ACF supports big emissions reductions from coal. We can do this by burning less coal, or by developing and installing new technologies that make it less dirty to burn. We may have to do both. Whatever we do, we need to do it pronto. Geosequestration or carbon capture and storage (CCS) is the sort of topic that raises lots of questions. Here are a few.
Will CCS ever work?
ACF hasn’t ruled out the possibility that CCS could work. But it is up to the coal industry to prove that it works and that it’s safe. There’s the possibility of leakage at each step in the process. There might be some CO2 that escapes between combustion and capture, then leaky pipelines or perhaps a dodgy cap at the storage site. Commonsense and experience tell us to be cautious. We all know how hard it is to keep a fart under the doona. We know wind turbines work. And they don’t smell.
When will it work?
In the crucial period to 2020 Australia needs to cut emissions by at least 30% from 1990 levels. We may need to make even bigger cuts in the context of a global arrangement. Earlier this year, economists McKinsey & Co found a 30% cut by 2020 is affordable and achievable for Australia — without using CCS. In the next decade, the big gains and opportunities will come from improved energy efficiency and renewable energy. That’s where Australians should be focusing our efforts.
Power plant operator HRL recently announced plans to build a medium scale coal-fired power station that is “CCS-ready”. HRL says its “CCS-ready” plant will be running in 2012 or maybe 2013, with the help of $150 million of taxpayer funds. The company hasn’t set a date for fitting CCS to the plant. In the urgent context of climate action, CCS-ready isn’t good enough. I know a lot of people who are “ready” to quit smoking. Who knows when they actually will?
How much will it cost?
Big bikkies. It’s likely a carbon price of at least $40 a tonne will be needed to make CCS feasible — at the cheapest and easiest sites. Then there’s the question of who will bear the cost of insuring against the risk of failure? Oh, that’s easy. The good people of Australia will. Despite years of record profits the companies don’t want to front up with the cash and insurance companies are too busy to work out the premium. Too busy with all those droughts, floods and storms…
Who should pay?
Big polluters should pay the cost of cleaning up their act. They’ve had decades to prepare. Some have prepared well – and should not be penalised. Fortunately, coal companies have built up a huge kitty for the job at hand. If they’re really concerned about the future of their workers and their industry, they should invest in CCS big time. That means a big ramp-up of the $100 million/year “Coal21” fund. A coal levy of $2/tonne of coal would be a good start, and bearable — prices just hit $300/tonne.
Public funds should be directed towards sunrise industries that are currently outmuscled, but will flourish with the right assistance. I’m talking about fledgling renewable industries like geothermal and solar thermal and job-friendly industries that will help us use energy more efficiently, through insulation and sustainable building design.
How do we make them pay?
A strong driver is needed to encourage the coal sector to make a serious investment in CCS. Emissions trading alone may not be enough in Australia, particularly if we try to keep the permit cost artificially low — by imposing a weak cap. And if we give coal power stations free permits they will definitely delay action to cut their emissions. In the UK, conservative opposition leader David Cameron supports a ban on any new coal power stations — unless they are fitted with CCS technology. Makes sense.
What about the ethics?
Carbon waste has something in common with nuclear waste. We’ll be leaving future generations to look after our carbon dumps for eternity. Not my idea of an endowment.
What if we think it works but it actually doesn’t?
We’d have wasted a lot of time and effort — particularly if we’d sidelined or downplayed our efforts in areas we know do work. And as Professor Garnaut has made painfully clear, we have precious little time up our sleeves.
Internationally recognised soil scientists estimate the capacity of Australia’s 427 million hectares of grazing land to sequester carbon dioxide out of the atmosphere to be in the order of 900 MILLION tonnes per annum.
Soil Carbon sequestration is available, proven, and viable at a carbon price much lower than $40 per tonne.
see http://www.soilcarbon.com.au/case_studies/pdf/08TL_SCCPPP_En.pdf for more information.
There is something decidedly archaic about all this talk of handing out huge grant-based subsidies, to coal power utilities, renewable energy start-ups and God-knows-who-else. Talk of compensation is even more antediluvian – to actually allocate government funds to finance private sector losses with no hope of recovery is madness, especially if they are in sunset industries that are inevitably going to have to go anyway.
Whatever happened to the notion of incentive-based lending? Why not allow energy providers, present or potential, to compete for loan funds – perhaps at slightly better-than-market interest rates, and with perhaps a five year no-premiums interregnum? Wouldn’t that leverage the available Government funds much more effectively? Wouldn’t it filter out the innovation tourists, willing to scoop up a pile of Government funds just to give something a go (in all likelihood in a profligate way, given that it will be free money they are using under a subsidy scheme ) and then walk away at some point in the (very likely) event that it failed? Wouldn’t it cause the rent-seekers (think of the less well-located and efficient coal power facilities which have no hope of delivering a solution any time soon) to think very carefully about signing themselves up for funds they would actually have to pay back in some period less than a geological age? Wouldn’t it attract some of the indirect solutions, such as the soil carbon solution commented on above, or avoided deforestation in tropical rainforests, into the mix? They are, after all, at the present time probably the really low hanging fruit (or maybe just after first-round domestic and industrial energy efficiency measures) in terms of producing net emissions reductions most effectively and efficiently, so why leave them out now, of all times?
An emissions trading system, properly administered, will give the competitors to coal the price margin they need to compete – or at least, all the price margin they should need, so start-up capital looks like the only impediment to their doing so, if they are a serious prospect. Availability of funds to invest in something like sequestration of coal emissions should be all the coal power utilities require to get on with this, if they really think they can do it: although frankly, Freeman’s suggestion of a fairly small levy – preferably levied by the industry itself – on the coal miners (who, after all, will be major beneficiaries of a successful sequestration technology, in both the domestic and export markets) will probably look like a better option for the real players in this sequestration initiative, when they think about it, if having to borrow the funds needed is the only alternative, even at fairly attractive rates. If so, that would produce an even better result for the poor old taxpayers who otherwise are going to be financing all this randomized largesse to the vested and sectional interest groups now battering on the Government’s vault doors.
Government has a responsibility, in introducing a serious emission trading scheme – or a carbon tax – to provide some form of adjustment assistance to ensure that the most efficient adaptation to the new price environment happens. This does not translate into shovelling funds down the throats of those who scream loudest; it means making available the amount of funds needed to generate the energy and emission results needed, al least cost to the taxpayer.
More than anything, thanks for the fart/doona analogy. That’s going to come up at a few dinner parties.