Melbourne
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Good morning ladies and gentlemen.
I extend a very warm welcome to you all and to our international and interstate visitors in particular.
I’m very pleased to address the sixth members’ meeting, which is also the first to be held in Australia since the Global Carbon Capture and Storage (CCS) Institute’s foundation.
We have learned a great deal since that inaugural meeting in Canberra back in 2009.
Knowledge-sharing is vital to the success of carbon capture and storage – its development and deployment.
It is this principle that the Institute was founded on.
And you, the Institute's members, are integral to achieving this.
Since 2009 membership of the Institute has grown to over 320.
Your contribution helps make the Institute a valuable resource for industry, investors, governments and researchers.
Through it, the global CCS community can learn from one another.
CCS state of play
A key tool for disseminating these learnings is the Institute's annual report.
The Global Status of CCS 2011 will give us a thorough assessment of how far CCS technology has come.
Brad and Barry will go into the findings from this year's report in detail later today, however I would say that the overall picture is one of measured progress.
And that’s certainly the message I took away from the Carbon Sequestration Leadership Forum Ministerial Conference in Beijing last week.
While much is happening, significant challenges to achieving faster progress remain.
In the past year one CCS project began operation and three commenced construction bringing the total of large scale projects now in operation around the world to eight with six under construction.
At the same time we have also seen some projects put on-hold or cancelled.
On the whole CCS has made progress but these mixed results remind us how susceptible the pace of CCS development and deployment is to prevailing global economic and political conditions.
International recognition of the important role CCS has to play in reducing greenhouse gas emissions remains strong – and indeed – has been re-enforced by the terrible events in Japan of March this year and the implications they have had for energy policy.
While it is clear that nuclear power will continue to be part of the global energy mix, as the Japanese experience demonstrates, any reduction in nuclear capacity means there will be, at least in the medium term increased reliance on fossil fuels, making the commercialisation of CCS even more important.
However the current climate of economic volatility is making it harder to secure finance for capital intensive, higher risk projects, and CCS falls into this category.
And as with any major investment, policy and regulatory certainty are required to get projects off the ground.
Again this has remained a challenge for governments in a variety of jurisdictions – a challenge compounded by the economic conditions I just mentioned.
I know that these are challenges you are very much aware of.
I do not believe they are insurmountable, and indeed the eight operational projects show this to be true.
I simply say that by taking into account the impacts of these overarching factors we are able to better evaluate the status of CCS globally and better plan its future.
Developing new technologies or new applications for existing technologies is never linear. Learning from the setbacks is just as important as building on the successes.
Because demonstration projects, be they in solar, geothermal, in CCS or whatever, are about finding out what doesn't work as well as what does.
Ceasing a demonstration project as soon as it is apparent that it cannot achieve what was hoped is not a symptom of failure, but of rigorous project management.
The really important thing is that information gathered during execution and learnings from the project are shared with all those interested in advancing the technology.
Addressing key risks before moving through the significant stages of project development is a good thing.
These are things the critics of CCS, and of other new technologies for that matter, often overlook.
CCS in Australia
Whereas we, committed as we are to finding real solutions to the challenge of reducing carbon emissions, embrace the process of learning by doing and sharing.
In a situation where global demand for coal may rise by more than half over the next 20 years the work we are doing now is critical.
The Australian Government recognises the potential of CCS when it comes to reducing our greenhouse gas emissions.
At the moment, about 70 per cent of Australia’s electricity generation comes from coal, with little carbon abatement of any kind.
Clearly, any strategy to deliver on our climate-change objectives requires changing the way we use coal.
By 2050, Australian Treasury modelling suggests coal and gas with CCS technology could give Australia about 30 per cent of our power generation.
And as well as maintaining energy security for ourselves, Australia has a responsibility to help others lift their standard of living.
To achieve both objectives, and to do so in a sustainable way, we are continuing to support the development and deployment of CCS in the same way that we support other emerging clean and renewable energy technologies.
Our approach is two-fold.
