Waiting that long means giving up on deep cuts by 2020, because, as Origin Energy’s Grant King has explained, all the investment decisions that determine our emissions outcome this decade will be taken by 2013.
Whatever our diminishing federal cabinet comes up with next week, if it does not set a price on carbon soon it will put Australia further behind. In the past fortnight we have been overtaken by New Zealand (a limited ETS with carbon priced at $NZ12.50 a tonne) and India (coal levy, as a prelude to a carbon tax, set at 50 rupees a tonne, to fund clean energy projects).
Our major trading partners, the US and China, are the ones to watch, of course. Perhaps they will announce that action on climate change is to be deferred until 2013, and then we can all get on with business as usual.
Unlikely. We are blinded by a coal rush. As the author Guy Pearse observed in his recent ”King Coal” essay for the magazine The Monthly, Australia will soon overtake Saudi Arabia as the world’s leading carbon exporter. Australia is betting that (a) the world will not switch from coal (but it will) and (b) carbon capture and storage will save us (but it will not, as I will argue next week).
AGL Energy’s managing director, Michael Fraser, hardly comes to this debate with clean hands (who does?) but he put the problem in stark terms in a speech yesterday: ”Do you think the community would accept 1000 oil wells, leaking at the same rate as BP’s Gulf of Mexico Deepwater Horizon well, every day into our oceans for the next 40 years? The answer is clearly a resounding ‘no’.
”Yet every single day we emit the equivalent greenhouse gases into the atmosphere of not 1000 BP Deepwater wells but over 9000.”
Australia, he warned, risked a ”Kodak moment” (in reference to the film giant all but killed off by the digital camera).
”Given the significant value from export dollars and employment, we cannot afford to wake up one day and find the world no longer wants to keep consuming our biggest export.”
We are firmly in the hands of a newly ascendant Energy and Resources Minister, Martin Ferguson – fresh-faced and back-slapped after surrendering up to $35 billion in future resource rent tax revenues to BHP, Rio Tinto and XStrata and friends in what were politely called ”negotiations” but which you and I would recognise as bending over.
Ferguson’s answer to Australia’s climate change challenge dilemma is simple: target Bob Brown. The minister said in Brisbane this week: ”I take the view Bob Brown is seeking to demonise the coal industry in the same way he has sought to demonise the forest industry.”
Ferguson is a coal guy. Among his most pressing concerns recently has been energy security. Australia’s oil production has already peaked and our trade deficit in the fuel is likely to reach $20 billion a year between 2015 and 2020.
Ferguson’s answer? Burn more coal, using you-beaut coal-to-liquids technology.
So we are now countenancing a $3.5 billion proposal, from Ambre Energy of Brisbane, to develop an open-cut coal mine and the country’s first coal-to-liquids petrochemical plant on about 2000 hectares of land at Felton, near Toowoomba, amid the fertile dryland cropping country of the Darling Downs.
Ambre is a private company, which may soon float, founded by Edek Choros in 2005. Choros made his fortune selling the coking coal exporter Millennium Coal to Excel Coal, later taken over by Peabody. Ambre has a 500 million tonne black coal resource that could be burned for power generation (as similar-quality coal is nearby) but has too much ash content for export. And Felton is too far from port and rail infrastructure to consider exporting the coal, anyway.
Ambre has spent about $70 million over the past three years working up its plan, now awaiting state environmental approval, to mine, crush, wash and gasify about 4 million tonnes of coal a year. Out the other end, if the plant is built, will come 940 million litres of petrol and 150 million litres of LPG – which represents about 4.9 per cent of the country’s annual consumption. To get a similar amount of fuel from sugar cane you would need 400,000 hectares of land, Ambre says.
The greenhouse implications? Enormous. Ambre says its plant would emit 4 million tonnes of carbon dioxide a year, and that does not count the emissions from burning the petrol, which would add another 2.2 million tonnes a year. In ballpark terms, that is 1 per cent of the country’s total current emissions for this one project.
About 3.5 million tonnes of pure CO2 is captured as part of the gasification process and, while the initial plan is to ”vent” it (you know where), Ambre aims to find storage sites in the nearby, prospective Surat Basin or – nirvana, triple whammy – use the trapped gas for enhanced oil recovery, targeting depleted oil fields in the Surat Basin.
The project has a positive internal rate of return at current oil prices of about $US70 a barrel and assuming a carbon price of about $20 a tonne. Ambre says there are other benefits – fewer dirty air pollutants like sulfur dioxides, and there is no chance of Gulf-like oil spills. ”CO2 gets all the press,” says Ambre’s spokesman, Michael van Baarle. ”The environmental movement is obsessed with the CO2 issue. I understand why that is, because it’s the latest issue.”
There is stiff local opposition – check out Friends of Felton online – and Brisbane’s The Courier-Mail has been following the story. The proposal has been staunchly opposed by the Nationals’ Barnaby Joyce, and the Greens’ leader Bob Brown went to Felton Hall this week and promised, if his party the balance of power in the next federal election, to stop the project.
He later told ABC radio: “It’s a very clear choice between unnecessary coal mining and petrochemical works, for which there are good alternatives – and absolutely essential alternatives in an age of climate change – and food production, for which there are no alternatives.”
paddy.manning@fairfaxmedia.com.au
