Tony Windsor (New England, Independent) Share this | Link to this | Hansard source

I spoke before question time on the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 and congratulated the Minister for Resources and Energy on the way in which a parliamentary committee has been used to examine the legislation and make recommendations, and some of those recommendations have been accepted by the minister and the government and put in the legislation. I also mentioned the role of agriculture in relation to climate change, global warming and greenhouse gas emissions and my support for doing something about emissions into the atmosphere, particularly the greenhouse gases—carbon dioxide, methane, nitrous oxide and, to a minor degree, others. I also made the point that there are many opportunities in relation to this issue. I think we are tending to concentrate far too much in this place on the negatives. But there are some positives out there. I highlighted earlier the use of carbon capture in a greenhouse in a small town called Guyra in my electorate where from the heating processes within the greenhouse, the glasshouse—a very large one, about 50 acres—carbon dioxide is captured and reinjected into that environment, which actually has a positive and dramatic impact on plant growth. I was in Canada a few years ago looking at an ethanol plant that was being commissioned at the time. This plant had a carbon capture arrangement as part of the process. They viewed the carbon dioxide they were capturing from that plant as an asset to market. As I said earlier, particularly as the price of petroleum and other energy sources tends to move upwards, it will create opportunities for those with initiative and enable new technologies to move forward.

There has been a lot of talk during the climate change debate in this parliament by the Minister for the Environment, Heritage and the Arts, the Minister for Climate Change and Water, the Prime Minister and others, and within the press, about the Murray-Darling system, which is under some degree of stress. Some of these people are suggesting that the crisis is caused by drought and climate change. Recently we had Professor Garnaut making recommendations on emissions targets and putting out reduction options of either five per cent or 10 per cent by 2020. The commentary on that sort of target seems to suggest that that will not save the Murray-Darling. The government should look at and quantify the climate change component of run-off loss within the Murray-Darling system. How much less water is flowing into the Murray-Darling system or is being assumed for the future will not flow into the Murray-Darling system because of climate change? I am not a climate change sceptic, but I think we have to get some consistency into the definitions and statistics. If climate change is having an impact on the Murray-Darling, and the reduction target that Professor Garnaut is recommending of either five per cent or 10 per cent will not be sufficient to ameliorate the climate change component of run-off loss, what is the difference? What is that figure? How many gigalitres of water is not flowing into the Murray-Darling catchment because of climate change?

I think the Prime Minister and others have to come to grips with that figure, because you cannot raise the issue of the Lower Lakes and the Coorong or Cubbie Station or Toorale and blame climate change if you cannot quantify the figure for the difference. This is a very different debate from the overallocation issue that many others are talking about, but the two debates are being blurred. I ask the minister at the table, the Minister for Defence Science and Personnel, whether he would ask the Prime Minister, Senator Wong, Mr Garrett and others to quantify that number. How many gigalitres are being lost to the system from climate change? The reason I want to find out that figure—and their logic is flawed if there is not a number; everybody cannot run around saying that it is all happening because of climate change if they cannot tell us what it is that is happening—is that there is an unnatural climate-change-driven change in run-off. The Minister for Infrastructure, Transport, Regional Development and Local Government should look at funding an analysis into that issue. If a crisis is occurring in the Murray-Darling and we do not do enough about it through our emissions targets—as Professor Garnaut has recommended and which, it seems, the government might take up for other political reasons—we will do irreparable damage to the Murray-Darling system.

If China, India and others do not enter the climate change debate and do something about their emissions, it strengthens the argument, but if those are the options I believe we should look very closely at bringing water into that system. Some people will say: ‘Here we go again, diverting water.’ Only last week this parliament, this government, signed off on a diversion of water out of the Murray-Darling system into the Melbourne system. So forget this argument that you cannot divert water from one catchment to another; it is occurring as we speak. I believe we should look closely at not only the costs and the obvious benefits of saving a food-bowl system but also the costs and benefits of potentially bringing water into that system out of Queensland, where we are also told that in some areas because of climate change there will be more water. Maybe there are some issues there of transference between the component of the overallocation process and the climate change component of inflow loss.

There may well be, as technology advances, some means of transferring water from the east coast—whether that be in Queensland or in New South Wales—or there may well be some long-term means of desalinating water and pumping it inland. We are told the impacts of climate change, the polar meltdown et cetera, will in fact create more water on the coast. So I think it is important that we start to get some numbers around these issues, and it is important we do that before we spend billions of dollars buying back bits of paper, as occurred with the Toorale sale the other day, that will not in any real context have an effect on the crisis in the Murray because we have not reduced our emissions to an extent that the climate change component of the reduction in inflows is impacted upon. I think that is an important issue that the Minister for Climate Change and Water and others should have a look at.

The other issue that I think is very relevant—and I know it is close to your heart, too, Mr Deputy Speaker Scott—is that of coalmining on very rich agricultural land, particularly alluvial flood plains. In my electorate the Liverpool Plains has some of the best cropping country in the world, and your electorate, Mr Deputy Speaker, has possibly the second- or third-best cropping country in the world. The issues are the same. With the advent of the high price of coal, exploration licences are being granted for major companies to look at coal deposits on these highly valuable agricultural lands. BHP is carrying out some exploration on the Liverpool Plains as we speak. There was a rally in Gunnedah yesterday that I attended—and that was the reason I was not in the chamber—that addressed this issue. There was also a meeting of the coal companies, which I addressed, on this issue.

