Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

The legislation that is before the House today is an important part of the government’s long-term strategy to tackle climate change. The Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 provides the world’s first comprehensive regulatory framework for carbon dioxide capture and geological storage. It will establish the foundations for the development of a greenhouse gas storage industry in Australia and it forms an important part of Australia’s response to climate change. Climate change is one of the greatest challenges for the future for Australia, for our region and for both the industrialised and developing worlds. It is a challenge with enormous economic, national security, environmental and moral implications. How Australia responds to this challenge now will have a great impact on the future—our economy, our future prosperity, our environment and also our national security. The scientific evidence of climate change continues to accumulate.

The Intergovernmental Panel on Climate Change last year predicted rises of between 1.1 and 6.4 degrees over the next century relative to the period 1980 to 1999. As the government’s green paper on the Carbon Pollution Reduction Scheme noted in July:

Under a high emissions scenario, average temperatures across Australia are expected to rise by up to 5 degrees by 2070. The IPCC concluded that Australia’s water resources, coastal communities, natural ecosystems, energy security, health, agriculture and tourism would all be vulnerable to climate change impacts if global temperatures rise by 3 degrees or more.

The expert analysis points to severe global consequences and severe national consequences. These include rising sea levels, more extreme weather events, more frequent droughts, floods and water shortages, large-scale migration, increased threats to border security, the loss of infrastructure, civil unrest and regional conflict over increasingly scarce resources. Climate change will also have significant national security implications in our region, with many Pacific island nations exposed to severe and early impacts from rising sea levels.

Australia is more exposed to the impact of climate change than probably any other industrialised nation, particularly through its impact on our agriculture, water supplies, tourism industry and environment. The Intergovernmental Panel on Climate Change forecast last year that by 2020 significant loss of biodiversity will occur in some ecologically rich sites, including the Great Barrier Reef and the Queensland wet tropics. Climate modelling by the CSIRO and the Bureau of Meteorology suggests that rainfall in southern Australia could be reduced by up to 10 per cent by 2030 and by 20 per cent by 2050.

Acting now is the responsible thing to do, and that is what this bill is all about. We must prepare for a global transition to a low-carbon economy. To delay any longer, to stay in denial, as the climate change sceptics and some members opposite would have us do, is reckless and irresponsible. For our generation, for our kids and for future generations, we must act now. There is no alternative. The longer we take to act, the more Australia risks falling behind in the race to build the clean, green energy industries of the future, the industries that will drive a global economic transformation and create the high-paid, high-skilled jobs of the future.

The Australian government is determined to rise to the long-term challenge of climate change and the long-term challenge of threats to our water and our energy security. We have committed to the long-term target of reducing Australia’s carbon pollution by 60 per cent below 2000 levels by 2050. The government’s strategy to achieve that goal is based on three pillars that address immediate challenges while also preparing for the long-term future: (1) reducing Australia’s greenhouse emissions; (2) helping to shape a global solution; and (3) adapting to climate change that we cannot avoid.

On the first of those pillars, the best way to reduce carbon pollution while building long-term economic prosperity is through a Carbon Pollution Reduction Scheme. This forms part of the government’s overall approach to reducing greenhouse gas emissions. A further approach lies in what we will do on renewable energy. A third approach lies in what we will do to increase energy efficiency across Australia as well. Next year the government will introduce legislation to establish the Carbon Pollution Reduction Scheme for Australia. It will be the largest reform of the Australian economy in many decades. It is also the most important because, by helping to reshape the Australian economy, we can position ourselves to thrive in an increasingly carbon constrained world.

The government recognises that any restructuring of the economy will affect some sectors more than others. That is why we have made a number of key commitments to protect the most vulnerable in our community and to support the most affected. It is also why we propose to provide assistance to the most heavily emissions intensive, trade exposed activities in the economy. The government is consulting widely with the Australian community and with the business community on the design of this scheme.

The government is also committed to a range of policies and measures to complement the Carbon Pollution Reduction Scheme and help lower the costs in both the short and the long term, including energy efficiency measures, the support of clean coal, carbon capture and storage, as well as renewable energy technologies. Energy efficiency will not only lower the costs of production in carbon pollution; it will provide other benefits like improved energy security, innovation and productivity improvements, greater household comfort and lower costs of living. New low-emission technologies like renewable energy and carbon capture and storage will be critical in transforming our energy markets.

The legislation before the House today establishes the legislative framework to make carbon capture and storage activities possible in Commonwealth offshore waters and to provide a management system for ensuring that that storage is secure. This bill is therefore crucial to Australia’s overall response to the challenge of climate change. It will help make possible projects that will be supported by the government’s National Low Emissions Coal Fund. That fund will be supported by our half-billion-dollar commitment to the Renewable Energy Fund to support the development and commercialisation of advanced renewable energy technologies in Australia. We have also committed $150 million to the Energy Innovation Fund, a fund that will support the creation of an Australian solar institute to fund solar thermal and solar photovoltaic research and development.

Each of the programs established by this government aims to build links in what the Garnaut review describes as the innovation chain—the chain from early research to demonstration, and commercialisation to market uptake—to turn ideas into solutions. We recognise that addressing climate change will require a massive collaborative effort between our scientists, our research institutes, CSIRO flagships, the CO2 Cooperative Research Centre, private capital and energy businesses themselves. This collaboration will be particularly critical in developing clean coal technologies such as CCS.

The government believes that this legislation and these investments are important because Australia has the potential to be a world leader in CCS technology. If we succeed in demonstrating CCS technology, many other nations are likely to follow. The bill therefore contributes also to the second pillar of our long-term plan to tackle climate change: helping to shape a global solution on climate change ahead of the Copenhagen climate change summit in December 2009. Australia is continuing to work closely with the international community, including China, the European Union, Japan, Indonesia and the United States, to develop an agreement that is effective and equitable. In the meantime, Australia is also working closely with Indonesia and Papua New Guinea to address deforestation, reduce greenhouse gas emissions and provide sustainable economic development here in our own region.

Regardless of our efforts to reduce Australia’s emissions and to shape an international solution, some impacts of climate change are now unavoidable, given the level of carbon pollution already in our atmosphere. That is why the third pillar of our climate change strategy is so important: adapting to the climate change we cannot avoid. The government is already investing significantly in initiatives to help those parts of Australia most exposed to the impacts of climate change, including our farming communities and coastal regions, as well as the Great Barrier Reef. We have also agreed to a National Climate Change Adaptation Framework with state and territory governments, which includes providing $50 million in funding for a national climate change research facility. Together, these initiatives represent a comprehensive plan to tackle the challenge of climate change—not to avoid the challenge of climate change.

The government is investing $2.3 billion over five years in reducing greenhouse gas emissions and investing in innovative technologies. This includes the National Low Emissions Coal Fund, half a billion dollars over eight years; the Renewable Energy Fund, half a billion dollars over six years; the Energy Innovation Fund, $150 million over four years; the Green Car Innovation Fund, half a billion dollars; and the Clean Business Australia Fund, $240 million over four years.

Through COAL21, the coal industry will be contributing an additional $1 billion to our Clean Coal Initiative—and I thank the industry for that. Direct beneficiaries of funding provided under the National Low Emissions Coal Fund will include the research community, technology developers, operators of demonstration projects and developers of CO2 storage sites and associated infrastructure.

CCS technologies are important because coal is such an important part of Australia’s economy both for domestic energy generation and export revenues. Eighty per cent of Australia’s electricity comes from coal-fired power generation. While we build our renewable energy and gas capacity, coal will continue to provide most of Australia’s electricity for decades to come. That also means it will continue to be a major source of greenhouse gas emissions. Right now, more than 30 per cent of our total greenhouse gas emissions comes from the use of coal. That is why the development and deployment of low-emissions coal technologies are so important to achieving substantial reductions in Australia’s greenhouse gas emissions.

