King Review looks to CCS, beefed up Safeguard Mechanism

THE federal government’s expert panel has released its review on the A$2 billion Climate Solutions policy, recommending a broadening of the government’s current policy scope to make a meaningful dent in Australia’s carbon emissions.
King Review looks to CCS, beefed up Safeguard Mechanism King Review looks to CCS, beefed up Safeguard Mechanism King Review looks to CCS, beefed up Safeguard Mechanism King Review looks to CCS, beefed up Safeguard Mechanism King Review looks to CCS, beefed up Safeguard Mechanism

Focuses on bringing down industrial emissions

Mark Tilly


The expert panel, headed by former Origin Energy boss Grant King, was quietly appointed by energy and emissions reduction minister Angus Taylor last year to find low-cost solutions to the government's emissions policies which have so far failed to deliver a meaningful reduction in CO2.

The latest review by the government's Climate Change Authority said Australia is not on track to meet its 26%-28% emissions reduction target by 2030, agreed to in the Paris agreement, but Taylor said the recommendations will help the government beat that target. 

"Our 2030 Paris target is a floor not a ceiling. These reforms will position Australia to overachieve on our 2030 Paris target while maintaining a strong economy," he said in a statement today. 

The government has adopted 21 of the 26 recommendations. 

One of the key recommendations of the review is to expand the remit of the Australian Renewable Energy Agency and the government backed green-bank, The Clean Energy Finance Corporation, to back "technological neutral" projects. 

The review panel said this "goal-oriented technology co investment program" would aim to bring down the cost of technologies in sectors with hard-to-abate- emissions levels, such as heavy industry, freight transport and aviation. 

This would include technology such as carbon capture and storage projects and hydrogen derived from fossil fuels. 

The government has agreed to this recommendation in principle. 

Wood Mackenzie research director Prakash Sharma told Energy News the world needed to learn how to efficiently remove carbon from the air and monetise it, if Paris targets are to be hit.  

"Australia is the best place to experiment the technology, scale up and commercialise it," he said. 

The review said there was a critical gap in Australia's support of CCS projects, noting there has been much research and development on the technology, but it never translated to commercial deployment at a scale needed to bring down emissions. 

The co-investment program would pay for larger polluters to adopt high abatement potential technologies. 

It suggests running targeted funding rounds focussed on technologies such as electrification or hydrogen for industrial process heating. 

The government will also implement the panel's recommendation to support investment that reduce emissions through a below-baseline crediting mechanism for large scale emitters covered under the Safeguard Mechanism.

The Mechanism, in its current form, is designed to ensure there is a cap on how much large polluters are allowed to emit, but it was not designed to reduce or place a cap on emissions in absolute terms. 

For some time Santos chief Kevin Gallagher has been calling for more incentives to develop CCS technology, such as a carbon price, and money to be earmarked for CCS work much the way it has for renewables. 

Gallagher today welcomed the review. 

"This has been a comprehensive and thorough process and shows that emissions reduction and job-creating resource development can work hand-in-hand," he said.

Santos has been progressing its Moomba CCS plan, which BP will join contingent on a positive final investment decision, and suggests it will be able to inject 1.7 million tonnes of CO2 per annum into old reservoirs in its home territory of the Cooper Basin.

BP's possible A$20 million investment will go towards the good standing arrangement it made with Canberra late last year to spend funds first earmarked for its Great Australian Bight work program elsewhere. 

The company pulled out of the Bight some years ago. 

"We estimate the cost of this abatement at less than A$30 per tonne and our aim is to drive these costs lower with scale and experience," Gallager said, though underlined again government support would be crucial. 

"Just as private investment in renewable energy deployment was accelerated through public policy and funding over the last two decades, we now need to focus on accelerating CCS in similar ways." 

He was joined by industry lobby body the Australian Petroleum Production and Exploration Association, which was also happy to see more of a technology-neutral approach given such moves usually encompass fossil fuels. 

"APPEA welcomes these recommendations to deliver greater abatement opportunities for the country. Importantly the report underlines the key role the oil and gas industry can play in cutting emissions," CEO Andrew McConville said who noted enhanced oil recovery techniques could also play a part alongside CCS. 

The review suggests the mechanism would provide credits to facilities who reduce their emissions below Safeguard baselines by undertaking ‘transformative' abatement projects. 

Prakash said while a direct carbon price would be most effective, emerging technologies still need investments in pilot projects to understand the scope and drive down costs.

"That's where broadening the remit of Climate Solutions Fund makes sense and is a step in the right direction," he said. 

The recommendation appears to be partly in line with the Climate Change Authority, which called for the Safeguard Mechanism to be enhanced to include a declining baseline to reduce industrial emissions across Scope 1 and 2. 

The King Review's versions are supported by business stakeholders including the Australian Aluminium Council and the APPEA, in their submissions during the review. 

"Providing credits for actions to reduce emissions could be an important way to "unlock" a wide range of abatement programs that are not well recognised under the existing policy framework or to improve the incentives and to investigate and potentially implement further abatement actions," APPEA said in its submission. 

The Clean Energy Council told Energy News the review had a range of "sensible" measures, welcoming the plan to create a carbon exchange rate for Large-scale Generation Certificates awarded under the renewable energy target. 

"This recognises the enormous potential and least cost nature of renewable energy to assist emissions reductions in other sectors of the economy," Clean Energy Council chief executive Kane Thornton said. 

However he rejected the idea that taxpayer money should go toward CCS projects, noting the billions which have been spent by private companies on the tech, yet it remains "difficult, complex and costly" to deploy. 

The review is expected to inform the government's Technology Investment Roadmap, which is set to be released "soon", according to Taylor, for public consultation. 


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