There has been a call for about two years now for an independent study into the potential impacts of longwall and open-cut mining not only on those alluvial flood plains but, particularly in relation to the Liverpool Plains, on the underpinning groundwater systems that extend for 250 to 300 kilometres in that system. We do not know—and the coal companies do not know but should know before they do anything—the impacts of slashing a groundwater artery that has got hydraulic pressures driving it not only through the other interconnected systems but also into the Murray-Darling system.

I call again on the Prime Minister and the Minister for Climate Change and Water, Senator Wong, to look seriously at this issue. If you are really concerned about the Lower Lakes and the Coorong, if you are really concerned about climate change, global warming and the potential impacts of coalmining in these areas and if you are really concerned about the food argument that keeps being put up that we need to produce more food, we really need some more knowledge. Whether it is in the Darling Downs, the Liverpool Plains or other areas, you cannot allow these areas to be risked without full knowledge of the impacts.

It is my view and, I think, the view of many others, particularly the farmers on the Liverpool Plains, that the state government has a flawed planning process in relation to the granting of mining licences. Part 3A of the Environment Protection and Biodiversity Conservation Act gives far too much discretion to the minister. The minister only has to take into account a whole range of other impacts and then, in a sense, can ignore them. I would ask you, Mr Deputy Speaker, and others in the parliament to take those words on board and request that the government at least partly fund an independent study into those potential impacts on our groundwater system and the Murray-Darling system generally.

Sharon Grierson (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Offshore Petroleum (Annual Fees) Amendment (Greenhouse Gas Storage) Bill 2008 and cognate bills. The main bill we are considering here today will establish a new range of offshore titles for the transportation by pipeline and injection and storage in geological formations of carbon dioxide and, potentially, other greenhouse gases. The government has chosen to amend the Offshore Petroleum Act because the types of geological formations that have stored oil and gas will likely be the same kinds of formations in which greenhouse gases can potentially be stored. Through these amendments we are seeking to balance the rights of those who seek to store greenhouse gases with the rights of those in the petroleum industry. The key aims of this legislation are to provide greenhouse gas injection and storage proponents with the certainty needed to bring forward investment, to preserve pre-existing rights of the petroleum industry as far as possible and to provide assurance to the community that CO2 is stored in a safe and secure way. The bill deals mainly with access and property rights for greenhouse gas injection and storage activities in Commonwealth offshore waters. The three associated bills deal with fees and charges in a similar fashion to the fees and charges associated with the petroleum and oil industries. Importantly, the legislation confers on the responsible Commonwealth minister a range of powers for dealing with situations where injection and storage does not go as planned. This means that, if something is going wrong or has the potential to go wrong, the minister has the power to direct an injection licensee to, for example, modify injection rates, undertake mediation work or cease injection.

When it comes to liability, this legislation treats the issue in the same manner as existing offshore petroleum production activities—that is, this law will not immunise greenhouse gas titleholders, or other participants, from common law liability to persons who suffer injury or loss as a result of their actions. Participants in the industry, like those in any other industry, will need to make their own arrangements to cover any potential common law liability. The buck stops with them. The Commonwealth will not take over any long-term liability. However, if for some reason the damages were not recoverable—for example, after an extended passage of time—the community would effectively bear the costs of any damage.

The amendments to the Offshore Petroleum Act in this bill are designed to establish a framework similar to that operating around the offshore petroleum industry. They are designed to give certainty to organisations looking to participate in a new carbon capture and storage industry—because there will be an industry developed around the storage of greenhouse gases. That is already arising. Our scientists are currently working on cutting-edge carbon capture and storage technologies, and several large-scale projects are already considering their requirements for geological storage. That is why this legislation is so important: to create a regime that gives certainty and puts in place arrangements that let these research and commercial projects continue. When a price is imposed on carbon by an emissions trading scheme, it may become financially viable for businesses to establish themselves as waste disposal services for CO2—that is, they will be able to charge CO2 emitters for collecting and burying their emissions.

What we have in this legislation is a framework for the development of a carbon storage industry. To highlight why it is so important, we only have to look at the report Australia’s national greenhouse accounts. While the figures in that report show that we are on track to meet our Kyoto target, they also show that we still have a great deal to do to reduce greenhouse emissions. Our emissions in 2007 are estimated to have grown to 585 million tonnes—an increase of 1.6 per cent on 2006. Significantly, growth in energy use has seen energy related emissions increase by 12 million tonnes to 378 million tonnes.

In 2006, our emissions were 4.2 per cent higher than 1990 levels. We have set a target of reducing emissions by 60 per cent of 2000 levels by 2050. Fortunately, the Rudd government takes its responsibility to fight climate change seriously. Carbon capture and storage is a very important part of the policy suite we have developed for this purpose. The International Energy Agency estimates that CO2 capture and geological storage has the second largest potential, behind energy efficiency itself, to achieve deep cuts in CO2 emissions. The storage formations in offshore waters made available by this legislation have the potential to securely store hundreds of millions of tonnes of CO2 for many thousands of years. We could store around 25 per cent of our annual CO2 emissions offshore. These are significant figures which would make a real difference in the fight against climate change, which is why it is so important to get this legislation right.

