Christine Milne (Tasmania, Australian Greens) Share this | Hansard source

I thank the senators for their comments. I draw their attention to the financial, legal, regulatory and public acceptance issues that are set out by the International Energy Agency in their recent report on carbon capture and storage. Contrary to what Senator McLucas has just said—that prioritising the issue of liability over everything else in the bill would elevate it to an issue beyond several others—it is the issue. It is the one issue that will govern whether people invest in this technology or not. It is the one issue that is dominating everybody’s minds for the very reason that Senator McLucas indicated—that we are talking about long-term liability. We are talking about a technology that is unproven and we are talking about companies that do not want to bear that cost.

It is interesting that Senator McLucas said—and she is quite right in saying this—that no company is going to invest if they have to take the long-term liability. Doesn’t that tell you something about this technology and about the companies involved? They all run around at every hearing on carbon capture and storage and tell you how this technology is proven—’We can do it. It’s never going to be a problem. It will never leak.’ If they believe their own rhetoric about it never being a problem, what is their problem about investing and taking on the liability? The fact of the matter is that they have no more confidence or knowledge than anybody else about whether the plugs they put on these repositories are going to last. They certainly will not withstand geological impact—a seismic impact, for example; nothing can withstand that. There are a range of other things that may occur in terms of the plug not succeeding in doing what it is set out to do.

I refer people to the International Energy Agency report. They go into a lot more considered detail about the costs, the liabilities and the level of risk associated with CO2 storage projects and how they will evolve as the project progresses given the life cycle of the project. They go on to say:

In general, the third party and self-insurance instruments are best suited to the injection-closure and post-closure periods. The risk profile of the project is clear while the site is active and the developer-owner or operator is best able at this stage to leverage the funds necessary to finance the instruments.

So you can do the estimated costs and risks and so on at the stage at which you are actually transferring the CO2, injecting it in the site and so on. But as the International Energy Agency points out:

… the long-tailed risk profiles of CO2 storage sites result in uncertain probability of risk exposure, which will make it difficult to define the degree and costs of any necessary remedial activities. It is also difficult to identify and monetise the damages that could result from the long-term leakage of CO2—

which is the point I am making about why we need to entrench the principle about who is liable, because at this point we do not know what the truth of the matter is in terms of our ability to capture and store for the long term. It goes on to say:

It is difficult to assign the upper limit of financial liability that underpins the more traditional third party and self-insurance financial instruments. In these circumstances a public-private pooling structure, either in the form of an insurance pooling model or a compensation as in trust fund model, is likely to be the most suitable to provide the necessary financial assurances over the long term. But both of these models involve a blend of financial instruments designed to pool potential risk.

Then it goes on to talk about all of that and says:

Governments are currently considering when they will take overall responsibility for managing a closed CO2 storage site—

which is the issue we have been grappling with here. Is it 10 years, 15 years, 20 years or 50 years? At what point does a government recognise a company will no longer exist? It goes on to say:

Many commentators have stated the need for governments to assume ultimate long-term liability for CO2 storage permanence, given that government is the organisational entity most likely to be in existence for the long term. However, there is still a need to clarify the extent of this transfer and the exact circumstances when this transfer of responsibility occurs—for example, the proposed European Union CCS Directive envisages the transfer of liabilities to individual member states “when all available evidence indicates that the stored CO2 will be completely contained for the indefinite future.”

It goes on:

More work is needed to clarify the conditions that might justify this transfer of responsibility.

This is where I would argue that this legislation is a pig in a poke. We simply do not know, just as the European Union does not know—nobody knows at this point—the point at which individual member states can be sure that the CO2 is completely contained for the indefinite future. The conclusion from the International Energy Agency is:

… governments and industry need to expand their discussions with the insurance industry on possible models for long-term liability. Any early CCS projects that receive special treatment regarding long-term liabilities, as in government risk sharing—

which clearly this does—

could be asked to make commitments in return—that is, regarding providing data on project performance and the independent assessment of risks and performance and so on.

This is the very latest from the International Energy Agency, making very clear that this is experimental territory. That is why this principle of the polluter pays must be entrenched. If we are silent on this issue in this legislation then we are buying ourselves real problems into the future. That is why I will be calling a division on this amendment—because I want it made very clear that, from the Greens’ point of view, we want an object in this legislation saying that it is the entity that injects the CO2, that effectively dumps CO2 into the environment, that is responsible in the longer term. Let us get that down so that 20 years hence, when this goes to court, courts can look back and see that at this time the parliament judged that the companies concerned did not have to take on long-term liability. It is a mistake, but it has to be there one way or the other.