Ian Goodenough (Moore, Liberal Party) Share this | Hansard source

My grievance relates to the lack of investment in marine bunkering infrastructure for liquefied natural gas at key ports around Australia for the supply of fuel for use by ships. The barriers preventing the transition of the maritime shipping industry from heavy fuel oil to LNG include a lack of appropriate infrastructure, such as bunkering facilities, and a lack of an appropriate policy framework. Based on projections by Perth based consulting firm BE&R Consulting, which specialises in small-scale LNG and LNG bunkering projects, this potentially equates to a lost opportunity to create a new industry capable of generating revenue of $500 million to $1 billion per annum for the Australian economy. Renewable fuels suitable for the bulk carrier marine industry and associated technology are not expected to be available on a commercial scale for another 15-plus years. There is a growing global movement to replace the use of heavy fuel oil as the primary fuel for maritime shipping with the more environmentally friendly LNG.

Australia is one of the largest producers of liquefied natural gas. In 2019 our nation exported 77 million tons of LNG, thus our nation is ideally placed to build an LNG bunkering industry. The global LNG bunkering market is expected to grow from one million tons per annum in 2020 to 15 million tons per annum by 2030. There is potential for Australia's LNG bunkering market to grow from zero to greater than two million tons per annum over the next 10 to 15 years. Currently, Australia is more than 80 per cent reliant on imported transport fuel oils despite extensive domestic natural gas reserves in our nation. Our reliance on imported fuels is concerning and an unsustainable model that undermines Australia's energy security. By adopting LNG as a marine fuel, Australia will provide the maritime industry with an alternative, sustainable and cost-effective fuel source. The use of LNG as a marine fuel provides a step towards Australia achieving energy independence.

Currently, minimal fuel bunkering of international shipping occurs in Australia. This is principally due to the high cost of fuel relative to elsewhere in Asia. Bunkering industries are generally located close to major refining capacity and shipping hubs. Our ports in the north-west of Australia are some of the largest in the world in terms of export tonnage, with over 3,000 bulk shipments departing from Port Hedland each year. The majority of demand in Australia is expected to come from the bulk ore carriers, which ship our iron ore and coal to Asia; container ships; and cruise liners. One very large ore carrier would consume in the order of 1,000 tons of LNG per round trip to China. Thus, Port Hedland alone has the potential to build a multimillion ton per annum LNG bunkering industry.

LNG is seen as a transition fuel to a low-carbon economy that provides substantial environmental benefits over conventional fuels in terms of improving air quality and human health, which is particularly important in ports and coastal areas. LNG emits zero sulfur oxides, virtually zero particulate matter and significantly less nitrogen oxides. It is estimated that the use of LNG reduces carbon dioxide emissions by around 20 per cent. According to DNVGL, a Norway based ship classification firm, LNG is clean and poses no pollution risk to ocean environments and has no waste disposal or discharge issues.

The LNG Marine Fuel Institute was established in 2016 to promote the transition of the maritime industry to the use of LNG as a marine and transport fuel. The objective is to replace the use of heavy fuel oil as the primary fuel for maritime shipping with the more environmentally friendly LNG, which is produced abundantly domestically. By promoting and facilitating the use of LNG as a marine transportation fuel, the federal government can partner with industry to help Australia's economy grow and create jobs while reducing pollution and emissions on a large scale.

The transition to LNG will be driven by a number of factors. LNG meets the International Maritime Organization's 2020 emissions guidelines, limiting sulfur emissions to 0.5 per cent from 1 January 2020. LNG is cheaper than using marine fuel oil. LNG represents the cleanest economical fuel option that is currently available. LNG is more environmentally friendly than diesel or heavy fuel oil, with less carbon dioxide and sulfur and nitrogen oxides. It also provides an environmental risk reduction in terms of accidental fuel spillage. If a ship runs aground, any LNG leaks will evaporate, whereas an oil spill will create an environmental disaster.

The implementation of emission control areas around major coastlines around the world with emission restrictions more stringent than those specified in IMO 2020 is continuing to grow as part of a global movement phasing out the burning of heavy fuel oils and diesel by the maritime shipping industry at sea and in ports. It should be a priority for the Commonwealth to implement emission control areas covering Australia's pristine coastal waters and estuaries, as has been done already in the USA, Canada, China, the North Sea and the Baltic. Industry adoption will significantly increase overall emissions reductions in the short term, prior to the introduction of future technologies. LNG is unlikely to be displaced by renewable fuels such as hydrogen in the next 15-plus years due to cost and limited available technology. Development of an LNG bunkering industry also creates other benefits for Australia, including employment for local residents in regional towns, Indigenous participation, and opportunities for design, construction and maintenance of LNG storage facilities and bunkering vessels in Australia.

We have the opportunity to create a series of Australia's first green ports, which aim to minimise import vessel emissions such as heavy particle emissions, carbon dioxide, sulphur and nitrogen oxides, noise, dust, waste and water pollution, providing both environmental and social benefits. Using LNG as a fuel is projected to achieve a 20 per cent reduction in carbon dioxide and a 90 per cent reduction in sulphur and nitrogen oxides and particulates, eliminating clouds of black soot emitted from ships whilst in port. Australia can emerge as a leader within the South-East Asian and Indo-Pacific region in green shipping and port infrastructure. Multiple Asian countries, with the support of their governments, are currently building their LNG bunkering capability to service the expected demand from vessels trading in Asia. This will include vessels carrying Australia's bulk ore. These countries, such as Singapore, Malaysia, China and Japan, are likely to be using LNG sourced from Australia. The opportunity exists for vessels to be refuelled using Australian LNG at Australian owned and operated facilities based at Australian ports, retaining the economic benefits and full value chain of LNG for Australia.

For Australia to grasp this opportunity to build a new industry using our domestic natural resources, federal government support is required to fund the development of bunkering infrastructure at key ports around Australia, as demonstrated successfully in Europe and Singapore. This could include incentives to encourage investors to build the required infrastructure, provision of sites at ports for infrastructure such as LNG storage and loading, and providing incentives for ships and charterers to refuel in Australia.

In concluding my contribution to this grievance debate, I call upon the minister for energy to take measures to actively promote the development of an Australian LNG bunkering industry through investment and appropriate infrastructure for maritime refuelling at Australian ports and developing an appropriate policy framework. Reducing Australia's reliance on imported fuels is a strategic benefit, and LNG offers an economically viable solution to power the shipping industry. To achieve this, it is also necessary to allocate adequate funding in research and development of future fuels technology. We have the opportunity to encourage institutional investment in the necessary facilities and infrastructure to support this innovative and new, environmentally friendly industry for the long-term economic development of our nation.

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