Firstly, we have we brought together:
- $2 billion in funding for CCS initiatives
- The most comprehensive CCS regulatory framework in the world
- The world’s first CO2 storage acreage for competitive exploration bids
- Support for ground-breaking projects including the Callide oxyfuel conversion project in Queensland
- And, of course, the Global CCS Institute to spread expertise far and wide.
This year we selected the first project to progress under our $1.7 billion CCS Flagships program - a program that will make a significant contribution to the G8 goal of at least 20 large-scale integrated CCS projects globally by the end of the decade.
The Government has committed $52 million to the first stage of the Collie South West Hub project, which will initially focus on proving up sufficient geological storage.
This project aims to store up to 2.4 mega-tonnes of CO2 a year from local industry, including coal-fired power plants.
The Flagships program is just part of the practical support for CCS in Australia.
The Australian Government will invest $60 million to implement a National CO2 Infrastructure Plan.
Among its features, the plan includes an assessment of potential CO2 storage corridors.
There’s also a drilling rig deployment strategy to maximise the cost efficiency of drilling rigs for CO2 exploration.
Geoscience Australia will be heavily involved in that part of the plan.
All this, in turn, will help to trim the financial bill for the uptake of CCS and thereby promote investor confidence.
Which brings me to the second part of our approach - creating an environment that will drive further commercial interest in CCS technology.
We are committed to a market-based approach to transform Australia's energy sector.
That's because we believe that it is the market that can deliver sustainable, long-term change at least cost.
That's what a carbon price will do.
Carbon pricing will give industry more confidence to invest in CCS.
It will help level the playing field.
Innovation will help to drive down capital and operating costs.
In short, carbon pricing is a substantial, timely and stable support mechanism for CCS.
Recent developments
It will help investors to capitalise on what we see happening in research and development.
For example, the Cooperative Research Centre for Greenhouse Gas Technologies has developed the world’s first single well test to evaluate CO2 storage security.
This technology has worldwide implications.
Industry can now judge how much CO2 can be stored in a particular place, and how cost effective it is to do so.
Investors can also be reassured that Australia has a comprehensive framework for the commercial deployment of CCS.
As part of that framework, our National Carbon Capture and Storage Council has a busy agenda.
Among its tasks, I want to see progress on CCS Flagships projects alongside the release of tenements to verify the suitability of proposed storage sites.
We also need approved corridors for CCS pipeline networks as well as completed CCS legislation at a state level.
The Council’s agenda also covers the oil and gas sectors.
After all, Australia will soon have the world’s biggest commercial CCS project.
The Gorgon LNG project will inject 120 million tonnes of CO2.
I would like to conclude today with a few remarks about community engagement.
As the role of CCS expands community engagement will be as valuable to a CCS business plan as any other aspect.
At every opportunity, the Australian Government urges industry to bring the community into its planning.
A shift in people’s values has made securing a social licence to operate more complex and less certain, meaning that effective engagement is imperative.
Many communities will not be won over by short-term benefits alone.
Instead, they are looking at broader, long-term implications.
The value of seeking community acceptance is not unique to Australia, and the Global CCS Institute understands its importance.
That’s why it’s been working with the CSIRO and other partners on a communications tool kit.
The Collie South West Hub project I mentioned earlier is a good case study.
A community consultation workshop gave Collie Hub a deeper understanding of local perceptions and attitudes to CCS development.
From this, a more refined strategy of providing fact-based information grew up around the project, one that reduced the risk of planning refusal.
In every facet of this emerging industry, the Australian Government prides itself on being a leader in CCS.
All this activity, from carbon pricing to community engagement, shows the fundamentals are there for industry to play its part in developing – and deploying – CCS in Australia.
Conclusion
Ladies and gentlemen, carbon capture and storage has the potential to be world-changing technology.
Success requires problem-solving and innovation on a global scale.
The Global CCS Institute is adding greater cohesion to this valuable work.
I wish you a very successful few days here together.
Thank you