While the world is still a long way from meaningful action on climate change, Kevin Rudd scored a major international victory overnight on the Government’s carbon capture and storage efforts.
CCS is central to the Government’s climate change strategy. Unlike its ETS, it is almost entirely within the Government’s control to establish and pursue major CCS initiatives. And unlike the ETS, CCS directly addresses the biggest problem for mainstream policy-makers: that Australia’s dependence on coal makes it not merely one of the most carbon-intense economies in the world, but also one of the planet’s biggest carbon dealers.
Last night, part of that gamble paid off — at least in political terms. Rudd announced that Nicholas Stern had been appointed to the International Advisory Panel for the Global Carbon Capture and Storage Institute established earlier this year. Former World Bank President James Wolfensohn has already been appointed to head the panel. Former International Energy Agency Executive Director Claude Mandil and the Executive Director of the Indian Energy and Resources Institute, Leena Srivastava, were also appointed, but Stern, who has serious climate change credentials, is the real coup. Expect Rudd to heavily emphasise Stern’s involvement.
Rudd launched the Institute in April, but gave it another, more international-flavoured launch last night in Italy. It is based in Canberra and the interim CEO is UK energy industry veteran Nick Otter, who has impressed with his rapid work to get the Institute up and running in a matter of months after its announcement in September. Crikey understands Otter has recently agreed to continue for another year.
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While the Institute was being set up in offices in Civic, the Government was selling it hard overseas with a significant senior diplomatic push. China was brought on board, moving from a “collaborating participant” to a founding member. The Indians, the Russians and the Swedes also joined. When Rudd met President Obama in March, they spent 20 minutes on CCS in their private meeting, with Obama apparently keen for Australia to lead on this issue as the major coal consumers of the future — China and India — are in our region.
Last night, Obama gave the Institute strong support as part of a clean energy partnership announced at the G8 summit.
Under the current Waxman-Markey bill, 4% of revenue from the US emissions trading scheme would go directly to CCS research, which means tens of billions of dollars. How that research effort would interact with the Institute’s efforts — particularly on the issue of intellectual property — is unclear. It’s unlikely the Americans will permit a Canberra institute too much say, given the commercial possibilities of a genuinely viable CCS technology.
While the Rudd Government is devoting billions to CCS research over the next decade, and the coal industry is investing heavily via a self-imposed tax, industry sources say significant additional investment is needed if major demonstration projects are to get off the ground — or, more correctly, get underground. Japan is directing significant investment to Australian projects, but the most important potential partners are China and India, who have made clear their use of coal will increase massively in coming decades regardless of what developed countries do.
The Chinese are also investing significantly in renewable energy, but the Indians appear to attach less priority to climate change generally and look disengaged from the entire debate.
Even so, Rudd has moved CCS to the top of the global climate change agenda from a standing start last year. Amazing what naked self-interest can achieve.