This chapter examines the evidence received by the committee in
submissions to this inquiry and during the public hearing. The structure of the
chapter reflects that the evidence essentially addresses two interrelated
issues: whether carbon capture and storage (CCS) technologies are an emissions
reduction option that is proven, commercially viable and safe; and whether it
is appropriate for the Clean Energy Finance Corporation (CEFC) to invest in CCS
The committee's overall conclusions on the bill are at the end of the
Use of CCS technology to assist with emissions reduction efforts
2.3 As noted in Chapter 1 (see paragraph 1.26), the explanatory memorandum
states that the bill is intended to facilitate potential support for the use of
CCS technologies to non-renewable electricity generation, which 'would help
provide security and stability for the electricity grid while significantly
reducing emissions compared to business-as-usual operation of fossil fuel fired
generation'. In addition, the bill would provide 'a potential support' to
reduce emissions from carbon-intensive industrial processes.
The committee received evidence supporting these statements as well as
evidence questioning whether CCS is currently ready, or is likely to ever be
ready, to be deployed on a commercially viable and safe basis, and on the scale
needed for emissions reduction.
Evidence supporting the continued development
of CCS technologies and projects
The statements in the explanatory memorandum were echoed in the
submission from the Department of the Environment and Energy (the department),
which argued that CCS technologies have 'the potential to form an important
component of global and domestic efforts to combat climate change'.
Comments made by the International Energy Agency (IEA) regarding the
potential for CCS technologies to reduce emissions across the energy system also
support these statements. In an IEA report on CCS technologies, Dr Fatih Birol,
the Executive Director of the IEA, wrote:
[IEA] scenario analysis has consistently highlighted that CCS
will be important in limiting future temperature increases to 2°C, and we
anticipate that this role for CCS will become increasingly significant if we
are to move towards "well below 2°C". Why is this? Because there is
no other technology solution that can significantly reduce emissions from the
coal and gas power generation capacity that will remain a feature of the
electricity mix for the foreseeable future. No other technology solution is
capable of delivering the deep emissions reductions needed across key
industrial processes such as steel, cement and chemicals manufacturing, all of
which will remain vital building blocks of modern society. In the future, it
may be a pivotal technological solution for removing large amounts of carbon
from the atmosphere—a likely requirement as we move to limit temperature
increases to well below 2°C. In short, deployment of CCS will not be optional
in implementing the Paris Agreement.
Dr Birol continued:
There are now 21 large-scale CCS projects operating or under
construction throughout the world, in addition to more than 100 smaller-scale
Behind this is a large and dedicated group of global
researchers, technology developers, utilities and service providers who have
been working to develop CCS to the point that there are no insurmountable
technology barriers to safe deployment. The IEA Technology Collaboration
Programmes, among other international collaborative efforts, have provided
essential support in this regard. What is missing is a strengthened climate
response to support CCS investment. The need for policy action is now urgent if
we are to maintain current momentum in CCS project development to meet the
Mr Bradley Page, Chief Executive Officer of the Global CCS Institute,
commented that other notable supporters of CCS technologies include 'Grantham
Research Institute chair and eminent economist Lord Nicholas Stern, Columbia
University professor and creator of the term "global warming" Wallace
Smith Broecker and international sustainable development expert John Elkington'.
The Intergovernmental Panel on Climate Change (IPCC) has also considered
the potential of CCS technology. As part of the Fifth Assessment Report,
in 2014 an IPCC working group indicated that, among its author team, there is a
'medium' level of agreement that CCS technologies could reduce the lifecycle
greenhouse gas emissions of fossil fuel power plants.
In its submission to this inquiry, the Global CCS Institute highlighted
existing international CCS projects and argued that additional projects are
needed to address emission reduction targets. The Institute submitted:
CCS is already curbing greenhouse gas emissions around the
globe, with more than 220mn tonnes of anthropogenic carbon dioxide safely and
permanently injected deep underground.
There are currently 17 large-scale CCS facilities operating
globally, with five more in development. These facilities are capturing and
storing 37 million tonnes of CO2 per annum, the equivalent of
removing eight million cars from the road each year.
However, this is not enough. To make deep, rapid reductions
in greenhouse gas emissions and meet Paris climate change targets at least
cost, CCS must be deployed swiftly and at scale.
