In submissions and evidence to the House of Representatives Standing Committee on Science and Innovation, companies and peak industry bodies warned that investment in geosequestration – the trapping of carbon dioxide underground in order to reduce the build-up of greenhouse gases in the atmosphere – would not occur without an emissions trading system.
The government has been advocating geosequestration as a way of fighting climate change without disadvantaging the Australian coal industry. But it refuses to plan for a greenhouse emissions trading system.
CSIRO told the inquiry that installing geosequestration at existing power stations would double the cost of electricity. Even with future improvements in the technology and installation from scratch in new power stations, geosequstration would still significantly increase the cost of power.
Industry agrees with the thrust of CSIRO’s figures and is telling government it will not bear the extra cost unless compelled to do so.
Santos told the inquiry it would not act on geosequestration without an emissions trading system.
“A viable carbon emission abatement trading system with a carbon dioxide price signal does not currently exist in Australia,” Australia’s third-largest petroleum company said.
“There is no economic incentive to consider geosequestration as a long-term business proposition.”
Petroleum producer and electricity generator Origin Energy told the inquiry that: "Commercial deployment of [carbon capture] technology is likely to be delayed until a comprehensive framework that values greenhouse emissions is established.
"While some commentators have suggested that the appropriate policy response to climate change is to “wait” for new technologies to arrive, it should be noted that in the case of geosequestration, the technology is already available and has been in use for decades," Origin said.
"The question, then, is how to incentivise commercial projects."
The Energy Supply Association of Australia agreed that geosequestration would only be implemented if an emissions trading system was in place to allow electricity producers to recoup investment in carbon capture.
A geosequestration demonstration project is currently underway in Queensland, but its developer, Stanwell Corporation, told the inquiry that the technology would not be widely implemented without a clear federal carbon trading scheme.
However, in a joint submission with the Minerals Council of Australia, the Australian Coal Association rejected this stance, saying that policy measures such as emissions trading should only be considered in concert with similar movements by the world’s major emitters and Australia’s international trading partners and competitors.
“Moving unilaterally to impose a price on carbon in the absence of similar action by the international community would be entirely self-defeating," ACA executive director Mark O’Neill said.
“It would have negligible impact on climate change, but Australia would miss out on new investment in energy intensive industries which would seek emissions havens in countries that were not imposing similar costs on energy.
“It could also have the perverse effect of driving investment out of the vital research and development effort needed to develop effective long term solutions to climate change.”
O’Neill said that the position of the ACA remains that the most valuable contribution Australia could make for the immediate future would be to invest heavily in research, development and demonstration of low emissions technologies for both fossil fuels and renewable energy.
But the ACA has not said what incentives could be used to induce power generators to use expensive systems such as geosequestration.
http://www.aph.gov.au/house/committee/scin/geosequestration/index.htm
