Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

I table a supplementary explanatory memorandum relating to the government amendments to be moved to this bill. I am advised that the memorandum was circulated in the chamber on 14 October 2008.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I move Australian Greens amendment (1) on sheet 5603 revised:

(1)    Schedule 1, item 2A, page 3 (after line 23), at the end of section 2A, add:

        (2)    Another object of this Act is to ensure the full liability into the future for any adverse impact, including any leakage from carbon storage projects, is borne by the entities undertaking those projects.

It is an additional subsection and the effect of this amendment is to include:

Another object of this Act is to ensure the full liability into the future for any adverse impact, including any leakage from carbon storage projects, is borne by the entities undertaking those projects.

The reason for this amendment is to make very clear in the objects of this legislation that the liability for leakage is borne by the entities that undertake the projects and cannot therefore be seen as being borne by the community. This is the most vexed issue of the whole thing around carbon capture and storage. Companies can go out and pump liquefied carbon dioxide into these cavities and get their closure certificate from the minister. But, as the current legislation stands, there is the question of liability. What if the liquefied carbon dioxide starts leaking out of these cavities 20 or 50 years later? You will then have massive volumes of carbon dioxide going into the atmosphere. There will be localised environmental impacts but the bigger picture impact is that every country has targets that it has to meet and, if you have large volumes of carbon dioxide bubbling to the surface and leaking out wherever, the community is going to have to make good elsewhere and pay the cost.

Why should these companies be able to privatise profit and socialise cost over time? We have had enough experience of mining companies doing this. I need only refer to the Fly River in Papua New Guinea. BHP polluted it, made maximum profits over a long period and left the community with a destroyed ecosystem and long-term health and environmental costs. BHP has never had to pay the full cost of the damage, let alone rehabilitate the area. That is an example of what is occurring right around the world. The legacy issues from the mining industry go on for years. Legacy issues from the mining industry are sometimes localised and sometimes they are regional. In my own state of Tasmania, there is the King River and the effect that the operations at Mount Lyell have had on it over time. The point is that companies have walked away and have not had to bear the cost of rehabilitation. Even where bonds have been paid up front, they have never been indexed in such a way that there is a reasonable amount of money to deal with the issues at the point where they need to be dealt with as community attitudes change. Rest assured, community attitudes have changed in terms of using the environment as a sewer. We cannot use the atmosphere and the ocean as a sewer anymore. The issue of liability needs to be resolved.

I rise to continue the debate on the amendment that the Australian Greens moved in this house in relation to ensuring that the full liability into the future for any adverse impact, including any leakage from carbon storage projects, is borne by the entities undertaking those projects. This is a critical principle for this bill. I say it is a critical principle because, right around the world at this particular time, governments everywhere are grappling with this issue. There is not, at the moment, a regulatory framework in any government anywhere, so Australia is trying to be the first country in the world to put together a framework for carbon capture and storage. Therefore, the principles on which this bill is based are more important, I would argue, than a lot of legislation we deal with where there is already considerable experience in other parts of the world in comparative analysis and historical data. This is cutting new territory, and everyone around the world will be looking at what Australia has done, so the principles underlying it are critically important.

I would argue that the principle that needs to be absolutely entrenched upfront is the polluter pays principle—that is, the idea that the full liability for any adverse impact is borne by the polluter, borne by the entity that is trying to store liquefied carbon dioxide in the cavities, wherever they may be in the ground. So this amendment is a critical amendment of principle because it underpins everything else I am trying to do in my amendments and that I understand the coalition are trying to do in their amendments, because we recognise that the issue into the future is that companies come and go. That is the problem. The problem is that companies have a shelf life of one, two, five, 10, 15 years or so. It is a record if they get to 50 years as the same entity as they started. But the problem is that, once carbon dioxide is pumped underground, we have to keep it there permanently—not for five, 10, 15 or 50 years, but in perpetuity.

How do you develop a framework where the liability is very clearly demonstrated so that courts in the future can make a determination about who should pay? The amendments that are going to come after this and the Greens amendments are basically about having the closure certificate at 20 years and then going to common law. This means that, if these storage cavities leak at some time in the future, that matter will end up in the courts. It is my contention, as a member of the Greens, that that will inevitably happen because, whilst you might initially get very good geological structures, the volumes we are talking about of liquefied carbon dioxide over time are such that there will be enormous pressure going into fewer suitable geological formations. We simply will not have them, and then you will have greater risks associated with leakage.

The second question is: how are we going to plug these storages? We do not know that. The technology for plugging cavities of liquefied carbon dioxide over time is unproven, and those plugs might well not last the distance. So, underpinning this legislation has to be a clear directive to courts in the future—20 or 50 years hence—covering when this carbon dioxide was pumped into these holes in the ground by companies that were profiting by pollution and then dealing with the pollution by carbon capture and storage, so the liability rests with them. That is why having this principle upfront is so important.

At the recent International Union for Conservation and Nature World Conservation Congress that I attended in Barcelona, I sat talking to people from the Environmental Law Centre in Bonn, Germany. They talked about how European governments were trying to grapple with this issue of liability. I come from a community perspective but I suspect there are other people in the parliament who may well come from a business perspective. But it is the same for both: there will be no investment in this technology unless there is certainty about how liability is going to be assessed in the future, because if you try to ignore it and not state it explicitly, then companies will not invest because they will run the risk that, in the future, courts may interpret it one way or another. So it is important that you be explicit and upfront about who should bear liability for any leakage and adverse environmental impact that may occur in the future. It is the Greens’ view, which is why we have an amendment to this effect, that a bond should be set aside—as we require now for mining companies and so on—and it should be indexed and looked at in terms of a reasonable projection over time so that you have a reasonable amount of money to address any leakage in the time frames that we are talking about. We do not want to have what we have now: the 100-year legacy of disastrous mining impacts around the world which, even though they are disastrous, are localised. As I said before dinner, if carbon capture and storage is rolled out on a grand scale around the planet, the potential adverse impacts as to global warming and carbon dioxide going into the atmosphere are incredibly dire.

The International Energy Agency, in its recent report on carbon capture and storage, which I have downloaded, says:

The regulatory framework necessary to support CCS projects also needs to be further developed. Despite important progress, especially in relation to international marine protection treaties, no country has yet developed the comprehensive, detailed legal and regulatory framework that is necessary effectively to govern the use of CCS.

This is where, essentially, the eyes of the world are turned on Australia in terms of this technology. It is no secret to anybody here that the Greens believe this technology is too slow, too far away, too expensive and too last century to be effective in dealing with greenhouse gas emissions. That is why we have argued constantly that, if the companies involved want to spend the money on it, well and good, let them do so, but public money ought not to be spent on unproven technologies when there are proven technologies that can produce zero emissions. Carbon capture and storage can never be zero emissions. It could be, if successful in terms of capturing the carbon dioxide, a low-emissions technology but it could never be zero emissions technology. And we ought to be leap-frogging the whole coal industry in favour of renewables and efficiency.

As I have said many times in this chamber, the Stone Age did not end because we ran out of stones; the Stone Age ended because we learnt to do things better. In my view, the coal age will end not because we run out of coal but because we recognise that we cannot afford to keep using it in a planetary sense because of our climate. So I would strongly put to the chamber that it is critically important in a global context that we make very clear at the beginning in the objects of this act, for the whole world to see, that Australia endorses the polluter pays principle, that an object of this act is to make sure that the entity that is responsible for undertaking these projects bears the full liability into the future for any adverse impact, including leakage.

That is why, in another amendment I will be moving later tonight, I want to make sure that one of the expert committees that the minister must appoint in relation to this must be a committee that actually monitors these underground storages for leakage. It is no use just saying that we want to look at the rights of petroleum producers, vis-a-vis carbon capture and storage proponents; we have to also be making sure that these repositories are monitored year in and year out, so that when we see any problems occurring they can be rectified—they can be examined in terms of what is happening and can be dealt with. It is such a critical matter of principle upfront in the bill. It underpins all the other amendments that the Australian Greens have. And I think, globally, it is the only responsible thing to do.

There are only two choices here: either you accept that the polluter pays and the liability rests with the polluter, or you believe that private companies ought to be able to maximise profits and that the ecological and social costs be socialised to the community in the longer term. They are the choices here in terms of principles that should underpin this legislation. I would argue that, after more than a hundred years of polluting the atmosphere for free—as these companies have done and maximised their profits in a way that the community is now suffering with global warming—there could be no moral argument whatsoever for suggesting that the community should not only pay the costs of climate change in terms of the environmental impacts but also pay the costs in terms of rectifying things after these companies have made mistakes.

David Johnston (WA, Liberal Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

The opposition opposes the Australian Greens amendment. Whilst I say that, I think to some greater or lesser extent we are all singing from the same song sheet with this very commendable, unique and revolutionary legislation that does, as Senator Milne has quite rightly pointed out, seek to establish a bit of a benchmark internationally for geosequestration of greenhouse gases. The reason we oppose this amendment is that we in the opposition have a greater emphasis on the commercial viability, and what we have seen in the last 15 to 20 years in Australia is the privatisation and the use of business models in the operation of utilities delivering electricity into all of our capital cities around Australia.

I do correct Senator Milne to the extent that it is not about postcombustion or precombustion capture; it is about geosequestration—that is, the product of, particularly, a brown coal power station being captured, in the nature of capturing the smoke or capturing the carbon pre combustion, changing it into a substance that can be moved and then injected sub surface into a repository that will hold that product, as it has held oil and gas for a very long time. What we are saying is that, if there is integrity in a geophysical formal that has held oil and gas for literally thousands, if not millions, of years, we can prove up a repository that can hold this product similarly.

I do not profess to say that this framework is perfect. It is new. It is different. It seeks to do a whole lot of things that have not been done before. I want to commend the Minister for Resources and Energy, Mr Ferguson, for his determination to get on with the job here—and he has, I think, done a very good job in difficult circumstances. It is extremely complex. It is always complex when you weigh up the priorities of different tenure holders. In this instance, we have licensees and lessees of petroleum and gas licences or permits and we have the potential applicants to sequester coming from coal fired power stations or from other sources. It may well be that people who are in the future producing carbon dioxide in one form or another will want to sequester.

The commercial reality here—and our amendments go to this—is that you cannot expect to have a system with integrity and that is viable if you cannot get insurance in the short term because of the long-term liability; if you cannot manage the risk. The fact is that the target and beneficiaries of this legislation are utility energy providers. This legislation provides that after 20 years the risk will revert to the Commonwealth, to the taxpayer. What it seeks to do—and I think it does it reasonably well, acceptably well—is to balance the commerciality of the energy producers and their emissions with the future risk in geosequestration. With respect to some of the things that Senator Milne said—and I think she was right and I do not criticise her for any of those things—if you look at all the mines around the world and all the mines in Australia, the environmental problems we have are very small relative to the number of tonnes moved every day and the amount of product that we export. If this is done well it will do very much to preserve and enhance the environment. It will take a lot of carbon out of the atmosphere.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Whilst I am sympathetic to the amendment moved by Senator Milne, as I see it the nub of the points of difference on this bill is the issue of liability. My concern is that if there is unlimited liability we will not get the investment in or commitment to geosequestration in the first place. What we now see is what has been agreed in relation to the government’s original position of simply relying on common-law liability, which was clearly not satisfactory. Common-law principles are valuable, they are all well and good, but I do not believe common law is the appropriate approach when you are looking at a greenhouse gas storage regime that is the first of its type anywhere in the world and which has at its core the issue of liability, which must be dealt with. I think the alternative approach of effectively having a 20-year period of liability and then the reversion of risk to the state, with ministerial discretion to ensure that there are bonds or a contribution from industry to a fund so that if there are problems in the future there are moneys to deal with them, is the preferable one—although I think there will be other amendments that will be dealt with in relation to this.