The potential for CCS technologies was also discussed in other industry
and research submissions that supported the bill. In addition to the Global CCS
Institute, submissions supporting the bill were received from Bridgeport Energy
Limited, the Australian National Low Emissions Coal Research and Development
(ANLEC R&D), CO2CRC Limited, the Minerals Council of Australia and the Australian
Petroleum Production and Exploration Association. For example, ANLEC R&D
Carbon Capture and Storage is being adopted at scale
internationally. USA and Canada have shown that the technology can be deployed
at scale for power generation purposes. Their respective operations at
Petra-Nova, Texas and Boundary Dam, Saskatchewan are delivering access to low
risk pathway to an affordable, reliable and cleaner energy system.
The committee was also advised that over the past 18 months, CCS technologies
have become supported in China 'at the highest government levels', with eight
facilities now under development. Furthermore, tax credits for carbon dioxide
storage and use have been enacted in the United States, and new approaches to
encourage the sharing of CCS infrastructure are being developed in the
United Kingdom, the Netherlands and Norway. Mr Page from the Global CCS
Institute concluded that his organisation believes 'CCS is at a turning point
globally, and we're eager to see Australia take full advantage of its benefits'.
Concerns about the readiness and
financial viability of CCS technologies
Several submissions argued that CCS technologies are untested and
unlikely to be financially viable. The following statement made in Environmental
Justice Australia's submission summarises the position held by these submitters:
CCS has so far failed to deliver on its potential to reduce
future carbon dioxide emissions into the atmosphere. It is not a proven
In expressing doubt about the commercial viability of CCS technologies,
past statements regarding the potential of CCS to reduce emissions were noted.
For example, Environmental Justice Australia cited a 2000 report by the
IPCC, in which it was projected that, by 2020, 9–12 per cent of global
emissions would be abated by CCS technologies. Environmental Justice Australia
As we approach 2020, the world does not speak of percentage
of global emissions captured by CCS. Rather, CCS proponents cite the handful of
CCS projects that might be successful, yet still have the potential to fail.
Submissions also discussed efforts to develop and implement CCS
technologies globally. Specific CCS projects in North America and the United
Kingdom that have been delayed or which submitters argued were unsuccessful were
highlighted. In Australia, it was argued that 'more than $1.3 billion has already been spent
by Australian governments attempting to develop CCS technologies, yet Australia
has very little to show for it'. In particular, it was noted there are no large‑scale
power plants operating with CCS technologies in Australia.
Given that renewable energy technologies exist, the need for CCS
technologies in electricity generation was questioned. Mr Simon Holmes à Court,
who argued that certain CCS opportunities for non-electricity generation
processes should be pursued but not through CEFC financing, argued that:
With energy technologies, we
know how to create zero carbon electricity. CCS on coal is an attempt to clean
up coal. We already have a cheaper way of producing electricity with
renewables. We don't yet have a cheaper way or a commercially proven cheaper
way of producing cement.
The cost and energy usage associated with CCS was also noted. Some
witnesses suggested that CCS technologies would not be viable without a carbon
price. In the absence of an economic incentive to capture carbon, it was suggested
that CCS activities would be limited. Regarding the Gorgon Project, where the
use of CCS was a condition for development approval, Mr Holmes à Court observed
that CCS technologies added over $2 billion to the cost, however, even
after this 'the project still stacked up for [the proponent]'. However, Mr Holmes à Court provided the following evidence to explain why the
cost and effort involved for CCS as part of the Gorgon Project is likely to
differ to the costs associated with CCS in other activities:
processes, the separation of CO2 is already part of an existing process. For
example, the well gas feeding into Chevron's Gorgon project in the North-west
Western Australia comprises approximately 15% CO2 which must be removed prior to
liquefaction in the normal course of business. As such there is relatively
little additional cost in capturing CO2.
for other processes, such as the combustion of coal, steelmaking and the
manufacture of cement, the flue gasses are not separated in the normal course
of business. As such, the application of CCS to these processes requires the
addition of significant capital equipment and operating expense (energy, staff
and consumables) with the sole purpose of capturing CO2.
