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Introduction
Good morning and can I say what a pleasure it is to be back here in the Latrobe Valley – an area of vital economic importance to my home state of Victoria and an important part of our national energy sector.
The Latrobe Valley is well known for its extensive brown coal resources, with estimates of over 500 years of easily accessible coal at current consumption rates.
When Henry Godridge first discovered coal in the Latrobe Valley in 1874, while looking for gold, he may have been disappointed.
However, the extensive brown coal seams would go on to become a vital resource providing low cost power to both the Victorian community and industry.
Yet with the growing concern regarding climate change, and the need to reduce our carbon emissions, some may again question the value of this resource.
However I, as the Minister for Resources and Energy, do not doubt its value.
I hope today's announcement takes us one step further to not only shoring up the value of Victoria’s brown coal resource, but perhaps more importantly helping to secure the economic future of the Latrobe Valley.
With that in mind it is with great pleasure, therefore, that I am here with Minister O’Brien to announce the Australian Government's investment to develop Victoria's first carbon capture and storage (CCS) project – CarbonNet.
CarbonNet is the second project selected under the Australian Government's Carbon Capture and Storage Flagships Program – a program designed to lead to the storage of tens of millions of tonnes of CO2.
The commitment that Minister O'Brien and I stand here and make is to an initial $100 million dollars towards the $1 billion plus CarbonNet project to demonstrate low emission brown coal electricity generation.
And importantly, the potential for significant employment opportunities for the Latrobe Valley.
This first stage of funding will support pre-feasibility studies to investigate the potential sites for the various components of the project.
A future for the Latrobe Valley
The CarbonNet project will capture emissions from power plants, industrial processes and coal-based industries – up to three million tonnes a year initially.
Indeed, the location of the project we’re announcing today is hard to beat.
The Latrobe Valley has vast reserves of brown coal; is a large electricity generation hub; and is near a world-class CO2 storage area in the Gippsland Basin.
In short, CarbonNet fits the bill.
The Commonwealth’s investment of $70 million will support feasibility studies and surveys in preparation for the next phase of the project.
This will involve extensive testing to make sure that the technology is effective and any chosen site for storage is safe.
The community will be engaged throughout the project’s development.
My presence, alongside Minister O’Brien, illustrates the close co-operation between all levels of Government to support the Latrobe Valley’s economic development.
The successful development of this project has the potential to underpin major resource development and infrastructure projects here in the Valley.
That, in turn, will retain jobs and a viable skills base.
Of all the legacies for the next generation of Victorians, a brand new industry – where skilled workers add real value to their local economy – is a very special one to leave.
The value of CCS Flagships
Australia’s abundant fossil fuel resources – and particularly our coal resources – have underpinned low cost electricity for decades and supported the economic development and wealth creation that we have enjoyed for generations.
Economic activity and wealth that stand us in good stead today when much of the developed world is facing a fairly bleak economic outlook.
That is why the Australian Government continues to play a leadership role in supporting a range of technological solutions to reduce greenhouse gas emissions.
CCS not only provides us with a tangible opportunity to remove significant quantities of carbon dioxide from coal-fired power but also a pathway for the continued sustainable utilisation of our abundant reserves of coal, conventional gas and coal seam gas.
Around 75 per cent of Australia’s electricity is generated from coal, and fossil fuels play a significant role in the global energy mix.
Accordingly, the International Energy Agency, has highlighted the importance of CCS if the world is to make the emissions reductions necessary by 2050 to mitigate climate change.
We should acknowledge that reaching Australia’s climate-change targets may in fact hinge on what happens here.
CCS is precisely the kind of innovation in clean energy that carbon pricing is designed to bring forward.
The Australian Government's $1.68 billion CCS Flagships program is supporting the development and demonstration of these technologies.
CCS technology is, in fact, not a new technology. It does, however, involve demonstrating the integration of proven technologies that have been used for decades in the chemical and petroleum industries.
The challenge today is applying the technology cost-effectively and at scale to power generation and industrial processes.
This is a challenge the program is designed to help overcome.
Today’s announcement builds on significant work on CCS in recent years.
This includes last year’s announcement of the Collie South-West Hub in Western Australia as the first Flagship project.
Recent years have also seen the establishment of a nationally coordinated research and development effort on CCS, work on storage exploration as well as the establishment of legislative frameworks around storage.
These are significant achievements in the advancement of CCS in Australia.
They are achievements we can all be proud of.
Related developments
There are two other matters relevant to the Valley that I would also like to address today.
Firstly, accompanying this project we are awarding an offshore tenement in the Gippsland Basin to the Victorian Government for CO2 storage exploration activities.
This tenement comes with a range of conditions, including the need to ensure there is no interference with the rights of other users of the sea.
This is Australia’s first such tenement under the Commonwealth CCS legislation for greenhouse gas exploration and storage.
The second is that the Government is granting a six-month extension to the HRL Dual Gas project.
As you know, Commonwealth funding for this integrated drying and gasification project is tied to conditions.
So far, not all of those conditions have been met but the extension is needed because the current Victorian Civil and Administrative Tribunal proceedings must be allowed to run their course.
However, the Commonwealth has made clear to HRL that this is their last and final extension.
Despite political pressure from the Greens and others, the Australian Government has treated the HRL grant with the same measure of good faith that we’ve shown to other challenging clean energy technologies – including the Low Emissions Technology Demonstration Fund grant to Solar Systems.
The Government is absolutely committed to a technology neutral approach and proper administration of grant programs in accordance with due process.
We want to see clean energy deployed cost-effectively and at scale. We will not be picking winners when it comes to the technologies that can deliver on this objective, and nor will the administration of grant programs be influenced by lobbying.
Rather we will continue to administer merit based programs on the basis of expert advice, and in doing so we will back a range of clean energy technologies with the intention that over time the market will support those technologies that stack up commercially.
Conclusion
Ladies and gentlemen, today’s announcement is important for this region – and could play an important role in testing the development of CCS technologies, which is of global importance as we seek to reduce greenhouse gas emissions.
Thank you.