I am pleased to note the tabling of the report of the inquiry into this legislation by the House of Representatives Standing Committee on Primary Industries and Resources. That report was presented on 1 September. I am also very pleased to note that the bipartisan report strongly supported the government’s approach to a carbon capture and storage framework. We are introducing amendments to the bill in the consideration in detail stage that will give effect to 17 of the committee’s 19 recommendations. These amendments will make the regulatory framework established by this legislation even more robust and effective. I must say that it is refreshing to see committee recommendations being seriously considered by this new government. It certainly was not something we saw much of under the Howard government. For their constructive approach and the contribution they made to getting this legislation right, I particularly commend the chair of the committee, the member for Lyons, Dick Adams, and the Minister for Resources and Energy, Martin Ferguson.

A carbon capture and storage framework that helps reduce greenhouse gases while maintaining our nation’s competitive advantage in fuels such as coal and gas will be very good news for the future of my own region—Newcastle and the Hunter Valley. Eighty-three per cent of this nation’s electricity is generated from coal, so cleaning it up is essential for Australia. My region—the Hunter Valley, Newcastle and the Central Coast—is one of the centres of this electricity generation. It is also the centre of coalmining in New South Wales. Apart from some of the extremists in the climate change debate, people in my region know that the Hunter’s coal industry has a big role to play in our economic future, but we also know that we have to do it in a cleaner way.

Carbon capture and storage technology is one of the most important avenues we need to explore if we are going to keep our coal industry viable in a carbon constrained world. By creating an environment in which industry can confidently invest in carbon capture and storage projects, we are encouraging the commercialisation of technologies that move us ever closer to our aim of a sustainable energy future for our region and our nation. The jobs of around 8,000 people in the coal industry in the Hunter depend on us getting it right. I think there are about another 20,000 jobs that depend indirectly on that coalmining effort. We exported 88 million tonnes of coal out of the Port of Newcastle last year. We are planning to reach 100 million tonnes of coal in the near future. This is vital economic activity.

As Minister Ferguson pointed out in his second reading speech, if we can use the carbon storage framework to encourage local innovation in carbon capture and storage technology then we can export this technology to the world. China and India, in particular, are undergoing rapid industrialisation. Those nations are not going to stop developing. Indeed, there is a moral imperative for them to continue to develop and to do their best to lift their people out of poverty and underdevelopment. However, development is often accompanied by an environmental cost. Having been to China, I have seen firsthand the impact of carbon emissions and pollution on urban and rural environments. Exporting clean coal technologies to China will be of enormous benefit to the Australian economy, to the environment and to the people of China. I will just mention that White Mining Ltd trialled an ultra-clean coal project some time ago. I note that they have reactivated that project and the ultra-clean coal technology is being exported to the world.

In Newcastle we are also a centre for the research and demonstration projects that are going to be the drivers of innovation in clean coal technologies in the future. In May, the Minister for Climate Change and Water, Senator Wong, visited Newcastle’s CSIRO Energy Centre with me to see firsthand the work that our scientists are doing there. We watched researchers who were in the laboratory testing which chemicals make the best binders for removing carbon from the other contents of electricity generated emissions. This is part of a wide range of work on clean coal being done by the CSIRO, looking at coal conversion and gasification processes. I also encourage the work of the University of Newcastle, which has set up a clean energy centre.

I am pleased that the Rudd government is providing a $500 million National Clean Coal Initiative, which will keep moving us closer to the commercialisation of low-emission technologies. Commercialisation of these technologies is vital for the future of the Hunter Valley coalmining industry and the future energy security of our nation. But one of the major drivers of new, clean technologies is going to be the Carbon Pollution Reduction Scheme. This is one of the key pillars of the government’s comprehensive and interconnected policy approach to tackling climate change. It is a refreshing approach after the denial and scepticism of the Howard government. At the heart of the CPRS is emissions trading designed to create incentives to look for cleaner energy options. Under the scheme, the market finds the most efficient ways to reduce carbon pollution. We believe this will be the lowest-cost and most economically responsible way to achieve this goal. I am pleased that every cent raised from the sale of permits will be used to help households and businesses make the move to a clean energy future. Tackling climate change cannot be without cost, but putting a limit and a price on pollution will drive the changes we need in what we produce and the way we produce it. This is a huge reform of the Australian economy and, once again, it is vital that we get it right.

As I mentioned earlier, the House committee process has produced some good amendments to the carbon capture and storage legislation that we are considering today. In the same way, the careful and considered community consultation that is underway on the CPRS will, I am sure, also result in the right settings being implemented. Last month, a departmental consultation was held in Newcastle. It was very well attended by local community groups, environmentalists, scientists, business and representatives from all levels of government. The feedback given and the questions asked showed just how important the issue of climate change is in my electorate. I know that the government will be carefully considering all the feedback it receives from the community as the CPRS is developed and implemented. That is the best way to get it right, because it is under the CPRS that the new technologies we need for a clean future are going to be encouraged. Efficiency measures, green cars, solar and other renewables, and the clean coal and carbon capture we have been looking at under this legislation will all contribute to making a difference.