The issues are to what extent, in the advice from expert committees the minister receives, there is transparency about the sequestration and capping of the material that has been stored, to what extent the minister has the power to require bonds from those who store greenhouse gases for the longer term, beyond the 20-year period that has been proposed, and in what manner the minister will exercise that power. I think they are the key issues that need to be dealt with.

That is my position in relation to this. I think Senator Johnston is absolutely right—this is an issue that we will need to revisit as technology and circumstances change. I see this as only a template which could well be subject to change in years to come.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

I thank Senator Milne, Senator Johnston and Senator Xenophon for their comments. Can I say at the outset that I think Senator Johnston is correct in saying we are all trying to achieve an outcome that will ensure long-term security of geosequestered greenhouse gases. The question is how we achieve that. It is the government’s view that the amendment moved by the Greens is not necessary to achieve that agreed outcome.

The government has strong reservations as to the insertion of a second object clause within the bill, as described in the amendment that we are now debating. Firstly, the Offshore Petroleum Act will cover a wide array of matters dealing with both petroleum and greenhouse gas storage activities. There are many inherent objects within this act. To elevate one element—in this case liability for greenhouse gas related adverse impacts—to a specific object against which all other activities, both petroleum and greenhouse, were assessed would in essence diminish the numerous other inherent objects contained within this complex legislation.

There are also concerns as to the practical effect of the proposed wording of the object clause; namely, that full liability be borne by the greenhouse gas project proponent in perpetuity. This message at the highest level within the legislation would give pause to even the most confident investor in the greenhouse gas industry. It would be highly unlikely that you could convince an investor to underwrite an activity that had no time bounds, and thus limitations on potential liability, given the geological time frames that may need to be accommodated.

I differ slightly with Senator Johnston’s comment that one balances greater economic benefit with, in his words, some small environmental damage. This legislation does not facilitate that outcome. There are protections in the bill that will meet the Greens’ desire to ensure that geosequestered greenhouse gases stay where they are.

The legislation provides for the minister to have absolute confidence in the long-term security of a reservoir—in fact, he or she cannot give a closure certificate unless he or she is assured of the security of that geosequestered material. So there is protection there, and we think it is strong protection, in relation to this field, which is acknowledged as a new field. There is a legislative basis to ensure the protection of the environment, particularly to ensure the goal that sequestered carbon and related material stays where it is intended it stay. So the government will not be supporting the Greens amendment, but I do thank senators for their comments.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I thank the senators for their comments. I draw their attention to the financial, legal, regulatory and public acceptance issues that are set out by the International Energy Agency in their recent report on carbon capture and storage. Contrary to what Senator McLucas has just said—that prioritising the issue of liability over everything else in the bill would elevate it to an issue beyond several others—it is the issue. It is the one issue that will govern whether people invest in this technology or not. It is the one issue that is dominating everybody’s minds for the very reason that Senator McLucas indicated—that we are talking about long-term liability. We are talking about a technology that is unproven and we are talking about companies that do not want to bear that cost.

It is interesting that Senator McLucas said—and she is quite right in saying this—that no company is going to invest if they have to take the long-term liability. Doesn’t that tell you something about this technology and about the companies involved? They all run around at every hearing on carbon capture and storage and tell you how this technology is proven—’We can do it. It’s never going to be a problem. It will never leak.’ If they believe their own rhetoric about it never being a problem, what is their problem about investing and taking on the liability? The fact of the matter is that they have no more confidence or knowledge than anybody else about whether the plugs they put on these repositories are going to last. They certainly will not withstand geological impact—a seismic impact, for example; nothing can withstand that. There are a range of other things that may occur in terms of the plug not succeeding in doing what it is set out to do.

I refer people to the International Energy Agency report. They go into a lot more considered detail about the costs, the liabilities and the level of risk associated with CO2 storage projects and how they will evolve as the project progresses given the life cycle of the project. They go on to say:

In general, the third party and self-insurance instruments are best suited to the injection-closure and post-closure periods. The risk profile of the project is clear while the site is active and the developer-owner or operator is best able at this stage to leverage the funds necessary to finance the instruments.

So you can do the estimated costs and risks and so on at the stage at which you are actually transferring the CO2, injecting it in the site and so on. But as the International Energy Agency points out:

… the long-tailed risk profiles of CO2 storage sites result in uncertain probability of risk exposure, which will make it difficult to define the degree and costs of any necessary remedial activities. It is also difficult to identify and monetise the damages that could result from the long-term leakage of CO2—

which is the point I am making about why we need to entrench the principle about who is liable, because at this point we do not know what the truth of the matter is in terms of our ability to capture and store for the long term. It goes on to say:

It is difficult to assign the upper limit of financial liability that underpins the more traditional third party and self-insurance financial instruments. In these circumstances a public-private pooling structure, either in the form of an insurance pooling model or a compensation as in trust fund model, is likely to be the most suitable to provide the necessary financial assurances over the long term. But both of these models involve a blend of financial instruments designed to pool potential risk.

Then it goes on to talk about all of that and says:

Governments are currently considering when they will take overall responsibility for managing a closed CO2 storage site—

which is the issue we have been grappling with here. Is it 10 years, 15 years, 20 years or 50 years? At what point does a government recognise a company will no longer exist? It goes on to say:

Many commentators have stated the need for governments to assume ultimate long-term liability for CO2 storage permanence, given that government is the organisational entity most likely to be in existence for the long term. However, there is still a need to clarify the extent of this transfer and the exact circumstances when this transfer of responsibility occurs—for example, the proposed European Union CCS Directive envisages the transfer of liabilities to individual member states “when all available evidence indicates that the stored CO2 will be completely contained for the indefinite future.”

It goes on:

More work is needed to clarify the conditions that might justify this transfer of responsibility.

This is where I would argue that this legislation is a pig in a poke. We simply do not know, just as the European Union does not know—nobody knows at this point—the point at which individual member states can be sure that the CO2 is completely contained for the indefinite future. The conclusion from the International Energy Agency is:

… governments and industry need to expand their discussions with the insurance industry on possible models for long-term liability. Any early CCS projects that receive special treatment regarding long-term liabilities, as in government risk sharing—

which clearly this does—

could be asked to make commitments in return—that is, regarding providing data on project performance and the independent assessment of risks and performance and so on.

This is the very latest from the International Energy Agency, making very clear that this is experimental territory. That is why this principle of the polluter pays must be entrenched. If we are silent on this issue in this legislation then we are buying ourselves real problems into the future. That is why I will be calling a division on this amendment—because I want it made very clear that, from the Greens’ point of view, we want an object in this legislation saying that it is the entity that injects the CO2, that effectively dumps CO2 into the environment, that is responsible in the longer term. Let us get that down so that 20 years hence, when this goes to court, courts can look back and see that at this time the parliament judged that the companies concerned did not have to take on long-term liability. It is a mistake, but it has to be there one way or the other.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

Thank you, Senator Milne. I really only can reiterate the assurance that I gave you earlier, that the legislation provides that the minister has to have absolute confidence before he or she can issue the closure certificate. That is the protection that I think you are seeking, the protection for the long-term liability for the material that has been sequestered. It is our view that the legislation does in fact provide that protection and it is our view that this amendment is, for the reasons I gave earlier, not necessary. I do understand your intent. We think it has been covered and we will not be supporting your amendment.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I think it is extraordinarily naive to say that the minister has to be certain that it will not leak before he signs the certificate. How on earth will a minister satisfy himself or herself of that, when the people telling them it will not leak are the proponents of the injection proposal? We have seen endless examples of ministers signing off all sorts of projects—on all sorts of conditions that have yet to be proven, yet to be assessed and so on—and later being proven to be wrong. In many cases they can be remediated. In this case, they will not be able to be remediated, and that is the difference.

I would hate to be a minister taking personal responsibility for signing off, saying, ‘This will not leak,’ because no minister could possibly make that judgement. Yet they will be making that judgement on an environmental impact assessment paid for by the proponents, and we all know that he who pays the piper calls the tune on environmental impact assessment. We have just had, in the last week, the Minister for the Environment, Heritage and the Arts, Mr Garrett, saying that it would be possible to approve the Gunns pulp mill in Tasmania and have the hydrodynamic modelling of the effluent done later. I have zero confidence in a minister signing a closure certificate because they are fully satisfied. He or she may well be fully satisfied, but it depends on the intelligence of the person concerned and the evidence before them; it does not actually bear any relation to the reality of whether or not that storage site will leak.

David Johnston (WA, Liberal Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

Without foreshadowing in too great detail, because I want to discuss this, in some respect, in context, in the scheme that is proposed, the closure certificate would be granted within five years after the end of the useful life of the repository, or earlier. The company would take its advice, the minister would take his own advice, geophysical et cetera, and then the minister would grant the site closure certificate. Thereafter, there would be a period of 15 years, called the closure assurance period. So we are talking about a period of 20 years, technically, wherein the proponent would monitor it, with the exclusive supervision of the departments, all of the data would be referred, and all of the measurements and detections would be done. It would only be after that that the minister could say the site was safe. When he did say that, and was satisfied on all the empirical data, liability would shift to the Commonwealth.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

The Office of the Chief Scientist monitors Ranger on exactly the same basis, Senator Johnston. I draw your attention to the number of leaks there and the failure to report any of the adverse environmental impacts in that time frame. I take your point about the time frame you are mentioning. That is why we have an amendment to 20 years, which would take it out to 25, effectively. I understand that issue. But it does not alter the fact that no minister can make that judgement about the long term from a five-year or even a 20-year time frame because this CO2 has to stay there for time immemorial.

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

The question is that Greens amendment (1) on sheet 5603 revised be agreed to.

David Johnston (WA, Liberal Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

by leave—I move opposition amendment (1); amendments (2), (4) and (5); amendments (3) and (10); amendments (6) to (8); and amendments (9) and (11), all on sheet 5620 revised. In effect, it is moving amendments (1) to (11):

(1)    Schedule 1, page 7 (after line 3), after item 10, insert:

10A  Section 6

Insert:

closure assurance period has the meaning given by section 249CZN.

(2)    Schedule 1, item 169, page 103 (after line 32), after section 249AJ, insert:

249AJA Retention lessee or production licensee to be notified of proposal to advertise blocks

Scope

        (1)    This section applies if:

             (a)    the responsible Commonwealth Minister proposes to publish a notice under subsection 249AJ(1) specifying a block that is the subject of a retention lease or production licence; and

             (b)    at the time of the proposal, the lessee or licensee is entitled to make an application for the grant of a greenhouse gas holding lease over the block.

Notification

        (2)    The responsible Commonwealth Minister must, at least 60 days before the proposed publication of the subsection 249AJ(1) notice, notify the lessee or licensee of the proposed publication.

Deferral of publication of notice

        (3)    If, during the period:

             (a)    beginning when the lessee or licensee is given the notification under subsection (2); and

             (b)    ending at the end of the day of proposed publication of the subsection 249AJ(1) notice;

the lessee or licensee makes such an application, the responsible Commonwealth Minister must not publish the subsection 249AJ(1) notice until:

             (c)    the application lapses; or

             (d)    the lessee withdraws the application; or

             (e)    the responsible Commonwealth Minister refuses to grant the greenhouse gas holding lease or greenhouse gas injection licence.

(3)    Schedule 1, item 169, page 104 (after line 21), at the end of section 249AK, add:

Decision must be made within 12 months

        (3)    The responsible Commonwealth Minister must make a decision under subsection (2) within 12 months after the end of the period specified in the relevant notice under subsection 249AJ(1).

(4)    Schedule 1, item 169, page 111 (after line 12), after section 249AP, insert:

249APA Retention lessee or production licensee to be notified of proposal to advertise blocks

Scope

        (1)    This section applies if:

             (a)    the responsible Commonwealth Minister proposes to publish a notice under subsection 249AP(1) specifying a block that is the subject of a retention lease or production licence; and

             (b)    at the time of the proposal, the lessee or licensee is entitled to make an application for the grant of a greenhouse gas holding lease or a greenhouse gas injection licence over the block.