Meeting our greenhouse target will require substantial greenhouse gas reductions from the operation of Australia’s coal-fired power stations. CCS technology is also important for the long-term future of our coal exports. Coal is now Australia’s largest source of export earnings, earning an estimated $43 billion in 2008-09. If Australia can play a role in developing low-emissions coal technologies, we can secure the long-term future of the coal industry in a world that in coming decades must transition to low-carbon energy sources. Carbon capture and geological storage is a key component of the government’s strategy to reduce carbon pollution from the operation of Australian coal-fired power stations. Through the National Low Emissions Coal Fund, the government will support the demonstration of postcombustion capture at coal-fired power stations and also the carbon storage aspects of CCS.

The passage of this legislation is an important step forward in advancing the large-scale development of CCS and making sure that we in Australia are prepared for the future. This legislation will mean that the Australian government will offer exploration acreage for carbon storage sites as early as next year. At the same time, the national carbon storage mapping project will identify the nation’s most prospective areas and match them with demand locations. That way, we can prioritise the carbon storage exploration infrastructure task which lies ahead of us. This work will be carried out by a carbon storage task force led by Keith Spence and including representatives of industry, the labour and environmental movements and the research community—we are determined to get this right. The carbon storage task force will also work closely with the National Low Emissions Coal Council.

As I have mentioned, this legislation will help position Australia as a world leader on CCS. Internationally, carbon capture and storage is recognised as a critical technology in reducing the emissions of CO2 into the atmosphere from both power generation and other activities. The recent G8 meeting in Hokkaido endorsed seven particular recommendations made by the International Energy Agency and the Carbon Sequestration Leadership Forum, which focused on two areas: firstly, demonstrating CO2 capture through a commitment to 20 industrial-scale CCS projects by 2010 to allow the broader development of this technology by 2020; and, secondly, taking concerted international action to partner financially, support and share information to build the development of CCS.

CCS has the potential to be a major low-emissions technology. That is why we need legislation that can create the certainty to underpin investments in large-scale demonstration projects into the future. The legislation before the House will help Australia to develop technologies that have the potential to make a major contribution towards reducing greenhouse gas emissions in Australia and around the world. It is a critical element of creating an environment for investment in the low-carbon energy industries of the future. The Australian government believes we cannot continue with a do nothing approach—the do nothing approach which characterised the government which preceded us. Acting now is our responsibility. Acting for the long-term interest of the Australian economy is our responsibility. Acting now for the long-term interest of the planet is our responsibility.

The market for low-carbon energy technologies is growing rapidly and it will be worth hundreds of billions of dollars in the future. Australia has the choice to be a hub of clean-energy technologies and businesses or to simply become a follower, an importer of technologies developed elsewhere. We do not intend to do that. We intend to be on the front foot. That is what this legislation is about. And there is more to come. But we will only achieve the critical mass of research, innovation and investment in Australia if we begin to move to a low-carbon economy ourselves. That is why carbon capture and storage technologies, alongside the Carbon Pollution Reduction Scheme and the government’s comprehensive response to climate change, are so critical to Australia’s future.

Some in the community caution us against acting. Some say it is better that we just do nothing on climate change—that we just wait until other nations act, until other nations develop these technologies, until other nations show us the way forward. That is not the attitude of this Australian government. Some say we are only a small country so whatever we do does not really matter for the rest of the world. That is not the attitude of this Australian government. I believe those arguments that have been advanced are just wrong. They are unprincipled, they are short-sighted and they are absolutely reckless in relation to this nation’s economic future. They are also out of step with the best Australian traditions—the traditions of innovation, initiative and being among the first to raise our hand when the world is looking for leadership.

This bill is about Australia providing that leadership. It is about preparing for the future with the world’s first comprehensive regulatory framework for carbon capture and storage projects. It is about building a strong foundation for the future and seizing a potentially very large market opportunity for the future. The government believes that Australia should not be a follower on climate change; the government believes Australia should be a leader on climate change. That underpins the legislation before the House. I commend the bill to the House.

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

It is always nice to follow the Prime Minister. I am very pleased to be able to discuss this legislation, the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 and related bills, for a number of reasons and I would like to highlight those as I go. Most especially, I want to commend this legislation for its pioneering element and I want to commend the Minister for Resources and Energy, who is at the table, for the excellent work that he, his advisers and the department have done in producing what is fundamentally a framework piece of legislation to allow for what will be a very important part of our whole approach to carbon pollution reduction. In this instance we are talking of course about the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008, which will establish a framework to allow people to prepare with certainty into the future to capture and then store carbon dioxide in our offshore reservoirs safely and securely, and we will be able to share with the rest of the world the technologies that are going to be encouraged by this. It is absolutely essential that we take the lead in this pioneering role which we share with others throughout the world, and I would like to discuss some of those a little bit later on.

Also, as the Prime Minister has just mentioned, this is part and parcel of a suite of legislation and schemes by which Australia, led by this government—so under this government—will attempt both to reduce carbon pollution in Australia and to make its contribution to reducing carbon pollution throughout the world. I think it is really important to note that by just about any measure the Australian population believe in this thing called climate change, even though it is rather amorphous at times, and that they believe climate change is occurring.

Yesterday I was in this House listening to the member for Tangney, who essentially repudiated the whole argument and the science for the rationale behind climate change. I was absolutely aghast because I regard the member for Tangney as having intelligence and articulation particularly in areas that I am particularly interested in, such as education. But I was staggered by the member for Tangney’s claim. But it was part and parcel of a contrary day for me yesterday.

I came across contrariness everywhere I went yesterday. It started with the member for Tangney then I picked up my newspapers and I came across the contrariness of others. As you know, Mr Deputy Speaker Bevis, along with you I have a passion for education, so I read in the newspaper comments by Mr Kevin Donnelly, Mr Contrary himself on education. It is Kevin Donnelly versus the rest of the world—and the rest of the world is wrong and he is right on education! I thought yesterday I would do a bit of historical reading and I came across Keith Windschuttle. Of course here we go again with this contrarian view of history that I was served up yesterday. So I thought I would go back for a bit of political comment and I came across Janet Albrechtsen’s work. Here was another contrary view of life. Of course you have to have contrary views once in a while, but yesterday the member for Tangney was completely contrary as if nothing was happening with climate change and it was all just seasonal—and I was staggered. He was supposed to be talking on this legislation—that is what I found extraordinary—and I do not think we ever got to the detail of this legislation.

This legislation is our attempt to do what we should do anyway: seek to attempt to reduce our carbon pollution. This framework seeks to do that, and I am very proud to be part of all this. I am very proud to have been part of the excellent inquiry which we have just conducted on the inquiry brief that we were given by the Minister for Resources and Energy. I think the report of the House of Representatives Standing Committee on Primary Industries and Resources is great reading for anyone who is struggling to sleep at night! It is called Down under: greenhouse gas storage. It is beautifully named—and I do not know which member of the committee suggested that! Anyway, one does not want to claim too much credit.

This is a significant piece of legislation and I was pleased to see that the minister directed this to a House of Representatives parliamentary committee—I thought that was fantastic—and I know that everyone on our committee was very pleased about that, and perhaps this process should be replicated more often in this place: put things in the House of Representatives parliamentary committees where we can do the robust investigation that we would like to do and hopefully arrive at consensus. I believe from the minister that, of all of our recommendations, there are perhaps two that we are going to discuss further—but that was a tremendous result and I do recommend this report to all my colleagues. I was very proud to be part of the inquiry and I congratulate the chair, my colleague the member for Lyons, for his work.

So what does this legislation do? I am a simple man and I like things to be simplified for me and I hope that I can go through and look at some aspects of this legislation and simplify them. Most specifically, the legislation establishes access and property rights for the safe and secure injection and storage of greenhouse gases into stable subsurface geological reservoirs in Commonwealth waters. In other words, we want to try to capture and store the carbon dioxide that is produced, most especially in the electricity production industries, through coal in particular and then transport and inject it into the ground and under the ground offshore. That is the heart of it. It sounds like scary science. But in actual fact our understanding of geological formations is quite extensive, having been gained over many decades, so we do have a very good knowledge of the geological structures that these gases are going to be injected into. We also look forward to these processes encouraging other technologies.