Another wonderful Rudd government initiative that will encourage us to move forward in this area is the Enterprise Connect network. Specifically, the new $20 million Clean Energy Innovation Centre will help enhance the performance of Australia’s small and medium sized clean energy companies by providing a range of business improvement services. The centre is expected to provide a comprehensive review of the firm that will identify its strengths and weaknesses, strategic business issues, potential areas for business improvement and potential areas for growth. It will provide grants for addressing areas identified by the review for improvement and growth. It will find and adapt the latest research and technology to help firms improve their products and manufacturing processes and services. It will provide access to specialist facilities and advice to turn innovative ideas into new products or to test products for new markets. It will help in identifying export markets and understanding relevant regulatory, cultural and market issues. The centre will also help firms to become export ready, including through developing management and marketing skills. It will also identify sources of government support for the firm’s innovation and export activities. Last year, I visited David Mills in San Francisco and looked at the wonderful work he was doing there in solar research. I reflect on the fact that we lost David Mills’s wonderful work to another country.

A call for expressions of interest went out earlier this year for organisations interested in running the Clean Energy Innovation Centre. I have discussed this at length with stakeholders in Newcastle, and an excellent proposal has been put forward from my region. As I have been telling everyone who will listen, the establishment of the Clean Energy Innovation Centre is a natural fit for Newcastle, as the future of our region lies very much in adapting our existing industrial base to a lower carbon future. It would be a great boost for us to fulfil the potential we already have here. The CSIRO’s Energy Transformed Flagship and Energy Technology Division and the University of Newcastle’s Clean Energy Centre are all doing great work on clean energy. Many of our SMEs, such as Corky’s Carbon and Combustion, are already developing new products and commercialising their ideas. Of course, we are at the centre of energy generation and have proximity to major energy users in NSW.

We also have the talent and expertise to link with other organisations around the country as a part of the national Enterprise Connect network. This network is a great initiative of the Rudd Labor government and highlights the wide-ranging approach we are taking to fighting climate change. I congratulate the University of Newcastle, and Newcastle Innovation in particular, on leading the submission process. I know Ernst & Young are part of that submission as well, as are HunterNet, the collaborative manufacturing network. I know from the research that was done to put that submission together that over 50 per cent of business members of the Clean Energy Council in Australia are located in New South Wales. As they are the only bid from New South Wales, I remain optimistic. The network is a great initiative and it highlights the wide-ranging approach we are taking to fighting climate change.

Another initiative I would like to highlight is the $500 million Energy Innovation Fund, which will boost Australia’s existing momentum in solar technology research, particularly solar thermal, which has great potential for augmenting baseload power and in which CSIRO Newcastle is a world leader. Solar photovoltaics will also benefit from the EIF, with $100 million being put towards solar technology research. This will be administered by a new body, the Australian Solar Institute. These initiatives build on the world-leading work already being undertaken at CSIRO in Newcastle.

I have digressed a little because it is important to understand that encouraging carbon capture and storage technologies is part of a broad-ranging approach by the Rudd government to fighting climate change. The practical assistance on the ground is something that we value. Encouraging research is at the centre of our reforms and, particularly in this legislation, giving certainty to business and industry is something that we all wish to progress. Carbon capture and storage is an important part of our strategy, and I wholeheartedly support the endeavours underway. The technologies involved in carbon capture and storage are well advanced, and there are international pilot projects directly involving the injection of CO2 into rock in Canada, Poland, Norway and the Otway Basin in Victoria. I hear people say that this is unproven technology. It is commercially unproven at this stage but certainly not scientifically unproven. I note that in April this year a project announced by Peter Cook, now head of the CO2CRC—and I know the University of Newcastle is part of the CO2CRC—began in the Otway Ranges in Victoria with the injection of up to 100,000 tonnes of CO2 down to a depth of about two kilometres. I also note that in July:

… the results of Australia’s first successful trials of the leading technology for capturing CO2, the most significant greenhouse gas, were announced.

According to David Brockway, the head of CSIRO Newcastle’s Energy Division:

… the jointly operated CSIRO-industry pilot plant at the Loy Yang power station in Victoria’s Latrobe Valley removed more than 80 per cent of the CO2, using so-called post-combustion capture.

So the technologies are advanced and they deserve a great deal of support and encouragement. The world is moving ahead on this and, now under the Rudd government, so is Australia. This is important legislation that gives certainty for investment in carbon capture and storage technology projects. It gives us another avenue with which to pursue reductions in greenhouse gases, and that is, of course, something vital for our future. I commend the bill to the House.

Barry Haase (Kalgoorlie, Liberal Party, Shadow Parliamentary Secretary for Infrastructure, Roads and Transport) Share this | Link to this | Hansard source

I thank the House for the opportunity to speak in this cognate debate on the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008, a vital piece of legislation. Even though the science surrounding sequestration of carbon is well advanced, and even though we have a number of practical operating sites today, there remains a great deal of scepticism in the minds of the public about the long-term veracity of this process. First of all, as a parliament we need to pass this legislation because it is important for Australia. Australia has huge resources of natural gas and coal. If we are to survive in this world, we are told, we have to reduce the emissions of carbon in the generation of electricity. If we are going to do that in a meaningful way, we are going to drastically increase the cost of living or, on the other hand, destroy the standard of living. If we as a public are going to accept that we can increase the price of things by deriving our energy from more expensive sources and not impact on the cost of living, then we are in gaga land. That is not a path that politicians of this country ought to lead the public down.

