Don Farrell (SA, Australian Labor Party) Share this | Link to this | Hansard source

I seek leave to incorporate Senator McEwen’s speech on the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 and related bills.

Leave granted.

Anne McEwen (SA, Australian Labor Party) Share this | Link to this | Hansard source

The incorporated speech read as follows—

The Rudd Labor Government is a Government of change; this Government will take Australia into the future with innovation and courage. Our climate change and environment policies demonstrate this huge difference between us and the former Government. Unlike those on the other side, we are not full of climate change deniers. We have recognised climate change as a problem and we are addressing it with a range of policy and legislative measures.

That we are a bold and innovative Government was proved again last month with our $10.4 billion Economic Security Strategy. This strategy is designed to strengthen the Australian economy in the face of the worst global financial crisis since the Great Depression. Since Budget night we have stressed the importance of having a strong surplus to act as a buffer during tough economic times. Those tough times have now arrived, so the Rudd Labor Government is ensuring that surplus will strengthen Australia’s economy.

The Government’s $10.4 billion Economic Security Strategy contains five key measures:

• $4.8 billion for an immediate down payment on long term pension reform.
• $3.9 billion in support payments for low and middle income families.
• $1.5 billion investment to help first home buyers purchase a home.
• $187 million to create 56,000 new training places in 2008-09.
• Accelerate the implementation of the Government’s three nation building funds and bring forward, the commencement of investment in nation building projects to 2009.

Just as the Economic Security Strategy is an important element of the Rudd Government’s plan for the future, so are the Bills before us today.

Energy security is an issue not only for Australia but the world, because whoever controls access to energy resources is able to control economic growth. Almost 20 per cent of Australia’s exports are energy resources — and this proportion is growing.

Currently 80 per cent of Australia’s electricity is generated from coal. It would be incredibly irresponsible for us to simply stop the production of coal as it would be of great detriment to Australia’s economy. Australia is the world’s largest coal exporter, generating an estimated $43 billion in export income in 2008-09. In addition, some 30 000 people are employed in the industry, making it a significant part of our rural and regional communities.

While a majority of coal mining in Australia is done in Queensland and New South Wales, South Australia plays an important role in the mining industry. According to Primary Industries and Resources SA, the first discovery of coal in South Australia was the very small occurrence of lignite near Pidinga, found in 1885. Coal has subsequently been found widely distributed throughout the State in sedimentary basins ranging in age from Permian to Tertiary.

While a majority of this coal is of low rank and poor quality, it is suitable for local electricity generation. Coking coal for ore smelting at Whyalla and Port Pirie is imported by ship from the eastern States and a small amount of high-grade steaming coal is also imported for rural industries and steam-train use.

Coal comprises a significant part of South Australia’s energy resource and it will play an increasing role in supplying more of the State’s energy needs over the next few decades. Coal is a part of the economy of South Australia, Australia and the Asia-Pacific region, a reality that must, and will be considered as we take action on climate change.

Despite investment in renewable energy, it is expected that coal will continue to generate a large proportion of Australia’s electricity in the future. This is supported by the International Energy Agency (IEA), which monitors and forecasts global energy supply and demand. The lEA estimates that the world’s future energy needs will be met primarily by fossil fuels, forecasting that coal will provide around 44 percent of world electricity needs in 2030- this is 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.

That is why we have focussed part of our response to climate change on making fossil fuel use cleaner. These bills help to establish carbon capture and geological storage (CCS) which will move us towards making low-emissions coal a reality. The Government will establish a framework to allow for the capture and geological storage of greenhouse gases emitted from fossil fuel use; not only domestically but also in countries which purchase Australian coal.

The Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 amends the Offshore Petroleum Act 2006 to establish a system of offshore titles that will authorise the transportation, injection and storage of greenhouse gas (GHG) substances, principally carbon dioxide (CO2), in deep geological formations under the seabed. To achieve this aim, the Bill changes the existing regime of petroleum titles in order to accommodate the new kinds of activity being authorised by the Act. Accordingly, the legislation seeks to balance the rights of new participants in the industry with those of the petroleum industry.