What else do we want to do? We want to provide project developers with certainty, because this is going to cost a lot of money. We want to be able to provide project developers with certainty. This is required to commit to major low-emissions energy projects involving CCS, carbon capture and storage. The legislation also allows for the establishment of an effective regulatory framework—we must have that—to ensure that projects meet health, safety and environmental requirements. Whatever we do has to be good science, good engineering, good technology and good for the environment. That means it will be good for all of us, and that is what this framework legislation seeks to do. What else will it do, simply? We want to create an environment in which industry can invest in CCS projects with confidence and to encourage the commercialisation of technologies which have the potential to play a vital role in reducing global greenhouse gas emissions in the future. It is not just here; it is worldwide. The great thing is that we will be able to offer our technologies to the world so that others can use them and our small footprint will become a larger footprint throughout the world.

The legislation also provides for appropriate consultation and multiple use rights with other marine users. We are going into an environment that many people use, including fishing and petroleum industries, and we have to ensure pre-existing property and use rights are properly preserved. They have rights there, and we have to ensure that those rights are respected. This regulatory framework sets out to create a mechanism so that people can use and co-use locations for a variety of reasons, and we need to do that safely and legally.

In effect, the proposed legislation recognises the need to, firstly, provide greenhouse gas injection and storage proponents with the certainty needed to bring forward investment; secondly, as I mentioned, preserve pre-existing rights of the petroleum industry as far as practicable to minimise sovereign risk to existing titleholders’ investment in Australian offshore resources; and, finally, provide assurance to the community that CO2 is stored in a safe and secure manner.

What is the context for this? I come from the renewable capital of Australia, Tasmania, which is based on renewable energy. It is excellent that the relevant minister is at the table, the Minister for the Environment, Heritage and the Arts, and I am really looking forward to hearing more about MRETs and the regulations involved with expanding the MRETs so that wind energy, particularly in Tassie, will continue to roar ahead—so much so that we will have so many wind turbines in Tassie that it will take off! I look forward to that. But I realise that we are a fossil fuel dependent economy. I am not used to brown and black coal; I thought they were racehorses where I come from.

However, it is a reality that we are a fossil fuel dependent economy. Indeed, 80 per cent of Australia’s electricity is generated from coal. That is a reality. So what do we do about it? First and foremost you face that reality and then you set out to clean it, and that is what this legislation is involved with, along with other policies of this government. Eighty per cent of our electricity is generated from coal. I also understand that some 40 per cent of the world’s electricity needs are based on coal and this will grow to some 44 per cent by 2030. I also understand, as the Prime Minister just updated the figures for us, it will be a $43 billion export industry in 2008-09. We are the largest exporter of coal in the world. Thirty thousand direct jobs are associated with this industry, so it is not something that you can walk away from. Others would have us close it down. I talked about the contrariness of the member for Tangney. We have contrariness in other places. Coal is absolutely essential to our economy and to our future. We can certainly lead the world in what we can do with carbon capture and storage.

So, for the non-scientific amongst us, what is involved with this carbon capture and storage, particularly in our offshore petroleum areas? CCS involves capturing greenhouse gas emissions, predominantly from coal-fired power stations, before they are released into the atmosphere, thus preventing the gases from entering the atmosphere and contributing to climate change—not easily done technologically, I might say, but a fairly simple concept. The gas is then injected and stored deep under the ground in geological formations similar to those which have stored oil and gas for millions of years. The original term for CCS was carbon dioxide geosequestration, but we call it CCS because we live on acronyms—you have them for breakfast in this place. The only other place I know that has more acronyms is Centrelink. They have extraordinary memories for acronyms. Anyway, CCS it is. That is what we use so that is what it will be. That is a technology that involves combined processes of capture, transport and geological storage of CO2, carbon dioxide, and/or other greenhouse gases.

For my simple brain, greenhouse gases may be produced by the combustion of fossil fuels or co-produced as a result of oil and gas extraction or some industrial processes. Instead of allowing the gases to be released into the atmosphere, because they are dirty, they are captured at the emission site where they are separated from other substances. The separated stream is then compressed into a concentrated volume and transported from the source location to the injection location. Geological storage comprises the injection of the compressed stream into the geological formation in the deep subsurface, its migration away from the immediate vicinity of the injection point and its subsequent trapping in geological formations.

I did a little bit of research, because the member for Tangney, the contrarian, yesterday was telling me how unsafe this practice could be. In that research I asked: are there other experiments with this? Is there some evidence to say that this can happen? I noticed that in Saskatchewan, Canada, CO2 is being used for enhanced oil recovery in the Weyburn field—there is a trip!—and in Poland CO2 is being used to help extract methane from coal beds that are too deep to mine, and, very interestingly, in the Norwegian North Sea, in the first direct sequestration project, naturally occurring CO2 is being stripped out of methane from the Sleipner field and reinjected into a deep saline formation for storage 900 metres below the seabed. Since that project started, over 10 years ago, one million tonnes of CO2 per year has been injected, and seismic techniques have monitored the successful dispersion and trapping of the gas within the formation. I believe also that in BP’s In Salah project in Algeria naturally occurring CO2 is being removed from natural gas and reinjected into the gas reservoir. Injection is at a rate of up to a million tonnes a year.

There is experimentation going on in Australia. The Otway project in south-west Victoria, operated by CO2CRC, is the first CCS project in Australia and is the world’s most advanced demonstration project based solely on storage without associated CO2 production. The project aims to demonstrate that up to 100,000 tonnes of CO2, extracted from a nearby natural accumulation, can be safely transported via a pipeline and injected and stored, while trialling a significant number of potential monitoring and verification techniques. To date, the Australian government has contributed in excess of $25 million to this important project.

To find out a little bit more—if I may share this with you to conclude—I looked to Rick Causebrook in AusGeo News, No. 76, December 2004. In answering the question: ‘How long will CO2 be trapped in the storage areas?’ Rick Causebrook wrote:

The petroleum industry is over a hundred years old and during this time geologists and other scientists have been studying the conditions under which oil and gas are generated and trapped in the subsurface.

For over 100 years they have been studying it. Further, he wrote:

The importance of oil to the world economy since the middle of the twentieth century has meant considerable resources have been directed at understanding the environment in which hydrocarbon accumulations occur and how they are preserved.

He went on to say:

Research in hydrocarbonbearing basins worldwide has shown that it is possible to determine the time that the source rocks started to generate oil and gas, and show how long these fluids have been held securely in the adjacent traps. In almost all cases this is tens to hundreds of million years. The fact that the sealing rocks have held naturally generated oil and gas accumulations over such a period, often with naturally occurring carbon dioxide, demonstrates that they can contain carbon dioxide that is purposefully injected into them for a very long time.

I am very pleased to speak on this legislation. It is part and parcel of a suite of schemes and projects that Labor want to introduce to help to reduce carbon pollution. (Time expired)

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

I too rise to speak in support of the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 and related bills. Let me start by congratulating the previous speaker, the member for Braddon, for his great explanation of what this bill will do and how we are combating climate change. As I said, I am here to speak on this legislation and to support the efforts of my parliamentary colleagues on the House of Representatives Standing Committee on Primary Industries and Resources, who worked so hard to bring this bill to the House. I would also like to support the efforts of the Minister for Resources and Energy and Minister for Tourism, the Hon. Martin Ferguson, who has taken the tremendous step of putting forward groundbreaking legislation aimed fairly and squarely at combating climate change and the contribution of greenhouse gases to climate change, both in Australia and potentially around the world, while maintaining Australian jobs and economic prosperity.