Mr Matt Rose from the Australian Conservation Foundation also comment on
the cost associated with CCS. Mr Rose argued that coal-fired power stations
fitted with clean coal technologies 'are much more expensive than any
alternatives'. Mr Rose stated:
...the technical aspects of retrofitting, finding appropriate
storage sites and all those things quickly add up and make it much more
expensive, because you're not actually just dealing with creating the energy
like a lot of your competitors will be. You have to find appropriate sites for
storage and in some cases retrofit, so it's a much more technically demanding
process, which adds to the cost.
Submissions supporting the bill responded to concerns about the
readiness and commercial viability of CCS technologies. The Minerals Council of
Australia stressed that 'CCS is not an experimental technology, with leading
examples in North America already operating in conjunction with coal fired
generation'. Similarly, the Global CCS Institute argued that 'CCS technology is verifiably
well tested', with large-scale and long running projects operating globally.
The Institute submitted:
The Institute's projects database currently tracks 38
large-scale CCS facilities either operating, under construction, or in
development, around the world. Some of these facilities have been operational
for more than
20 years. The Institute also tracks 72 individual smaller pilot and
Bridgeport Energy acknowledged that CCS technologies have 'always
suffered from the issue of high cost and lack of a revenue stream to aid
project financial viability'. However, it advised that a revenue stream to
support CCS could be created by using carbon dioxide produced from power
generation and industrial processes for 'enhanced (or tertiary phase) oil
recovery (EOR) in suitable oil fields'. EOR can enable significant additional
oil production with the process resulting in carbon dioxide being 'sequestered
in parallel as it replaces the oil and water volume in the reservoir'.
Bridgeport Energy remarked that EOR:
...not only provides the opportunity to safely sequester CO2 in a well‑defined geological trap structure with existing wells drilled,
but also stimulates the tertiary phase production of an oil reservoir,
producing additional oil and therefore offsetting carbon capture equipment and
supply costs by the CO2 emitters.
Evidence from the Global CCS Institute also suggested that the costs
associated with CCS should be considered alongside the need to meet
international emissions reduction targets. The Institute submitted:
Modelling of least-cost emission pathways consistently
identifies the need to deploy CCS in large volumes if Paris emission targets
are to be achieved. The importance of CCS in these results is in direct
contrast to claims that CCS is either 'too costly' or 'cannot compete with
Furthermore, the Minerals Council of Australia argued that the
development of CCS has been impeded by an imbalance in government funding for
CCS compared to other technologies. Since 2003, the Australian Government has
provided approximately $1.3 billion to CCS-related projects. The Minerals Council contrasted this figure with the funding provided for
renewable energy technologies; it submitted that:
Renewable technologies have access to over $2 billion in
funding managed by the Australian Renewable Energy Agency, $200 million in the
Clean Energy Innovation Fund (jointly managed by ARENA and the CEFC) and an
estimated $20 billion in indirect support provided by the Renewable Energy
Target. The exclusion of CCS from the CEFC exacerbates the current funding
imbalance and handicaps the development of a key low emission solution.
Finally, it was argued that costs associated with CCS will decrease
following the development of additional projects. CO2CRC advised that there are
CCS projects 'at concept stage that could benefit from access to low cost
finance within the CEFC'. CO2CRC suggested that these projects could have costs
reduced by 20–30 per cent compared to existing programs due to the benefits of
learning-by-doing. The Minerals Council of Australia stated:
CCS is proven at scale and policies that stimulate demand for
CCS and further deployment will inevitably deliver technology improvements and
cost reductions. This will come through learning by doing, competition between
vendors, improved processes, materials and metals, and other developments as
has been the case with other technologies.
Concerns about carbon dioxide
Mr Richard Horton, who advised that he has 'worked for many years in the
extractive and power industries and in the financing of both' and who was a founder
member of the Global CCS Institute, commented on the risk of carbon dioxide
leakage that could be associated with CCS. Mr Horton noted that 'strong
arguments can be presented to justify CCS technically and geologically',
however, he argued that there 'can be no certainty that re-injected CO2 will remain in situ in perpetuity'.
Environmental Justice Australia expressed concern that leakage from
carbon dioxide stored in a geological formation could have adverse consequences
for human health.