The Bill provides for access and property rights for greenhouse gas injection and storage activities in Commonwealth offshore waters. It applies to titles which will be located in the area between the outer limits of the states’ coastal waters and the outer limit of the continental shelf. Importantly, the Bill also provides a management system for ensuring that the storage is safe and secure.

A greenhouse gas injection license will authorise the injection and storage of a ‘greenhouse gas substance’. For practicality, this will initially mean carbon dioxide, together with any substance incidentally derived from the capture or injection and storage processes. There will be a power by regulation to extend the meaning of ‘greenhouse gas substance’ in the future to include other greenhouse gas substances.

This regulation-making power could be used in two circumstances: if the Protocol to the London Dumping Convention is amended to permit geological storage of other greenhouse gas substances; or if the provisions of the legislation need to be extended to include the permanent storage of methane from offshore petroleum operation.

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 arrangements applying to the petroleum industry. The responsible commonwealth Minister will have ultimate regulatory responsibility. This approach is consistent with industry’s preference for a consistent and harmonised national approach and will improve the efficiency of project approvals and minimise administrative duplication.

The legislation confers on the responsible Commonwealth Minister a range of powers for dealing with situations where injection and storage operations do not go as planned. The Bill defines a ‘serious situation’ as existing if one of the following has happened or is happening, or if there is a significant risk that one of the following will happen:

• leakage of a greenhouse gas substance from an identified greenhouse gas storage formation; or
• an injected greenhouse gas substance behaving otherwise than as predicted in the site plan; or
• injection or storage of a greenhouse gas substance compromising the geotechnical integrity of a geological formation; or the identified greenhouse gas storage formation not being suitable for the permanent storage of greenhouse gas

If the Minister is satisfied that a ‘serious situation’ exists, they have the power to direct the injection licensee:

• to carry on operations in a manner specified in the direction;
• to cease or suspend injection at one or more, or all, sites;
• to inject greenhouse gases at one or more sites
• to undertake such activities as are specified in the direction for the purpose of eliminating, mitigating, managing or remediating the serious situation,
• to take, or not to take, such action as is specified in the direction

The legislation before us 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 Government has provided $500 million for the 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.

It is integral that we work with industry on these plans, which is why the National Low Emissions Coal Initiative is being matched by the coal industry’s COAL2 I initiative. The industry has set up a $1 billion fund to support clean coal projects to combat climate change and reduce our emissions.

Just last month the first meeting of the Australia Government’s Carbon Storage Taskforce took place. The Minister for Resources and Energy, Martin Ferguson, addressed the meeting and stressed to members the important role Australia can play in developing economically-responsible climate change policy.

The Taskforce has been charged with developing the National Carbon Mapping and Infrastructure Plan, which will prioritise the development of geological storage sites for carbon capture and storage.

The Taskforce is also pivotal to the development of the Government’s aforementioned $500 million National Low Emissions Coal Initiative and complements the research and development work to be undertaken by the National Low Emissions Coal Research Centre.

What we are discussing today is an integral part of the Government’s ongoing commitment to addressing climate change, a commitment that has been evident from the minute we stepped into office. Just over a week after the election, the Rudd Government ratified the Kyoto Protocol, something that the Howard Government had refused to do for years. Labor did not stop there. We have reached an agreement with State Governments to secure a sustainable future for the Murray Darling Basin, something the Howard Government failed to do.

We have also injected substantial funding into projects including; $1 billion to help Australians overcome barriers to making their homes more environmentally sustainable and $2.2 billion over five years to deliver an environment that is healthy, better protected, well managed and resilient in the face of climate change as part of Caring for our Country.

The Rudd Government’s innovative approach to climate change keeps getting bigger and better. Today we released a $6.2 billion plan to make the automotive industry more economically and environmentally sustainable by 2020.