We have had a number of statements over the years from members opposite, and over the last 24 hours, whilst I have been following this debate very closely, I have seen that those statements and arguments have not changed. The opposition continue to be climate change sceptics. If we go down that path we will achieve zilch. We have heard those opposite, both in this place and in the media, discounting the science that continues to accumulate and mocking anyone who takes the issue of global warming and dangerous climate change with the seriousness that they clearly deserve. We have had senior members of the former government making their positions crystal clear, saying, ‘It’s all too ambiguous; it’s all too hard.’ We have heard these arguments again over the last 24 hours; arguments like: ‘We’re simply too small a player to be involved in any global attempt to limit the proportion of carbon dioxide and other gases in our atmosphere.’ Over the last 24 hours they have said that it is not real, promoting broadcasts that cast the science and responsible leaders’ reactions to the situation as a swindle. Yet virtually in the same breath they have attempted to swindle the Australian public by characterising their support of a non-viable nuclear power industry within Australia as their responsible policy towards tackling the very climate change they discount.

The Australian public certainly believe the scientific consensus. We saw that last year as the average Australian voter showed their support for responsible government at the general election. They showed their support for federal Labor developing and implementing policies to combat the unsustainable polluting of our environment with ever-increasing volumes of carbon dioxide and other greenhouse gases.

The Australian public continue to show their support for the Labor government’s policies in this area. Recently, within the context of the Garnaut and Carbon Pollution Reduction Scheme debate, the overwhelming majority of Australians voted yes, that we need to take these responsible and necessary steps to combat climate change. The bills before us today, the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008, the Offshore Petroleum (Annual Fees) Amendment (Greenhouse Gas Storage) Bill 2008, the Offshore Petroleum (Registration Fees) Amendment (Greenhouse Gas Storage) Bill 2008 and the Offshore Petroleum (Safety Levies) Amendment (Greenhouse Gas Storage) Bill 2008, in total, are designed to establish the context within which Australian industry can get on with the job of investigating options for the safe and secure storage of carbon dioxide within geological structures for many, many years to come.

The Minister for Resources and Energy and the Minister for Tourism, in his second reading speech, called for the parliament to await the outcome of the House of Representatives Standing Committee on Primary Industries and Resources inquiry into such matters and, in particular, whether the bills before us establish the best balance between the rights of players within the extraction industry and the needs of the sequestration industry. As I said earlier, I commend the minister for willing the committee to report to the parliament for his and the parliament’s fair and balanced considerations of the committee’s recommendations towards matters, including those addressing the balance of respective players’ rights and access. I note that in its report the committee congratulated the minister for his efforts in bringing the legislation to the House. It said:

The Committee would like to congratulate the Minister for Resources, Energy and Tourism, the Hon Martin Ferguson MP, for this pioneering legislation. This legislation sets the groundwork for the establishment of a national GHG—

that is, greenhouse gas—

industry in Australia. If we grasp the opportunity provided, it will allow us to lead the world in the implementation and development of CCS—

that is, carbon dioxide capture and storage.

Some within the community question the wisdom of investing our support in geosequestration as a partial solution to increasing concentrations of global greenhouse gases. Some in the community believe that the government should limit our support in tackling climate change to possibilities that literally would be the best of all possible power generation technologies and systems. The position of the government is very clear: the government are encouraging the development of a suite of power-generating technologies utilising a range of resources. Not all of these technologies are totally waste free, not all of them are perfect in being fully sustainable, not all of them are likely to be systems fully accessible by all Australians and not all of them will be satisfactorily economical, nor even functional. But options that are being actively pursued around this nation have absolutely breathtaking potential. The federal Labor government have established the target of Australia, sourcing 20 per cent of our needed power for renewable sources by 2020.

Within my own home state of South Australia we are currently very well positioned to take up opportunities to harness the power of wind, being in the roaring forties. More wind farms are being built from Cape Jervis to the Flinders Ranges. If South Australia has not already met the 20 per cent renewable target, we will be very shortly. This is a very realistic target. It is a target that we must meet to achieve Labor’s longer term target of a 60 per cent reduction in emissions by 2050. South Australia is also blessed with natural resources in the form of hot rocks or radioactive granite under the ground in the mid- to far north of the state. Within my electorate office I have met with players from the geothermal industry and I am highly interested in this industry’s developments, as I think we all should be.

Geoscience Australia reportedly estimates that just one per cent of Australia’s geothermal energy is equivalent to 26,000 times Australia’s total annual energy consumption. Geothermal power generation has the potential to supply Australia with clean energy for hundreds, if not thousands, of years to come. The potential for this industry is really breathtaking. It is an industry that is receiving very real assistance from this federal Labor government in the form of a $50 million Geothermal Drilling Program, which will provide grants of up to $7 million on a matched funding basis to support the high cost of drilling deep geothermal wells for proof-of-concept projects. The Geothermal Drilling Program, launched by the Minister for Resources and Energy on 20 August this year, is the first program to be launched under the government’s $500 million Renewable Energy Fund. This fund is designed to accelerate the development, commercialisation and deployment of renewable energy technologies in Australia. Which technologies will emerge as clear winners over the next decades? That will be up to the market and the industries which seek to take advantage of this amazing period of change within Australia and around the world. The responsible policy of this federal Labor government is to cut overall carbon dioxide and other greenhouse gases within Australia through the Carbon Pollution Reduction Scheme. This scheme will be the vehicle that drives investment in cleaner energy generation technologies and waste minimisation technologies, such as those required for geosequestration.

With bills such as these before us today, the government can and is willing to set the framework for doing business in a fair and reasonable manner. The government continues to provide encouragement with innovative technology development before letting the competing interests work out their own destiny over the longer term within the private sector. I expect that most Australians would conclude that this federal Labor government is taking the problem of climate change very seriously indeed and is pursuing the right mix of policies for us to meet our objectives in the short, medium and long term, and at the same time maintaining Australian jobs and economic prosperity. I would like to congratulate the committee that worked so hard on bringing this bill to the House and recommending it to the parliament. I commend this bill to the House.

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in full support of the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 and cognate bills. This bill will establish a new range of offshore titles providing for the transportation by pipeline and injection and storage in geological formations of CO2 and, potentially, other greenhouse gases. The Offshore Petroleum Act 2006—otherwise known as OPA—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 states and the Northern Territory—three nautical miles of coastal waters—and the outer limit of the Australian continental shelf. Under the proposed greenhouse gas legislative model, the Australian government will be primarily responsible for administering the regulation in Commonwealth waters, rather than the current joint authority of state, Northern Territory and Commonwealth government arrangements applying to the petroleum industry.

The responsible Commonwealth minister, known as RCM, will have ultimate regulatory responsibility. This approach is consistent with the industry’s preference for a consistent and harmonised national approach and will improve the efficiency of project approvals and minimise administrative duplication. The government referred this bill to the House of Representatives Standing Committee on Primary Industries and Resources, of which I am a member, for inquiry and report on 19 May 2008. The committee’s bipartisan report, Downunder: greenhouse gas storage, was tabled on 1 September and strongly endorsed the government’s CCS framework.

With 80 per cent of Australia’s electricity generated from coal, no serious response to climate change can ignore the need to clean up coal. The establishment of a carbon capture and geological storage framework represents a major step towards making low-emissions coal a reality. CCS is essential for the long-term sustainability of coal-fired electricity generation and to realise the potential of new industries such as coal-to-liquids, which could improve Australia’s liquid transportation fuel security.

The coal industry is highly significant not only to my electorate of Dawson and Australia’s economic prosperity but also to the world’s current and forecast energy supply. Coal currently provides almost 80 per cent of Australia’s electricity generation capacity, and also some 40 per cent of world electricity needs. While coal’s share of future power generation in Australia will decline in favour of renewable energy and less greenhouse intensive fossil fuels, such as gas, coal will continue to provide much of Australia’s electricity generation requirements well into the future. This view is supported by the International Energy Agency. This monitors and forecasts global energy supply and demand. The IEA estimates that the world’s future energy needs will be met primarily by fossil fuels, forecasting that coal will provide around 44 per cent of world electricity needs in 2030—an increase on its current share. It is therefore vitally important that domestic and international greenhouse gas abatement solutions include policies that support the development and deployment of low-emissions coal technologies. Against this reality, it would be irresponsible for the Australian government to close down Australia’s coal industry and forsake the economic opportunity that the global demand for coal represents for all Australians.

