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Speech to the National Carbon Capture and Storage Conference 2012



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Minister for Resources and Energy, Minister for Tourism

National Carbon Capture and Storage Conference 2012 23 October 2012

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Introduction

Good morning.

It is my pleasure to be addressing the 2012 National Carbon Capture and Storage Conference.

I acknowledge this session's chair, Dr Richard Aldous, chief executive of the Cooperative Research Centre for Greenhouse Gas Technologies.

The Australian Government is targeting a reduction in greenhouse gas emissions of at least five per cent below 2000 levels by 2020.

Our long-term goal is to reduce emissions by 80 per cent below 2000 levels by 2050.

As everyone in this room appreciates, achieving these targets represents a huge challenge.

It is because the Australian Government is committed to achieving our greenhouse gas reduction targets that it strongly supports the development of CCS technologies.

Importance of CCS investment in Australia

Investment in CCS makes a lot of sense for Australia.

Our economic and population growth rates are above the OECD average.

We have a heavy reliance on fossil fuels, particularly coal, for power generation and production.

And the mining processes for our major exports also tend to be energy intensive.

More than this, the nature of our energy exports, means that it is very important that we invest in CCS.

Globally, fossil fuels account for 81 per cent of primary energy consumption.

Coal itself has met half of the world's increase in energy demand in the past decade.

As the largest global exporter of coal and a growing global supplier of LNG, Australia plays a major role in the supply of both sources of primary energy.

The IEA forecasts that fossil fuels are still expected to make up about 75 per cent of global energy consumption by 2035.

This is despite efforts in Australia and globally to increase the use of renewable energy,

Carbon capture and storage remains the only viable method of using fossil fuels, which are still favoured for energy security and affordability, while reducing global emissions in the long run.

As we know CCS will not be a significant contributor to meeting our emissions reduction targets by 2020.

However, a significant uptake of CCS from the 2030s is vital to our capacity to reduce our emissions by 80 percent by 2050.

Like other emerging low emissions technologies, targeted actions to support early-stage CCS development today will accelerate the availability of the technologies tomorrow.

For example the Government's decision to link Australia to the European Union's emissions trading scheme will give Australian businesses access to a carbon market five times larger than Australia's.

This will better underpin investment confidence in the development and uptake of new low emissions technology.

CCS Achievements

Australia is a leading nation in the development and uptake of CCS technology.

Here in Western Australia, the Gorgon Carbon Dioxide Injection Project will be the world's largest CCS project, injecting 3.5 million tonnes of CO2 per year at a depth of some 2300 metres below Barrow Island.

The project is on track to commence CO2 injections in 2015.

Additionally, the first project selected under the CCS Flagships Program, the Western Australian South West Hub, is progressing well.

As Dominique van Gent mentioned in his presentation yesterday, the project has drilled its first well investigating suitability of the site for CO2 storage.

The second CCS Flagships project, the Victorian CarbonNet Project, received combined funding of $100 million to support feasibility work on capture sources and storage.

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In terms of reducing emissions, this project is important to Victoria as it will be utilised by brown coal electricity generation and other emissions intensive industries in the Latrobe Valley.

In December I will be opening the operational phase of Australia's Callide project, currently the world's only oxyfuel demonstration project at this scale.

Energy White Paper and CCS

Despite these valuable investments, CCS is still in the early stages of its development.

Navigating to a clean and secure energy future, with the uptake of emerging technologies, will require a long-term framework to guide the development of energy policy beyond the next decade.

The Energy White Paper is a strategic policy document that identifies key trends, challenges and policy priorities for Australia's energy markets to 2035.

It will endorse a predominantly market based approach to emissions reduction, with the support of well-developed regulation and targeted Government assistance to bring emerging technologies like CCS to market.

The Energy White Paper will highlight CCS as a key part of our energy mix into the future.

It will recommend that my Department collaborate with the National Carbon Capture and Storage Council to develop a CCS Roadmap for Australia to 2030. This will include:

• Completing pre-competitive CO2 storage assessments and regulatory frameworks; • Identifying single and multi-user transport and storage hub infrastructure options to inform investment decisions; • Implementing the large-scale demonstration projects announced under the CCS Flagships program; • Investing in R&D to improve the efficiency and reduce the cost of large-scale CO2 capture technologies; • Increasing public awareness of the role and benefits of CCS; and • Exploring the commercial imperatives, investment conditions and transitional incentives needed to deploy CCS in Australia

CCS regulatory frameworks and infrastructure

These important steps will build on the direct investment the Government is taking in CCS deployment.

Already Australian jurisdictions are among the first in the world to introduce dedicated legislation for greenhouse gas storage in the Offshore Petroleum and Greenhouse Gas Storage Act.

This Act established title systems and frameworks for managing exploration, the operation of storage sites and closure activities.

The legislation came into effect in November 2008 and the regulations were completed in June 2011.

For onshore and coastal jurisdictions, legislation is either in place or expected to be passed this year.

