Tuesday, 12 May 2020
Offshore Petroleum and Greenhouse Gas Storage Amendment (Cross-boundary Greenhouse Gas Titles and Other Measures) Bill 2019, Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment (Miscellaneous Measures) Bill 2019; Second Reading
I rise to speak on the Offshore Petroleum and Greenhouse Gas Storage Amendment (Cross-boundary Greenhouse Gas Titles and Other Measures) Bill 2019 and the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment (Miscellaneous Measures) Bill 2019. These bills amend the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Act 2003 and the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to clarify the regions that the acts apply to and the related levies.
These bills also strengthen and clarify the powers of the National Offshore Petroleum Safety and Environmental Management Authority inspectors during oil pollution emergencies that originate in our waters. These changes are important for the National Offshore Petroleum Safety and Environmental Management Authority, NOPSEMA, as Australia's regulator for health and safety, well integrity and environmental management for offshore oil and gas activities. It is vital that there is clarity around the authority's responsibilities and jurisdiction.
As my Senate colleagues in the economics legislation committee reported, the current powers of the authority are not sufficient to ensure compliance by a titleholder with its environmental management obligations in the event of an oil pollution emergency in the Commonwealth. In particular, the authority currently does not have power to inspect for or enforce compliance by the titleholder in areas of state or territory jurisdiction, such as in coastal waters or onshore. To be burdened with the bureaucratic need to obtain a warrant or consent from another jurisdiction can significantly impede compliance monitoring in emergency situations. In an oil pollution emergency, the authority's inspectors will need regulatory intelligence in real time, under dynamic situations, including monitoring and enforcing compliance across a number of locations within and outside offshore areas.
The bill will amend the act to enable the authority's inspectors to enter premises used for implementation of oil spill response obligations without a warrant, whether located in Commonwealth or state or territory jurisdictions, in the event of such an emergency. The amendment will enable the authority to monitor whether a titleholder is in compliance with its oil spill response obligations and take enforcement action if the titleholder is failing to meet its obligations. The bill will also amend the act to extend the operation of polluter-pays obligations and the application of significant incident directions. This may be given by the authority to areas of state and territory jurisdiction.
There is another purpose for this bill, and it is to enable the CarbonNet Project and the Hydrogen Energy Supply Chain project to proceed. These projects are of great interest to me and are also the conduit of many more jobs in my home state of Victoria. Our abundant natural resources mean we could become one of the first countries to create a hydrogen export industry, helping to generate a significant number of Australian jobs and lay the foundations for a new hydrogen industry.
The government has invested $96 million in the CarbonNet Project, which is investigating the potential for establishing a commercial-scale carbon capture and storage network in the Latrobe Valley. Carbon capture and storage is where we capture carbon dioxide released by industrial processes and compress it and store it. It is transported to an injection site to be sequestered deep underground for safe, long-term storage in suitable geological formations. Carbon capture and storage is being investigated as part of a suite of solutions with the potential to mitigate greenhouse gas emissions and help address climate change. I am proud to say those on this side of the chamber are supportive of carbon capture and storage. Additionally, both the International Energy Agency and the Intergovernmental Panel on Climate Change believe that carbon capture and storage can play an important role in helping to meet global emission reduction targets.
CarbonNet has commenced its stage 3 work program. This includes, firstly, drilling an appraisal well in the Bass Strait to determine the suitability of its preferred CO2 storage site. This work is currently underway. Secondly, the project will obtain a declaration of storage and injection licence. Thirdly, it will define a commercial structure and financial model to attract private sector investment, confirming interest in operating a carbon capture and storage service.
CarbonNet's preferred storage site overlaps both Commonwealth and state greenhouse gas titles. As such, these bills provide the mechanism to regulate the likely storage formation that straddles state and Commonwealth boundaries. Commercial-scale hydrogen production from brown coal will require carbon capture and storage infrastructure, such as those being investigated by CarbonNet.