Notification

        (2)    The responsible Commonwealth Minister must, at least 60 days before the proposed publication of the subsection 249AP(1) notice, notify the lessee or licensee of the proposed publication.

Deferral of publication of notice

        (3)    If, during the period:

             (a)    beginning when the lessee or licensee is given the notification under subsection (2); and

             (b)    ending at the end of the day of proposed publication of the subsection 249AP(1) notice;

the lessee or licensee makes such an application, the responsible Commonwealth Minister must not publish the subsection 249AP(1) notice until:

             (c)    the application lapses; or

             (d)    the lessee withdraws the application; or

             (e)    the responsible Commonwealth Minister refuses to grant the greenhouse gas holding lease or greenhouse gas injection licence.

(5)    Schedule 1, item 169, page 189 (lines 30 to 34), omit paragraph 249CR(c), substitute:

             (c)    either:

                   (i)    the responsible Commonwealth Minister is satisfied that all of the greenhouse gas substance injected into the identified greenhouse gas storage formation or formations concerned will be obtained as a by-product of petroleum recovery operations carried on under the production licence; or

                  (ii)    the responsible Commonwealth Minister is satisfied that some or all of the greenhouse gas substance injected into the identified greenhouse gas storage formation or formations concerned will be obtained as a by-product of petroleum recovery operations carried on under any production licence, and that the grant of the greenhouse gas injection licence is in the public interest; and

(6)    Schedule 1, item 169, page 219 (lines 13 and 14), omit subsection 249CZF(8), substitute:

Decision must be made within 5 years

        (8)    If an application for a site closing certificate has been made under section 249CZE, the responsible Commonwealth Minister must make a decision on the application within 5 years after the application was made.

(7)    Schedule 1, item 169, page 219 (lines 15 to 22), omit section 249CZFA.

(8)    Schedule 1, item 169, page 219 (before line 23), before section 249CZG, insert:

249CZFB Acknowledgement of receipt of application for site closing certificate

Scope

        (1)    This section applies if an application has been made under section 249CZE for a site closing certificate.

Acknowledgement of receipt of application

        (2)    The responsible Commonwealth Minister must give the applicant notice of receipt of the application.

(9)    Schedule 1, item 169, page 223 (after line 16), at the end of Part 2A.4, add:

Division 8—Long-term liabilities

249CZN Closure assurance period

        (1)    If:

             (a)    a site closing certificate is in force in relation to an identified greenhouse gas storage formation; and

             (b)    the responsible Commonwealth Minister is satisfied that operations for the injection of a greenhouse gas substance into the formation ceased on a day (the cessation day) before the application for the site closing certificate was made; and

             (c)    on a day (the decision day) that is at least 15 years after the issue of the site closing certificate, the responsible Commonwealth Minister is satisfied that:

                   (i)    the greenhouse gas substance injected into the formation is behaving as predicted in Part A of the approved site plan for the formation; and

                  (ii)    there is no significant risk that a greenhouse gas substance injected into the formation will have a significant adverse impact on the geotechnical integrity of the whole or a part of a geological formation or geological structure; and

                 (iii)    there is no significant risk that a greenhouse gas substance injected into the formation will have a significant adverse impact on the environment; and

                 (iv)    there is no significant risk that a greenhouse gas substance injected into the formation will have a significant adverse impact on human health or safety; and

                  (v)    since the cessation day, there have not been any operations for the injection of a greenhouse gas substance into the formation;

the responsible Commonwealth Minister may, by writing, declare that the period:

             (d)    beginning at the end of the cessation day; and

             (e)    ending at the end of the decision day;

is the closure assurance period in relation to the formation for the purposes of this Act.

        (2)    A copy of a declaration under subsection (1) is to be given to the holder of the site closing certificate.

249CZO Indemnity—long-term liability

Scope

        (1)    This section applies if:

             (a)    a site closing certificate is in force in relation to an identified greenhouse gas storage formation; and

             (b)    when the application for the certificate was made, the formation was specified in a greenhouse gas injection licence; and

             (c)    there is a closure assurance period in relation to the formation; and

             (d)    the following conditions are satisfied in relation to a liability of an existing person who is or has been the registered holder of the licence (whether or not the licence is in force):

                   (i)    the liability is a liability for damages;

                  (ii)    the liability is attributable to an act done or omitted to be done in the carrying out of operations authorised by the licence in relation to the formation;

                 (iii)    the liability is incurred or accrued after the end of the closure assurance period in relation to the formation;

                 (iv)    such other conditions (if any) as are specified in the regulations.

Indemnity

        (2)    The Commonwealth must indemnify the person against the liability.

249CZP Commonwealth to assume long-term liability if licensee has ceased to exist

Scope

        (1)    This section applies if:

             (a)    a site closing certificate is in force in relation to an identified greenhouse gas storage formation; and

             (b)    when the application for the certificate was made, the formation was specified in a greenhouse gas injection licence; and

             (c)    there is a closure assurance period in relation to the formation; and

             (d)    a person who has been the registered holder of the licence (whether or not the licence is in force) has ceased to exist; and

             (e)    if the person had continued in existence, the following conditions would have been satisfied in relation to a liability of the person:

                   (i)    the liability is a liability for damages;

                  (ii)    the liability is attributable to an act done or omitted to be done in the carrying out of operations authorised by the licence in relation to the formation;

                 (iii)    the liability is incurred or accrued after the end of the closure assurance period in relation to the formation;

                 (iv)    such other conditions (if any) as are specified in the regulations; and

              (f)    apart from this section, the damages are irrecoverable because the person has ceased to exist.

Commonwealth to assume liability

        (2)    The liability is taken to be a liability of the Commonwealth.

(10)  Schedule 1, item 274B, page 372 (before line 12), before subparagraph 435B(2)(f)(i), insert:

                 (ia)    the powers conferred by section 249AK;

                 (ib)    the powers conferred by section 249AL;

(11)  Schedule 1, item 274B, page 372 (after line 23), after subparagraph 435B(2)(f)(ix), insert:

                (ixa)    the making of a declaration under section 249CZN;

I will try to be brief with what is a very complex piece of legislation. As Senator Milne has quite rightly identified, this is the first time that I think a constitutional government, in the Western world at least, has sought to enact a framework for geosequestration of postcombustion or precombustion greenhouse gas captured material to be sequestered in circumstances where the Commonwealth only has jurisdictional power beyond the three-mile limit. Accordingly, your first thought is that this piece of legislation is essentially focused upon Gippsland in Victoria, where the burning of brown coal for electricity generation is a very big emitter of greenhouse gases.

I refer to the vital ingredients in any piece of legislation such as this. Firstly, it must be commercially viable. If there is going to be any future for geosequestration as a solution to greenhouse gas emission, we must have a commercial focus. We must then also seek to have a commercial focus mindful that we do not want to have any diminution or derogation of the rights held by oil and gas licensees or lessees where obviously there is a high correlation between likely repositories and prospective repositories for greenhouse gas sequestration and oil and gas deposits. I emphasise commercial viability because the ultimate users will be and have been to this point in time commercial entities supplying energy into the capital cities and their hinterlands of almost every state in Australia through the combustion of coal. Such sequestration must be affordable and such rights acquired without a predominance of red tape. In other words, the system has to be very user friendly.

The first opposition amendment deals with the closure assurance period. This is relevant to amendments (9) and (11). It is simply a definition and, as I mentioned previously with respect to Senator Milne’s and the Greens’ amendments, it establishes the 15-year period whereby the minister, through the observation of his skilled departmental scientific officers and those of the proponent, monitors the site prior to allowing the proponent formally to be able to say that the site has fulfilled its purpose and is a secure site such that the long-term liability shifts to the Commonwealth.

Opposition amendments (2), (4) and (5) deal with the rights of the petroleum titleholders and underpin the commercial integrity of the overall offshore petroleum gas and petroleum legal frameworks. In other words, what the minister and the government have sought to do is to allow the licensees and lessees of oil and gas titles to be able to intercede—’object’ is the word I would use, as a West Australian—where an applicant to geosequester a greenhouse gas brings an application on a retention lease or another title held by an oil and gas titleholder and that titleholder can effectively stop the geosequestration proponent from proceeding further. What that does, of course, is protect the rights of the oil and gas licensee, permit holder or leaseholder, as the case may be, and it quite quickly allows—I think the period is 60 days—the proponent to realise that there is going to be disputation over that particular site so that it can move on. That is a very difficult balancing act, and I think the minister has struck a fair balance. I think that it is workable. Both the oil and gas licensees and lessees would be reasonably satisfied that their interests and proprietary rights are being protected and that the proponent to geosequester greenhouse gases would have a reasonable opportunity of knowing in a relatively short and timely fashion that that is an unacceptable proposal so far as the existing titleholder goes.

Effectively, these amendments provide for and affirm the inherent correlation and interdependence of sequestration rights with oil and gas production rights, exploration rights and retention lease rights. Such rights will now extend to greenhouse gases derived from the processing of product from the titles of, for example, the North West Shelf. So we have a difficult situation in terms of the legislative framework. In the Gippsland area of Victoria, we would anticipate that there would be greenhouse gases produced onshore through the burning of brown coal, whereas on the North West Shelf there would be substantial portions of carbon dioxide produced as a by-product of the LNG industry. The oil and gas producers in the North West Shelf would have ready access to their existing tenements for the geosequestration of those greenhouse gases into the future. I think that this is a very reasonable, albeit highly technical and difficult, marrying up of those different requirements. I want to compliment the department and the minister for what I think is a very reasonable and proper attempt at seeking to cover the field in what is a very difficult and complex area.

With respect to amendments (3) and (10), again, in line with what I have said about the user-friendly nature and the minimum of delay and red tape from a greenhouse gas producer’s point of view, we seek to limit the minister’s ability to sit on applications for any longer than 12 months. The minister will be taking advice in the practical way that I anticipate that this will be dealt with. He will be calling on his department to assess the application from a geophysical and geotechnical perspective and he will have 12 months to make a decision. Whilst that timeline, from my point of view, could be a bit quicker, we have to be thankful for small mercies. In the scheme of this complex legislation, 12 months is probably quite reasonable. Ultimately, I anticipate that a proponent into the future—and I anticipate 10 years into the future—will come to the government with a plan for carbon capture and conversion into a substance to be piped into a repository some distance away from the power station. Part of that plan will incorporate a review of the legislation. They can ask the government to change the bits they do not like or maybe alter the regulations. I believe 12 months is a reasonable period and quite user-friendly. I think it tells us that the government is dinkum about making some legislation that is actually practically applicable.

Opposition amendments (6), (7) and (8) deal with the site closure certificate. If this were to be a successful scientific scheme into the future, I anticipate there would literally be millions of tonnes of greenhouse gas product injected into the particular site. At the end of the sequestration site’s usefulness or when the geophysicist says, ‘This site will not safely accommodate any more greenhouse gas,’ the proponent must prepare the site for its capping and closure. Thereafter, when the proponent is satisfied that the capping and closure can proceed and that the site has integrity, it will apply to the minister for a site closure certificate. The minister will have five years to second-guess and review all of the data and scientific information available, as I said to Senator Milne earlier, to take the advice of his department and come to a conclusion that the site certificate may or may not be granted. If it is granted, the liability resides with the proponent. The 15 years begins upon grant of that site clearance certificate. After 15 years, if all is well and there is no leakage, and if everything goes according to the plan that was incorporated from the site’s inception in the application, the minister will declare that the site assurance period has expired.