The overall Green Car Plan will provide:

• A better-targeted, greener, $3.4 billion assistance program, the Automotive Transformation Scheme (ATS), running from 2011 to 2020;
• Changes to the Automotive Competitiveness and Investment Scheme in 2010, consistent with the Bracks review proposals, to smooth the transition to the ATS ($79.6 million);
• $116.3 million to promote structural adjustment through consolidation in the components sector and to facilitate labour market adjustment;
• $20 million from 2009-10 to help suppliers improve their capabilities and their integration in complex national and global supply chains;
• $6.3 million from 2009-10 for an enhanced market access program;
• A new Automotive Industry Innovation Council, bringing key decision makers together to drive innovation and reform; and
• A $10.5 million expansion of the LPG vehicle scheme, to start immediately, that doubles payments to purchasers of new vehicles using LPG technology.

The Carbon Pollution Reduction Scheme is another element of our climate change strategy and will help to make coal greener. The scheme has two distinct elements - the cap on carbon pollution and the ability to trade. The cap achieves the environmental outcome of reducing carbon pollution. The ability to trade ensures carbon pollution is reduced at the lowest possible cost.

The following principles will guide the development of the scheme:

• The scheme will be a ‘cap and trade’ scheme. That is, it will set an overall environmental cap by issuing a set number of permits, and allow entities to trade permits, thereby putting a price on carbon.
• The caps will be designed to place Australia on a low emissions path in a way that best manages the economic impacts of transition, while assuring our ongoing economic prosperity.
• The scheme will have maximal coverage of greenhouse gases and sectors, to the extent that this is practical. The broader the scheme’s coverage, the more cost-effectively it will reduce greenhouse gas emissions, and more fairly spread the burden of such reductions across the community.
• The scheme will be designed to enable international linkages, while ensuring it suits Australia’s economic conditions.
• The scheme design will address the competitive challenges facing emission-intensive trade-exposed industries in Australia.
• The scheme will also address the impact on strongly-affected industries.
• Measures will be developed to assist households - particularly low income households - to adjust to the impact of carbon prices.

New clean technologies, including both fossil fuels and renewable energy sources are the key to a sustainable climate change solution. Australia’s geothermal energy resources have the potential to play a significant role in Australia’s clean energy future. It was astounding to hear that Geoscience Australia estimates that if we were able to extract just one percent of Australia’s geothermal energy, it would be equivalent to 26 000 times Australia’s total annual energy consumption.

This technology is a very clean source of energy; it is renewable and despite claims to the contrary, it is not radioactive. The challenge Australia faces is to develop the technologies and techniques needed to produce this heat from deep below the earth’s surface, convert it into power and get it to market without detriment to the economy.

At CEDAs Energy Overview Forum in Adelaide on 24th October, the Minister reiterated this point saying that ‘In a carbon-constrained world, we have to continue to pursue new clean energy technologies such as geothermal, even though capital-raising may be more challenging in the near to medium term.’

The Rudd Labor Government sees those challenges and with State Governments, the private sector and our $50 million Geothermal Drilling Program, we are working to overcome them so that geothermal energy can become a reality.

While we have our eyes on a healthier environment, we have not lost sight of Australia’s economic prosperity and the jobs of Australians. The Rudd Government is making responsible decisions as we don’t want to achieve success in one area at the detriment of another.

We have made it clear from the beginning that we consider climate change to be as much an economic issue as it is an environmental one. Without sound environmental and economic policies working in conjunction with one another, we will not be able to move forward.

These Bills have received extensive consideration by both houses, particularly through the committee process. The Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 was the subject of an inquiry by the House of Representatives Standing Committee on Primary Industries and Resources. It was also the subject of an inquiry by the Senate Economics Committee, a report of which was tabled during the September sitting. The committee recommends that the Bill be passed and that the operation of the bill be reviewed three years after its proclamation.

I look forward to Senate support for these important Bills.

