With around 80% of Australia’s total electricity generated by burning coal, it’s fair to say that the coal industry is here to stay, at least for the foreseeable future. But while coal fired power stations aren’t about to be shut down en masse, it’s also true that the next decade will see significant change within the industry, in particular with “clean coal”.

As Federal Resources Minister Martin Ferguson recently pointed out:

Carbon capture and storage (CCS) is essential for the long-term sustainability of coal-fired power generation and the potential of new industries such as coal-to-liquids, which could improve Australia’s liquid transport fuel security.

Of course, such a clear statement of support for CCS will always attract questions about whether CCS is a genuine climate change mitigation solution (you’re still emitting carbon dioxide after all), and whether it’s being supported at the expense of renewable energy technologies (which produce CO2 themselves, albeit in lower amounts).

Yet Rudd’s position has long been clear. He supports the mandatory renewable energy targets and is an eager proponent of the imminent emissions trading scheme. And this week the government released the exposure draft of the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008, showing again that all mitigation measures should, and will, be pursued.

Sceptics will read the new Bill carefully, perhaps hoping for evidence that it’s a legislative gift to the coal industry. In essence, the Bill gives a clearer view, from a statutory perspective, of the risks associated with the exploration of GHG storage formations and the injection of GHGs into such formations, thereby filling in some of the missing legal detail needed by those involved in developing and aiming to commercialise CCS technology. Inevitably that has the effect of encouraging investment.

Due to be tabled in Parliament’s winter sitting, this draft has the ability to keep coal power stations viable. And to a certain degree, it inoculates the coal industry against the big hits it would have taken from the implementation of an emissions trading system. It all comes down to the price of carbon.

But you can also argue that it’s responsible governance, especially considering the reality of Australia’s current and future reliance on coal power. There’s an obvious need to strike a balance between encouraging renewable energy and low emission technology and mitigating emissions through CCS.

There are other questions which remain unanswered. While the Bill incorporates a comprehensive storage site management and closure framework, it does not expressly resolve who owns the GHGs once they have been injected into a storage formation. And, given the enormous expense of moving CCS from the drawing board to reality, the Bill is silent on the incentives needed to encourage investments in developing the infrastructure for transporting and storing GHGs.

Realistically, we are years off seeing any large scale commercially viable CCS project in Australia. While BP and Rio Tinto failed to find a suitable place to bury the CO2 created by a proposed new coal-to-gas power plant at Kwinana, south of Perth, there are other demonstration projects underway, such as the CO2CRC Otway Project (Victoria), which is expected to start injecting 100,000 tonnes of CO2 from a nearby gas well into a depleted gas field at a depth of 2km this year.

When you combine projects like this with the Offshore Petroleum Amendment Bill, you might say the future for clean coal just got a little brighter. But there remains a long way to go.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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