Professor Garnaut, in his latest statements, has suggested that the price of electricity will increase by 40 per cent. In industries where electricity is a major component, will it be business as usual? Will consumers continue to use that energy and, as a consequence—we are told—pollute the atmosphere with carbon? If their carbon emissions are so great, will they be compensated? If they are going to be compensated then why on earth will their behaviour change? Surely they will then use the same amount because the bottom line net effect will be the same financially. I have just heard the member for Newcastle say that she would like consumers to be compensated for the increased cost of their lifestyle because of the necessity to have a carbon pollution reduction scheme for the good of the world—although it would seem that the Rudd government do not care whether the rest of the world engages in that concern for the world. When we see Australian citizens having an increased cost of living because of a 40 per cent increase in the cost of electricity, for instance, the member for Newcastle would have us believe that the Rudd government will compensate for that increased impact on households. And with that compensation, when we have a 40-degree day in the Pilbara, I am sure that the householders will switch off their air conditioning. No, I do not believe that for a moment. They will leave their air conditioning on, especially if they are going to be compensated for the increased costs of electricity.

I could go on about the illogical nature of this proposed scheme, but it simply strikes me as being so odd that intelligent adults can be hoodwinked in such a way; the hoodwinking is extreme. It makes no sense. If you introduce a Carbon Pollution Reduction Scheme by 2010 in an attempt to contribute to the reduction of carbon globally—without caring whether anyone else in the world does it, or whether by 2010 it will be a good system, or whether we understand it, or whether the public know what the impact is going to be—and then believe that the increased cost of living will somehow be compensated for by a charge on a tonne of carbon, won’t consumers simply keep the cycle going and spend the compensation money on more pollution, if it is to be called pollution? The logic escapes me.

Those who moved into government at the last election have an ability to embrace such an illogical argument. When they were in opposition they were incredibly sceptical about any technology that might involve putting carbon dioxide underground. They could not possibly embrace that idea and that technology, but now they do; so there has been a transition in belief. Wouldn’t it have been a wonderful outcome if those same people could have embraced the absolute logic of nuclear energy? It is not such a magnificent step when you think about it. If you can reconsider the scientific evidence around sequestering carbon dioxide permanently, deep underground in rock formations where carbon dioxide and other gases have remained for millions of years without any surface detection, and if the government can go from a position of not believing in carbon sequestration to embracing carbon sequestration in a period of nine months, wouldn’t it have been a wonderful world had they, from their position of not believing in nuclear energy, had been able to embrace a belief in nuclear energy? But we in opposition today obviously expect too much.

So we have a necessity for the continued use of fossil fuels and, therefore, the necessity to come up with a plan to dispose of the waste product of fossil fuels—which we all know is carbon dioxide, which is a perfectly useful gas that is very common on this earth but has now been demonised and has to be put away out of sight, out of mind where it will never return. Surely trees will form themselves from other substances in the future. I heard someone today talk about a post-carbon world. What a wonderful idea: no more steel, no more trees, no more grass and no more food. Such is the intelligence of the current government.

We have this scheme which is necessary to sequester the nasty carbon dioxide and, because of it, a very complex document that will set up the guidelines for leases to be planned and processes to be undertaken so that those who are today engaged in extracting gases from deep under the earth—natural gas, hydrocarbon gas—will not be interfered with by those who are sequestering carbon dioxide. That is a perfectly logical arrangement. It is a realisation that we have to have this control in place. Of course, the smart way to do that was to modify existing acts, and the Offshore Petroleum Act was the perfect vehicle for these changes.

Of course, as we have heard during this debate, the Standing Committee on Primary Industries and Resources has carried out an analysis of the proposed legislation and received numerous submissions—very solid and intelligent submissions—from various players in the industry. One such submission came from a firm favourite organisation of mine, Woodside Petroleum. I have the pleasure of being the member for the federal seat of Kalgoorlie and, of course, the majority of Woodside’s operations are offshore from my patch. Woodside supports a number of aspects of the bill. It supports the introduction of the legislation generally to accommodate greenhouse gas storage activities. It also supports the regime being included in the Offshore Petroleum Act given the synergies between the title systems and the need to manage the potential for conflict between petroleum activities and greenhouse gas storage activities. It also strongly supports the adoption of the proposed legislative model by states and territories to ensure a nationally consistent framework in both offshore and onshore areas to minimise the regulatory burden.

However, Woodside stated quite clearly in its submission that it has strong reservations about the impact of this bill on the company’s ability to develop some of the largest resource projects in Australia—for example, the proposed Browse Basin LNG development, for which key terms agreements to the value of $A70 billion to $A90 billion in sales revenue have been signed. The company will be restricted by this bill in its ability and flexibility to dispose of the carbon dioxide that is produced with the reservoir gas. In Woodside’s view, the object of this bill should be to provide cost-effective carbon dioxide storage solutions without impeding the development of natural hydrocarbon resources. It should not constrain the ability of a project to dispose of carbon dioxide that arises from an integrated multiple field development, as would be the outcome of the current draft legislation, which prohibits disposal within a petroleum production licence area for carbon dioxide derived from outside the licence area.

