In August 2008, two separate reports were issued by two Commonwealth Parliament's House of Representatives Standing Committees that go to answering the question whether Australia is ready for geosequestration.
Geosequestration of carbon dioxide has for some time been recognised as a possible opportunity to significantly reduce Australia's level of greenhouse gas emissions that are largely generated from coal-fired electricity power stations. Policy and regulatory interest in geosequestration was enlivened by the recent amendment to the Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter (1972) to allow storage of greenhouse gases in suitable seabed structures. The effect of this amendment is that countries can now implement regulatory arrangements facilitating geosequestration offshore.
At present, the Queensland Petroleum and Gas (Protection and Safety) Act 2004 and the South Australian Petroleum Act 2000 regulate the transport and storage of substances including carbon dioxide in natural reservoirs. Whilst the Commonwealth Government has laws that regulate some aspects of geosequestration activities, there are no specific laws regulating sequestration or monitoring at either the Commonwealth or State Government level. In May 2007, the Commonwealth Government
committed to a process of amending the Offshore Petroleum Act 2006 (Cth) to facilitate offshore geosequestration and encourage the States to introduce mirror legislation.
The two reports are:
- Between a rock and a hard place – the science of geosequestration prepared by the Standing Committee on Science and Innovation (the Science of Geosequestration report), and
- Down Under: Greenhouse Gas Storage – the review of the draft Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill which was introduced in the Commonwealth Parliament on 18 June 2008 (the Offshore Petroleum Bill report).
It is convenient to first turn to the challenges associated with the science of geosequestration before turning to legal issues arising under the proposed amendments of the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill.
The Science of Geosequestration report
It is expected that Australia and many other countries will continue to rely on coal-fired electricity power stations well into the future. Many of these power stations are expected to operate for up to 40 years. Geosequestration can be broadly divided into three areas:
- gas separation and capture at the source
- transportation of gas to the storage site, and
- long-term storage in either an underground geological formation or a depleted oil or gas field.
There are relatively few geological formations in Australia that are suitable for geosequestration – by comparison, deep saline aquifers offshore have been estimated to represent 94% of Australia's feasible geosequestration capacity.
For gas separation and capture, again there are three possible areas:
- post-combustion, where carbon dioxide is separated from other flue gases through a chemical process
- oxyfuel combustion, where coal is burned in pure oxygen rather than air with the flue gas producing a high concentration of carbon dioxide, and
- pre-combustion, where carbon dioxide is removed from processed coal before combustion in a power station.
There are 6 major demonstration plants in Australia seeking to test science aspects of the above gas separation and capture areas. The Science of Geosequestration report recommended that each of the above three areas need to be pursued in an effort to make geosequestration achievable at commercial levels for coal-fired power stations that are typically around 600MW in capacity.
The Offshore Petroleum Bill report
The reliance on the Commonwealth's powers under the Offshore Petroleum Act 2006 to regulate geosequestration activities may not be settled. This is because:
- the Victorian and West Australian Governments have expressed reservations regarding the level of transfer of administrative authority to the Commonwealth Government under the Act
- petroleum companies are concerned that the Act does not provide for a mechanism to define the relationship between petroleum activities and geosequestration activities, with some petroleum companies making submissions that any grant of geosequestration rights may jeopardise the operational safety or decision to invest in developing a nearby petroleum field, and
- environmental non-government organisations assert that the lack of public accountability and transparency provisions in the Act runs contrary to the high level of public concern on the environmental implications and risks associated with geosequestration activities.
Even if the Commonwealth petroleum regulatory framework is used, a key regulatory aspect that remains to be fully understood is the allocation of liability for storage of greenhouse gas emissions.
The recommendation for this long-term liability allocation was structured as follows:
- site closure, where the geosequestration operator applies for a site closure certificate when the geological structure has reached its capacity
- post-injection period, where the regulator receives and reviews information provided by the geosequestration operator before making a decision to grant the site closure certificate, and
- post-closure monitoring and verification period, where the regulator gives notice to the geosequestration operator an estimate of costs and program of monitoring and verification works that the Commonwealth would carry out supported by a security of payment by the geosequestration operator.
Another important recommendation was that incumbent petroleum operators are proposed to be offered a one-off opportunity to incorporate a greenhouse gas assessment permit over their exploration or production licence with a condition that they must demonstrate utilisation of this permit within five years, or surrender it.
Recommendations
Each of the two reports (as referred to above) support ongoing policy and regulatory development for geosequestration. Both reports highlight that Australia has an important role in developing the science and internationally consistent regulatory frameworks for geosequestration in light of Australia's greenhouse gas emissions profile being largely generated by coal-fired power stations and Australia's high level of coal exports. The Science of Geosequestration report made five recommendations. The Offshore Petroleum Bill report made 14 recommendations. It follows that there is still much more work to be done before Australia is ready for geosequestration.
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