The recently announced National Hydrogen Strategy highlights the economic opportunity the hydrogen export industry presents for Australia. It also aims to position our industry as a major player by 2030. The CarbonNet Project will facilitate the Hydrogen Energy Supply Chain project, which aims to produce hydrogen from brown coal resources and requires suitable carbon capture and storage resources. This is the cheapest way to produce clean hydrogen. The government has invested $50 million so far in the world's first Hydrogen Energy Supply Chain pilot project, worth half a billion dollars in total. It is aimed at producing hydrogen from brown coal in Victoria's Latrobe Valley and liquefying and transporting the hydrogen to Japan. The pilot project is aimed to safely produce and transport clean hydrogen from Victoria to Japan. I am pleased that this pilot project presents an opportunity for our nation to establish a new hydrogen export industry and develop its own domestic hydrogen supply by using the Latrobe Valley's abundant coal reserves. As well as supporting a cleaner future, the pilot project supports great potential for new jobs, based on brown coal in the Latrobe Valley.
The government are committed to protecting our marine environment—also seen through our recent announcement that over 24 tonnes of rubbish were cleaned up from the Great Barrier Reef last year. I would like to say congratulations to my colleagues Sussan Ley, the Minister for the Environment; and Warren Entsch, the Special Envoy for the Great Barrier Reef. This bill is consistent with this government's commitment to healthy and cleaner oceans, and I commend the bill to the Senate.
These bills raise questions about Australia's fuel and energy policies, and they go beyond the specific contents of the bills themselves. On the face of it, they make technical and uncontentious changes to the maritime jurisdictions, allowing combined Commonwealth and state jurisdictions to exist in coastal waters for the purposes of greenhouse gas storage.
The first beneficiaries of these changes will be Victoria's CarbonNet and the Hydrogen Energy Supply Chain projects, which will sequester CO2 from the Latrobe Valley power stations in Bass Strait and generate hydrogen for export to Japan, a project I have strongly supported for some time. It will welcome development that, among other things, reflects many years of research on the technology of carbon capture and storage by the CSIRO and by the University of Melbourne and by the CO2CRC. It means that the mining of Victoria's extensive brown coal reserves can have a future and can contribute to the lowering of global emissions and not to increasing them. Hydrogen is effective as a zero-emissions fuel, and it is used in motor vehicles, for example, which see the emission of water vapour rather than other noxious vapours. All of this is undoubtedly good, but the export of hydrogen produced in this country is also a reminder of what we have to do to invest in the development of alternative fuels for use here.
It's troubled me that Australia being, I think, the ninth major energy producer in the world earns so little attention in terms of public policy on the development of fuel usage and storage. Of course, so little attention is paid in terms of the wider energy policy, particularly around the questions of the strategic value of providing energy security in this country. Most recently a glaring example of this failure to think strategically was the announcement by the minister for energy, Angus Taylor, that Australia will buy oil and store it in the US petroleum reserve in Texas and Louisiana. One consequence of the COVID-19 pandemic is that we have become more intensely aware of our dependence on fragile global supply chains. Of course that's no more evident than in our reliance on imported oil. Everything—quite literally everything—that keeps the economy moving depends on the availability of sufficient supplies of oil and the existence of sufficient refining capacity. We have gone backwards in both respects in this country. Minister Taylor's purchase of two days of consumption in the United States does not fundamentally change that equation.
US politicians have previously raised concerns about the idea of selling off fuel from the petroleum reserve to other countries. But the fact Australia's deal involves leasing facilities in the US—rather than shipping the oil directly to Australia—helped assuage some worries in Washington
To me, that quote summed up one of the major problems with this purchase. It is clear now that the new oil reserve is really part of another country's reserve. We have yet to discover how this will actually work and how it will actually work in Australia's interest. It's obvious from the point of view of Texas and Louisiana that Australian oil would not necessarily flow to Australia in times of emergency. The reason is that, of course, the strategic reserve is held by that country, in those states.
I asked a simple series of questions at Senate estimates around these matters, and I hoped to get some clarification. The officers have responded in writing to the questions which they took on notice, and unfortunately they were about as clear as the contents of a barrel of west Texas crude itself. I asked:
Please outline the main steps in the process from Australia's request for access to the arrival in Australia of the fuel
We were told it was done individually 'by the terms and conditions in the relevant commercial contracts'. That, of course, is subject to ongoing negotiations with the United States. I asked—and they were equally as murky in response—'Does the Agreement include minimum and maximum times for the delivery of SPR fuel to Australia?' I was told, 'This is subject to ongoing negotiations with the United States.' Finally—and this is a masterpiece of obfuscation worthy of the very best of Sir Humphrey Appleby—I asked:
What arrangements does the Australian government have in place to guarantee timely access to appropriate shipping to bring the fuel to Australia in an emergency?