The Global CCS Institute responded to concerns about the potential for
carbon dioxide leakage as follows:
Operations undertaken over
almost half a century demonstrate that CO2 can be permanently stored
deep below ground. Oil, gas and naturally occurring CO2 reservoirs
have proven that fluids can be safely sealed underground for millions of years.
CCS facilities access the same geology.
The issue of potential carbon dioxide leakage was raised during the
public hearing. Mr Brad Archer, a first assistant secretary at the department, noted
that the proposition of storing emissions in appropriate geological formations
is considered theoretically sound. However, Mr Archer explained that the data
needed for 'complete assurance' about the risk of leakage does not exist because
of the absence of long-term CCS projects in Australia. Mr Archer added that the
department would 'definitely want to have an understanding that these stores of
carbon will be enduring' to ensure that Australia's greenhouse gas emissions
are tracked accurately.
Supporting CCS projects through the CEFC
This section considers the evidence received regarding whether the CEFC is
an appropriate entity to invest in CCS technologies.
Support for a more technology
neutral approach to emissions reduction programs
As noted in Chapter 1, the Clean Energy Finance Corporation Act 2012 (CEFC
Act) expressly prohibits the CEFC from investing in CCS technologies. Industry
and CCS research submissions called for the prohibition to be lifted to enable
a wider range of low-emission technologies to be considered by the CEFC as part
of a more technology neutral policy approach. For example, the Global CCS
In building a reliable, affordable, low emissions power
system, and meeting international climate targets, energy policy must abandon
ideology and align with reality. The reality is that every low emission
technology including CCS is required. All low emissions technologies, including
CCS, deserve equal access to policy support and concessional finance necessary
to accelerate its deployment.
Mr Bradley Page, the Chief Executive Officer of the Global CCS Institute,
summed up his organisation's view on the merits of technology neutrality with
the observation that 'one of the things we never know about the future is
what's going to turn up'. To illustrate, Mr Page referred to the recently announced pilot project in the
Latrobe Valley to produce hydrogen from brown coal (see Chapter 1) and
'some very exciting technological developments in places like the United States'.
Mr Page explained:
We are starting to see private capital involved in novel
capture processes. NET Power, for example, which is based in Texas on English
technology, actually uses the CO2 instead of steam to drive turbines
and has the promise of very low cost capture. It'd be unfortunate if that
technology comes through in the next 12 months—and we will know in the next 12
months whether it works—and if the CEFC couldn't then invest in it where it
delivered to Australia a clear economic benefit in the power sector.
ANLEC R&D submitted that it supports the bill 'as one additional
step in policies and legislation that takes a technology neutral approach to
emissions reduction from the energy sector'. ANLEC R&D argued that CCS:
...is a proven low emissions technology that can make
significant inroads to reducing emissions from the electricity generation and
industrial sectors of the Australian economy. Including CCS as an eligible
technology for investment by the Clean Energy Finance Corporation, provides
access to capital on terms that might not otherwise be available from
commercial markets due to perceived policy risk.
In addition, ANLEC R&D commented that permitting the CEFC to invest
in CCS would help allow 'the largest section of Australian energy production—both
coal and gas—to respond with low emissions solutions'.
Similarly, the Minerals Council of Australia highlighted the potential for
the resources sector to be involved in the development and deployment of 'solutions
that will provide a secure, reliable, safe and low-emission energy supply for
future generations'. The Minerals Council argued that advanced coal combustion
through high efficiency, low emissions (HELE) power generation with CCS
technologies can result in emissions reductions of up to 90 per cent compared
with the oldest technology in place. The Minerals Council added:
The Australian Energy Market Commission has highlighted the
importance of technology neutrality in energy policy noting that 'a policy that
allows the greatest number of technology options is likely to minimise costs
If the policy goal is to reduce emissions at lowest cost, a
technology neutral approach is imperative. That means considering the potential
of advanced coal combustion through...HELE power generation and CCS technologies.
AGL Energy also offered in principle support for the bill on the grounds
of enabling 'a more technology neutral policy framework for investment
decisions'. AGL Energy submitted:
In our view, a technology neutral approach to investment
decisions provides Australia with the best prospects of attracting the scale
and diversity of investments required to decarbonise the Australian economy
consistent with Australia's commitments made under the Paris Agreement.
