Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

On behalf of the Standing Committee on Primary Industries and Resources, I present the committee’s report entitled Down Under: greenhouse gas storage—review of the draft Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill, together with the minutes of proceedings.

Ordered that the report be made a parliamentary paper.

On behalf of the Standing Committee on Primary Industries and Resources, I have the pleasure of presenting our report entitled Down Under: greenhouse gas storage—review of the draft Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill. This report assesses the proposed legislation introduced into the parliament by the Minister for Resources, Energy and Tourism, the Hon. Martin Ferguson MP, on 18 June 2008. The bill provides for the storage of greenhouse gas substances in offshore Commonwealth waters. Through the titles and rights established by the bill, proponents will set up commercial operations to permanently store captured carbon dioxide, and as such abate a proportion of Australia’s emissions.

The committee have reviewed the proposed legislation and largely find in favour of it. With the recommendations we suggest, the committee believe that it will be important, successful legislation. It will provide a much-needed mitigation option for Australia’s carbon dioxide emissions while also allowing for the continued exploitation of our coal reserves—so important to our energy security.

The proposed management of interactions between greenhouse gas storage proponents and pre-existing petroleum titleholders was of particular interest to the committee during its deliberations. The potential for conflict between these two parties was identified, especially with regard to the protection afforded pre-existing petroleum titleholders, which could potentially frustrate the establishment of greenhouse gas storage activities in some areas. It was felt that, while the bill largely strikes an appropriate balance between these two key parties, further improvements could be made. As such, the committee recommends in this report that the best solution would be for the legislation to include a clause to provide the responsible Commonwealth minister with the power to direct both parties to come to commercial agreements in good faith.

The cost of establishing greenhouse gas storage operations is likely to be vast. It will require new technology, specialist expertise and significant time frames in order to become effective. As such, the committee has recommended financial incentives from the government to both promote investment in and encourage uptake of this important new industry. Also, to encourage the early injection of carbon dioxide, the committee recommends in this report that those proponents who can demonstrate an available carbon dioxide stream be favoured for acreage release.

Through its inquiry process the committee also identified the large and possibly vital role the petroleum industry is likely to play in the uptake of greenhouse gas storage in offshore Commonwealth waters. The petroleum companies currently hold most of the technical knowledge and expertise required for the establishment of greenhouse gas storage. They are also current tenement holders in offshore Commonwealth waters. Therefore the committee has recommended that petroleum titleholders be offered a chance to combine a greenhouse gas storage title with their production or exploration permits.

The issue of long-term liability was also identified by the committee as highly significant. Due to the extensive time frames over which the carbon dioxide is to be stored, the question of liability is particularly complex. The bill as it stands is silent on liability, leaving it entirely to common law. The committee recommend in our report that long-term liability be transferred from the operator to the government after site closure conditions have been met, as this is likely to act as an incentive for greenhouse gas storage proponents to maintain high management standards as well as create greater investment certainty.

The committee congratulates the minister for this pioneering legislation and acknowledges that it sets the scene for Australia to lead the world in this new technology, which has great potential to make deep cuts in carbon dioxide emissions while continuing to support our energy security. The committee supports the proposed legislation and believes that it provides an appropriate groundwork for the establishment of a national greenhouse gas storage industry in Australia.

I would like to express, on behalf of the committee, our gratitude to all those who participated in the inquiry; to the staff of the secretariat who were involved in preparing the report Bill Pender, John Miller and Sophia Nicolle; and to you, Mr Deputy Speaker Sidebottom, the member for Braddon, for your involvement and commitment to getting this good work done. To my deputy chair, the member for Hume, I thank you for all the work you did as well, during a difficult time for you. On behalf of the committee I commend the report to the House.

Alby Schultz (Hume, Liberal Party) Share this | Link to this | Hansard source

I rise in support of the Chair of the Standing Com-mittee on Primary Industries and Resources to speak on the review of the draft Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008. The committee’s report, entitled Down Under: greenhouse gas storage, has made some recommendations to the draft legislation to promote the legislation’s effectiveness. Recommendations include refinements to: ensure that the extraction of petroleum and the storage of carbon do not preclude other activity occurring nearby; provide the minister with the power to insist that, where respective titles overlap, the parties negotiate in good faith; ensure that all regulations and guidelines under this proposed legislation are released to industry and the public as a matter of urgency well before the legislation is passed; and establish a process for the transfer of long-term liability from a greenhouse gas operator to the government, after strict site closure criteria are met, in order to create business and investment certainty.

This bill will establish a new range of offshore titles providing for the transportation by pipeline, and injection and storage in geological formations, of carbon dioxide and potentially other greenhouse gases. The Offshore Petroleum Act 2006, as amended by the bill, will continue to apply only in the Commonwealth offshore jurisdiction. The new titles will therefore be located in the area between the outer limits of the state and Northern Territory coastal waters and the outer limit of the Australian continental shelf. A licence will authorise the injection and storage of a ‘greenhouse gas substance’. This will initially mean carbon dioxide, together with any substances incidentally derived from the capture or injection and storage processes, including added chemical detection agents to assist the tracing of the injected substance. There is a power by regulation to extend the meaning of ‘greenhouse gas substance’ to include other substances. This regulation-making power is not expected to be used until such time as the protocol to the London dumping convention is amended to permit geological storage of those other substances.

Under the proposed legislative model, the Australian government will be primarily responsible for administering the regulation in Commonwealth waters, rather than the current joint authority arrangements applying to the petroleum industry. The responsible Commonwealth minister will have ultimate regulatory responsibility. This approach is consistent with industry’s preference for a consistent and harmonised national approach and will improve the efficiency of project approvals and minimise administrative duplication.

The bill establishes three categories of ‘storage formation’, with increasingly specific descriptors that correspond to the titleholder’s improving level of knowledge about the formation: (a) a ‘potential greenhouse gas storage formation’, (b) an ‘eligible greenhouse gas storage formation’ and (c) an ‘identified greenhouse gas storage formation’, which is an ‘eligible greenhouse gas storage formation’ that is declared by the minister to be an ‘identified greenhouse gas storage formation’. An injection licence authorises the injection and storage of a substance into an ‘identified greenhouse gas storage formation’.

Once injection operations cease permanently in an injection licence area, the licensee must apply for a site-closing certificate. This triggers the commencement of the site-closing period, during which the injection licensee will be required to carry out a work program corresponding to a petroleum decommissioning process, but potentially with additional requirements. The application must be accompanied by a written report setting out the licensee’s modelling of the behaviour of the GHG and relevant information and analysis; the licensee’s assessment of the expected migration pathways and short- and long-term consequences of the migration; and the licensee’s suggestions for post site-closing monitoring and verification.

These processes may take months or years. As is the case with petroleum decommissioning, the injection licensee will be required to plug wells, repair damage to the seabed and remove or otherwise deal with property and equipment. The minister may refuse to give a certificate if the substance is not behaving as predicted or there is a significant risk of a significant adverse impact on other potential resources.

Mr Deputy Speaker Sidebottom, I support this acknowledgement and thank all of the people involved in putting this report together, including your considerable learned contribution. (Time expired)

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

The time allocated for statements on this report has expired. Does the member for Lyons wish to move a motion in connection with the report to enable it to be debated on a later occasion?

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

I move:

That the House take note of the report.

In accordance with standing order 39(c), the debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting. Does the member for Lyons wish to move a motion to refer the matter to the Main Committee?