I was told:
This is subject to ongoing negotiations with the United States. Through these negotiations, Australia will ensure any deal represents the best possible outcomes for Australians.
Of course we live in hope, don't we? We live in hope. A great deal appears to rest on the ongoing negotiations. As those negotiations have progressed, Mr Taylor should be able by now to enlighten us.
Australia has purchased from this reserve, it will be held a long, long way away from Australia, and we're not able to know exactly how long it will take to get to Australia and under what terms and conditions. What happens if President Trump, or whoever it is that leads the United States administration at the time, decides that in such a world emergency the United States' interests are greater than Australia's? Would that oil legally belong to Australia? And, if so, what would it matter? What would it matter? Have we not seen, in the last six weeks, vital supplies being held up at borders despite contractual arrangements by governments that felt that their people deserved consideration over and above any contractual arrangements entered into by another government? The naive belief that contract law is going to rise above the national interest of other countries—I find that quite remarkable. Yet that is the belief that is being peddled to us on a regular basis.
I hope that the operation of this faraway strategic oil reserve might become clearer when the fuel security review is actually released and when the government releases its response to this review's recommendations. But I asked a few questions on this matter as well, and we were told that the timing of the release is a matter for the government, and the timing of the response will depend on the timing of the release. This, of course, is a pattern that's emerged. Unfortunately, what we see from that pattern is that Australia's position has only deteriorated.
Australia, in 1979, became a member of the International Energy Agency, and we were required to have 90 days supply of fuel reserves on tap. What we have seen since that time is that our position has steadily deteriorated. The Australian National Audit Office undertook, for instance, a report into our net import stocktake in 2002. It decided that we had 310 days supply. By 2008, it decided that we had 101 days supply. In 2011 the Liquid fuels vulnerability assessment concluded:
With growing net imports, the ratio of stocks to net imports is likely to decline.
I understand that the minister now acknowledges that we have the equivalent of 52 days supply. That's a misleading figure, of course, because, if we look at the detail of where that's held, that includes supplies held on water, supplies held in a foreign country, supplies held in people's petrol tanks and supplies held in reserve by private companies. That doesn't take into account that, if we look at what's happening in terms of availability of specific types of energy reserves, it's less than three weeks for jet fuels, for diesel and for various other different grades of fuels. Think about the vulnerability if our shipping lanes were closed. Reports such as the one produced by the NRMA back in 2013 suggest that, in the pharmaceutical industry, the food industry and in many other key sectors of our economy that actually determine what sort of country we are and what level of welfare our people enjoy, we may in fact be down to less than a week's supply. When I asked officials, 'Have you done modelling on that to confirm those things?' they said, 'Oh no, we weren't required to.' Just last February I asked those questions. They said, 'We weren't required to examine the detail of those matters. So officially the government have not undertaken a study as part of this review.
We've seen the destruction of these fragile supply chains in the time of the pandemic. Circumstances have highlighted particular difficulties. It's unique in a way, because people aren't driving; they're not actually using transport for domestic purposes. It doesn't change the proposition that what was once considered only a theoretical model—that the international trading system could be thoroughly disrupted—has now been seen to be a real possibility. I'd say that way of thinking needs to be extended through to the implications of what might happen in times of real conflict, in which shipping lanes are affected as well, and what the consequences might be for us.
If the United States's strategic petroleum reserve is to be made available, under what circumstances would it be made available to Australia? What is the strategic thinking about supplying our fuel where we don't even have capacity to provide the shipping to get it to Australia in times of international crisis? What's the kind of thinking that leads us to make an assumption that those conditions are likely to change? What's the investment strategy that this government has undertaken to develop the storage capacity onshore? What's the strategic thinking that this government has undertaken to establish the refining capacity onshore?
