Carbon capture: Australia's coal industry makes slow progress

Australia, addicted to coal for export dollars and domestic energy, is at the forefront of global efforts to prove and legally underpin carbon-storage technology.

The country’s earnings will hit A$43 billion in the year to June 2009 from coal exports, which account for almost one-third of global supplies. That is why Australia has one of the world's biggest public-private R&D efforts to make carbon capture and storage (CCS) a commercial reality.

But, in the same way US flagship CCS project FutureGen folded beneath rising costs, some high-profile Australian projects have already been canned. A A$2 billion project of Rio Tinto and BP, for example, bit the dust in the May after it was found that its rock formations wouldn’t seal in carbon dioxide.

The cost of failure

The International Energy Agency this month warned that global CCS spending and activity levels are “nowhere near enough” to achieve an agreed G8 goal to begin developing 20 large-scale demonstration CCS projects by 2010.


Around 20 of the world’s largest energy companies are partners in CO₂CRC, Australia’s peak CCS R&D programme


The IEA said several industrial-size pilot CCS projects planned for Europe, North America and Australia are making “slow progress” and if they fail to materialise soon, it will be at least 2030 before CCS can contribute meaningfully to greenhouse-gas reduction.

Australia has a number of small-scale CCS demonstration projects underway at power stations, but no industrial-scale integrated CCS power station has been built.

Big investment

Australia’s government is ploughing $500 million into a low-emissions coal program and another $100 million a year into helping establish an institute to promote large-scale CCS projects. It has launched a Carbon Storage Taskforce to identify by June suitable sites to store carbon, and is also attempting to pass legislation covering below-seabed storage of CO₂.

The Australian coal industry is spending about A$1 billion on technology to cut emissions from burning coal. Around 20 of the world’s largest energy companies are among partners in CO₂CRC, Australia’s peak CCS R&D programme.

Zeroing in

Following what the US energy department described as the “restructuring” and others saw as the collapse of its FutureGen project, clean coal proponents say Australia’s equivalent – ZeroGen, a A$1.7 billion project planned near Rockhampton in Queensland – has become even more important to establishing a low-emission future for coal.

The Queensland government, Australian Coal Association and industry partners including Shell have proposed a 300MW coal gasification plant by 2017, capturing and transporting CO₂ 220km by pipeline for underground storage. But ZeroGen has undergone several government review processes. “We all hope ZeroGen gets up, but it’s taking a while and is undergoing another review,” CO₂CRC chief executive Dr Peter Cook says.

Otway

On the other hand, CO₂CRC’s $40 million Otway Project in Victoria is “going along well,” says Cook. This is Australia’s most advanced CCS demonstration project and the largest R&D project in the world in terms of the amount of CO₂ going underground for storage.


Australia’s Greenhouse Gas Storage bill covers access and property rights for offshore carbon storage activities and seeks to provide a regulatory and management system for safe CO2 storage



Since its launch in April, it has injected 30,000 tonnes of liquified CO₂ 2km underground, moving towards an injection target of 100,000 tonnes over two years. It allows monitoring and verification techniques to be perfected. Funding it are AngloCoal, BHP Billiton, BP, Chevron, Schlumberger, Shell, RioTinto Solid Energy, Woodside and Xstrata. Additional funding comes from the Australian government, Victorian government and the US energy department.

Monash and Gorgon

The outlook for two CCS projects of massive scale – the Monash coal-to-liquids project in Victoria and Gorgon LNG project in Western Australia – hinges partly on the outlook for oil prices (for Monash) and the economics of getting LNG to market (for Gorgon).

Monash Energy, a venture of Anglo American and Shell Gas and Power, are eyeing a plant that would churn out 70,000 barrels a day of syngas from brown coal, which would require injection and storage of 15 million tonnes a year of CO₂ in the offshore Gippsland Basin.

At Gorgon, Chevron, Shell and Exxon are looking at injecting 3.3 million tonnes of CO₂ from their Gorgon LNG project 2.3km under Barrow Island, or 125 million tonnes over the life of the project, which is planned to start in 2009. A major study of subsurface storage capacity is underway.

Another CO₂CRC project, underway in a few weeks’ time, will retrofit post-combustion CO₂ capture technology to an existing plant, at Hazelwood in Victoria. It aims to capture and store 15,000 tonnes of CO₂ a year.

Legislating for CCS

Australia’s federal government is also trying to pioneer global efforts to introduce legislation governing CO₂ storage. It is pushing legislation covering offshore storage where it has jurisdiction, while states are working on onshore storage laws.

“If approved that would be a world first for offshore storage,” Cook says. “Victoria is also in the process of finalising legislation for onshore storage and if that’s not a world first, it must be pretty close.”

Australia’s Greenhouse Gas Storage bill covers access and property rights for offshore carbon storage activities and seeks to provide a regulatory and management system for safe CO₂ storage.

The federal bill goes before the Senate as early as November 10 for a second round that focuses on policy aspects. Already a raft of concerns have been raised about inadequate consideration of liability.

The Australian Network for Environmental Defender’s Offices (ANEDO) – a coalition of independent environmental legal centres – says the bill must be amended to identify parties liable should problems occur during the injection stage, in addition to long-term liabilities that may arise once injection has ceased.

ANEDO says the federal government’s approach saddles taxpayers with the costs of long-term liability. It calls for the legislation to include the creation of an industry-funded, Commonwealth-held trust that will ensure funds are available for any future remediation works.

Map of Carbon Capture Storage sites in Australia


Source: CO₂CRC