Greens kill ARENA funding for CCS and blue hydrogen

LABOR has sided with the Australian Greens and killed the Morrison government’s efforts to bolster low-carbon investment in the oil and gas sector, via its favoured methods of carbon capture and storage and blue hydrogen development.
Greens kill ARENA funding for CCS and blue hydrogen Greens kill ARENA funding for CCS and blue hydrogen Greens kill ARENA funding for CCS and blue hydrogen Greens kill ARENA funding for CCS and blue hydrogen Greens kill ARENA funding for CCS and blue hydrogen

Energy and emission reduction minister Angus Taylor.

Paul Hunt and Mark Tilly

Last night Greens leader Adam Bandt declared a victory in the Australian Senate, passing a motion with a margin of just one vote.

The move has been dubbed as "short-sighted" by the peak body, the Australian Petroleum Production Exploration Association. 

Bandt actually sits in the Lower House, but used one of his senators to put the motion before the Senate. 

The motion blocked the federal government funds from the Australian Renewable Energy Agency (ARENA) being allocated to coal and gas companies to pursue carbon capture storage and low carbon emissions technology. 

Coal companies spent a good part, and much government money, the previous decade pursuing CCS, with little to show.

The Morrison government had planned to continue funding for the ARENA on the provision it provided investment for oil and gas companies and coal bodies to develop CCS and blue hydrogen projects. 

It was intended to move government funding from large-scale solar and wind to other areas which had received less attention and financing, such as hydrogen, CCS, and microgrids. It would also have funded energy efficiency projects. 

However, last night, the Greens argued that the provision would breach the Australian Renewable Energy Act, and were even gearing up for a legal battle with environmentalist groups. 

The Greens' motion was supported by the Labor Party and independent Senators. 

APPEA chief Andrew McConville said the voting down of the expansion of ARENA to include a broader range of emissions reduction technologies is a missed opportunity and a blow for a cleaner energy future. 

"All technology, including hydrogen and carbon capture and storage (CCS), should be on the table to help reduce emissions, so this is clearly a missed opportunity and pretty shortsighted," McConville said.  

"The global oil and gas industry is leading the world in the practical deployment of CCS and hydrogen. In Australia, the oil and gas industry has been at the leading edge of researching and deploying CCS and greenhouse gas storage technologies. 

"Natural gas with CCS is a pathway to a large-scale clean hydrogen industry." 

The Morrison government had announced the change to ARENA's funding mandate last year and was attacked for not consulting the Labor opposition over the changes. 

Labor energy spokesperson Chris Bowen said the changes were part of a long-running history of the Liberal's attempting to water-down ARENA's mandate, or to kill it off completely.

"The LNP keeps attacking ARENA and the CEFC and Labor will continue to defend them," he tweeted. 

Energy and emissions reduction minister Angus Taylor blasted Labor for siding with the Greens, describing the move as "economically reckless" that would kill off jobs and investment. 

"The funding included support for electric vehicle charging infrastructure and microgrid infrastructure to make energy affordable and reliable in regional and remote Australia," he said. 

"The loss of this funding will cost up to 1400 new jobs in emerging industries and would have supported industries like mining, agriculture, transport, manufacturing and electricity, which employ over 2.2 million Australians."

Emerging energy sources such as blue hydrogen - produced from gas with either an  emissions offset or the resulting carbon sequestered- is seen by Canberra, independent experts, and the oil and gas industry as an opportunity to accelerate the energy transition while other technologies such as electrolysers catch up. 

The International Energy Agency reports that the cost of electricity is the single most significant cost in electrolyser-based  hydrogen production, which uses water as feedstock and with zero emissions is known as ‘green' hydrogen. 

Both the IEA, Australia's oil and gas industry and Canberra see CCS, with its symbiotic skill set, as critical to decarbonisation. Much of last week's APPEA conference focussed on this, but for it to be economic one thing is needed: a carbon price. 

Previously this was something Australia's oil and gas industry railed against, but it is now central to ensuring projects like Santos' Moomba CCS project in the Cooper Basin can get up and running. 

CEO Kevin Gallagher called for a mechanism so his company will be eligible for Australian Carbon Credit Units, but never suggested he needed ARENA funding during his keynote speech last week as APPEA chair. 

However, with the Greens' motion now pased, both CCS technology and blue hydrogen won't receive ARENA funding, though there are other government funding mechanisms available. 

Last Monday ARENA announced funding to Rio Tinto to trial replacing  gas at its aluminium refinery in Queensland with ‘clean' hydrogen. 

"If we can replace fossil fuels with clean hydrogen in the refining process for alumina, this will reduce emissions in the energy and emissions intensive refining stage of the aluminium supply chain. Exploring these new clean energy technologies and methods is a crucial step towards producing green aluminium," ARENA CEO Darren Miller said then. 

APPEA called the vote a missed opportunity, saying all technologies, such as CCS and blue hydrogen should be on the table to help reduce emissions. 

"Some politicians need to remember that just as government investment in renewables has fast tracked projects, this would have done the same and created thousands of jobs in the process," CEO Andrew McConville said. 

However the Smart Energy Council welcomed the move. 

"This is a significant win for Australia's renewables industry and a big loss for Angus Taylor," the organisation said. 

"Australians want their renewable energy agencies to support renewable energy projects."

Clean Energy Council CEO Kane Thornton told Energy News it would be inappropriate to "water down" the ARENA's investment mandate by redirecting its focus to new non-renewable technologies such as gas and CCS. 

"These solutions are higher emissions and more expensive, exposing Australia's taxpayers to higher costs and unacceptable risk at a time when an unequivocal message is being sent around the world to back away from publicly-funded fossil fuel projects," he said. 

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