When it comes to the development of energy security, you would think now would be an appropriate occasion on which to show some real leadership and to be able to demonstrate that it is actually cost-effective to think in longer terms than we have seen. The swiftness with which this pandemic has swept across the world shows what can go wrong with neoliberal assumptions about the way in which the capitalist system actually works. It surely is a wake-up call for us to think about what can be done to protect our national sovereignty, the welfare of our people and the living conditions of our people.
The present crisis has shown there is no substitute for proper planning by government and effective action by government. The prescriptions of neoliberal economics that have guided policymakers for a generation are no basis for building a secure and prosperous future in this country, where the national government is willing to take the initiative in fuel and energy policy. The government must be prepared to support the development of alternative fuels in this country as well as options for our own export industries. We must be able to develop a genuine fuel reserve on Australian soil, a reserve that will be readily available for the benefit of Australians in times of an emergency, where we can genuinely demonstrate our sovereignty and our independence from long and fragile supply chains.
The Greens support the aim of the Offshore Petroleum and Greenhouse Gas Storage Amendment (Cross-boundary Greenhouse Gas Titles and Other Measures) Bill 2019 to strengthen and clarify the monitoring, inspection and enforcement powers of NOPSEMA during an oil pollution emergency. Earlier this year we celebrated Equinor pulling out of the Great Australian Bight. It was a huge win for environmentalists, coastal communities and the surfing community. For those who love our pristine beaches, the risk of an oil pollution emergency was not something to be monitored or managed; it was to be avoided at all costs. Thousands of people stood up, and Equinor stood down. My colleague Senator Hanson-Young will be moving amendments in the committee stage of this bill to secure the ongoing protection of the bight from the sorts of emergencies that this bill is designed to manage.
But what of the ongoing climate emergency? We've just experienced one of the hottest summers on record and a devastating bushfire season that claimed 34 lives. Regional communities are still struggling to recover from the impacts in the brief reprieve before the fire season starts again. But, despite the need for urgent climate action, Australia's pollution from oil and gas production has increased a staggering 621 per cent since 2005, and it continues to rise each quarter. It's no wonder that we're on track for 3.4 degrees of warming.
The Institute for Energy Economics and Financial Analysis recently released a report comparing government and industry use of methane emissions data to the scandal of Volkswagen under-reporting its emissions. That report notes that methane from gas poses the greatest threat to the warming climate.
Peer reviewed studies have consistently shown that so-called natural gas emissions have actually been underestimated by at least 25 to 40 per cent, with some studies suggesting as much as 60 per cent. Methane leaks like a sieve from fracking for unconventional gas, and those fugitive emissions, when properly accounted for, make gas almost as polluting as coal, with damage to underground water supplies thrown in to boot. Yet the gas industry in Australia has no intention of reducing supply, and, therefore, its emissions. Instead, Australia's gas industry has the enthusiastic support of government to keep polluting, with a long list of new gas projects, both onshore and offshore, from Narrabri to the Galilee, from the Beetaloo Basin to the Burrup Peninsula. Perhaps the regular donations from the gas industry—and they go to both sides of politics—are what shore up that enthusiastic support.
While the country's attention has been on COVID responses, NOPSEMA, the regulator, has quietly approved the Scarborough offshore gasfield development. That development is part of Woodside's proposed $50 billion Burrup Hub LNG project, which analysis estimates would have a footprint of six billion tonnes—that's six gigatonnes—of carbon pollution, equivalent to four Adani sized coalmines. Emissions at that scale will jeopardise any prospect of Australia meeting its Paris climate targets. But most concerning is the statement from NOPSEMA that the project will be contributing to reducing global greenhouse gas emissions. This is straight from the industry and government playbook that talks up gas as a transitional fuel. But there is little evidence that gas is in fact displacing coal globally. It simply adds to the carbon intensity in many countries, and it can divert efforts from a genuine switch to renewables. And no end date is being proposed for this so-called transition fuel.
Australia's recovery from the COVID-19 crisis presents an opportunity for a genuine transition to a genuinely clean renewable future. The International Renewable Energy Agency has estimated that a renewable energy driven transition to zero net emissions would boost global GDP by $155 trillion. Numerous business leaders have urged the government to use the recovery to invest in renewables to support a green steel manufacturing boom and to provide sustainable jobs for regional areas. And yet this government remains focused on a gas fired recovery, and so the carbon racket goes on.