Coal is Australia’s largest export commodity, generating some $24 billion in export income in the years 2005 and 2006. This is to the nation’s economic bottom line. According to the Queensland Resource Council, it generated some $18 billion in income in 2007 for the Queensland economy alone. Just this morning, we were honoured with the presence of the Prime Minister talking to this bill. He informed the House of the latest figures, which say that our exports will be worth $43 billion in the year 2008-09. Australia truly is the world’s largest exporter of coal. The coal industry is also the lifeblood of many of our rural and regional communities, and this is especially the case in my seat of Dawson. The industry employs some 30,000 people and one in four of those jobs are in the Bowen Basin. Low-cost coal supports Australia’s high living standards and is the foundation for Australia’s energy intensive industries. The success of CCS technology will guarantee the long-term future of the coal power industry and the job security for power industry workers.

If Australia were to stop exporting coal, countries like China and India would simply find other suppliers to meet their demand. Therefore, any response to climate change pressures must also take into account the need to maintain adequate and reliable energy supplies by making fossil fuel use cleaner. The government recognises that new clean energy technologies, including both fossil fuels and renewable energy sources, are the key to a sustainable climate change solution. The Rudd government is providing leadership and policies that reduce or eliminate greenhouse gas emissions, while at the same time ensuring that we continue to prosper from our abundant energy resources. In this context, and as a fossil fuel dependent economy, the Australian government has a pivotal role to play in driving technology outcomes that reduce or eliminate greenhouse gas emissions. A key part of this effort is the need to establish a framework to allow for the capture and geological storage of greenhouse gases emitted from fossil fuel use, both domestically and in countries which purchase Australian coal.

The centrepiece of the government’s climate change policy is its commitment to establish the Carbon Pollution Reduction Scheme, known as CPRS, in 2010. The scheme will establish a forward price for carbon within the Australian economy. Placing a cost on carbon will encourage industry to develop and deploy low-emission technologies over time. In addition, the government has established the $500 million National Low Emissions Coal Fund to support the National Low Emissions Coal Initiative and deliver breakthroughs in clean coal technologies, of which CCS is a key part. The NLECI is being matched by the coal industry’s COAL21 initiative. The industry has set up a $1 billion fund to support clean coal projects, to combat climate change and to reduce our emissions. This initiative will showcase practical ways to reduce emissions from coal use to our key major trading partners, such as China.

The government’s legislation will establish access and property rights for the safe and secure injection and storage of greenhouse gases into stable subsurface geological reservoirs in Commonwealth waters more than three nautical miles offshore. The legislation aims to provide project developers with the certainty required to commit to major low-emission energy projects involving CCS. It also allows for the establishment of an effective regulatory framework to ensure that projects meet health, safety and environmental requirements. The legislation will create an environment in which industry can invest in CCS projects with confidence and will encourage the commercialisation of technologies which have the potential to play a vital role in reducing global greenhouse gas emissions in the future. The legislation provides for appropriate consultation and multiple use rights with other marine users, including the fishing and petroleum industries, and ensures pre-existing property and use rights are properly preserved.

The government’s framework comprises four bills which were introduced into the House on 18 June 2008: the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008, which is the principal bill to establish the Commonwealth’s CCS framework; the Offshore Petroleum (Annual Fees) Amendment (Greenhouse Gas Storage) Bill 2008; the Offshore Petroleum (Registration Fees) Amendment (Greenhouse Gas Storage) Bill 2008; and the Offshore Petroleum (Safety Levies) Amendment (Greenhouse Gas Storage) Bill 2008. The bills 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 legislation deals primarily with the provision of access and property rights for greenhouse gas injection and storage activities in Commonwealth offshore waters and provides a management system for ensuring that storage is safe and secure while balancing the rights of this new industry with the petroleum industry in a manner that encourages investment in both industries. The proposed legislation recognises the need to (a) provide greenhouse gas injection and storage proponents with the certainty needed to bring forward investment, (b) preserve pre-existing rights of the petroleum industry as far as is practicable to minimise sovereign risk to existing titleholders’ investment in Australia’s offshore resources and (c) provide assurance to the community that CO2 is stored in a safe and secure manner.

In his second reading speech introducing the legislation, the Minister for Resources and Energy, Minister Martin Ferguson, noted the need for urgent action in addressing climate change and the significant role that these amendments may play in developing one of the available methods for reducing greenhouse gas emissions. The minister also noted that several large-scale projects have been considering their requirements for geological storage for some years. The proponents are eager to gain access to areas so that they can commence detailed assessment of storage formations. In conclusion, Minister Martin Ferguson, who has visited my electorate on two occasions and has seen firsthand the service industries that have developed to support the coal industry, noted that this bill provides proponents with access to potential storage formations and ‘will play a key role’ in accelerating the development of the carbon capture and storage industry. In doing so, this bill provides a significant opportunity to tackle climate change in a way which protects jobs in Dawson and maintains our economic prosperity. Indeed, it will add to the nation’s bottom line in this economy. We have the potential in this House today to be world leaders, not followers. We have the potential to show to the world the way of new technologies and new research, and we should go forward with confidence, not with denial. Because of this, and the leadership of the Rudd Labor government in carbon capture and storage, I commend the bill to the House.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

I thank the honourable member for Dawson. While I do not want to be pedantic I draw to his attention the provisions of standing order 64. I think on at least two occasions the member for Dawson referred to the minister as ‘Minister Martin Ferguson’. Under that standing order he should refer to the minister by his ministerial office or alternatively by the division he is privileged to represent in the House. I did not want to interrupt the honourable member at the time.

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

I apologise, Mr Deputy Speaker.

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

I thank the honourable member.

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

The Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 aims to provide the regulatory framework for greenhouse gas storage activities and the further investment in carbon capture and storage technologies that we hope to see in this country in the near future. The purpose of the bill itself is to enable carbon dioxide to be stored safely and securely in geological storage formations deep underground in Australian offshore waters under Commonwealth jurisdiction.

Specifically, the bill seeks to provide greenhouse gas injection and storage proponents with the certainty needed to bring forward investment; to preserve pre-existing rights of the petroleum industry as far as is practicable to minimise sovereign risk to existing titleholders’ investment in Australia’s offshore resources; and to provide assurance to the community that carbon dioxide is stored in a safe and secure manner. The bill is the first of its kind in the world and it is hoped and expected that it will act as a model for other jurisdictions both here and overseas as they develop and apply CCS technologies as part of their greenhouse gas reduction strategies.

This bill is significant, and I know that the Minister for Resources and Energy has made it one of his priorities to complete the consultation process with industry and other stakeholders and bring it before the House for debate. I had the pleasure of working with my colleagues on the House of Representatives Standing Committee on Primary Industries and Resources a couple of months ago as we worked through the issues raised in the inquiry into the bill. The inquiry was a great opportunity to talk to those involved in both the oil and gas industries and carbon dioxide injection operations. Through that process committee members gained a very good insight into what is needed to facilitate investment in carbon capture and storage at the same time as recognising that our national interest is served by ensuring that existing oil and gas operators have certainty with respect to their considerable investments in those other important resources: oil and natural gas. I am very pleased to see that the minister has accepted 17 of the 19 recommendations made by the committee. Some of those recommendations have been incorporated into the amendments that will be moved later in the third reading of the bill.

