Age
Monday 18/5/2009 Page: 8
THERE are some disturbing question marks hanging over carbon capture and storage as a reasonable technology bet. As tipped here a month ago, the Federal Government will spend $2 billion to build "industrial-scale" carbon capture and storage projects in Australia. You would be better off just burying the money from an environmental point of view because many doubt the CCS technology will work.
The best that proponents can say is, it has to work. But if it doesn't, the money is worse than wasted, because the spending will have exacerbated the climate problem by justifying construction of new coalfired power stations that burn for another 30 to 40 years. The public could bear the ultimate liability if the technology fails because the Offshore Petroleum and Greenhouse Gas Storage Act, the world's most comprehensive according to the Government, nicely shifts long-term liability (beyond 15 years) onto the Commonwealth.
There are loopholes anyway. For example, if a greenhouse gas storage licence holder has "ceased to exist" after a site closure certificate is issued by the resources minister, then liability reverts to the Commonwealth. We've seen what lengths James Hardie went to to avoid its long-tail asbestos liabilities. Insurance companies would not take on CCS risk at any price, which even the Government recognises. "Obtaining insurance (for CCS) is nigh on impossible because these are pilot schemes," a spokesman for Resources and Energy Minister Martin Ferguson told The Age.
Ferguson's office says coal companies had no incentive to invest in CCS under the Howard government. "The reason the coal industry is now starting to make significant contributions towards CCS.., is because they now see the Federal Government is going to put a price on CO2 emissions, meaning they now have an economic incentive to invest in reducing emissions," the spokesman said.
Industry views the budget commitment to CCS as merely a "down payment" on the investment required - as National Low Emissions Coal Council chairman Dick Wells told one newspaper - or "a bit like peeing in the ocean", according to Keith Orchison, a columnist and former oil and gas industry lobbyist.
Tony Maher, national president of the Construction, Forestry, Mining and Energy Union, welcomed the Government's CCS commitment. But two years ago, he told a public meeting that unlike renewables, where there was a clear need for government funding for pilot projects, the coal mining industry was "a very wealthy global private sector industry and it does not need one dollar of public support".
So having prospered for decades under generous state-based royalty regimes, and having furtively lobbied against effective climate change policy, and having failed to manage the risk that climate change was actually occurring, and having demanded (and won) extensive concessions under the draft emissions trading scheme now that action is urgent, the coal lobby has the hide to demand that the public fund the very CCS technology they haven't been prepared to back themselves for the last 15 years.
And the money needed? Whatever it takes. It's a bottomless pit. What do we get for our initial outlay? The Government expects its investment of $2 billion, generating a total investment of $6 billion after 2-for-1 matched funding from industry and state governments, will pay for construction of between two and four new CCS-fitted coal-fired power stations generating between 250MW and 450MW each.
By comparison, the $1.2 billion investment in four flagship solar energy stations will generate Ref: 1000MW for about $3.6 billion after matched funds are invested, according to the Government's announcement. Simply put, CCS is hideously expensive. At Moomba, the biggest known onshore reservoir, it is technically feasible, I am told, and commercially attractive if the carbon price is about $80 a tonne.
Well, we're starting at $10, so don't hold your breath. WorleyParsons is big in CCS and solar. Last year Worley proposed Australia's largest solar energy project to date, the Advanced Solar Thermal initiative. Backed by Rio Tinto, BHP Billiton, Woodside Petroleum and others, the project would generate 250MW, for about $1 billion.
That project could qualify for funding under the Government's solar flagship program. Worley sustainable business unit managing director Peter Meurs told BusinessDay: "My feeling is the Government is doing the right thing in helping the first large-scale CCS and solar projects get going in Australia." My feeling? The solar spending better count because we'll never see that CCS money again.
paddy.manningfairfaxmedia.com.au
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