Given the energy minister's obsession with oil, gas and coal, it's hardly surprising that the COVID-19 commission, tasked with guiding our recovery, is stacked with the government's fossil fuel mates. The chair, Mr Nev Power, is the director of an onshore gas exploration company, Strike Energy. Catherine Tanna is the managing director of Energy Australia and, of course, was a former director of the BG Group, which led the charge to open up Queensland's gasfields. The list of high-priority projects promoted by the commission includes a new fertiliser plant that is only possible if the Narrabri gas project proceeds. History shows that incumbent industries like the fossil fuel lobby use their power to convince governments that an economic crisis could justify the relaxation of climate change and environmental regulations. We will stand against such attempts.
My bill to give traditional owners, farmers and landholders the right to say no to gas companies—and coal companies, for that matter—has been before this parliament since 2011. We will continue to fight for those rights to protect land, water, the climate and people's livelihoods. We'll continue to push for the true cost of carbon emissions to be accounted for and for big emitters to be held responsible. That brings me to the Greens second reading amendment on sheet 8894, which I so move:
At the end of the motion, add:
", but the Senate notes that:
(a) Australia's emissions from gas production has risen a staggering 621 per cent since 2005 to record high levels;
(b) the gas industry no longer pays for its emissions, and that regulatory attempts to require carbon abatement be purchased from farmers and land managers have been thwarted by the industry and their close financial and employment relationships with political parties; and
(c) letting gas companies pollute for free is denying new income streams for Australia's farmers struggling through a deep drought, exacerbated by the gas industry".
I move this amendment to recognise that polluting companies are currently not paying for the damage they do.
When the carbon price was first established, Western Australia removed its requirements for gas projects to pay farmers to abate carbon emissions. But, despite the scrapping of the carbon price, the abatement requirements were not put back in place. When the WA EPA introduced guidelines last year requiring resource projects to completely offset their greenhouse gas emissions, the usual suspects were outraged and demanded the guidelines be withdrawn, and they were. New guidelines have not yet been finalised. The gas donors called in their favours and used the Liberal and Labor parties to squash reform. If resource companies were required to buy Australian certified carbon units, it would not only drive efforts to reduce emissions; it would transfer wealth from gas companies to farmers, who desperately need the income stream. It will be interesting to see whose side the National Party is on. When we vote on my second reading amendment, which notes this, we invite the Nationals to come over and vote with us, to represent farmers instead of their coal, oil and gas donors.
I rise today to speak to the Offshore Petroleum and Greenhouse Gas Storage Amendment (Cross-boundary Greenhouse Gas Titles and Other Measures) Bill 2019 and the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment (Miscellaneous Measures) Bill 2019. I want to cover three points in the course of my speech. Firstly, I want to give a short summary of what the bills are about. Secondly, I want to outline why the bills are important, especially in today's context. Thirdly, I will make a few comments in response to some of the remarks which have been made by some of my fellow senators.
Firstly, what do the bills do? The bills enable title administration and regulation of a greenhouse gas storage formation that straddles the boundary between state and/or Territory coastal waters and Commonwealth waters; enable unification of adjacent Commonwealth greenhouse gas titles; strengthen the powers of the National Offshore Petroleum Safety and Environmental Management Authority during an oil pollution emergency originating in Commonwealth waters; and make minor policy and technical amendments to the Offshore Petroleum and Greenhouse Gas Storage Act. Those issues have been discussed by a number of the previous speakers, and they're relatively straightforward. If this nation is to develop carbon capture and storage, we need to have a title system which reflects the geographical reality of where the formations are located, the jurisdictions in which they reside and how the carbon capture and storage technology would be utilised, with injections into those formations. Those formations don't necessarily respect state and territory borders. That all makes great sense.
It also makes great sense that NOPSEMA, the relevant authority and regulator, is given appropriate powers in the event of an oil pollution emergency. We need a regulator on the beat who can take the appropriate action if there is an oil pollution emergency. And, of course, in that context as well, state and Commonwealth borders aren't necessarily respected in the context of that emergency. The regulator needs to act in both the Commonwealth's jurisdiction and in the states' jurisdictions.
