CEFC Bill

Should carbon capture and storage (CCS) be funded by the Federal government as a way to mitigate climate change or is it more to transfer the risks to the taxpayer?

A Senate inquiry into the Clean Energy Finance Corporation Amendment (Carbon Capture and Storage) Bill 2017 recommends it should in their May 2018 report
This is supported by Dept of Industry, Innovation & Science in their 2017 presentation noting that a new mandate,

‘Will provide a significant signal of support and reduce risk for potential investors’ – page 8

The CEFC bill’s purpose according to past Minister for Environment and Energy, Mr Josh FRYDENBERG is to permit the Clean Energy Finance Corporation to invest in carbon capture and storage technologies which currently is prohibited. The change would then provide direct support for CCS technologies, encourage greater private sector investment and reduce risk for potential investors.

Unfortunately, the Ninety Mile Beach Action Group against Carbon Storage was not aware of this inquiry so could not provide a submission. The list to contributing submitters can be found on this link.

Submission #1 by Richard Norton notes that CCS is not clean energy as it simply relocates the collection and concentrated pollution from hydrocarbon production.

One particular justification for the proposed amendments was that it,

Would help provide security and stability for the electricity grid while significantly reducing emissions compared to business-as-usual operation of fossil fuel fired generation.

A valid comment but exposes the flaw in justification in recommending this bill given the Latrobe Valley Coal to Hydrogen project uses brown coal here to convert to hydrogen for export to Japan.

Whilst Australia may benefit from some hydrogen production, the bulk production of hydrogen is not for Australia’s use rather for another country. So it can’t provide security of energy supply for the domestic grid and is false economics to finance a project in Latrobe Valley on the basis CCS would be required. Rather the hydrogen project is more to support AGL rationalising their business model to continue operations into the future given subsurface land movement that already exists. file:///C:/Users/A660/Downloads/C87_Panel_Report_-_22_June_2015.pdf Page 11

Why this project sits at top of the list as an example for CCS investment is a total contradiction because COemissions will need to be stored while the hydrogen is shipped overseas to Japan to utilise in black coal power generation adding significant CO2 emissions to the world account. How is that carbon neutral? Meanwhile, Latrobe Valley and broader areas must endure the significant waste stream (CO2, So2, NOX) having a negative value worth on the environment.

The report uses comments from some of submitters with Environmental Justice Australia noting,

As we approach 2020, the world does not speak of percentage of global emissions captured by CCS. Rather, CCS proponents cite the handful of CCS projects that might be successful, yet still have the potential to fail.

This is an important point because CCS, as a business model and viable GHG mitigation strategy for the future, cannot be proven so reliance on carbon storage in a couple of decades is not going to solve the problems for future climate change concerns.

Also applicable is the market move by AusNet to partner in projects to decentralise the electricity power generation grid via renewables which changes dependence on a base load system currently dependent on non-renewable energy.

The following comment by Rod Campbell from TAI comes to the core of proactive energy policy that includes the full cost analysis over a lifetime to prove viability and not just one step in a process.

The cost and energy usage associated with CCS was also noted. Some witnesses suggested that CCS technologies would not be viable without a carbon price. In the absence of an economic incentive to capture carbon, it was suggested that CCS activities would be limited.

Of course the current Federal Coalition government would be loath to introduce a carbon tax given Coalition government won an election based on removing the carbon tax. In hindsight the tax did have a reduction in emissions.

Submitter Bridgeport Energy acknowledged that CCS technologies have ‘always suffered from the issue of high cost and lack of a revenue stream to aid project financial viability’. However, it advised that a revenue stream to support CCS could be created by using carbon dioxide produced from power generation and industrial processes for ‘enhanced (or tertiary phase) oil recovery (EOR) in suitable oil fields.’ EOR can enable significant additional oil production with the process resulting in carbon dioxide being ‘sequestered in parallel as it replaces the oil and water volume in the reservoir.’

This is interesting to argue as Gippsland has huge problems with depleted aquifer system from over-extraction of oil and gas offshore. To use CCS to enable EOR is false economics as it only services a profit margin for the licensee while further lowering water table for other users onshore. How is the ability to extract more oil emissions neutral or providing increased value worth to the environment?

The Minerals Council of Australia bemoaned the development of CCS has been impeded by an imbalance in government funding for CCS compared to other technologies… submitting:

Renewable technologies have access to over $2 billion in funding managed by the Australian Renewable Energy Agency, $200 million in the Clean Energy Innovation Fund (jointly managed by ARENA and the CEFC) and an estimated $20 billion in indirect support provided by the Renewable Energy Target. The exclusion of CCS from the CEFC exacerbates the current funding imbalance and handicaps the development of a key low emission solution.

To argue subsidised funding MCA are conveniently ignoring how much coal is actually subsidised with our taxes, then the negative and huge cost analysis of other consequential impacts (externalities) including air, water and land pollution, aquifer depletion from dewatering of open cut mining and associated health costs. These do not occur and are largely absent with renewables.

Concerns about carbon dioxide leakage prompted Mr Richard Horton, a founder member of the Global CCS Institute to argue ‘there can be no certainty that re-injected CO2 will remain insitu in perpetuity.’

Likewise for storing CO2 long-term in appropriate geological formations is ‘considered theoretically sound with the data needed for ‘complete assurance’ about the risk of leakage not existing because of the absence of long-term CCS projects in Australia.’

While some argue oil, gas and naturally occurring CO2 reservoirs have proven fluids can be safely sealed underground for millions of years this does not discount the touchy subject of re-injecting under pressure to not over-pressurise the pore space leading to increase in seismic movement.

Rod Campbell points out the long term monitoring required is poorly understood so ‘costs and risks will likely be largely borne by the public.’ This is important to realise as the public currently wear the cost burden for non-renewable energy’s waste stream so, again, reveals a flaw in the plan for the economic benefits to Australia.

The math would not stack up on a full cost analysis of CCS deployment in consideration of capturing CO2, pipeline, transport, injecting offshore and monitoring to name just a few.

Did the committee get it right?