The bill introduces hurdles for accessing suitable low-cost disposal sites by making them subject to a new regime of greenhouse gas titles. Recognising that geosequestration of carbon dioxide from flue gas is unlikely to be commercially available for the coming 10 years, the ability of large gas developments to dispose of reservoir CO2 should not be compromised. Geosequestration projects, such as that considered by Woodside, should be recognised as fulfilling a crucial role in developing Australia’s LNG potential while at the same time achieving the objective of large-scale carbon dioxide disposal in Australia. Woodside is also concerned about the limited consultation on the bill and the absence of associated regulations and guidelines at this stage. The bill raises significant issues in relation to the sovereignty of existing petroleum operations as against the relative uncertainty posed by the entry of a new activity and supporting industry for greenhouse gas storage into the same areas. Given the significance of these issues, Woodside recommends that the bill be considered as a legislative regime in its entirety.

Woodside mentioned in its submission to the standing committee that it was concerned about the sovereignty of existing petroleum operations. Of course, that leads me straight to my next point, which is that Woodside may well raise the issue of sovereignty and it may well be concerned about this government’s future intentions and any legislation it may introduce. Madam Deputy Speaker, you will recall that in the last budget, like a thief in the night, the Australian Taxation Office attacked Woodside’s bottom line to the tune of $2.5 billion over four years. That is hardly petty cash. I have spoken about that in this place previously.

I am sympathetic to Woodside’s case and their very strongly stated belief that, when they were developing the North West Shelf gas project, one of the enabling factors was the agreement between the then government and the Woodside partnership that would allow condensate to become a cash crop. It would return revenue to the project and the project could proceed on an economic basis. That was, I might add, aided by the bold move of then Premier Charles Court—later Sir Charles Court—in signing a take-or-pay contract with Woodside for domestic gas for the people of south-west Western Australia. Those two components of negotiations allowed the Woodside North West Shelf project to proceed—and, in doing so, invited further exploration and further project development of that incredible wealth that we now know of today, which is earning billions of dollars for this nation and powering up Asia and Japan.

When the budget measure was announced to renege on that agreement, it came as a great shock to Woodside. So it is not surprising that they should be concerned about sovereign issues. They will be concerned about legislation proposed by this government because I am quite sure there is a perception that this government believe that companies that are making a profit today ought not do so—because perhaps ‘profit’ is a dirty word—or they simply do not understand or they do not bother honouring long-term agreements.

It is just as necessary for condensate to remain free of excise today as it was when the contract was first negotiated. To renege on that will mean that the increased costs—$2.5 billion over four years—have to be passed on somewhere. We cannot have this cost disappear into thin air. And who will be in the firing line? It will be the consumers of petroleum products in Western Australia. If nothing else, I think members of this House ought to be incensed by that action because, as I said earlier, it is comparable to the actions of a thief in the night: it came without warning. It is a dastardly act, and Woodside are quite right in being concerned about sovereign risk and deals that have been done in the past and whether they will be honoured in the future.

Even though I have great faith in the science of carbon sequestration, there is no doubt that there are many who still have reservations about the permanence of the science. Unfortunately, because of that lack of belief or confidence—call it what you like—there will be an increased cost in any process of sequestration. And I refer, of course, to the issue of long-term insurance against eventuality into the future. The doomsayers would talk about leakage and incidents that have occurred on the African continent in the past, with carbon dioxide poisoning through natural events. Of course, as a displacer of oxygen, it can be a dangerous gas—as can many gases be. But the problem is that, because of the ‘what if’ nature of this sequestration and the minute doubt that exists in the minds of some people, the question of insurance will be a very large one indeed and has to be resolved. I believe the way to resolve that is for the Commonwealth to consider carrying insurance into the future. Companies may come and go but, if we are talking about hundreds if not thousands of years of storage of CO2 and the minute risk of that gas escaping, there will be necessary monitoring costs and we will have to decide who is going to carry the cost of insurance. The solution will be for the Commonwealth to do so.

We have pleasure in allowing the passage of this legislation through the House, although I note that amendments will be proposed in the Senate. They will cover a number of issues: minister directing an outcome, potential overlapping of the greenhouse gas storage et cetera. (Time expired)

Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Link to this | Hansard source

I rise to speak on the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 in this cognate debate. This bill is of relevance and of vital interest to the people in my electorate and in the Hunter region more generally—as well as, of course, to the nation. In my electorate there are quite a number of underground coalmines and there is also one of the largest coal-fired electricity generation stations in New South Wales. And, of course, in the Hunter region there is a very important aluminium smelting capacity. That is an industry that uses a lot of electricity in the manufacturing of aluminium. Greenhouse gas emissions and how the government deals with them is of immediate economic and social relevance to my electorate and the people of the region.

The amendments contained in the bill will enable carbon dioxide to be stored safely and securely in geological storage formations deep underground in Australian offshore waters under the Commonwealth’s jurisdiction. The government is committed to comprehensive action—as the House has been informed on a number of occasions—to tackle climate change whilst also recognising the importance of supporting Australian jobs and the community. To bring it back to local and regional relevance in my area, the role of the coal industry and electricity generation distribution and retailing are extremely important for living standards and employment. That is why it is such an important issue, and close examination of the government’s policy responses is constantly under discussion.