The last point I'd make in relation to the introductory comments on what the bill achieves is that the bill does respect our Federation and there's an appropriate allowance for Commonwealth-state cooperation with respect to management and regulation of the titles, all the way from the initial grant to the renewal process, and through the imposition of various conditions on the titles.
I'd now like to talk about why this bill is important. Last year, I served on a Senate select committee that looked at the vexed question of jobs in the regions, and some of those regions are suffering a great deal. One of the regions in relation to which we took evidence was the Latrobe Valley. Some of the most thought-provoking evidence I think we received in the context of that committee meeting was from representatives of AMWU and also from some of their members. The point that they made during the—
Senator Watt interjecting—
I'll take that interjection, Senator Watt. They were very smart people and they cared about their members. One of the points they made was that, in the context of a major shutdown of, say, an electricity power station—automotive manufacturing—the research indicates that the prospects for people employed on a full-time basis in those facilities were quite grim. The evidence suggests that only one-third of the long-term employees would find long-term employment somewhere else after they'd been made redundant from such facilities; one-third would go on the treadmill of short-term casual work; and one-third would never have a full-time job ever again. That evidence really did resonate with me and stayed with me far after the hearings of the committee.
When I look at this bill, it seems to me that we have an opportunity here, as a chamber, to support the promotion and development of a new industry: an export hydrogen industry. The position with respect to regulation of titles and with respect to the formation of titles will assist the development of that industry. The Commonwealth government, as has the Victorian government, has already been supporting the development of the export hydrogen industry. I want to talk about two projects in this context. The first is the government's investment of $96 million in the CarbonNet project, which is investigating the potential for establishing a commercial-scale carbon capture and storage network in the Latrobe Valley, Victoria. CarbonNet has commenced what is referred to as a stage 3 work program, which includes drilling an appraisal well—which is currently underway in Bass Strait—to determine the suitability of its preferred CO2 storage site, obtaining a declaration of a storage and injection licence and also defining a commercial structure and financial model to attract private sector investment.
The second project I want to refer to is the hydrogen energy supply chain into which the federal government has invested $50 million. This is a world-first pilot project, which is being supported by substantial private sector and public sector investment from Japan. This is where the opportunity lies for this country to develop a world-leading hydrogen export industry. HSC is co-funded by a Japanese-led business consortium to the tune of $230 million; $166 million from the Japanese government; $250 million from the Commonwealth government; and $50 million from the Victorian government. If we can get that to work, if we can get that project off the ground, it will provide billions in export dollars and it will provide hundreds and hundreds of jobs, and it will do it in a way that is environmentally responsible and will provide job creation and investment in one of our regions that has suffered from redundancies over the last 20 years—the Latrobe Valley. It has suffered. Here's an opportunity for that region to reinvent itself. Here is an opportunity for that region to create additional jobs and employment and economic activity, the exact sort of economic activity that this nation will need as we emerge from this COVID-19 crisis.
The other aspect of that project that really resonates with me is the work being undertaken by the Commonwealth government, the Victorian government, the Japanese government, and significant private sector players in both the Australian economy and the Japanese economy. I've seen that work in my home state of Queensland: the BHP Mitsubishi Alliance in Queensland, which constituted a great partnership between great Australian companies and great Japanese companies, developed undeveloped resources in the great state of Queensland. It provided jobs, generated growth and provided prosperity for the people of Queensland. I can see the opportunity we have here for exactly the same thing to be achieved in Victoria.
I'm supportive of the Offshore Petroleum and Greenhouse Gas Storage Amendment (Cross-boundary Greenhouse Gas Titles and Other Measures) Bill 2019 and the Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment (Miscellaneous Measures) Bill 2019, but I just want to make a quick point about hydrogen gas projects in the country. The explanatory memorandum for these bills says that they will support two related projects in Victoria that will use coal and carbon capture and storage to export liquid hydrogen to Japan. The federal government has apparently tipped in around $150 million to get these two projects off the ground. Clearly, the government is pretty interested in getting the ball rolling on this one. I mean to say, this is the first thing we've been asked to look at after months of parliament being shut down. That's all well and good for Victoria, and good on you. I'm not going to get in the way of it. I can tell you that much right now.