If the minister is satisfied on all the conditions set out in amendments (9) and (11), he will effectively grant that closure and close the site such that the liability and risk moves from the corporate entity. Importantly, the corporate entity may devolve into nothing. It may be a toothless tiger, a house of straw, that has no assets and capacity to meet the liability in any event. We have suggested that 20 years is a reasonable period from the decision of the proponent to close the site to when the minister may formally address all of the data and say, ‘Yes, I accept that the site is safe and closed and no liability flows.’ If the minister finds something else, it is a problem for the proponent, which is in line with what Senator Milne is concerned about. In passing, I think I have dealt with amendments (9) and (11). I think that we are all, to a greater or lesser extent, singing from the same song sheet. It is simply a question of balancing the commercial risk and the liability. I think that the opposition’s amendments have struck a fair, commercial and viable balance.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I have listened with interest to Senator Johnston and there are a couple of issues I would like to raise. He says that the government must make a decision within a year. Realistically, how many sites does he think are going to be up for assessment in any one year? Given the volumes of greenhouse gases we are talking about—and we are talking about coal-fired power stations pumping out huge volumes of carbon dioxide converted to liquid CO2 and pumped by pipelines to various sites—we are giving the minister one year. It is going to involve a whole bureaucracy, depending on the number of sites. In the pilot phases and the early years there might only be a few, but it could well end up being a huge number of sites when you consider the number of coal-fired power stations on the east coast of Australia and the lack of suitable sites on the east coast of Australia. There is none off the Hunter Valley. There are better prospective sites off Gippsland and Victoria, but there is certainly none off the Hunter Valley. According to the International Energy Agency maps, the most prospective sites are off the North West Shelf. It would be an awfully long pipeline from the Hunter Valley to the North West Shelf, dare I say. With carbon dioxide going one way and water the other, according to Senator Heffernan’s plan we will have an awful lot of carbonated water going one way or the other! However, that is not the point.

The issue here is: how many sites? You are saying the minister must decide within a year. That is a huge workload to be dealt with in that time. The second thing is: why five years? Whilst in the initial phases there might be greater certainty about the geological structures, as the volume increases and the necessity for more sites increases, some sites may well need longer than five years to make a decision about whether they are suitable. I would like to know why Senator Johnston has determined a five-year term and whether he thinks one year is realistic given the volumes we are talking about—if this actually proceeds in the way that the government and perhaps the opposition think it might.

David Johnston (WA, Liberal Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

That is a very legitimate question from Senator Milne. Nobody would lodge an application seeking to commence work on the site or the region immediately thereafter. They will do an enormous amount of work to ascertain whether the site has integrity—the geophysical profile and the cap security that is necessary in terms of the rock type formations and all of that—before they even contemplate lodging an application. They can do that by going to the department and asking for the material and information that the oil and gas companies have provided from that region, more broadly, over a long period. They would then plan an exploration program of maybe a half a dozen holes. Their plan would be completely made out before they lodged their application. If the holes do not prove up the integrity, the application simply goes nowhere.

What the minister would receive is not just a piece of paper saying, ‘I would like this area defined by GPS references.’ He would have a huge screed of documentation supporting the fact that this is a likely site, that it does not interfere with other proponents and that it is at a depth and location that is viable to the commercial interests of the greenhouse gas emitter. The minister then has 12 months to reconcile all of that work with his department to see whether they would advise that he grant the application on so many different threshold issues. That is the way the system should work and, indeed, to a greater or lesser extent that is the way mining works in Australia today. No-one simply goes out and marks out a large tenement without having done a huge amount of reconciliation of information from the particular region in question.

The other question was, I think, about the five years. Similarly, the company will never purport to close the site or apply for a closure certificate unless their scientists are telling them the site is secure and stable and they believe that the company may now make application to the minister to get the five years running. The minister may grant that application in less than the five years, in which case the 15 years would run. So there is an incentive for them to provide an enormous amount of data and supporting information that can be crosschecked by the department as to whether the site is secure.

Bear in mind that, as with the Otway trial project, there are measuring devices in the site. They are measuring and watching and calibrating the movement of the greenhouse gas material in the repository. All of this information would be available to the proponent—and must be available to him—for him to know viably how long he has got to use that site at the rate that he is injecting the material.

I actually think that the minister’s department would be able to deal with quite a number. The department has recognised from estimates, I think, some 15 feasible sites. Some are at a more advanced stage of assessment than others. But the point is that nothing is going to happen in a way that leaves the department, the minister, the government and indeed the parliament left in the dark as to what capacity this particular site or sites would have.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I accept that it is possible to measure the capacity that a site would have. What is not possible to measure is the likelihood of it staying there. That is my issue. I am fully aware that you can measure the size of a cavity and you can determine the volume of the CO2, once liquefied, in that particular cavity. What you cannot determine is how you are going to keep it there. I am interested to know how you are going to monitor these cement plugs, or whatever they are called, over time underneath the ocean.

When I come to the one year and the five years, I am concerned that we are talking about 15 sites. But we are going to need a lot more than 15 sites for the volumes that we are talking about in the foreseeable future, because we are only talking about coal-fired power stations for the next 20 or 30 years. That is a huge volume of greenhouse gases, and I would argue that those 15 or so sites are nowhere near what would be necessary in that time frame. My concern is that the minister is only going to be as well informed as the companies that make the greenhouse gases. Contrary to the argument, you are saying that no company is going to put it forward until they can prove that there is no leakage. On the contrary, I think that, now that the principle is established that the polluter does not pay and that the liability will be shifted to the taxpayer and the community as soon as this period ends, there is a strong argument for them to get their closure certificate as fast as possible so that they can wash their hands of the liability. As long as you take away the liability from them, there is an incentive for them to get it off their books as fast as possible. To give them an incentive to do the right thing, you must make them fully liable. That is where I have a totally reverse point of view from the government and the opposition. There is no evidence anywhere that people who have been excused of liability are more responsible than people who have to bear full liability.

David Johnston (WA, Liberal Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

In answer to those perfectly legitimate questions, firstly, we have not even begun to properly look for sites. These are sites that have been yielded through oil and gas exploration or through any other means where we have been taking commercial carbon dioxide or where we have been mining generally. Once we start to see a commercial imperative in looking for and drilling up sites, I think you will see that there will be many more sites and they will have a potentially enormous capacity. We know how much oil and gas there is. I am told, but I stand to be corrected, that there is 70 years worth of gas at the current rate of extraction on the North West Shelf. I think the figure changes on an almost daily basis.

Currently, there is a very large number of projects around the world that are using sequestration in one form or another. It is carbon capture and storage that are new here. At Sleipner and Snohvit, in Norway, I believe there is a project going along quite successfully. In Salah, in Algeria, there is a very successful project. And at the Archer Daniels ethanol plant in Illinois there is a successful project that is sequestering carbon dioxide closely adjacent to a town site and the town’s water reservoir.

Ultimately, the proof of this pudding will be in a complete review of the Otway Basin project, which is going along, I think, very successfully. It is sequestering 100,000 tonnes of CO2. The report on that project will probably be available in the mid to latter part of next year. The measurements and all of the information is there. The measuring devices are so sensitive that, when the wind is blowing from the north-east, they can detect carbon dioxide from the city of Melbourne, some 300 kilometres away.

Those are the facts about what is happening with this technology. Bear in mind that this is inaugurating legislation. It is the first time anyone has attempted to create a framework that is user friendly and potentially viable for brown coal energy producers in particular.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

First of all, I want to thank the Senate for facilitating the consideration of all opposition amendments together. I think it is very sensible. The amendments moved by Senator Johnston reflect the outcome of very constructive negotiations with the opposition and will be supported by the government. It is important to note that these discussions were assisted by the valuable reports on the bills prepared by the Senate Standing Committee on Economics and the House of Representatives Standing Committee on Primary Industries and Resources. I place on record our thanks to the membership of both those committees for the work that they have done in informing this debate.

Senator Johnston outlined very clearly the result of the adoption of those amendments, so I will not take the Senate’s time to go through that. On behalf of the minister, I want to thank the opposition spokespeople who have had carriage of the legislation, Mr Ian Macfarlane and Senator Johnston, for their assistance and the cooperative way in which their offices and the office of the minister have operated. The government will be supporting the opposition amendments.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I am concerned about one particular amendment. When Senator Johnston said that he would move them all together, I had not anticipated that he was going to do that. I thought that we were going to take them in order. I would like to have opposition amendments (6) to (8) on sheet 5620 voted on separately.

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Thank you, Senator Milne. I will put opposition amendments (6) to (8) on sheet 5620 separately. The question is that opposition amendments (1) to (5) and (9) to (11) on sheet 5620 be agreed to.

Question agreed to.

The Temporary Chairman:

The question is that opposition amendments (6) to (8) on sheet 5620 be agreed to.

Question agreed to.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I would like it recorded that the Greens voted against amendments (6) to (8) on sheet 5620.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

by leave—I move government amendments (1) and (2) on sheet PN302:

(1)    Schedule 1, item 81, page 22 (line 21), at the end of the definition of significant risk, add “, 15FA, 15FB, 15FC or 15FD”.

(2)    Schedule 1, item 109, page 36 (line 23) to page 38 (line 7), omit section 15F, substitute:

15F Significant risk of a significant adverse impact—approval of key petroleum operations

        (1)    For the purposes of sections 79A, 79B, 114A, 114B, 138A and 138B and paragraph 435B(2)(a), the question of whether there is a significant risk that a key petroleum operation will have a significant adverse impact on:

             (a)    operations for the injection of a greenhouse gas substance; or

             (b)    operations for the storage of a greenhouse gas substance;

is to be determined in a manner ascertained in accordance with the regulations.

        (2)    A manner ascertained in accordance with regulations made for the purposes of subsection (1) must take into account:

             (a)    the probability, or range of probabilities, of the occurrence of the adverse impact; and

             (b)    the economic consequences of the adverse impact; and

             (c)    the economic consequences of the adverse impact relative to the potential economic value of the operations referred to in whichever of paragraph (1)(a) or (b) is applicable.

        (3)    Subsection (2) does not limit the matters that may be taken into account.

        (4)    Subsections (1) and (2) have effect subject to subsections (5) and (6).

        (5)    For the purposes of sections 79A, 79B, 114A, 114B, 138A and 138B and paragraph 435B(2)(a), a key petroleum operation will have an adverse impact on:

             (a)    operations for the injection of a greenhouse gas substance; or

             (b)    operations for the storage of a greenhouse gas substance;

(the relevant greenhouse gas operations) if, and only if, the key petroleum operation will result in:

             (c)    an increase in the capital costs (other than prescribed costs) of the relevant greenhouse gas operations; or

             (d)    an increase in the operating costs (other than prescribed costs) of the relevant greenhouse gas operations; or

             (e)    a reduction in the rate of injection of the greenhouse gas substance; or

              (f)    a reduction in the quantity of the greenhouse gas substance that will be able to be stored.

        (6)    For the purposes of sections 79A, 79B, 114A, 114B, 138A and 138B and paragraph 435B(2)(a), if there is a risk that a key petroleum operation will have an adverse impact on:

             (a)    operations for the injection of a greenhouse gas substance; or

             (b)    operations for the storage of a greenhouse gas substance;

then that risk is not to be treated as significant, and that adverse impact is not to be treated as significant, if the amount that, under the regulations, is taken to be the probability-weighted impact cost of the key petroleum operation is less than the amount that, under the regulations, is taken to be the threshold amount.

15FA Significant risk of a significant adverse impact—grant of production licence

        (1)    For the purposes of sections 145 and 146, the question of whether there is a significant risk that any of the operations that could be carried on under a production licence will have a significant adverse impact on operations that are being, or could be, carried on under:

             (a)    a greenhouse gas assessment permit; or

             (b)    a greenhouse gas holding lease; or

             (c)    a greenhouse gas injection licence;

is to be determined in a manner ascertained in accordance with the regulations.

        (2)    A manner ascertained in accordance with regulations made for the purposes of subsection (1) must take into account:

             (a)    the probability, or range of probabilities, of the occurrence of the adverse impact; and

             (b)    the economic consequences of the adverse impact; and

             (c)    the economic consequences of the adverse impact relative to the potential economic value of the operations that are being, or could be, carried on under the permit, lease or licence referred to in whichever of paragraph (1)(a), (b) or (c) is applicable.

        (3)    Subsection (2) does not limit the matters that may be taken into account.

        (4)    Subsections (1) and (2) have effect subject to subsections (5) and (6).

