Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Hansard source

I rise today to speak on the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment Bill 2009 and the Offshore Petroleum and Greenhouse Gas Storage (Safety Levies) Amendment Bill 2009. The Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment Bill seeks to correct omissions in the act, which came into effect in November 2008, and also is intended to make a number of technical corrections, including to references to the act in other legislation. By way of background, the Offshore Petroleum and Greenhouse Gas Storage Legislation Amendment Bill 2009 provides for the injection and geological storage of greenhouse gas substances in Australia’s offshore areas—that is, those covered by the Commonwealth. The bill will provide for access and property rights for greenhouse gas injection and storage.

Despite the constant assertions by the Prime Minister and the current government that the Howard government did nothing on greenhouse gas emissions, the fact of the matter is quite the contrary, and I was pleased that the Prime Minister finally acknowledged that in the House yesterday. I am surprised the Prime Minister had trouble saying ‘$3 billion’, because the ‘billions of dollars’ figures tend to roll off their tongues these days like they were just lolly money. But in the main chamber yesterday the Prime Minister did admit that the Howard government had allocated $3 billion to lowering greenhouse gas emissions in Australia.

The work that has been done to date on lowering greenhouse gas emissions in Australia was done by the previous government. That is a fact. The money that has been put into solar energy, the money that has been put into carbon capture and storage, the money that has been put into better efficiencies in coal fired power stations, the money that has been put into looking at ways in which we can improve the combustion of coal—the money that has gone into all those projects came from the previous government.

It has taken the government 18 months to allocate money for new projects. As yet, no major sums of money have been spent building anything. There has been a great deal of talk—and I know that many would not be surprised by that fact—about what the government are doing about greenhouse gas emissions. But the reality is that they sign things, they initiate reports, they establish a new institute that duplicates the previous institute and they do round-the-world trips talking about what they are going to do. They say they are going to do a lot, but they have not done anything.

The reality is, as is the case with this legislation which began development in 2005 under the previous government, that it is one of the real initiatives that will make a difference. I do commend the government for the work it is doing to ensure this bill operates correctly, but it highlights that bills of this nature—and this one is relatively simple—will continue to need amendment to ensure that they work. I will come back to that point a bit later.

The provisions of this bill will authorise the injection and storage of greenhouse gas substances, as I say, in offshore waters. This means in essence the capture of carbon dioxide together with any substances incidentally derived from the capture or injection and storage process with the permitted and required addition of chemical detention agents to assist in the tracing of the injected greenhouse gas. What that means in layman’s terms is that, when you bury this gas and sequester it in the ground in these subterranean reservoirs or storage spaces, there will be a gas agent that will be put in there that can be traced so that we will know if that storage is leaking.

I cannot emphasise how important this legislation is in regard to where we go in Australia, in particular in regard to the use of zero-emission coal fired power stations. Again, this government has said a lot about that but has not yet put any money into building one. I see it is allocated and I thank the Minister for Resources and Energy for providing me with a briefing yesterday, but what it says is that still this government is not providing enough money to build a series of zero-emission coal fired power stations. We have heard figures bounced around by the Prime Minister of somewhere between two, four and eight of these power stations being built by 2020.

Let me apprise the House of what one of these power stations will cost. It will cost around $3 billion—about as much as a nuclear power station. They are an extremely expensive piece of kit. They are arguably almost double what it would cost to build the same size power station conventionally, as we call it, even using the latest super- and ultra-critical boilers. These power stations are not efficient by nature—30 per cent of the energy they produce goes into capturing and storing the CO2. That CO2, as I mentioned, will be stored in these subterranean reservoirs.

What we all need to understand about carbon capture and storage in relation to zero-emission coal is that it is extraordinarily expensive to build these power stations and extraordinarily expensive to run them. What the government is not telling the people of Australia is that the price of electricity ex the power station will treble. It will go up threefold under their greenhouse gas emission program. Between the carbon price and the actual physical cost of building and running one of these power stations, people in Australia need to be aware that the price of electricity at the power station will treble. No-one is arguing with that figure. The figure is generally accepted to be in excess of $120 a megawatt hour, it is $40 currently and it is possible and accepted that the figure could in fact be as high as $150 a megawatt hour.

That will bring into focus some of the folly of what this government is trying to do with the pittance that it has put into this technology in the 18 months that it has been in power. I say pittance as a relative term, but we need to understand that under the program which the government boasts about of somewhere between two and eight power stations having this technology by 2020 that, in fact, each of those power stations have a commercial shortfall or an economic gap, as they call it, of around $1 billion. And there is nothing that the government has announced to date that will cover that gap. Having covered that construction cost, they then need to be honest with the Australian people about what their electricity bills are going to be.

Industry have got it worked out. They know that, between the CPRS, the rent and the actual cost of building these power stations, their power bills are going to go up significantly, and one of the great natural advantages that Australia has had as a country will be lost forever. Before any of our competitors move to this sort of regime, before we even know what any of our trade competitors are doing, Australia will be locked in through this ridiculous, poorly thought out CPRS to committing Australian consumers, in the case of industry, to an uneconomical price of electricity for those high-level consumers.

We need at some stage to see the government be honest about the challenge that lies in front of them. Can I start by suggesting that they look at this publication, Powering Australia: the business of electricity supply. It has a wonderful photo on the front of a wind energy power station. I know there are some—not me, because I have an engineering eye, being an ex-farmer and someone with that sort of bent—who would say, ‘You have polluted the landscape with wind farms.’ I am not of that ilk. I believe wind farms, along with other forms of renewable energy, have an important role to play, but we need to understand that, given the remoteness of that power station, there are going to be added costs in transmission and energy lost, along with the fact that wind energy costs twice as much as coal energy now. We need to understand that, in terms of cost reduction, that technology is not going to see that figure alter dramatically.

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