Fact sheet: Carbon capture and storage
14 November 2008
What is carbon capture and storage?
Carbon capture and storage (CCS) is a type of 'clean coal technology', involving the capture, transport, injection and storage of greenhouse gases (including carbon dioxide). The best sites for storage are deep geological formations, such as depleted petroleum fields or deep natural aquifers filled with saline water.
Why is it important?
The use of CCS is an important part of the global effort to reduce carbon dioxide emissions and to confront climate change.
The development of a CCS industry is of particular relevance in Australia as the world's largest coal exporter and fourth largest coal producer. Due to our reliance on coal-based energy generation, we also have one of the highest per capita greenhouse gas emission rates in the world. The Federal Government has acknowledged that the early commercialisation of CCS is critical to meeting the target of a 60 per cent reduction in emissions by 2050.
The Commonwealth offshore legislation provides an important first step in the establishment of a regulatory framework which will form a key element of investment decision making to facilitate CCS development.
CCS legislation
Offshore CCS activities will be regulated under a federal regime. Onshore CCS activities will be regulated by separate state regimes. The regulatory models so far adopted under the different regimes are not entirely inconsistent.
Commonwealth
In November 2008, the Federal Parliament passed the Offshore Petroleum Amendment (Greenhouse Gas Storage) Act 2008, which amends the Offshore Petroleum Act 2006 by creating a regulatory regime for CCS activities in Commonwealth offshore areas.
It is anticipated that the states and territories will enact 'mirror' offshore legislation to enable this federal regime to apply to their respective territorial seas.
State legislation regulating onshore CCS
- Victoria: The Victorian Parliament has enacted a stand-alone Act, the Greenhouse Gas Geological Sequestration Act 2008.
- Queensland: The Queensland Government is currently working on a stand-alone draft CCS Bill, the Greenhouse Gas Storage Bill, which has not yet been officially released.
- South Australia: CCS activities are regulated under the Petroleum Act 2000 (SA).
- Western Australia: The Western Australian Parliament has passed project-specific legislation to regulate CCS activities associated with each particular project.
Key legislative issues
Issue: Managing CCS and petroleum interactions
Petroleum reservoirs are an ideal CO2 storage resource. As such, the rights of existing petroleum titleholders and CCS proponents may interact and will need to be managed. Both the Federal and Victorian legislation contain provisions addressing a situation of 'overlapping titles'.
Legislation
Under the Federal legislation, the main test to decide the outcome of conflicts is the 'no significant adverse impact' test. The form of the legislation defines those impacts that will be regarded as an 'adverse impact'. In addition, the regulations will require the Minister to take various matters into account in determining whether there is a 'significant risk of a significant impact'.
In the case of 'post-commencement' petroleum titles, the Minister has the power to break overlapping usage deadlocks 'in the public interest' - that is, to permit the conduct of CCS activities. These titles are distinguished from 'pre-commencement' petroleum titles, on the basis that such a power could encroach on petroleum titleholders' existing rights.
The Victorian legislation vests in the relevant Minister a wider scope to approve CCS activities if they are determined to be in the 'public interest' and does not distinguish between pre- and post-commencement titles in the same way.
Issue: Long-term liability - The 'escape' into the atmosphere, or contamination of other resources, by stored CO2, is a risk associated with CCS. This raises the issue as to whether the CCS proponent, government, or both, should bear any long-term liability associated with the CCS project following its cessation.
Legislation
The Federal legislation requires CCS proponents to bear the Commonwealth's costs of post-closing monitoring and verification of the stored CO2. Significantly, however, the legislation effectively imposes a 20-year limit following project closure on CCS proponents' potential common law liability for any damage caused by 'leakage' or 'migration' of the stored CO2. After this time, the Federal Government will assume the long-term liabilities, provided that the applicable closure criteria have been met in respect of the 'closure assurance period'. This is different to the approach adopted under the Victorian legislation, which is silent on the issue of long-term liability (ie the Victorian Government has not been prepared to provide for its assumption of long term liability).
Next 12 months
- The Federal legislation needs to be supported by the development of detailed Regulations and guidelines.
- The Federal Government has intimated that the passage of its CCS legislation will allow Australia to offer the first carbon storage blocks for commercial development in early 2009.
- The Coal Association of Australia has launched a contemporaneous media campaign to promote public awareness and understanding of CCS.
- The Federal Government has offered to host, and contribute $100 million towards, a global institute to accelerate the development of CCS technology. The Victorian Government is supporting a local bid to have the Australian arm of the institute located in the Latrobe Valley.
Key CCS projects
International - Norway's StatoilHydro is recognised as pioneering the first CO2 storage project in the North Sea. Storage of CO2 in the 'Sleipner Vest' offshore natural gas field commenced in October 1996, becoming the world's first offshore CO2 storage project in a geological layer 1000 metres below the sea floor. StatoilHydro is also a partner in a CO2 injection project located at In Salah in Algeria, which commenced operation in 2004. The same rock layer that houses natural gas is used to store the 1.2 million tonnes of CO2 injected annually.
Australia - Victoria: The $40 million CO2 storage demonstration
project carried out by the Cooperative Research Centre for Greenhouse Gas
Technologies joint venture, is Australia's most advanced. Situated in Victoria's
Otway region, the pilot project is resourced by 15 industry participants, and
seven government agencies.
Western Australia: Under the Barrow Island Act 2003 (WA), Chevron and its Gorgon
Project partners are considering a development concept that includes CO2
injection and storage up to 2.3km beneath Barrow Island, in the vicinity of the
project's gas processing plant. Injection activities are planned to commence in
2009.
Queensland: The $206 million Callide Oxyfuel (demonstration) Project is being
undertaken in two stages, with commencement of injection and storage of CO2
scheduled for 2011.
Media contacts
For more information on carbon capture and storage, contact Allens Arthur Robinson Partner Anna Collyer on Anna Collyer +61 9613 8650 or by email at Anna.Collyer@aar.com.au.
For more information on climate change issues, contact Allens Arthur Robinson Partner Grant Anderson on +61 3 9613 8928 or by email at Grant.Anderson@aar.com.au
For all media issues, contact Allens Arthur Robinson's Director - Corporate Affairs, Chris Fogarty, on +61 2 9230 4489 or by email at Chris.Fogarty@aar.com.au.
Media release on Carbon Capture and Storage
Ends
Notes for editors.
Allens Arthur Robinson has staff in 14 cities and eight countries across the Asia Pacific.