As I said in the debate on the committee report a few weeks ago, the committee sought to provide common-sense recommendations based on the evidence received—common-sense recommendations to facilitate the uptake of carbon capture and storage technologies and to encourage cooperation between oil and gas producers and prospective greenhouse gas storage operators. As we have heard from the speakers in this debate—and certainly from the Prime Minister in his contribution earlier this morning—there is a great deal of support within the government for Australia to continue to lead the way in the development and widespread application of carbon capture and storage technologies. This bill and the priority it has been given by the minister is another indication of that support. We recognise that carbon capture and storage is a necessary part of this country’s response to climate change and the urgent need to reduce our carbon emissions.

In dealing with the challenges presented by climate change and the imperative to act, we have to face the reality of the role that coal and other fossil fuels play in our economy. No serious response to climate change can ignore the need to clean up coal. To start with, as we have heard from other speakers in this debate, 80 per cent of Australia’s electricity is generated from coal. In addition, Australia is the largest exporter of coal in the world, something that I and my colleague the member for Dawson know only too well as representatives of a very large coal producing area. Black coal accounts for over $25 billion of Australian exports annually. The coal industry is also the lifeblood of many regional communities, employing over 30,000 people. Low-cost coal supports Australia’s high living standards and is the foundation for Australia’s energy intensive industries, many of which are also major exporters and of course major employers in our country.

While coal’s share of future power generation in Australia will decline in favour of renewable energy and less greenhouse intensive fossil fuels such as gas, we have to acknowledge that coal will continue to provide much of Australia’s electricity generation requirements well into the future. It is just not realistic or responsible to advocate the shutting down of the coal industry. Instead, the government is providing funding and support for initiatives to develop low-emission technologies. We believe that the answer for Australia is to perfect the technology that will allow us to benefit from our coal reserves while reducing our carbon emissions. The success of carbon capture and storage technology will guarantee the long-term future of the coal industry and job security for those thousands of Australians employed in the coal and energy sectors.

Of course, whenever you talk about the challenge of climate change you have to acknowledge that this is a problem on a global scale. While we take steps here in Australia to reduce our emissions we also have to be mindful of the global perspective. And when you are you realise that the need for a breakthrough on CCS technologies is even more urgent. You also realise that the opportunities for Australia are even more valuable. The Centre for Low Emission Technology submission to the inquiry of the House of Representatives Standing Committee on Science and Innovation a couple of years ago tells us that, internationally, carbon dioxide emissions are expected to grow by over 50 per cent, from 24 billion to 37 billion tonnes per year in 2030.

The International Energy Agency, which monitors and forecasts global energy supply and demand, also estimates that the world’s future energy needs will be met primarily by fossil fuels, forecasting that coal will provide around 44 per cent of world electricity needs in 2030—an increase on its current share. It is clear from those figures that the work we do in Australia to perfect and commercialise carbon capture and storage technology has enormous potential to reduce global emissions if it can be exported to other countries, especially developing countries like India and China. Demand for our coal and other resources will continue to grow. If we can continue to take the lead on clean energy technologies, we can also export those technologies and play a crucial role in reducing not only our own but also global carbon emissions.

As this bill demonstrates, the Labor government is getting behind efforts to develop and commercialise clean energy. We have established the National Clean Coal Initiative, backed up by a $500 million Clean Coal Fund. This will be matched by $1 billion from industry through its COAL21 initiative. All in all, that is an available investment of $1½ billion to go towards the development and deployment of clean coal technologies.

Much of the work on clean energy to date has been in the area of carbon capture. This bill enables work to proceed in the important area of carbon dioxide injection and storage. The government is also supporting that work through the recent establishment of a carbon storage task force. One of the first jobs of that body is to develop a national carbon mapping and infrastructure plan. This recognises that we are now at the point where we need to identify storage sites for carbon dioxide. We particularly need to find potential storage sites that match up with significant new energy projects, such as coal to liquids and gas to liquids.

As we learned in the House of Representatives Standing Committee on Science and Innovation inquiry into geosequestration technology, some of the sites with the most valuable storage potential are located in areas, like the Gippsland Basin, that are already under petroleum titles. The focus of this bill, therefore, is to provide access and property rights for greenhouse gas injection and storage activities and, very importantly, to balance the potential conflict of interest between the offshore petroleum and gas industries and an emerging greenhouse gas storage industry in a way that encourages investment in both industries.

Another important aspect of the bill is the sections dealing with the regulation of this new industry to ensure that the government and the public can have confidence that carbon dioxide once injected is safely and permanently stored. It is easy for us to forget, when we have been engaged in discussions and debates about emissions trading, geosequestration and carbon capture and storage, that these are very new concepts for most of the community. The terminology is unfamiliar, and we are asking people to accept technology that is completely alien to most of them. It is important, therefore, that the public is informed about the science involved and that we can point to very strong and effective legislation to say that this emerging industry will be properly managed and regulated.

A lot of people I have spoken to about this technology have been surprised to learn that the science surrounding the injection and storage of carbon dioxide in geological formations is actually well established and widely employed in the oil and gas industries. In fact, the Intergovernmental Panel on Climate Change, in its 2005 Special report on carbon dioxide capture and storage, confirmed that the injection of CO2 in deep geological formations involves many of the same technologies that have been developed in the oil and gas exploration and production industry. Well-drilling technology, injection technology, computer simulation of storage reservoir dynamics and monitoring methods from existing applications are being developed further for the design and operation of geological storage.

I note that in the report by the science and innovation committee, Between a rock and a hard place, BP estimated that currently there are around 35 million tonnes of carbon dioxide each year injected into geological formations around the world, mainly for the purposes of enhanced oil recovery. For example, there are around 150 sites in the United States already using that process. The Sleipner project in the Norwegian North Sea strips methane from natural gas and re-injects it into a deep saline formation 900 metres beneath the sea floor for storage. This project has been running now for 10 years, and one million tonnes of CO2 has been injected each year. Over that time, seismic techniques have monitored the successful dispersion and trapping of the gas within the geological formation. We heard during the course of our inquiry into the bill that in that project the greenhouse gas is behaving as predicted in those models.

Here in Australia, the Otway project conducted by the CO2CRC has this year begun injecting CO2 into the Naylor gas field. The project includes extensive monitoring of the CO2’s behaviour, and new monitoring and verification technology will be developed with the aim of demonstrating that the injection and storage is safe and that any leakage of CO2 can be detected. The committee heard from the head of the CO2CRC, Dr Peter Cook, that the Otway Basin is the most comprehensive monitoring verification system anywhere in the world. So, once again, Australia is leading the way in this vital technology. It is expected that the results of the Otway project will confirm the IPCC’s findings that the risks associated with CO2 capture and storage are low. The IPCC has stated that well-selected geological formations are likely to retain over 99 per cent of their storage over a period of 1,000 years. Overall, the risks of CO2 storage are comparable to the risks in similar existing industrial operations, such as underground natural gas storage and enhanced oil recovery. The existing science and experience in industry gives us confidence that it is indeed safe to proceed with the development of this technology and to encourage industry to deploy CCS technology on a commercial scale. The bill and supporting regulations will make sure that companies know what standards are expected of them and give the government powers to oversee and enforce these strict standards.

One of the key mechanisms in the bill when it comes to reassuring the government and also the community about the long-term safety of these processes, and of storing CO2 in these sites, is the site closing process. When a greenhouse gas operator has finished injecting CO2 into their site, they apply to the minister for a site closing certificate. As part of that application, they must set out the modelling that they have already done—and we are talking about timelines of 30, 40 or 50 years when it comes to the point of applying for a closing certificate, so by then there would have been a very good opportunity for the proponent to know exactly what had been going on and the behaviour of the CO2 in the subsurface.

So the application to the minister must set out the modelling that the proponent has developed for the behaviour of the greenhouse gas. It must also set out the expected migration pathways—so what the CO2 is doing and is expected to do—in the geological formation. And it must also include suggestions for post-site-closing monitoring and verification by the Commonwealth. So, at the point where the minister is satisfied that it is appropriate and safe to award a site closing certificate to the greenhouse gas operator, there are also negotiations around an amount of security to be paid by the company to the Commonwealth to cover the costs of long-term monitoring undertaken by the government. So it is a very rigorous process that greenhouse gas storage operators must go through.