AGL Energy's qualified support for the bill is based on its view that
any support provided by the CEFC for CCS technologies should not detract from
the resources currently available to the CEFC to support renewable energy,
energy efficiency and low-emission technologies. That is, if the CEFC Act is
amended to allow investments in CCS, AGL Energy argued that the government should
provide the CEFC with 'appropriate incremental funding' to facilitate any
investments in CCS. AGL Energy concluded:
With an appropriately expanded budget to focus on CCS, we
consider that the CEFC would be well placed to make investment decisions that
support both renewable energy and low emissions technologies and CCS
technologies, in accordance with its investment mandate and guidelines.
Whether CCS processes should be
considered 'clean energy'
As explained in Chapter 1, the CEFC Act provides that the CEFC may only
invest in 'clean energy technologies', which are defined as either energy efficiency
technologies, low-emission technologies or renewable energy technologies.
The CEFC explained that, following enactment of the bill, it would
consider whether any proposal based on CCS technologies met the statutory
definition of a low-emission technology. Under the CEFC Board's current approach to determining whether a technology is
a low-emission technology, it is expected that the technology would 'result in
emissions of CO2e being substantially lower than the current average of the
most relevant baseline for the activity being undertaken'. To fulfil this
requirement, a proponent of a project is required to demonstrate that:
- if the project is solely for electricity generation, that the
- achieve 'an emissions intensity of less than 50 per cent of the
existing generation system as connected to the transmission network/grid, or
where not connected to a grid, less than 50 per cent of the emissions intensity
of the baseline activity', or
- 'achieve useful-life emissions at 50 per cent less than the
relevant current average baseline of the activity being undertaken'; or
if the project is not solely for electricity generation and does
not achieve useful-life emissions at 50 per cent less than the relevant current
average baseline of the activity being undertaken, that the technology
'achieves (or has demonstrable ability to achieve) meaningful aggregate
emission reductions and other positive externalities'.
Whether CCS technologies fit within the CEFC's remit attracted comment
from both supporters and opponents of the bill.
The Australia Institute highlighted the CEFC's role as a specialised
clean energy financier that has helped to 'catalyse projects and emissions
reductions that would otherwise been less likely to occur'. The Australia Institute
argued that CCS technologies 'are not low-emission'. The Institute explained:
[CCS technologies] do not reduce the emissions being produced
by the energy source. Rather, they use significant energy, itself a source of
emissions, to capture and store some of the emissions from the plant, rather
than reducing them. The ultimate effectiveness of CCS in reducing the quantity
of greenhouse emissions that enter the atmosphere relies on long term
monitoring of any location used to sequester the emissions. These costs and
risks are poorly understood in the long term and will likely be largely borne
by the public.
Renewable energy technologies, by comparison, genuinely
reduce the emissions of the energy sector if they replace generation that would
occur from higher emissions sources.
Mr Richard Horton similarly argued that CCS is not clean energy. Mr
Terrestrial sequestering of carbon pollution from hydrocarbon
production and consumption does not make dirty energy clean; it simply
relocates the collected and concentrated pollution. This statement holds true
even whilst acknowledging that more efficient burning of hydro-carbons (Ultra
Super Critical and beyond) can materially reduce the CO2 footprint
per unit of power generated, the facilitation of which is not necessarily
beyond the current scope of the CEFC.
Other submissions, however, argued that it is appropriate for the CEFC
to have the option to invest in CCS technologies because these technologies:
- could result in significant emissions reductions by supporting
the use of renewables;
- could facilitate the development of other sources of clean
- enable processes that would qualify as low-emission technologies.
The Global CCS Institute argued that CCS is 'part of a flotilla of clean
technologies needed to turn the tide on climate change'. The Institute emphasised
that CCS is not a competitor to renewables, rather it should be seen as 'a supportive
adjunct'; that is, CCS is 'part of a flotilla of clean technologies needed to
turn the tide on climate change'.
As noted at paragraph 2.3, it is also considered that CCS could assist
to address grid stability issues associated with increasing use of renewable
energy. ANLEC R&D submitted:
At about 45% renewables penetration of the grid, the nature
of investment to support the energy system increases substantively to where CCS
is considered to be among the lowest cost options for deployment...