I think it is well appreciated now that climate change is one of the greatest threats that the nation faces. Carbon capture and storage, or CCS—which is the subject of the bill—holds great potential as one important method, amongst a number of strategies, for avoiding the damaging effects of the emission of carbon dioxide and other greenhouse gases into the atmosphere. That is why this is a significant bill before the House. Geological surveys have indicated that 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. If successfully developed, carbon capture and storage has the potential to significantly reduce Australia’s greenhouse gas emissions whilst allowing for the continued use of fossil fuel.

This bill focuses on establishing a framework of access and property rights for greenhouse gas injection and storage activities in Commonwealth offshore waters. The bill also provides a management system for ensuring that storage is safe and secure. The types of geological formations—and I have some interest in this myself, having trained as a mining engineer—that have stored oil and gas for millions of years are the same as the logical storage formations for carbon dioxide. That implies that petroleum and greenhouse gas operations are therefore likely to operate in similar regions. It is important that this bill balances the rights of the new carbon storage industry with the rights of the petroleum and energy industry in particular. Accordingly, the legislation provides greenhouse gas injection and storage proponents with the certainty that is needed to invest, which is ultimately the key to enabling the technology, if it is found to be feasible, to work. Secondly, it preserves the pre-existing rights of the petroleum industry, as much as is practicable, to minimise sovereign risk to existing titleholders’ investment in Australia’s offshore resources. Importantly, the bill also provides for the release of areas for exploration in Commonwealth offshore waters for greenhouse gas injection and storage sites. Of course, this activity will have to be commercialised for it to be effective. The impact on other users of these areas will be considered. If the identified area is considered safe and secure, the legislation provides for the injection and storage of greenhouse gases at a rate and volume agreed by the responsible Commonwealth minister.

It is very important to put the legislation into a broader context. The scientific consensus is that the earth has been warming and that the release of greenhouse gases into the atmosphere is the main cause, and that, if we continue on this course, we will run into dangerous climate change that may threaten the established patterns of life. If we do nothing, as we have been informed by the work of Professor Garnaut, the middle-of-the road impacts are in the region of a 4.8 per cent cut in GDP by the end of this century. That is a reduction of $400 billion in today’s money. There is also a projected 4.5-degree increase in Australia’s mean temperature by 2100. On these trends, 5½ million Australians may be exposed to dengue fever virus by 2100. There will be 4,000 extra heat related deaths per year by 2100. The value of irrigated agriculture grown in the Murray-Darling Basin by 2100 would decline by no less than 92 per cent. These are the projections referred to by Professor Garnaut in his research, and to this point in time I have not heard a credible argument placed against them.

The central method of avoiding catastrophic climate change is to reduce our greenhouse gas emissions. The government has set a goal of a reduction of 60 per cent in the 2000 level of emissions by 2050. The most efficient method of reducing these emissions is an emissions trading system or, as the government describes it, a Carbon Pollution Reduction Scheme. It is understandable, I guess, that some people will ask why the Rudd Labor government is considering introducing a Carbon Pollution Reduction Scheme while some of the largest global emitters are not. In other words, why does Australia need to act early? This is another issue that was addressed by Professor Garnaut in his work. The short answer is that Australia is not that early at all. As Professor Garnaut argued, by number, more developed countries are already doing quite a lot more. That is not to say that there are more developed countries in Europe than elsewhere. Quite a lot of developed countries are doing a lot more. Even though the United States, at a national level, is not acting to mitigate greenhouse gas emissions, the reality is that some of the US states—some much bigger than Australia in terms of population and economic activity in some sectors, including states such as California—have in fact done a lot, and that has been reflected in greatly reduced greenhouse gas emissions in those parts of the US.

Another important point is that it is unlikely that we will get the developing nations to commit to reducing their emissions unless the developed world and countries such as Australia begin this process. That, of course, was what the Kyoto protocol was all about. It is essential that China in particular becomes part of a serious international mitigation effort, and much earlier than the current international discussion currently contemplates. That, of course, is an important goal. Professor Garnaut was also right when he noted that our location, compared to other developed nations such as Canada and the northern areas of the United States, means that Australia has a bigger interest than many other developed countries in a strongly mitigative outcome. We are already a hot and dry country, and small variations in temperature and rainfall do have a much bigger impact here than in other developed countries. As important is the fact that, unlike other developed countries, our neighbours are mainly developing countries—in some respects some of the most fragile nations in the world. The problems of our neighbours in these circumstances would inevitably also become our problems.

While a number of opposition speakers that I have heard contributing to the debate have pointed to Australia’s relatively small overall contribution to greenhouse gas emissions internationally, it is the case that whatever Australia does is important and that it does matter. Professor Garnaut made the point that Australia has been punching above its weight on climate change for the last seven years—however, not in a good way. Any discussion of climate change policy in the US over these years highlighted Australia more than almost any other developed country for the fact that we had not signed up to the Kyoto protocol and were not taking steps that others were taking. We were the reason why the Bush administration was able to say, ‘We’re not alone amongst developed countries.’ I think it is fair to say that that was a relevant factor in some of the US domestic debate. Fortunately, that situation has now ended. As Professor Garnaut said, without early and strong action some time before 2020, we will realise that we have indelibly surrendered to forces beyond our control. Delaying now will eliminate attractive lower cost options to reduce emissions.

Reducing carbon pollution from fossil fuels has to be a central part of Australia’s efforts to minimise the impact of climate change. The burning of fossil fuels for power generation accounts for one-third of humanity’s total emissions of greenhouse gas to the atmosphere—no less than one-third. Most forecasts of Australian and global energy production and use predict heavy fossil fuel use continuing for many years to come. The Stern review, for example, forecast that fossil fuels would still account for a majority of energy production in 2050 and well beyond.