One of the things that the committee suggested in our recommendations to give the community an extra bit of reassurance about this process is contained in recommendation 18:

The Committee recommends consideration be given to making monitoring data associated with GHG storage project publicly available.

I am pleased to see that the minister has indeed accepted that recommendation, and that is reflected in the amendments that will be moved later on in the debate.

As I have said, public confidence in this technology is crucial. We have heard from speaker after speaker that both the economic interests of Australia and the future of our environment depend on getting this technology operating very soon and operating effectively. Part of that is going to be the public having confidence in this process. So what we do not need is for members of this House to be out there running scare campaigns about this technology, like the one that the member for Herbert has been conducting. And in his contribution to the debate yesterday he continued to perpetuate the myth that this is somehow going to impact on the Great Barrier Reef, when he well knows—or, if he does not know, then he should know, if he is serious about doing his job in this place—that in fact the government moved amendments to the Great Barrier Reef Marine Park Act a couple of months ago to explicitly and absolutely rule out any greenhouse gas storage operations on the Great Barrier Reef. That is consistent with the government’s policy and the provisions of that same act, which rule out mining and drilling operations on the Great Barrier Reef.

So, as I say, public confidence in this technology is important, and our task as a government and as members of this place in supporting this technology is not helped when members put their own political interests first and run around with very irresponsible and completely inaccurate scare campaigns. So I encourage the member for Herbert to try and keep up with legislation which goes through this House and to understand that the amendments to the Great Barrier Reef Marine Park Act explicitly rule out any kind of greenhouse gas storage operations on the Great Barrier Reef. Of course, as a member whose electorate is adjacent to the Great Barrier Reef, I completely support the government’s moves in that way to protect that beautiful natural icon.

Mr Acting Deputy Speaker, in closing, I commend the government for this bill. I commend the minister for making this bill such a priority so that we can get carbon capture and storage beyond the R&D stage that it is currently at, and really start being able to commercialise this technology and make it a widespread part of our energy sector in Australia. As someone who represents an electorate that has a great reliance on the coal industry, I understand that this is absolutely vital for the future of that industry and that Australia can take the lead and can continue to maintain the lead that we have in developing this technology to secure the future of the coal industry, to do that in a way that acknowledges the need for reduced emissions, and to create opportunities for Australia to export this technology to the rest of the world.

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Before I call the honourable the minister, I would just like to remind the member for Capricornia that the correct means of reference to the occupant of the chair is ‘Mr Deputy Speaker’, or ‘Madam Deputy Speaker’—unless of course Mr Speaker himself is here. The terminology ‘Acting Deputy Speaker’ is inappropriate. To sum up I call the honourable the minister.

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

in reply—Thank you, Mr Deputy Speaker. It is always a pleasure to follow the member for Capricornia because I very much appreciate not only her support for this bill but also her great appreciation of the significance of the coal industry, especially to the area which she represents and also to Australia as a nation.

On 18 June 2008, I had the pleasure to introduce the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 and associated bills, going to annual fees, registration fees and safety levies, into this parliament. As I outlined when I introduced the bills, this government is committed to comprehensive action to tackle climate change whilst maintaining Australian jobs and economic prosperity. We are committed to the widest possible portfolio of responses, of which the geological storage of greenhouse gases is an important avenue being explored. Other activities include the development of renewable energy sources and a focus on improving efficiency in energy consumption. The consideration of a Carbon Pollution Reduction Scheme is also part of this armoury. And we are going through a detailed green paper process at the moment, leading to a white paper and legislation in 2009.

We believe carbon dioxide capture and geological storage—or CCS, as it is commonly known—holds great potential as a method of avoiding emissions of carbon dioxide and other greenhouse gases into the atmosphere. Geological surveys have indicated that the storage formations in offshore waters made available by these amendments have the potential to securely store hundreds of millions of tonnes of carbon dioxide. These quantities represent a significant proportion of Australia’s greenhouse gas emissions, and carbon capture and storage has the potential to substantially reduce Australia’s emissions.

The amendments I intend to introduce today enable a key component of the carbon capture and storage process—namely, geological storage—to be actively developed by industry proponents. Companies are keen to identify suitable storage sites to match their parallel development of carbon dioxide capture from coal or gas powered electricity generation and from other industrial and extraction processes. The bill focuses on the provision of access and property rights for greenhouse gas injection and storage activities in Commonwealth offshore waters and provides a management system for ensuring that storage is safe and secure.

On 19 May I was pleased to refer the exposure draft of the bill to the House of Representatives Standing Committee on Primary Industries and Resources for inquiry and report. The committee, chaired by the member for Lyons, Dick Adams, with the deputy chair, the member for Hume, Alby Schultz, received submissions and heard testimony from a broad range of stakeholders, including the petroleum industry, coal producers, governments and non-government organisations. The committee publicly released its final report, which included 19 recommendations, on 15 August 2008. On behalf of the government and the Australian community, I express my sincere appreciation to the committee for their hard work and insight. The committee’s final report, Down under: greenhouse gas storage, did a superb job of distilling the key positions of the various stakeholders into a format that provides greater clarity of the government’s legislative framework. It also speaks volumes for the committee structure of the House of Representatives and the need for all of us to consider referring detailed bills to the House of Representatives committee structure for consideration and report to the parliament. The process undertaken by the Standing Committee on Primary Industries and Resources with respect to these bills clearly indicates the capacity of members to improve legislation, and I commend the process to the House.

Most of the recommendations made in the report either endorse existing principles which are currently within the provisions of the bill—or which are part of the general policy framework—or refer to matters that are to be addressed in regulations and guidelines. These are supported by the government; however, I contend that a number of amendments, which I am tabling today, are required to the draft bill to give effect to the committee’s recommendations, to remove ambiguities and to clarify processes. These amendments will contribute meaningfully to a robust and effective regulatory framework. I also note that the Senate Standing Committee on Economics is considering this bill—specifically, the question of liability. The government will consider the committee’s report when it becomes available.

Yesterday I had the pleasure of tabling the government’s formal response to the report of the Standing Committee on Primary Industries and Resources. I am pleased to note that the government supports 15 of the committee’s 19 recommendations. A further two recommendations were partially supported. A number of recommendations required careful consideration to address underlying issues. These include recommendations 1, 8, 9, 11, 12 and 14. Amendments to the legislation are required to give effect to the matters raised by recommendations 1, 6, 8, 9 and 12. In relation to recommendation 1, which the government supports, a high-level objects clause has been included as part of the amendments. A more detailed objects clause along the lines suggested by the committee is not recommended, as it has the very real potential to impact on the interpretation of the detailed contents of the bill, including the balance of objectives relating to the interactions between petroleum and greenhouse sections of the bill.

The government supports recommendation 6—renewal of greenhouse gas assessment permits. The current proposed term for greenhouse gas assessment permits—six years non-renewable—may not provide sufficient time for assessment works in a situation where demand for equipment such as drilling rigs is booked for an extended period into the future. However, to ensure that renewals are not used to warehouse areas, the renewal will be subject either to proposed work programs having been fully met but further work being required on them or to work programs having been subject to unavoidable delays.

The government partially supports recommendation 8—recognition of integrated petroleum developments. The government recommends amending the bill to allow activities across different petroleum title areas to be permitted, subject to the normal approval processes where these are consistent with good oilfield practice, protection of the environment and occupational health and safety. It is not proposed, however, that the disposal of greenhouse gas substances consisting overwhelmingly of carbon dioxide be permitted across multiple petroleum title areas. If such an operation were to be undertaken, it should be subject to the greenhouse gas requirements of this bill and hence should be done under a greenhouse gas title. If injection of by-product greenhouse gases from multiple sources were to be permitted under a petroleum title, there is the possibility that the amount of the greenhouse gas to be injected will exceed the quantity of fluids produced from the reservoir with no requirement for the operator to monitor the behaviour of the stored substance or to ensure that it does not migrate outside the boundaries of the title area. There is a need, therefore, to ensure that such injection projects be regulated under the requirements of the greenhouse gas provisions of the act.

