The Morrison government will put another $50 million into carbon capture and storage technology, following more than $1 billion in taxpayer subsidies and investment from the fossil fuel sector since the early 2000s.
This is part of the government’s $1.9 billion “new technologies” package, aimed at funding fledgling projects such as making gas-fired hydrogen fuel – a process that still needs CCS as the process releases carbon dioxide that has to be buried if the hydrogen is to pass as clean energy.
Carbon capture and storage technology has been backed by the likes of the International Energy Agency (IEA), International Panel on Climate Change (IPCC) and fossil fuel lobbies to reduce emissions but it has enjoyed little commercial success in Australia and abroad.
The proposal was backed by oil fossil fuel companies but Emma Herd, chief executive officer of the Investor Group on Climate Change (IGCC ), said investors did not want taxpayer money spent on CCS in the fossil fuel industry.
Though the consortium, which has $2 trillion under management, does back CCS funding in other sectors, which would include capturing, storing and in some cases utilising the carbon dioxide that will be emitted by producers of cement, plastics and steel, even if those manufacturers were to source 100 per cent of their power from renewables.
“Institutional investors have little appetite to allocate capital to legacy technology such as fossil fuels with carbon capture, utilisation and storage in the electricity sector,” Ms Herd said.
“Expanding the functions of the ARENA [Australian Renewable Energy Agency] and the CEFC [Clean Energy Finance Corporation] to open up opportunities for this technology in other sectors can be valuable for creating opportunities for zero and negative emission technologies in harder to abate industries,” she said.
The funding hinges on Parliament approving an extension to the remits of the Clean Energy Finance Corporation and the Australian Renewable Energy Agency to include fossil fuel research.
Currently, the CEFC can invest only in clean energy technologies; ARENA can support only renewable energy.
Capturing carbon for permanent storage underground is seen as key in so-called “negative emissions technologies” – processes that suck carbon dioxide out of the air – to help reach the global goal of limiting warming to below two degrees.
The Morrison government’s strategy to support gas-made hydrogen, which promises to be a powerful fuel replacement for coking coal in the steel-making process, is contingent on CCS successfully working.
More support needed
But enthusiastic efforts to support CCS have so far proved costly and can boast only limited success. The Australia Institute estimates $1.3 billion of taxpayer money was spent on CCS research from 2003 to 2017.
In the years since the first push to explore the technology under the Howard government, several pilot projects using the technology in coal-fired power generation either fell by the wayside or were completed without any commercial follow-up due to high costs.
A $2.5 billion-plus project at Chevron’s $US54 billion ($82 billion) Gorgon LNG venture on Western Australia’s Barrow Island started up last August more than two years late and is still ramping up to full capacity but is set to be the largest CCS project worldwide.
The Gorgon project is expected to inject 3.4 million-4 million tonnes of greenhouse gas emissions each year once fully running.
The expensive investment, for which the federal government contributed $60 million through its Low Emissions Technology Demonstration Fund, is expected to make Gorgon the least carbon-intensive LNG project in Australia.
Woodside Petroleum chief executive Peter Coleman said in March the longer the company’s $31 billion Browse LNG project was delayed, the more likely it was to include carbon capture from the outset.
He welcomed the government’s support for “carbon management technologies”, pointing out it would “support the development of next-generation technology for new gas projects in Australia and emerging industries, like hydrogen”.
Oil and gas giant Santos is also working on a CCS project in the Cooper Basin in South Australia’s north with BP, but is yet to make a final investment decision on the project, which would sequester 1.7 million tonnes of emissions.
Santos chief executive officer Kevin Gallagher backed the government’s decision to use the green banks to fund CCS, recognising current CCS projects fall short of what is needed.
“Just as private investment in renewable energy deployment was accelerated through public policy and funding over the last two decades, we now need to focus on accelerating CCS in similar ways,” he said.
“Today, CCS projects store around 40 million tonnes per year of carbon dioxide, far short of the more than 2 billion tonnes of carbon dioxide the IEA forecasts that CCS projects will need to store each year by 2040.
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