The failed Gorgon carbon capture and storage (CCS) project could be spared more than $100 million in costs after the Morrison government intervened to change the rules around Australian Carbon Credit Units, lowering the bill its fossil fuel company owners are facing, a new report reveals.
The report by the Institute for Energy Economics and Financial Analysis describes the extent of the failure of the Gorgon carbon capture and storage project to make good on its proponents’ claims that it would capture and store 40% of the greenhouse gases produced during extraction of gas from the Gorgon field (the storage would have no impact on the production of greenhouse emissions produced when that gas was used by customers).
As the biggest carbon capture and storage project in the world, the Gorgon facility at Barrow Island was supposed to lead the way in demonstrating the viability of the technology. Instead, it has demonstrated how even the simplest and most straightforward applications of the technology, using existing processes, has failed.
In recognition of its failure, Chevron, which owns nearly half of Gorgon, with Shell and Exxon as smaller shareholders, agreed with the Western Australian government to buy genuine greenhouse gas offsets to the extent of its shortfall in megatonnes of CO2. It has until July to complete this acquisition.
Earlier this year, Chevron faced a bill of nearly $300 million to purchase the necessary 5.23 million tonnes’ worth of offsets if it used Australian Carbon Credit Units, which reached a price of $57 a tonne in January.
Enter the Morrison government. On 4 March, the Clean Energy Regulator (CER), the now-discredited body revealed by whistleblower Andrew Macintosh to be approving worthless emissions reduction projects, changed the rules. The CER, which is controlled by Energy Minister Angus Taylor, in effect unlocked vast numbers of permits to be traded on the open market (despite being tradable, ACCUs are not a carbon price, because the cost of creating them is borne by taxpayers, rather than industry, when they are handed out for emission reduction projects).
The effect was immediate: the price of ACCUs plummeted virtually overnight to just $30 a tonne — potentially saving Chevron around $140 million in permit acquisition costs. Currently the spot price for ACCUs is $29.
Chevron is a major donor to the Coalition. Since 2010 it has handed more than $1 million to Liberal Party branches, along with $280,000 to Labor branches. Gorgon has also received $60 million in taxpayer subsidies for the failed CCS system.
Between when the first gas was shipped from Barrow Island in 2016 and 2020, Chevron has made $37.6 billion in revenue, officially made $1.6 billion in profit, and has paid zero company tax and zero petroleum resource rent tax.
On Sunday, Morrison announced another $130 million in handouts to fossil fuel companies for CCS projects in the Northern Territory, guaranteeing that Australian taxpayers will continue to subsidise fossil fuel companies to sell our resources at colossal profit and massive environmental damage without paying any tax of any kind.
It’s called state capture.
Thanks BK. It can’t be stressed enough that the Gorgon CCS project has nothing to do with the actual methane being mined – which is sent off to consumers around the world to be burnt to create CO2.
It’s just about capturing part (40% I think) of the CO2 already in the extracted gas – a useless impurity which is otherwise released to the atmosphere.
Yet this much-hyped biggest CCS project in the world didn’t get anywhere near achieving that pathetic aim!
State capture +++
Not to mention vast amounts of gas that are burnt to covert to gas to LNG (look it up, the largest use of gas in Australia is for that purpose),
Then there is leakage (often 3%, though I hear in the fracking fields of New Mexico it is 9%) which is 87 times worse per unit than CO2 (though it breaks down in 10 to 20 years),
Finally there is the destination industrial/ residential usage.
I saw an RE article about a year ago that claimed up to that point the CO2 removed by the Barrow Island facility was only about 3% of the final CO2 emitted.
LNP relationships to, with International corporates. Potentially, a Morrison future?
Governance on behalf of Nation and citizens, hoisted upon our own petard. For we solely, responsible for whom we elect!
This CCS project has not been just “a miserable failure”, it has been a predictable failure. In other CCS projects around the world, the contracts routinely say “up to 100% of emissions”. That is, they are planned to fail, achieving only a pretence to vanish the emissions. If they were confident that CCS was possible, the contracts should require vanishing 200%, that is 100% of the current emissions plus 100% of previous emissions. After all, it would be more important to pull CO2 out of the atmosphere than to make excuses for increasing it.
On ‘state capture’, here is a description of the coalition?
‘has become … ideologically extreme; contemptuous of the inherited social and economic policy regime; scornful of compromise; unpersuaded by conventional understanding of facts, evidence, and science; and dismissive of the legitimacy of its political opposition’
(Skocpol & Hertel-Fernandez, September 2016, American Political Science Association, Vol. 14/No. 3, ‘The Koch Network and Republican Party Extremism’).
Not the coalition but the GOP, and could be the UK Tories too; same modus operandi across the Anglosphere supported by nativist libertarian think tanks and media architecture to support fossil fuels, low regulation, low taxes and ‘owned’ governments (at least busy distracting ageing electorates by dog whistling sociocultural non-substantive ‘wedge’ issues).
Well put
Thanks Bernard, that was pretty brave, this contrived pretend science of stuffing the co2 back into where it came from clearly doesn’t work and is only possible because media is allowed to lie as it is part of the system and funding that elects corrupt governments in the US and here.
They’re big and bad and more powerful than anything else going around, it is amazingly brazen.