        (5)    For the purposes of sections 145 and 146, an operation that could be carried on under a production licence (the production licence operation) will have an adverse impact on operations (the relevant greenhouse gas operations) that are being, or could be, carried on under:

             (a)    a greenhouse gas assessment permit; or

             (b)    a greenhouse gas holding lease; or

             (c)    a greenhouse gas injection licence;

if, and only if, the production licence operation will result in:

             (d)    an increase in the capital costs (other than prescribed costs) of the relevant greenhouse gas operations; or

             (e)    an increase in the operating costs (other than prescribed costs) of the relevant greenhouse gas operations; or

              (f)    a reduction in the rate of injection of the greenhouse gas substance; or

             (g)    a reduction in the quantity of the greenhouse gas substance that will be able to be stored.

        (6)    For the purposes of sections 145 and 146, if there is a risk that an operation that could be carried on under a production licence (the production licence operation) will have an adverse impact on operations that are being, or could be, carried on under:

             (a)    a greenhouse gas assessment permit; or

             (b)    a greenhouse gas holding lease; or

             (c)    a greenhouse gas injection licence;

then that risk is not to be treated as significant, and that adverse impact is not to be treated as significant, if the amount that, under the regulations, is taken to be the probability-weighted impact cost of the production licence operation is less than the amount that, under the regulations, is taken to be the threshold amount.

15FB Significant risk of a significant adverse impact—approval of key greenhouse gas operations

        (1)    For the purposes of sections 249AF and 249BD and paragraph 435B(2)(b), the question of whether there is a significant risk that a key greenhouse gas operation will have a significant adverse impact on petroleum exploration operations, or petroleum recovery operations, that are being, or could be, carried on under:

             (a)    an existing exploration permit; or

             (b)    an existing retention lease; or

             (c)    an existing production licence; or

             (d)    a future exploration permit; or

             (e)    a future retention lease; or

              (f)    a future production licence;

is to be determined in a manner ascertained in accordance with the regulations.

        (2)    A manner ascertained in accordance with regulations made for the purposes of subsection (1) must take into account:

             (a)    the probability, or range of probabilities, of the occurrence of the adverse impact; and

             (b)    the economic consequences of the adverse impact; and

             (c)    the economic consequences of the adverse impact relative to the potential economic value of the petroleum exploration operations, or petroleum recovery operations, that are being, or could be, carried on under the permit, lease or licence referred to in whichever of paragraph (1)(a), (b), (c), (d), (e) or (f) is applicable.

        (3)    Subsection (2) does not limit the matters that may be taken into account.

        (4)    Subsections (1) and (2) have effect subject to subsections (5) and (6).

        (5)    For the purposes of sections 249AF and 249BD and paragraph 435B(2)(b), a key greenhouse gas operation will have an adverse impact on petroleum exploration operations, or petroleum recovery operations, that are being, or could be, carried on under:

             (a)    an existing exploration permit; or

             (b)    an existing retention lease; or

             (c)    an existing production licence; or

             (d)    a future exploration permit; or

             (e)    a future retention lease; or

              (f)    a future production licence;

if, and only if, the key greenhouse gas operation will result in:

             (g)    an increase in the capital costs (other than prescribed costs) of the petroleum exploration operations or petroleum recovery operations; or

             (h)    an increase in the operating costs (other than prescribed costs) of the petroleum exploration operations or petroleum recovery operations; or

              (i)    a reduction in the rate of recovery of the petroleum; or

              (j)    a reduction in the quantity of the petroleum that will be able to be recovered.

        (6)    For the purposes of sections 249AF and 249BD and paragraph 435B(2)(b), if there is a risk that a key greenhouse gas operation will have an adverse impact on petroleum exploration operations, or petroleum recovery operations, that are being, or could be, carried on under:

             (a)    an existing exploration permit; or

             (b)    an existing retention lease; or

             (c)    an existing production licence; or

             (d)    a future exploration permit; or

             (e)    a future retention lease; or

              (f)    a future production licence;

then that risk is not to be treated as significant, and that adverse impact is not to be treated as significant, if the amount that, under the regulations, is taken to be the probability-weighted impact cost of the key greenhouse gas operation is less than the amount that, under the regulations, is taken to be the threshold amount.

15FC Significant risk of a significant adverse impact—grant of greenhouse gas injection licence

        (1)    For the purposes of sections 249CI and 249CR and paragraph 435B(2)(c), the question of whether there is a significant risk that any of the operations that could be carried on under a greenhouse gas injection licence will have a significant adverse impact on operations that are being, or could be, carried on under:

             (a)    an existing exploration permit; or

             (b)    an existing retention lease; or

             (c)    an existing production licence; or

             (d)    a future exploration permit; or

             (e)    a future retention lease; or

              (f)    a future production licence;

is to be determined in a manner ascertained in accordance with the regulations.

        (2)    A manner ascertained in accordance with regulations made for the purposes of subsection (1) must take into account:

             (a)    the probability, or range of probabilities, of the occurrence of the adverse impact; and

             (b)    the economic consequences of the adverse impact; and

             (c)    the economic consequences of the adverse impact relative to the potential economic value of the operations that are being, or could be, carried on under the permit, lease or licence referred to in whichever of paragraph (1)(a), (b), (c), (d), (e) or (f) is applicable.

        (3)    Subsection (2) does not limit the matters that may be taken into account.

        (4)    Subsections (1) and (2) have effect subject to subsections (5) and (6).

        (5)    For the purposes of sections 249CI and 249CR and paragraph 435B(2)(c), an operation that could be carried on under a greenhouse gas injection licence (the injection licence operation) will have an adverse impact on operations (the relevant petroleum operations) that are being, or could be, carried on under:

             (a)    an existing exploration permit; or

             (b)    an existing retention lease; or

             (c)    an existing production licence; or

             (d)    a future exploration permit; or

             (e)    a future retention lease; or

              (f)    a future production licence;

if, and only if, the injection licence operation will result in:

             (g)    an increase in the capital costs (other than prescribed costs) of the relevant petroleum operations; or

             (h)    an increase in the operating costs (other than prescribed costs) of the relevant petroleum operations; or

              (i)    a reduction in the rate of recovery of the petroleum; or

              (j)    a reduction in the quantity of the petroleum that will be able to be recovered.

        (6)    For the purposes of sections 249CI and 249CR and paragraph 435B(2)(c), if there is a risk that an operation that could be carried on under a greenhouse gas injection licence (the injection licence operation) will have an adverse impact on operations that are being, or could be, carried on under:

             (a)    an existing exploration permit; or

             (b)    an existing retention lease; or

             (c)    an existing production licence; or

             (d)    a future exploration permit; or

             (e)    a future retention lease; or

              (f)    a future production licence;

then that risk is not to be treated as significant, and that adverse impact is not to be treated as significant, if the amount that, under the regulations, is taken to be the probability-weighted impact cost of the injection licence operation is less than the amount that, under the regulations, is taken to be the threshold amount.

15FD Significant risk of a significant adverse impact—power of responsible Commonwealth Minister to protect petroleum

        (1)    For the purposes of section 249CZC and paragraph 435B(2)(d), the question of whether there is a significant risk that any of the operations that are being, or could be, carried on under a greenhouse gas injection licence will have a significant adverse impact on:

             (a)    operations to recover petroleum; or

             (b)    the commercial viability of the recovery of petroleum;

is to be determined in a manner ascertained in accordance with the regulations.

        (2)    A manner ascertained in accordance with regulations made for the purposes of subsection (1) must take into account:

             (a)    the probability, or range of probabilities, of the occurrence of the adverse impact; and

             (b)    the economic consequences of the adverse impact; and

             (c)    the economic consequences of the adverse impact relative to the potential economic value of the operations or recovery referred to in whichever of paragraph (1)(a) or (b) is applicable.

        (3)    Subsection (2) does not limit the matters that may be taken into account.

        (4)    Subsections (1) and (2) have effect subject to subsections (5) and (6).

        (5)    For the purposes of section 249CZC and paragraph 435B(2)(d), an operation that could be carried on under a greenhouse gas injection licence (the injection licence operation) will have an adverse impact on:

             (a)    operations to recover petroleum; or

             (b)    the commercial viability of the recovery of petroleum;

if, and only if, the injection licence operation will result in:

             (c)    an increase in the capital costs (other than prescribed costs) of the recovery of the petroleum; or

             (d)    an increase in the operating costs (other than prescribed costs) of the recovery of the petroleum; or

             (e)    a reduction in the rate of recovery of the petroleum; or

              (f)    a reduction in the quantity of the petroleum that will be able to be recovered.

        (6)    For the purposes of section 249CZC and paragraph 435B(2)(d), if there is a risk that an operation that is being, or could be, carried on under a greenhouse gas injection licence (the injection licence operation) will have an adverse impact on:

             (a)    operations to recover petroleum; or

             (b)    the commercial viability of the recovery of petroleum;

then that risk is not to be treated as significant, and that adverse impact is not to be treated as significant, if the amount that, under the regulations, is taken to be the probability-weighted impact cost of the injection licence operation is less than the amount that, under the regulations, is taken to be the threshold amount.

The government proposes these amendments in response to the recommendation of the Senate Scrutiny of Bills Committee, which, in considering the amendments made to the bill in the House of Representatives, concluded that provisions in the revised bill relating to the minister’s regulation-making power in respect of the significant risk of a significant adverse impact test may inappropriately delegate legislative powers and, in effect, suggested that these criteria might be included in the primary legislation rather than in the regulations. To address that matter it is proposed to amend the bill to define the impacts that will be regarded as adverse impacts.

The amendment will allow the regulations to set threshold criteria that may be taken into account in determining whether a significant risk of a significant adverse impact exists. Thresholds will be determined on the basis of the probability of occurrence and consequences. The proposed amendments relate to each of the situations in which the responsible Commonwealth minister is required to determine whether or not there is a significant risk of a significant adverse impact. Specific regulation-making powers have been included to provide for the manner of determining whether a significant risk of a significant adverse impact exists.

In determining if a significant risk of a significant adverse impact exists—the person who wrote this legislation was having fun—the amendments require regulations to take into account the probability of the occurrence of the adverse impact, the economic consequences of the adverse impact and the relative value of the consequences to the potential economic value of the operations undertaken on the title. The proposed amendments define the impacts that will be regarded as an adverse impact on petroleum title activities. These are: an increase in the capital costs, an increase in the operating costs, a reduction in the petroleum recovery rates and a reduction in the quantity of petroleum recovered.

The proposed amendments also define the impacts that will be regarded as an adverse impact for greenhouse gas title activities. These are: an increase in the capital costs, an increase in the operating costs, a reduction in the greenhouse gas injection rates or a reduction in the quantity of greenhouse gas that can be injected. Provisions to enable the regulations to set threshold criteria that may be regarded in determining if a significant risk of a significant impact exists are included in the proposed amendments. I commend the amendments to the Senate.

David Johnston (WA, Liberal Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

The opposition supports these amendments and commends the government for the very complex nature of issues they have had to deal with. I believe that we have achieved a lot in the addressing of significant risk as to the various interests of the various parties that are potentially affected through the grant or through an application to sequester this material. I too commend these amendments to the Senate.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I note with interest that these amendments refer to significant adverse impact in relation to other users but not in relation to the environment or the community. Why is it confined to sorting out the differences in terms of significant adverse impact on the petroleum and gas industry or on those proponents seeking to inject liquefied CO2? Why is there no requirement to address the significant adverse impacts in relation to what happens to the community—either at the local level, if the gas leaks out, or at the global level, in terms of a state party’s responsibility to meet an agreed treaty target—and who will bear the responsibility to make good? Why is that not there? I concur that it is a good idea to address what the significant adverse impacts are, and that a lot of work has been done on that, but why is it restricted to that and why does it not include the broader common interest position?