Jan McLucas (Queensland, Australian Labor Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

As outlined when the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 and related bills were introduced to the Senate, the government is committed to comprehensive action to tackle climate change whilst maintaining Australian jobs and economic prosperity. We are committed to a portfolio of responses, including development of renewable energy sources and a focus on improving efficiency in energy consumption. Carbon dioxide capture and geological storage, or CCS, holds great potential to reduce emissions of carbon dioxide and other greenhouse gases from fossil fuel use. 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 from coal-fired power generation and from industrial processes. CCS has the potential to substantially reduce Australia’s emissions.

On Friday, 19 September, the Prime Minister announced a major initiative to accelerate the development of carbon capture and storage technology to pave the way for its commercial deployment across the world by the end of the next decade. The initiative will involve the establishment of a new global institute to help deliver the Group of Eight’s goal to commit to at least 20 fully integrated carbon dioxide capture and storage projects by 2020. The institute will help deliver this goal by facilitating large-scale demonstration projects and identifying and supporting the necessary research, regulatory settings and policy frameworks. The Australian government is determined to play a global leadership role in CCS. This bill is an important part of that objective and will create the world’s first property rights and regulatory framework specifically for long-term greenhouse gas storage.

On 25 June 2008, the Senate Selection of Bills Committee referred the provisions of the bill and associated bills to the Senate Standing Committee on Economics. The committee received submissions and heard testimony from a broad range of stakeholders, including the petroleum industry, coal producers, government and NGOs. The committee publicly released its final report, which includes four recommendations, on 23 September. I would like to thank the members of the Senate economics committee on behalf of the government for their hard work on this bill. The committee’s report provides an endorsement of the government’s proposed legislative framework. The government has already addressed the committee’s recommendation 3 through the amendments that were tabled in the House of Representatives on 18 September and that are contained in the revised bill.

The government supports the four recommendations made by the Senate economics committee. The government supports recommendation 1. The passing of this bill will enable a key component of the CCS process—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 extractive processes.

The government also supports recommendation 2. However, given the lead times likely to be involved, the government considers that it would be unlikely that three years would allow sufficient experience with the administration of the act to provide the background for a comprehensive review. The government therefore proposes that the review be undertaken after five years.

The government largely supports recommendation 3 from the report. The bill, as amended in the House of Representatives, now includes a provision for the responsible Commonwealth minister to establish expert advisory committees on a needs basis which will strengthen the treatment of the significant risk of a significant adverse impact test. The revised bill also addresses such matters as membership, remuneration, confidentiality and conflicts of interest. However, the government does not consider that the scope of expert advisory committees to be established under this legislation should extend to environmental impacts. This is because environmental impact assessment is the role of the Environment Protection and Biodiversity Conservation Act and is therefore not dealt with in this legislation.

In relation to recommendation 4 from the committee, which deals with long-term liability, the government notes that this recommendation supports the current framework in the bill but it also recognises that the whole issue is a complex balance between the need to provide industry with the certainty it needs to make investment decisions while ensuring that the risks of anything untoward happening in the longer term are addressed.

The Senate Scrutiny of Bills Committee, in considering the amendments made in the House of Representatives, concluded that provisions in the revised bill relating to the minister’s regulation-making power in respect of the significant risk of a significant adverse impact test ‘may inappropriately delegate legislative powers’ and sought the minister’s advice on whether these criteria might be included in the primary legislation rather than in the regulations. To address this matter, it is proposed to amend the bill to define the impacts that will be regarded as adverse impacts. The amendment will allow the regulations to set threshold criteria that may be taken into account when determining whether a significant risk of a significant adverse impact exists. Thresholds will be determined on the basis of the probability of occurrence and consequences.

In closing, may I refer to 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 from coal-fired power generation and industrial processes. Large-scale projects for capturing and storing greenhouse gases involve investments of many hundreds of millions, or billions, of dollars. Several large-scale projects have already been considering their requirements for geological storage for some years. While recognising the complexities needing 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. This bill provides that access and will play a key role in accelerating the development of the carbon capture and geological storage industry. In doing so, it provides a significant opportunity to tackle climate change in a way that protects Australian jobs and maintains our economic prosperity. I look forward to the detailed debate on the bill.

Question agreed to.

Bills read a second time.