The main underlying issue is to give petroleum operators reasonable certainty that they will be able to obtain the greenhouse gas titles needed for an integrated operation. Giving these industries increased certainty is critical because they are likely to be early movers in the Australian greenhouse gas storage industry. This can best be managed by adopting the committee’s recommendation 12, which would make the availability of a carbon dioxide stream for imminent injection a criterion when assessing bids for the award of acreage.

The government partially supports recommendation 9, allowing ministerial intervention in negotiations between greenhouse gas and petroleum operators. The underlying concern that led to this recommendation relates to the potential for petroleum titleholders to effectively block greenhouse gas activities in an area by claiming that there is a ‘significant risk of a significant adverse impact’ on their petroleum operations. While the government does not believe the recommendation can be adopted in its current form, there are a number of amendments that can be made to address the concerns of the committee. The government believes that the responsible Commonwealth minister having power to direct the parties to negotiate in good faith would be unlikely to assist the parties to reach a negotiated settlement. This is because each party will, albeit in good faith, inevitably continue to act in pursuance of their own commercial interests.

Giving the responsible Commonwealth minister the power to direct an outcome needs to be given separate consideration in relation to pre-commencement and post-commencement petroleum titles. In pre-commencement petroleum titles, the government considers that a power for the responsible Commonwealth minister to direct an outcome would be a substantial encroachment on pre-existing petroleum rights and would represent a major policy shift in the policy balance of this bill in its current form. Regarding post-commencement petroleum titles, there is already a circuit-breaker mechanism in place where parties fail to agree. In the absence of agreement between parties, or if the responsible Commonwealth minister is not satisfied with the terms of the agreement, the responsible Commonwealth minister has power to decide the outcome in the public interest.

As I have already mentioned, a number of amendments to the bill are recommended to address the concerns of the committee. Regarding the ‘significant risk of a significant adverse impact test’, the government recommends that the test criteria be strengthened and handled by regulations rather than in legislation. On that note, I have also given the committee an undertaking that we will present to them for consideration the regulations once they have been drafted. I appreciate their offer to also assist in that process.

To strengthen the treatment of the ‘significant risk of a significant adverse impact test’, the government is proposing to provide the responsible Commonwealth minister with the power to establish an expert advisory committee to provide technical advice. This proposal goes beyond the recommendations of the House of Representatives committee, but the government believes that it will help address the committee’s underlying concerns about the balance between petroleum and greenhouse gas storage rights. The advisory committee would be convened on a ‘needs’ basis. The amendments also cover such matters as membership, remuneration and conflicts of interest.

The government also recommends that the bill be amended to give the responsible Commonwealth minister the power to request parties to report on any negotiations that have taken place and the outcome of those negotiations. The recommended amendments to the bill require parties to exchange information on their proposed activities. While the existing framework of the legislation has been prepared with the intention of providing incentives for commercial negotiations, explicit provisions such as these will provide further encouragement. Another area where regulations can contribute to addressing the underlying issues relates to data. The government recommends an amendment to the bill to allow the responsible Commonwealth minister to request production of any relevant information as an aid in decision making. The proposed amendment also makes provision, and appropriately so, for confidentiality.

The government does not support recommendation 11, which provides for a one-off opportunity for petroleum operators to apply for and incorporate a greenhouse gas assessment permit over their exploration or production licence. While adoption of this recommendation would, as the committee suggest in their report, likely lead to increased exploration activity and knowledge of Australia’s storage resource, it could alternatively delay implementation of some projects by locking out early movers which do not have existing petroleum rights. Another major drawback is that storage sites are very unlikely to match petroleum title boundaries. The underlying geology will be a crucial factor when selecting acreage for release for a greenhouse gas assessment permit because of the need to take migration paths into account, which is not a factor in determining petroleum title areas. As a result, areas that would be selected to give the best utilisation of potential storage sites would almost certainly be very different from the areas covered by existing petroleum titles.

There is, however, one area where the Commonwealth has proposed that rights be extended. The bill provides for the holder of a petroleum production licence to apply for a greenhouse gas injection licence. Additional certainty will be provided by the mirroring of these rights to allow petroleum retention leaseholders to apply for a greenhouse gas holding licence. Only greenhouse gases derived from petroleum operations in the production licence area could be stored under an injection licence awarded under this provision. This need was highlighted in several submissions to the committee. There is also a need to include an amendment to ensure that if the holder of a petroleum production licence holds a greenhouse gas title through this mechanism then the titleholder should not be able to sell one title separately from another. This provision was aimed at promoting synergies between the petroleum and greenhouse gas industries, and allowing them to pass into several hands could result in these synergies being largely lost. Moreover, allowing separate sale could simply be ‘gifting’ the petroleum licensee with a valuable asset that could be sold without public benefit.

The government supports recommendation 12. The government recommends including the demonstration of a readily available carbon dioxide stream for imminent injection as a criterion in the amended criteria for assessing bids for acreage.

The government does not support recommendation 14, which recommends a process for formal transfer of long-term liability to the government. This is an area which has critical implications for the public acceptability of the framework. The practical effect of the current legislative framework is that, after statutory obligations cease and when a closure certificate is issued, common law will apply. The existing bill sets out requirements that have to be met before a closing certificate can be issued. In particular, it requires the responsible Commonwealth minister to be satisfied that the injected substance is behaving as predicted and does not pose a significant risk to the conservation of natural resources, the environment, human health and safety or other matters that the responsible Commonwealth minister considers relevant.

One possible impact of taking over all liability, as recommended by the committee, could be to lengthen the closure period and increase the complexities of the closure processes. This could occur because such a transfer of liability would likely lead to the responsible Commonwealth minister requiring a higher degree of certainty concerning long-term liability issues. As a result, the reduced uncertainty for industry as a result of transferring long-term liability to the Commonwealth could be offset by increased uncertainty concerning the requirements of the closure processes. Under certain provisions, which remain silent on long-term liability and hence leave the matter to common law, a greenhouse gas operator would likely only be liable if damage arose and there was fault or a failing of some kind, such as negligence on the part of the operator. The government therefore recommends that the existing framework remain unchanged.

I also note that the Senate Standing Committee on Economics is considering the bill. The government will consider the report when it becomes available. I would again like to express my appreciation and the government’s appreciation to the House of Representatives Standing Committee on Primary Industries and Resources for its contribution to this pioneering legislation. This bill is a world first and will play a significant role in developing one of the key available methods for reducing greenhouse gas emissions, thereby assisting Australia to address the challenges of climate change. Large-scale projects for capturing and concentrating greenhouse gases involve potential investments of many hundreds of millions, or billions, of dollars. Several large-scale projects in Australia have already been considering their requirements for geological storage for some years. While they recognise the complexities that need to be addressed by this bill, the proponents are also eager to gain access to areas so that they can commence detailed assessment of storage formations. It is the government’s belief that this bill provides that access and will play a key role in accelerating the development of the carbon dioxide capture and geological storage industry. In so doing, it provides a significant opportunity to tackle climate change in a way that protects Australian jobs and maintains our economic prosperity.

In closing, I wish to thank all members for their positive contributions to the debate on the bills. I appreciate the spirit in which contributions have been made. Members of the opposition have indicated in their speeches that opposition senators may wish to move amendments once the bills have been introduced in the other place. The government has already commenced detailed discussions with Senator Johnston and the member for Groom, Mr Ian Macfarlane, on these matters of concern. I look forward to continuing those constructive discussions so as to reach consensus on this vital piece of legislation. I commend the bills to the House.

Question agreed to.

Bill read a second time.

OFFSHORE PETROLEUM AMENDMENT (GREENHOUSE GAS STORAGE) BILL 2008