David Johnston (WA, Liberal Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

The simple answer is that, when the minister exercises his discretion and his powers of grant, he is taken to be considering those aspects. So he will call for advice and for matters of public interest and importance in the making of his decision. He is taken to have considered those matters because he is the guardian of the public interest in this instance.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Again, I might say that there are plenty of environment ministers and resource ministers who have never been the guardian of the public interest.

David Johnston (WA, Liberal Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

That’s why they get voted out.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

This is a very different issue from ones we normally deal with. Yes, as Senator Johnston says, ministers and governments can be voted out if they fail to take the public interest into account. The problem here, however, is that it is easier for a minister not to take the public interest into account because a problem may occur two generations hence and they will be long gone from the ministry. They may not even be alive when, some time in the future, the consequences of their actions in giving these certificates may come to bear on the community. My issue is that Australia, as a state party, will have binding targets in a post-2012 treaty. Senator Johnston rightly points out that we are talking about vast underground storages of liquefied CO2. If there is a substantial leak from one of these storages, from a failure of one of these plugs, or if the geological formation is unstable and leads to a massive release of CO2, there might be, as has happened in Africa, a significant localised impact.

The greater concern, however, is the impact on the liability. The country concerned will have to make good that CO2 emission. That may be in terms of offsets, or in terms of strengthening the cap, or whatever you may have in terms of your other obligatory framework, but the broader community will pay, one way or another. And they will pay in terms of greenhouse gas impacts if this fails around the world in a similar time frame. If you have pumped it in and, for 20 years, things are reasonably stable everywhere and then, for some reason, over time there is a deterioration and you lose a lot at any one time, you could potentially have a massive impact on the acceleration of global warming. So that is why I make the point that it is all very well to address the significant adverse risk to petroleum companies, and to sort out who takes precedence in terms of those injecting the CO2 and those who have exploration rights or oil and gas extraction rights, but it is the longer-term broader interest that, I think, should have been identified.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

Thank you, Senator Milne, for your comment. This amendment goes to the management of the interaction between the petrol industry and the greenhouse gas industry. The concerns that you have about long-term effects on both the environment and human health and safety are shared. I think they are shared by every person in this chamber. But this particular amendment goes to the interaction between those two entities in terms of sequestration.

When the minister is making his or her decision about closure, that is the point where your concerns will be dealt with—where any significant adverse impact on the environment or the community is covered. Division 8, ‘Long-term liabilities’, 249CZN, ‘Closure assurance period’, sections 1C (iii) and (iv), specifically says that you cannot issue a site closing certificate unless that responsible Commonwealth minister is satisfied that:

… there is no significant risk that a greenhouse gas substance injected into the formation will have a significant adverse impact on the environment …

Then, in subsection (iv), the word ‘environment’ is replaced by ‘human health or safety’. It is our view that that is very strongly considered in the issuing of a closure certificate. So your concerns are shared and, we believe, are covered off by the legislation, which ensures that the closure certificate will protect not only the fact that the gases will be captured but also the long-term security of that capturing. Can I also indicate that the EPBC Act interrelates with this bill—which, hopefully, will become an act—and that is where issues of environmental regulation, as you are undoubtedly aware, will be covered.

David Johnston (WA, Liberal Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

Just to support what Senator McLucas said, I think the legislation is much the better for these provisions. Let us face it, ministers are building public buildings, railway lines, roads and bridges—you name it—which are all very risk-laden activities. The minister, the department, the government and the parliament can only do their best to mitigate those risks. This legislation is an example of seeking a very laudable and noble outcome through providing a system which, if it works, if is done properly and if it is safe, will be a substantial advance in environmentalism. It will take literally millions, if not billions, of tonnes of carbon out of the atmosphere, which is something I know that Senator Milne would want. We are seeking to do it in a way that is feasible, reasonable, safe and risk averse. That is what this piece of legislation seeks to do. At the end of the day, we cannot guarantee that the site or sites used will not be affected by geophysical activity or by something that we could not possibly know about or that was not reasonably foreseeable. But, at the end of the day, we would not get out of bed if we relied on that perspective too greatly.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

There are a couple of matters I want to raise. Senator McLucas made the point that the minister must be satisfied in terms of adverse significant impact to human health and the environment and so on. What is the definition of ‘significant adverse impact’ in this legislation in relation to human health and environment? Is it a subjective analysis, or does the government have a definition of what a significant adverse impact is? We know what a significant adverse impact on a company is in relation to the petroleum rights and/or the storage and injection rights, but we only have ‘must take into account significant adverse impact’ to human health and the environment. I would like to know what a significant adverse impact is.

While Senator McLucas is considering that definition, I would point out to Senator Johnston that there is no-one in this place more passionate about reducing greenhouse gasses than I am, but the 21st century demands more than a 21st century landfill strategy. This legislation is a 21st century landfill strategy, following on from landfill strategies for the last 200 years that have landed us with shocking waste issues. The most informed and enlightened environmental thinking says that we ought not to be generating waste and that we should reuse and recycle. We should regard what we now see as waste as an underutilised resource. I do not need to tell you all those things. But pumping waste into holes in the ground is no different from people digging holes and dumping things in it for landfill.

Whilst we know that the earth is a finite planet, there was a view that it had an infinite capacity to provide resources and an infinite capacity to absorb waste. Interestingly, people speculated for a long time that the ecosystems would collapse because we would not be able to keep on supplying resources. In fact, our ecosystems are collapsing because we do not have an infinite capacity to absorb waste. That is what the greenhouse effect is. That is what the impact of greenhouse gasses is. The ecosystems of the planet do not have an infinite ability to absorb waste. We have said that we cannot put this waste into the atmosphere—we know that now—and we are going to pump it into holes in the ground indefinitely. That is our strategy. Let me tell you that that is a very ‘last century’ strategy.

Our aim ought to be not to produce the waste in the first place and not to dump it into landfill post the event. That is why I have an incredible scepticism about this legislation being a holding strategy for the coal industry. It is a holding strategy to legitimatise ongoing burning of coal and ongoing export of coal. It is not a strategy for reducing greenhouse gasses. If you were serious about this and if you took the IPCC report seriously, you would understand that global emissions have to peak by 2015 and come down. Carbon capture and storage is not going to be commercialised by 2020—probably not even by 2025, which is long after the imperative to reduce greenhouse emissions. We have the technologies now to roll out renewable energy and to be energy efficient. Why would we want to take liability to the taxpayer for this strategy? Why would we want to spend public dollars now on a landfill strategy and take liability for that for the companies which continue to profit from it? Why wouldn’t we want to use our public investment money in a zero-waste, zero-emissions strategy? It is a fundamental difference of opinion about how quickly we can move from a landfill strategy to a prevention strategy—that is, not generating the waste in the first place.

However, I am interested in Senator McLucas’s answer to my question about the definition of ‘significant adverse impact’ in terms of human health and the environment.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

Senator Milne would be aware that the drafters of legislation regularly use language like ‘significant’. It is term that is well understood by the general populous, and that is why drafters use it. People understand that ‘significant’ means significant. It is not quantifiable. We do not want to try and define what a significant event might be when, in many respects, we do not have a crystal ball to look into the future. But can I assure Senator Milne and the Greens that this is an often used term in legislation. It is well understood by drafters, it is well understood by those of us who sit in this place and I think it is reasonably well understood by the community that a significant event is a significant event. That language is often used.

I want to respond very briefly to Senator Milne’s comments about landfill. It is really quite wrong to characterise geosequestration as landfill. It is not helpful for the community who are trying to grapple with what is a very difficult concept. When I first heard of geosequestration some years ago I had a notion that there were all these holes under the earth that must be filled with something, and that we were going to take that something out and there would be a big cavern. It is not a big cavern. We need to be very careful with our language when we are talking about new areas of science, research and technology, and we need to use language that best describes to our constituents what we are talking about, because it is not a big cavern under the ocean. As I am sure Senator Milne knows, it is porous material that we know is contained, but through which liquefied greenhouse gases can be put. We all know that it is new technology but, for those of us who are civic leaders, it is important to use language that provides information to our constituents rather than to perpetuate a myth in the community—a myth that I shared, but that was some years ago, thank goodness—that we are pumping into these big caverns under the sea. So, it is not a hole in the ground and it is not appropriate to characterise geosequestration as landfill.

This is new technology and it is really quite important technology. If the expectations that we rightly hold are achieved, we can do some fantastic things for the planet. I understand Senator Milne’s frustration that all this greenhouse gas has been produced and people have been warning about it for years. Our government is trying to deal with it now. We have a range of other measures along with geosequestration, like increasing the renewable energy target and investing into alternative energies. We are honestly trying to deal with the reality in a practical way that will protect our economy, that will protect our environment, that will ensure that icons that I hold incredibly close to my heart—the Great Barrier Reef—have the best chance of being protected. That is why I support this legislation: to ensure that we facilitate as best we can the reduction of carbon in our atmosphere with the net benefit to the world as a whole.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I am sorry, Senator McLucas, but carbon capture and storage, geosequestration, is landfill. There is no other way you can describe injecting a waste product under the ground than landfill. That is what it does. Of course the coal industry hates that terminology, just like the tobacco industry did not like being called on the consequences of its actions, and hence we got low-tar cigarettes. This is the equivalent of low-tar cigarettes. This is the coal industry’s low-tar cigarettes. For years the tobacco industry pretended there was no connection to lung cancer but, when the connection was finally proved, they came out with low-tar cigarettes to legitimise their ongoing sales of cigarettes for another 20 years. Finally they have been called on that, too. This is a holding strategy only. This is being seen as the strategy that will somehow transition us from coal fired power plants to this new energy revolution, except that the energy revolution is going to leapfrog clean coal before there is ever a commercialised plant and, frankly, by the time you get a single commercialised carbon capture and storage plant—if you ever do—we are likely to be beyond the thresholds in terms of climate change. That is the reality. We have so much warmth locked into the ocean right now that the Great Barrier Reef cannot wait for carbon capture and storage. The International Energy Agency says as much. They have said that, if this was going to be commercialised in the time frame, there needed to be many more billions spent on it in the 20 years before now. Nobody is arguing that you are going to have this at a commercial scale with any kind of real impact on greenhouse gases before 2025, and the industry is pushing it out further. Even the US government, which had all the faith in it, has pushed out the time frames, and a number of the projects have fallen over in recent years because they are just not making it on economic terms.

To give you an example, we are talking about the storage aspect of it but, in terms of the capture aspect, we are not even there yet. There is not a commercial scale coal fired power station which is capable of bolting on a post combustion capture technology. If you want to have post combustion capture, then you reduce the efficiency of your power station by at least 30 or 40 per cent, which means you burn that much more coal at the front end in order to get the same amount of electricity out the other end, and you have to have the carbon capture and storage. It does not exist yet. If you want pre combustion capture, you have to build a new power station. Talking about building new coal fired power stations to go with this technology is crazy. If you have to build a new power station, why not build renewables? Why build something that is unproven, expensive and not economically viable? However, the whole world is waiting for this technology, meanwhile burning coal as usual. But I think there is about to be a big shift in gears on this because people are going to realise that we are closer to greenhouse gas thresholds than we thought. The coral reef scientists are already saying that it is too late for the world’s coral reefs and that we are now managing them for decline. Nobody wants to hear these messages because everybody wants to think there is enough time to turn it all around, have everything the way it is at the moment, continue as we are and somehow technology will get us through it. Well, it will not.

The reality is that two weeks ago a Russian Arctic exploration ship and a British ship at two separate locations discovered methane chimneys bubbling up through the Arctic, caused by the melting of the permafrost on the ocean floor. Once you start getting methane chimneys, you are into an almost feedback loop that you cannot stop. There are indications that the thermohaline is starting to slow, the thinnest Antarctic ice is melting from underneath, and the Arctic has had its lowest level of ice ever in the summer this year. This is the reality. We do not have the time to wait for this.

