies and tests, should not be impeded by the overlay of an additional and unnecessary acreage bidding system.

On the other hand, Mr Ralph Hillman, Executive Director of the Australian Coal Association, asserted:

Currently, the oil and gas industry naturally have a very large advantage in terms of the information they have to make and defend their case compared with what a storage proponent has.

He went on to say:

 … we do want to see this be an open, competitive industry where new proponents can enter quickly and effectively and with certainty and invest.

They did not want to see any barriers to entry. The committee recognised these issues in its work. An important element of the bill is ensuring a balance between attracting investment to the new CCS industry and protecting the pre-existing rights of oil and gas producers. The committee believed the bill seems to get this balance right, although there is inevitably some uncertainty about this judgement, given the groundbreaking nature of the legislation.

To conclude, I think we need everything in our arsenal to effectively tackle climate change. I know some people have doubts about carbon capture and storage, but it is something that we must facilitate. As legislators, we must play our part in putting the frameworks in place so that we can demonstrate we are serious in our message to the fossil fuel industry that they do not have a limitless mandate to pollute. We need to be serious about the climate change challenge and we especially need to ensure that big polluters are serious about it too.

Debate interrupted.