Overview
2.1
The committee received five submissions to the inquiry, all of which were generally supportive of the bills. They were from:
National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA);
Department of Industry, Innovation and Science (DIIS);
Australian Petroleum Production & Exploration Association (APPEA); and
The Government of South Australia.
Submitter comments
Government agencies
2.2
NOPSEMA was fully supportive of the passage of the bills.
2.3
DIIS, in their submission, provided further explanation and clarification of the bills. Of particular note, is the necessity of the bills' passing for the CarbonNet and Hydrogen Energy Supply Chain (HESC) projects. The DIIS explained:
The CarbonNet project is investigating the potential for a commercial-scale, multi-user carbon capture and storage (CCS) network in Gippsland, Victoria. CarbonNet is managed by the Victorian Government Department of Jobs, Precincts and Regions, and is funded by both the Australian and Victorian governments.
The most significant proposed GHG storage site under CarbonNet’s project straddles the boundary between Commonwealth waters and Victorian coastal waters. Without the amendments in the OPGGS bill, CarbonNet will be unable to progress to a declaration of identified storage formation, which is a legislative precursor to obtaining a licence to inject and store a GHG substance in the storage site.
The CarbonNet project is highly interdependent with the Hydrogen Energy Supply Chain (HESC) project. The HESC project is a world-first pilot project to safely and efficiently produce and transport clean hydrogen from Victoria’s Latrobe Valley to Japan. The HESC project relies on suitable CCS that the CarbonNet project will provide. This is the cheapest way to produce clean hydrogen.
2.4
Finally, the South Australian Government was fully supportive of the bills including the amendments regarding NOPSEMA and its compliance and enforcement powers, as well as those amendments that pertain to GHG storage.
Non-government submitters
2.5
APPEA and Professor Cook made constructive suggestions as to how the bills could further be amended to improve their intended outcomes, including outlining further issues to be considered.
Professor Cook
2.6
Professor Cook provided general comment from a scientific and technical perspective and did not attempt to consider in detail the many legal and regulatory aspects of the bills.
2.7
His submission also made reference to the CarbonNet Project and the related HESC Project which he sees as an important element of Australia’s technology-neutral hydrogen strategy. He reiterates DIIS's argument that the legislation, which allows for cross-boundary permits and operations, is essential to the project's future. He noted that:
The CarbonNet Project is a world leading initiative aimed at producing zero emission hydrogen from Victorian brown coal, using carbon capture and offshore geological storage of carbon dioxide. It has been waiting for this legislation for quite some time. It is important that the legislation now progresses speedily. Further delays will jeopardise the Project.
2.8
Professor Cook also observed that the legislation and associated regulations are appropriately grounded in well-established petroleum legislation but that it is important to note that there are significant differences between the operational and safety aspects of petroleum operations and CO2 [carbon dioxide] operations. In particular, the fundamental difference that oil and gas is highly flammable and CO2 is inert. He argued:
It is therefore important that GHG-related legislation does not slavishly follow oil and gas legislation and regulations. This needs to be borne in mind by regulators who are very familiar with oil and gas operations but not CO2. Because of unfamiliarity, there is always the potential for regulators to ‘over-regulate’, to be on the ‘safe side,’ with consequent increases in costs and time to the CCS project. It is important that not be allowed to happen as it could be a major impediment to development of a CCS-related industry in Australia.
2.9
Finally, Professor Cook observed that currently offshore geological storage of CO2 produces no income stream and is not in a position to support an expensive regulatory scheme. He concluded:
This almost certainly means that regulation of early offshore CCS projects will need significant government support. This is appropriate, as it will provide the Regulator with the opportunity to learn in partnership with this nascent industry, thereby producing an appropriate and cost-effective regulatory regime and making Australia a preferred destination for offshore CCS investment.
Australian Petroleum Production & Exploration Association (APPEA)
2.10
APPEA, in its submission, unequivocally supported the 'polluter pays' principle for clean-up and other associated costs. However, APPEA was concerned about the significant powers NOPSEMA can exercise during a declared oil pollution emergency as it believes there is a lack of clarity in the Explanatory Memorandum (EM) on what constitutes a declarable oil pollution emergency.
2.11
In response, APPEA suggested clarification of which events would constitute a declared oil pollution emergency based on the imminent, significant risk to the safety of personnel, facilities and potential significant impact to the environment.
2.12
APPEA also recommended closer consideration of the procedural fairness aspects of the legislation, and gave the example of paragraph 444 in the EM. That paragraph states:
If a titleholder fails to comply with their polluter pays obligations in section 572C, including the obligations in areas of State or Territory jurisdiction inserted by item 5, sections 572D and 572E empower NOPSEMA and the Minister respectively to do any or all of the things they consider that the titleholder has failed to do. The titleholder must then reimburse NOPSEMA or the Minister for the costs and expenses of taking any such action.
2.13
APPEA believes the description is far too general and that it would seem to give NOPSEMA and the Minister near limitless authority to take whatever action they deem appropriate and seek reimbursement after the fact, without the need to consult the titleholder.
2.14
APPEA suggested that a process should be included where this obligation, to cover any and all costs, is only enacted after communication with the titleholder and where there is clear demonstration that the titleholder has either not followed a NOPSEMA or Ministerial directive within an agreed timeframe. Similarly it should only be enacted when the titleholder, after discussion with NOPSEMA, has clearly not or is not planning to undertake response activities detailed in the accepted environment or oil pollution emergency plan. This would also provide titleholders with advanced notice that NOPSEMA and/or the Minister is not satisfied with the response activities and gives them an opportunity to modify their behaviour prior to NOPSEMA and/or the Minister undertaking activities that the titleholder will be obliged to pay for.
2.15
Further, APPEA argued that issues could arise should NOPSEMA and/or the Minister engage organisations to undertake response activities in isolation and without consultation/ coordination with the titleholder. Simultaneous operations managed by different parties, where efforts are being undertaken by both the titleholder and other organisations under the direction of NOPSEMA, could result in competition for resources and equipment which may result in the response activities for all parties being adversely affected.
2.16
APPEA suggested that any activity NOPSEMA and/or the Minister wish to undertake should be done via directive to the titleholder or at least through a unified command approach where all response activities are managed through a single point so response activities can be coordinated.
2.17
Finally, APPEA appreciates that in certain situations, timely access to facilities, premises and personnel by NOPSEMA can be critical in an emergency event. However, the provision of warrant-free inspection and seizure powers in the bill's EM raises concern.
2.18
APPEA suggested that any warrant-free activities are strictly limited and where these powers are provided for, senior executive authorisation should be required and rigorous reporting requirements should be imposed, to ensure that a sufficient level of accountability is maintained.
Committee comment
2.19
The committee notes the general support for the passage of these bills. The committee shares DIIS's view that the measures in the bills provide an effective regulatory framework for offshore petroleum and GHG storage.
2.20
The committee also notes the importance of the bills to the CarbonNet and HESC projects. The potential benefits to the fledgling hydrogen industry make the passing of these bills essential. This is an exciting project that provides a carbon neutral power source while still allowing the exploitation of the brown coal deposits in the Latrobe Valley.
2.21
The committee notes the consultation process conducted by the DIIS. Their submission lists APPEA as one of their consultees, yet the APPEA submission contains a number of concerns on the bills' content. The committee recommends that DIIS publicly responds to the issues raised by the APPEA.
2.22
The committee recommends that the Department of Industry, Science Energy and Resources publicly respond to the concerns raised by the Australian Petroleum Production & Exploration Association in their submission.
2.23
The committee recommends that the bills be passed.
Senator Slade Brockman
Chair