I do not go out and talk about doomsday scenarios, but I can tell you that I lose a lot of sleep worrying about just how accelerating the greenhouse impact is, how little time we have got to turn it around and the lack of political will to do so in terms of rigorous targets. That is why I take some hope from the fact that Obama has come out and said that a new target for America will be 80 per cent by 2050 and that the UK government has transformed its target to 80 per cent by 2050. It will leave this government with no other choice but to do the same or be seen as a global recalcitrant. That debate is going to be had in Poznan and Copenhagen next year.

That is why I think you have to call this for what it is. Anything that is trying to deal with a waste that you have generated is a last century idea. A 21st century idea is preventing the waste in the first place, doing the full cycle analysis of whatever the product is, learning to reuse and learning to have synergies in uses of waste products so that you do not end up with dumping to atmosphere, dumping to ocean and dumping to rivers. We have to end that mentality—and we are nowhere near ending that mentality right now.

Question agreed to.

by leave—I move Australian Greens amendments (2) and (3) on sheet 5603:

(2)    Schedule 1, item 169, page 218 (line 6), omit “may”, substitute “must”.

(3)    Schedule 1, item 169, page 218 (line 7), omit “may”, substitute “must”.

These amendments regard mandatory refusal of pre-certificate notices. A concern was raised in the Senate inquiry that the minister does not have to refuse to give a pre-certificate notice relating to an application for a site even if the minister is satisfied that there is a significant risk that the greenhouse gas injected into that site will have an adverse impact.

Given that the minister, even if satisfied that there is a significant risk, does not have to refuse to give such a pre-certificate notice, these amendments change the word ‘may’ to ‘must’, so that the minister must refuse it as a site if he or she is persuaded at that point that there is a significant risk of an adverse impact. Otherwise, you can have a minister who knows that there is a significant risk that greenhouse gases injected into that site will have an adverse impact but they can still grant the particular certificate. These amendments provide the minister with some certainty when being leant on by either the politics of the day or the imperative to approve sites and so on. If he or she knows that there is a high risk of an adverse impact, then they must refuse that site.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

The government indicates that it will not be supporting the amendments moved by the Australian Greens. It is our belief that there is a need for flexibility in ministerial decision making with regard to the issuing of the closure certificate. Because of the process of the issuing of that closure certificate being very robust and very regulated, it is our view that issues and their importance will be considered on a case-by-case basis and an event-by-event basis. So it is our view that it is not a requirement to support the amendments moved by the Australian Greens.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I think the minister may have misunderstood, because this is relating to the application for a site, not a closure certificate. The fact is that the minister does not have to refuse to give a pre-certificate notice relating to an application for a site even if the minister is satisfied. This is before they actually pump anything in there, not at the point at which they would sign off.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

Thank you, Senator Milne; I take your point. Can I say, though, that the same response applies whether it be either of the elements that you are referring to.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I cannot understand why a minister ought to be able to have a discretion at that point. This is for an application for a site. Why would you need the discretion to approve that site if you knew that it was unsuitable? Why would you do that? I can think of a hundred reasons, with a lot of pressure on governments and so on to actually go ahead, that a minister might think: ‘Gosh, I’ve got a few suspicions about whether this site is going to be suitable but I’ll sign it anyway. I won’t be here in five years time when they finish this, so it will be somebody else’s worry.’ That has been said to me before by ministers on various things—though not of course on this matter.

So the issue to me is: why would a minister need that discretion if they know at the point of application for a site that there is a high risk associated with that site? It just seems to me that that is giving political discretion. The very point I am making about all of this is that, if it becomes a political judgement about the suitability of sites, the urgency of signing off on sites and the question of a subjective judgement about significant risk, then we might as well just accept that we are going to have the outcome of dubious political decisions.

David Johnston (WA, Liberal Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

It is undeniable that there may, in some circumstances, be adverse consequences that far outweigh the adverse impact, if there is one, of the granting of the precertificate notice. If I were to crank up my imagination I could think of myriad times whereby the minister, in consultation with state governments, looking at a blackout, a brownout—whatever you want to call it—would need to have flexibility. If the threshold of a mandatory prevention or prohibition were there his hands would be tied, and if there were something good to flow from it he would be prevented from accessing it.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

That just proves the point entirely that if there is a political imperative and there is a significant risk that the greenhouse gas injected into the site will have an adverse impact then the latter can be overlooked in order to deal with the imperative of the day. And that is my concern. That is why I think the minister, having been informed that there is a significant risk that the greenhouse gas injected will have an adverse impact, ought not to have the discretion to proceed regardless of that significant adverse impact.

Question negatived.

by leave—I move Australian Greens amendments (4) and (5) on sheet 5603 revised:

(4)    Schedule 1, item 169, page 220 (after line 21), after subsection 249CZGAA(1), insert:

     (1A)    A pre-certificate notice that relates to an application for a site closing certificate must also:

             (a)    contain a statement specifying the ongoing liability of the applicant for the site, including (without limiting the matters for which the applicant is to remain liable) liability for the risks specified in subsections 249CZF(2) and (4); and

             (b)    specify the form and amount of an additional security to be lodged by the applicant to be held in perpetuity by the Commonwealth against any long-term need to meet costs arising in respect of monitoring, remediation and repair of the site.

      (1B)    The responsible Commonwealth Minister must seek and have regard to the advice of an expert advisory committee established under section 435A in respect of the amount of any security to be lodged by an applicant under paragraph (1A)(b).

(5)    Schedule 1, item 169, page 220 (lines 22 and 23), omit subsection 249CZGAA(2), substitute:

        (2)    The amount of the security is the sum of the estimate referred to in paragraph (1)(b) and the amount referred to in paragraph (1A)(b).

These amendments go to additional security for future liabilities. The Australian Greens believe that there should be a bond attached to these storage sites, just as we now have for the mining industry. Where clearly there will be costs associated with rehabilitation and risks associated with the venture, companies are required to put up a bond. That bond is kept by the state to make good the damages in the future. I think it is only sensible, particularly since we have no mechanism now for determining what the adverse impacts or the costs might be, that the minister has a mechanism to require the company to post a bond. If the company is so confident that the site will not leak and that there will be no liability into the future then this ought not to be a problem.

After years of dealing with the mining industry, we learnt that the best way of dealing with it was to require that companies post a bond. In that way there is an imperative for the company to be responsible. The bond money is there to address things in the future. Why wouldn’t we do exactly the same thing here? We have learnt from experience that not to require mining companies to do so leaves the community with multimillion-dollar—in some cases billion-dollar—costs.

I refer again to the Tasmanian context, where the Queen and King rivers have been destroyed. There has been massive pollution of those rivers and Macquarie Harbour as a result of mining over many years. When we moved for years for tailings dams they said: ‘No, it will be too expensive. It will not be economically viable for us to continue.’ The company soon leaves, leaving the community with the massive cost of rehabilitation—so massive, in fact, that it is unlikely, in my lifetime, that they will ever clean up those rivers and Macquarie Harbour as a result of the mining at Mount Lyell over a long period. You would not want to go back and do that again, so from my point of view it is essential that we have additional security for future liabilities other than those provided for. The Greens are putting forward that:

     (1A)    A pre-certificate notice that relates to an application for a site closing certificate must also:

             (a)    contain a statement specifying the ongoing liability of the applicant for the site, including (without limiting the matters for which the applicant is to remain liable) liability for the risks specified in subsections 249CZF(2) and (4); and

             (b)    specify the form and amount of an additional security to be lodged by the applicant to be held in perpetuity by the Commonwealth against any long-term need to meet costs arising in respect of monitoring, remediation and repair of the site.

      (1B)    The responsible Commonwealth Minister must seek and have regard to the advice of an expert advisory committee established under section 435A in respect of the amount of any security to be lodged by an applicant under paragraph (1A)(b).

Amendment (5) states that the amount of the security will be the sum of the estimate referred to in the previous paragraphs. So this does not specify the exact amount; it provides a framework for the government to strike an amount for that additional liability. Otherwise, I would like to know who is going to meet the costs in respect of monitoring, remediation and repair of the site. How is the Commonwealth going to pay for the monitoring of the site?

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

Thank you, Senator Milne. Amendments (4) and (5), as proposed by the Australian Greens, recommend that securities be lodged by the greenhouse gas injection licence holder to obtain a site closure certificate. The security will be held in perpetuity, and that is the difficult part of the amendments that you have proposed. The security would be to cover monitoring, remediation and repair of the site. It is our belief that this approach to long-term liability will not in fact deal with the question. It assumes that contingencies will definitely be required for mediation and repair.

Like you, Senator Milne, I come from an environmentalist background. I have seen many local government approvals of mining events where a bond has not been required. But can I say it is wrong to extrapolate that sort of thinking to geosequestration. CCS is a different kettle of fish to a development that has gone awry or a mine that cannot be fixed. That is why this legislation is so complex. That is why the process, particularly of the closure certificate, is so robust that it allows the minister at that point to require that funds be provided for the ongoing monitoring of the site for a period of 15 years. We know that there is a potential for a long-term liability. It is the reasoned judgement of the government that this is the way forward that will encourage and facilitate sequestration but at the same time protect our community, protect our environment and protect our economy from a liability into the future.

The legislation as drafted adopts a more proactive approach to long-term liability, particularly compared with what is applied to the mining industry. It is far stronger; it is much strengthened. I think you would agree that this legislation is far more robust than a local government act of any state legislature. It ensures that an operator must demonstrate that any injected greenhouse gas substance is stored in a safe and secure manner and that the highest level of confidence in the long-term behaviour has been obtained. In that situation a bond for remediation and repair would be superfluous, so we will not be supporting the Greens amendment.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

So, after 20 years, who is going to monitor the sites and who is going to pay for that monitoring to take place? And who is going to pay for the remediation and repair if and when leakage occurs? It is not just about the remediation and repair. Who is going to make good the financial cost, to offset the carbon dioxide going into the atmosphere, that will occur under our treaty obligations? I think it is more than reasonable to ask who is going to monitor after 20 years—or are we going to pretend that no monitoring is required after 20 years? Who will pay? Who is going to remediate and repair if there is a leak? Who is going to put up the money for the offsets under our treaty obligations in order to make good the carbon that is released to atmosphere?

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

Senator Milne, I think you would be aware that the legislation requires that a prepayment would be made for monitoring by any licence holder. That is not a time limited payment. I think it is also flexible so that it can respond to the various risks that the minister may or may not see for monitoring. It would also reflect the size of the site; it would reflect how the site is behaving. So there is an opportunity in the legislation, which you would imagine would be taken up, for a prepayment monitoring charge. It is a capital payment. As I said, it is not time limited.

Should the event occur where there is a breakdown in technology or an escaping of greenhouse gases, after all of that rigour has been gone through, after we have gone through the process of the closure certificate—which, as I am sure we will talk about some more, I can confirm to you is much stronger than anything we have ever seen in the development industry or in the mining industry—it would be at that point that government would have the liability. But it is the government’s view, and I think this is shared by the opposition, that we do not predict that will happen. This legislation has been drafted in such a way as to protect human health and safety and the environment with an approach of constant monitoring and vigilance—I think that is the right word—through the life of the project. So it is our view that the amendments moved by the Greens are not required.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Firstly, in terms of the monitoring, it is a fixed sum without a time limit. For how many years would you expect the monitoring to be able to be financed? Is this for the 15 years or indefinitely? For how long are we paying to monitor the site?

Secondly, I want it very strongly on the record that, unlike the government and the opposition, the Greens do believe there will be leakage and damage from these sites, that there will be a need to make good, and we totally oppose the notion that the government take liability. It will be joy to the ears of the companies to know that, after their 15 years, it is the community—it is not the government; it is the community—who will bear the liability. They will bear it not only financially but in terms of the climate. That is something that we have never dealt with before. It is a mindset entirely different from anything we have had to bear before. It has always been in monetary terms or regional or localised environmental terms before; it is now the climate—and the planet—that will suffer the consequences.