This means it is essential that we decouple carbon pollution from fossil fuel based energy production. Carbon capture and storage technologies are the important mechanisms by which this decoupling can occur. Studies have found that carbon capture and storage can reduce emissions from fossil fuel use by 80 to 85 per cent. That is the sort of quantum leap that is required to achieve deep cuts in global emissions.

The need to capture carbon has very important regional dimensions. For example, as I indicated in opening, the coal industry in the Hunter region has been the heart of economic activity since European colonisation in the area. The Hunter coal industry is now worth $6 billion a year, with nearly 90 million tonnes exported each year. With significant growth projections, the current level of exports is making up 90 per cent of the region’s exports—90 per cent gives a reasonable indication of its economic significance. The current level of exports also makes up nearly 30 per cent of New South Wales’ total exports. As I said, with increased port capacity in Newcastle and current levels of demand, the projections are that the level of coal exports is set to increase quite significantly in coming years.

The industry in the Hunter directly employs 7,000 people, with another 21,000 in related employment. Many of these employees and their families live in my electorate. The region also produces over 35 per cent of Australia’s aluminium. Its four power stations in the Hunter and Central Coast regions generate 80 per cent of New South Wales’s electricity. It is evident from those statistics just how important the examination of the policy responses to climate change is for the Hunter region. This is why people in the region take a very keen interest in these issues and why the question of carbon capture and storage in a region heavily dependent on coal exports and coal-fired electricity generation is vital. Emissions from the stationary energy sector, of which coal-fired power stations are the dominant energy source, represent more than 50 per cent of our greenhouse gas emissions, and this share is growing. It is in this context that this parliament needs to consider this bill.

The need for policy intervention is absolutely clear. In particular, I was very pleased that Labor took to the last election a commitment to establish a $500 million clean coal technology fund. The government has established two new bodies to drive the deployment of low-emission coal technologies in Australia. One is the National Low Emissions Coal Council and the other is the carbon storage task force. In addition, industry and state governments are committing more than $1 billion.

I applaud the important initiatives of the New South Wales government as well, including a pilot project to capture postcombustion carbon dioxide from the Lake Munmorah power station. This power station is just down the road from my electorate. The Eraring power station is in my electorate. Furthermore, the coal industry, through the COAL21 program, has levied itself 20c per tonne of coal production per year to fund carbon capture and storage and related technologies. The levy is estimated to be worth $1 billion over 10 years. The CFMEU—the coalminers union—has proposed that the Australian coal industry, through this program, should increase its levy on itself from 20c per tonne to $1 per tonne. This would increase the COAL21 fund by a factor of five to around $5 billion over the coming decade. They have that view because they understand the necessity for investment in the investigation of carbon capture and storage and other technologies to address greenhouse gas emissions. These sorts of investments will complement investments in renewable energies. For example, the $150 million Energy Innovation Fund will boost Australia’s existing momentum in solar technology research, while the $500 million Renewable Energy Fund will accelerate the commercialisation of new renewable energy technologies.

Australia also possesses amazing potential for geothermal energy production, and the government is committed to renewable energy representing a 20 per cent share in Australia’s electricity supply by 2020. If it can be developed and commercialised, geothermal energy production can play an extremely important role in achieving that outcome. The renewable energy industry can develop and invest with confidence in these circumstances.

Nevertheless, for the reasons I have described, the government recognises the vital importance that the coal industry specifically, and fossil fuels in general, will continue to represent to Australia for some time to come. Again, I emphasise the importance of it in my region. As a former coalmining engineer, and with a strong commitment to the industry, I am particularly interested, as a member of parliament, to see this particular technology successfully evolved.

This bill will help develop the carbon capture and storage industry. The successful development of the technology will massively reduce greenhouse gas emissions from coal and gas. As I referred to a moment ago, the CFMEU, the coalminers union, has done a lot of work in this area, for which I congratulate it. At times, unions are accused of not looking positively towards future policy positions. Certainly, the CFMEU has distinctly not had that approach in relation to the issue of climate change. The president of the union, Tony Maher, who I know well, has been a leader in the debate on these particular matters. He and his organisation have highlighted three positive outcomes of the industrialisation of carbon capture and storage technology, with which I concur.

The three positive outcomes that can emanate from the development of this technology include, firstly, a substantial contribution to avoiding the risk of global temperature rises that would cause widespread species and ecosystem loss and extreme weather conditions that could threaten many human communities. The second outcome is that the development of carbon capture and storage technology will enable growth in energy use to continue in a carbon constrained world and thereby enable economic growth to continue. This is especially important for developing countries that have legitimate and appropriate aspirations for substantial economic growth to give their citizens a better quality of life. The third positive outcome is that the technology will allow Australia to maintain its coal industry, which is a major engine of economic growth and wellbeing in regional Australia, the source of significant exports and a key component of Australia’s competitive advantage in energy-intensive manufacturing. That is a critical economic imperative for the House to consider. I hope we can ensure the safe passage of this legislation through the parliament to provide secure rights in relation to the development of carbon capture and storage technology.

Debate (on motion by Dr Kelly) adjourned.