Confirming suitable large geological storage sites for permanent long-term storage is a critical requirement for CCS.

The Australian Government has to date provided nearly $90 million towards an extensive national work program for pre-competitive CO2 storage data acquisition, with other contributions made by state governments and industry.

Dr Clinton Foster from Geoscience Australia will shortly be giving you an update on CO2 storage exploration programs in Australia, including lessons learnt so far.

The Australian Government recognises that CCS will require a pipeline network and is funding work to ensure an efficient regulatory framework is in place for future private sector investment.

A notable early outcome in this area was the release by Standards Australia last month of the first extension of Australian pipeline standards to now also cover carbon dioxide pipelines.

Work is also underway to identify potential future CO2 pipeline easements in government planning processes.

We will also continue to leverage Australia's excellence in science and innovation.

A number of specialised CCS research bodies have been established in Australia under collaborative support arrangements between governments, industry and the research sector. These include:

• Dr Aldous' Cooperative Research Centre for Greenhouse Gas Technologies; • the Australian National Low Emissions Coal Research and Development agency; and • most recently, the National Geosequestration Laboratory, launched here in Perth last month, for which the Australian Government is providing over $48 million.

National Carbon Capture and Storage Council

At the inaugural National CCS Conference in 2010, I announced the establishment of the National Carbon Capture and Storage Council.

The Council brings together key stakeholders to advise the Australian Government on the accelerated development and deployment of CCS technologies in Australia.

Membership of the Council includes the coal, oil and gas sectors, power generators, the research community and the Australian and state governments.

I met with the Council earlier this morning and we discussed many of their recent initiatives.

A particularly important initiative is the establishment of a Communications Unit to develop and implement the Council's CCS Communications and Awareness Strategy.

Understanding of CCS in the Australian community is low and international research has shown this can act as a barrier to implementation.

Australia is adopting an iterative approach to supporting CCS development and deployment, building on lessons and experience to date here and internationally.

Unlike some other countries, Australian work continues to focus on permanent geological storage of CO2 rather than the use of CO2.

This is essentially because Australia does not have access to enhanced oil recovery opportunities.

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Enhanced oil recovery has been important in bringing down capture costs, but it will never dispose of the volume of CO2 to meet emission reduction targets.

It is important that the world continue to focus on permanent storage.

International collaboration

As with all low emissions technologies, international collaboration will be crucial in making breakthroughs.

That's why Australia has a strong presence in international CCS affairs. This includes hosting the Carbon Sequestration Leadership Forum Annual Meeting here in Perth this week.

The Forum is a ministerial-level international climate change initiative focused on the development of improved, cost-effective carbon capture, use and storage technologies.

Unfortunately, I will not be able to attend, but I hope the delegates from 25 member countries have useful discussions on progressing collaborative opportunities in overcoming the obstacles to the deployment of CCS.

In 2009, the Australian Government established the Global CCS Institute with a mandate to collect and disseminate CCS expertise to help advance CCS deployment.

It has committed over $36 million to support studies at projects around the world, from which we can learn valuable lessons to help address the challenges to CCS.

The Institute has established its reputation as a key go to source of expertise to assist in advancing projects.

It now has over 350 members representing governments, industry, research organisations and non-government organisations from all over the world.

Last week, the Institute held its Members' Meeting and Annual General Meeting in Canada, and released its Global Status of CCS 2012 report.

This report shows that there are now seventy-five large-scale integrated CCS projects planned or underway around the world.

This includes eight already in operation and eight under construction, with a total confirmed capture capacity of more than 36 million tonnes of carbon dioxide per annum.

Australia not only works through multilateral forums to advance the deployment of CCS.

We have a number of close bilateral relationships, most notably with China, to support the development of low-emissions coal technologies.

The Chinese Government recently announced the inclusion of CCS in China's 12th Five-Year Plan.

As Dr Peng Sizhen from the Administrative Centre for China's Agenda 21 will no doubt highlight in his address later this morning, progress on CCS in China is strong.

In the last year alone, more new CCS projects were announced in China than in any other country.

Through the Australia-China Joint Coordination Group on Clean Coal Technology, Australia is working collaboratively with China's National Energy Administration on low-emissions coal technologies.

Through the Joint Coordination Group, Australia and China are currently:

• advancing a feasibility study for an industrial-scale post-combustion capture project with CCS; • building collaborative partnerships through capacity building activities under the JCG Partnership Fund; • finalising six R&D projects; and • building on the work of the China-Australia Geological Storage of CO2 initiative to promote training opportunities and knowledge-sharing on the storage of

CO2.

Conclusion

The programs and initiatives I have spoken about today are a strong indication of the future directions for CCS.

However, we still have a long way to go to establish CCS on a scale that can significantly reduce emissions across the world.

A coordinated global effort will be required for many years if we are to break down the barriers to the development and deployment of CCS.

I wish you all a successful conference as we move forward in the CCS journey.

Thank you.

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