I find it naive in the extreme of anyone to stand here today, with what is a purely experimental technology and in the absence of enough safe storage sites for the volumes concerned, and say emphatically that it will not happen. I am going to stand here emphatically and say that it will, and it will happen sooner than you think. When it does then a lot of people are going to look back and realise just how naive and desperate people were to see a future for the coal industry that they were not prepared to put in place the financial mechanism for the long-term monitoring—but, more particularly, for the remediation and repair of the site—and to make good the carbon costs associated with meeting our target when it does happen, because the costs will either be monetary or the costs will be in an increased, more stringent cap, which means that the costs will be spread across the entire community, climate wise and financially.

I am disappointed that neither the opposition nor the government will support the need for additional security for future liabilities, but it is on the record that it is only the Greens who recognise the purely experimental and fanciful nature of this technology.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

Very briefly, I will not respond to Senator Milne’s crystal ball, with which she can emphatically tell us that something is or is not going to happen; I do not think any of us can do that when we are talking about CCS. The specific question that Senator Milne asked was what amount per year would be required for monitoring. The reality is that that will be site specific. We are talking about sites of such variable size that every site will need to be addressed specifically. It will depend on their geology, their size and the porous nature of the material we are talking about. So it is not possible to answer that question in terms of an amount per year. The quantum will be ascertained according to the needs of each site.

Question negatived.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

by leave—I move Australian Green amendments (6) to (11) on sheet 5603 revised:

(6)    Schedule 1, item 169, page 221 (line 9), before “site closing certificate”, insert “provisional”.

(7)    Schedule 1, item 169, page 221 (line 17), before “site closing certificate”, insert “provisional”.

(8)    Schedule 1, item 169, page 221 (after line 23), after section 249CZGA, insert:

249CZGAB Duration of provisional site closing certificate

        (1)    A provisional site closing certificate remains in force in relation to an identified greenhouse gas storage formation until a site closing certificate has been issued in relation to that formation.

        (2)    Without limiting the liability of the applicant for the site, the applicant (or any transferee under section 249CZH) remains liable for the matters specified in the statement made under paragraph 249CZGAA(1A)(a) while the provisional site closing certificate remains in force.

249CZGAC Issue of site closing certificate

        (1)    If:

             (a)    a provisional site closing certificate has been issued in relation to an identified greenhouse gas storage formation under section 249CZGA; and

             (b)    a period of not less than 20 years has elapsed since the provisional site closing certificate was issued;

the responsible Commonwealth Minister may decide to issue a site closing certificate in relation to that formation.

        (2)    In deciding whether to issue a site closing certificate under subsection (1), the responsible Commonwealth Minister must have regard to the matters set out in section 249CZF in relation to a decision to issue a pre-certificate notice.

(9)    Schedule 1, item 169, page 222 (line 2), omit “249CZGA”, substitute “249CZGAC”.

(10)  Schedule 1, item 274B, page 370 (line 26), omit “may”, substitute “must”.

(11)  Schedule 1, item 274B, page 372 (after line 29), at the end of section 435B, add:

        (3)    The responsible Commonwealth Minister must:

             (a)    seek and have regard to the advice of an expert advisory committee on matters of site selection, licensing, regulation, monitoring of leakage and environmental impact and site closures; and

             (b)    publish the advice given by the panel.

I draw attention to the fact that we are dealing with sheet 5603 revised, so these are slightly different amendments, in terms of the expert advisory committees in particular—just to make sure that people are aware of that. In terms of the provisional site closing certificates, it is quite clear that the Greens want a longer period than that which has been proposed by the opposition. However, we recognise the opposition’s amendment to 15 years. We would have liked to make it longer, but we recognise where the government and opposition are coming from in relation to that. We would have liked to see the provisional site closing certificate remain in force until the final site closing certificate was issued, rather than the other way around, as has been proposed, but we accept that.

What I really want to speak about are the expert advisory committees. I note that the government has taken note of the concerns of the Senate committee in relation to expert advisory committees and note that there have been government amendments in relation to that. But my real concern is that, in the amendments put forward by the government and supported by the opposition, there is no requirement for the responsible Commonwealth minister to have an expert advisory committee on matters relating to site selection, licensing, regulation, and monitoring of leakage and environmental impact.

Earlier, at the closure of the second reading debate, in the summation of the government’s comments, I heard Senator McLucas say that the reason there is not to be an expert advisory committee in relation to monitoring of leakage and environmental impact and site closure is that that comes under the EPBC Act. Nobody in this chamber is under any illusion that the EPBC Act actually protects the environment. It is totally up to the discretion of the minister. It depends on what the minister chooses to do, and that has been the fundamental flaw with the act from the beginning.

The issue for me is that there needs to be an expert advisory committee whose advice the Commonwealth minister must seek and have regard to in relation to issues of monitoring. Once the liquefied carbon dioxide has been pumped into storage, there must be an expert committee looking at the science and the technology and advising on the monitoring. I would like to know—and I asked this earlier—who is going to be monitoring the plugs under the sea for some of these sites, who is going to be keeping up with the latest science from around the world.

We are asking people in other countries to trust us about how well we are going to sign off our injection sites. Would we necessarily trust other countries to undertake the same due diligence with theirs? I would not, and I would not expect to. I would expect, just like with everything else around the world, some countries to have rigorous processes in place and some not to. That is the reality of the international environment. The sad thing is that we all suffer the consequences if these storage sites leak, whether they are off China, Russia, Australia, Britain or anywhere else.

So it is imperative that we set up, and the Commonwealth minister seeks and has regard to the advice of, an expert advisory committee on matters of site selection, licensing, regulation, monitoring of leakage and environmental impact, and site closures and that we publish the advice given by the panel. I do not think that is an unreasonable thing to ask for. The other expert advisory committees relate to matters of interest to the corporates and others, but there is no expert advisory committee on the environmental and ongoing impacts of these storage sites. It is imperative that the minister not only has such a panel but seeks its advice and publishes that advice so the community can see what the latest science and expert advice is in relation to these storage sites and their impacts.

David Johnston (WA, Liberal Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

With respect to Senator Milne’s advisory panel, the fundamental driver of risk is leakage. Leakage is a matter of expert evaluation of the geophysical environment and of the integrity of the cap structure that we are dealing with. If that is done well and there is no leakage, there is no problem. That is why the advisory panel is not talking about the wider environmental issue; it is talking about the structure and the interrelationship of accessing the structure with other tenement holders.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I am not talking about the wider environment in terms of this; what I am asking is that there is an expert advisory panel in relation to the sites for which the Commonwealth has issued these site closure certificates and the pre-certificates and so on. We need to have ongoing environmental impact assessment by an expert panel, not under EPBC but in the same way as the committee recommended that there be these panels for other matters. What I am saying is that there must be an expert panel, because again this is going to determine liability. Of course nobody wants to have an expert environmental panel looking at the ongoing monitoring and the latest science and what is actually happening at that site. They would be very happy not to have one. But we want to have the minister being forced to actually have an expert advisory panel on the environmental impact of the storage sites as they currently stand at any time, regardless of who has got liability. Especially if the community ends up with the liability, it is even more imperative that the community knows what is going on at those sites.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

Thank you, Senator Milne. I refer you to section 435B. I honestly think if you look at the breadth of the matters that must be referred to the committee, a matter referred under subsection (1) must be referred and then there is almost a page and a half of matters, including, I think, the issue of environmental issues being referred to the committee. It is true that the EPBC Act is triggered by this legislation or by the actions that would be facilitated under this legislation, and I think your concerns about the EPBC Act you could deal with in amendments to the EPBC Act rather than not using the facility that exists through EPBC. However, if you read through section 435B I think you have to agree that almost any matter that you wanted to be could be referred to an expert committee. It is comprehensive; it does allow for all matters to be assessed. Can I say, though, that we thank you for the change to your earlier amendment around the membership of the expert committee. I think the panel as proposed by the government is far more sensible. But please have a look at 435B. I think you would have to agree that it is as comprehensive as it could be.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I ask Senator McLucas to point out to me under 435B where the environment is taken into account. As I read it, the expert panel has the function of advising the minister and it goes under whether there is significant risk as to a key petroleum operation—rah, rah, rah—so in terms of the key petroleum operation. There is nothing in that list, as I can see it, that is telling me about environmental concerns. It is all about risks to companies. Could you tell me where in that list the minister must talk to this expert advisory panel about the environmental impacts associated with leakage.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

I think you may have construed me to mean something that I meant not to say. But I think if you look at (e) and (f) you will see they go to the variation of a matter specified in a greenhouse gas injection licence. I think all of them could be viewed as being environmental matters. We are dealing with the environment, and any of those licensed dealings dealing with the sequestration of greenhouse gases can be seen as being matters dealing with the environment. I will come back to the earlier point I made. EPBC is triggered by this legislation. I am advised it is not formally so, but EPBC would be triggered, and that is the more appropriate place where issues of environment will be assessed. Your point about whether or not EPBC is good legislation can be debated another day, but that is the way the environment will be protected, through this legislation.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I point out that paragraph (d) says in relation to the minister and the expert advisory committee:

Where there is a significant risk that any of the operations that are being or could be carried out under a greenhouse gas injection licence will have a significant adverse impact on operations to recover petroleum or the commercial viability of the recovery of petroleum or whether a serious situation exists in relation to an identified greenhouse gas storage formation specified in a greenhouse injection licence …

It then goes on:

… matters related to the exercise of any of the following powers and in relation to the Commonwealth.

It does not actually talk about the environment—so, you are quite right to say that it does not talk about the environment, even though that is not what you said earlier, but you have now. It should be in here and not just left to the EPBC as some kind of thing over there. Everything else is spelled out in this legislation except the responsibility of the minister to set up the expert advisory panel so that they advise on the environment.

I accept that the government and the opposition are not going to support this, but it is absolutely irresponsible to be setting out conditions the minister must look at it if it is going to have any impact on the operations to recover petroleum, or the commercial viability of the recovery of petroleum, but does not actually look at the adverse impacts on the environment, the monitoring and so on. Where under the EPBC Act does it tell me about monitoring for carbon dioxide leakage? It is just not going to happen. We are realists here; it is not going to happen. Are we pretending that the Environmental Protection and Biodiversity Conservation Act exists for the benefit of the environmental law centre in Bonn, which will be reading this transcript? We are just referring to the fact that Australia happens to have environmental protection legislation and therefore, through some sort of osmosis, it will automatically be triggered in the mind of the Commonwealth minister and his advisory committees.

What this says to me is that the Commonwealth is more interested in making sure that the Commonwealth has an expert advisory committee so that the petroleum or the coal industries do not get themselves upset or the Commonwealth does not get caught between a fight between the petroleum industry and the coal industry as to who has precedence over the injection sites that they intend to use. The community is not part of this in terms of these expert advisory panels, and I feel very strongly that the EPBC Act is totally inadequate and almost irrelevant to this. If we are going to have expert advisory panels, let us have a panel that is there in the community interest, acting for the community, for the environment and for the bigger picture on greenhouse and not just to sort out the Commonwealth’s role in the potential litigation between the petroleum industry and the coal industry as they come to fight over precedence in the future.

David Johnston (WA, Liberal Party, Shadow Minister for Defence) Share this | Link to this | Hansard source

This whole act has the environment as its fundamental objective. It is trite to say that the words ‘a serious situation exists in relation to an identified greenhouse gas storage formation specified in a greenhouse gas injection licence’ are not a matter for the environment. That is the fundamental issue that will cause the system to break down. It is what we do not want; it is about the environment. With the greatest of respect, this is not about something that is in the EPBC Act; this is about the integrity of the formation, and the environment flows from the breakdown of that. This is what the advisory committee has to look at. What we are seeking to do is establish a framework for the storage in a repository that has integrity.

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

The question is that Greens amendment 6-11 on sheet 5630 revised be agreed to.

Question negatived.

Bill, as amended, agreed to.

The Temporary Chairman:

There are three bills remaining. Is it the wish of the committee that the bills be taken together as a whole.

Question agreed to.

Bills reported without amendment or request; report adopted.