The Global CCS Institute also indicated that CCS provides an opportunity
for new clean energy sources to be developed. As noted in Chapter 1, a pilot
project in the Latrobe Valley to produce hydrogen from brown coal was recently
announced. The Institute submitted:
As the energy matrix continues
to evolve, CCS...facilitates the creation of new energy economies, which are yet
to reach their apex. A good example is the work Kawasaki Heavy Industries is
undertaking with Iwatani, J‑Power and Shell Japan to scope a hydrogen
energy supply chain in Australia's Latrobe Valley. The opportunity to turn
Victoria's brown coal into clean hydrogen is just one example of the new
opportunities CCS can create.
It sets the stage for a clean energy hub in Australia which
preserves jobs, creates new employment opportunities and creates a new,
sustainable, decarbonised economy.
Continuing with the potential for EOR to improve the financial viability
of CCS (see paragraph 2.20), Bridgeport Energy argued that the use of CCS for
EOR opportunities in the Surat and Cooper Basins would 'see the reduction of CO2 emissions from Australia's newest, most efficient and reliable supercritical
power stations by up to 90%'. Accordingly, Bridgeport argued that EOR using
carbon dioxide from CCS would be a 'low emission technology' for the purposes
of the CEFC Act.
The likelihood of the CEFC investing in EOR-based projects was
questioned, however. Mr Simon Holmes à Court noted that the oil extracted under
EOR 'follows the same lifecycle as any other crude oil—it is refined and burnt,
generally in internal combustion engines, resulting in atmospheric carbon
emissions'. Mr Holmes à Court reasoned that 'the immense efforts of capturing
and sequestering CO2 is undermined by fugitive emissions within the
EOR process and the ultimate emissions of the oil extracted'. Mr Holmes à Court concluded:
Any lifecycle assessment of the entire process from capturing
carbon to bringing up and burning the extracted oil shows that the projects are
actually responsible for an increase in atmospheric carbon.
Other matters regarding the role of
As the department made clear in its submission, the bill would not
require the CEFC to invest in CCS projects; it simply would remove the current
prohibition on doing so. Following the bill being enacted, the CEFC would have
the option to invest in CCS projects 'should any projects of sufficient
commercial merit come forward following the change'.
The CEFC noted that 'legal eligibility as a complying investment is only
one element of whether the CEFC Board will decide to invest in a project or not'.
The CEFC explained that investment decisions are subject to other
requirements of the CEFC Act, the CEFC's investment mandate and the application
of the CEFC's Investment Policies and risk management practices.
The CEFC added that, as it 'presently understands CCS', 'it is still a challenging technology with elevated levels of construction,
implementation and economic risks'. Nevertheless, the CEFC stated:
If an investment proposal was presented with an appropriate
risk and return profile, or if complementary policy settings are put in place
to support CCS, then with the proposed legislative amendment, CCS may not only
be an eligible technology but also an investable technology.
Ms Tania Constable, Chief Executive Officer, CO2CRC, indicated that
there are projects under consideration that could meet the CEFC's conditions
for investment. However, given the history of CCS projects and the CEFC's commercial approach
to investment decisions, other individuals and organisations questioned whether
the proposed amendment would result in any investments by the CEFC in CCS
Environmental Justice Australia highlighted the small number of
successful CCS projects and referred to comments made by the IEA about the
commercial challenges associated with the use of CCS technologies. Environment
Justice Australia characterised CCS as being 'an untested technology', which it
argued 'should not be seriously considered as a sound option to reduce carbon
emissions, let alone by a government body with capital return requirements'.
Similar observations were made in other submissions. The Australia
Institute contended that the Australian Government has 'very little to show
for' the $1.3 billion spent in support of CCS technologies and that this
indicates 'CCS technologies are not yet developed and demonstrated sufficiently
to fit the CEFC's focus on technologies in the later stages of development and
Likewise, Mr Simon Holmes à Court commented that the CEFC 'is not a
research and development program' and that CCS projects 'have yet to
demonstrate technical and commercial readiness to the CEFC's standards'. Mr Holmes
à Court commented that, with 'a lack of commercial viable CCS opportunities on
offer', if the CEFC's current investment approach is maintained, the bill 'is
highly unlikely to have any difference to either the CEFC or the development of
Furthermore, Mr Holmes à Court expressed doubt that the CEFC would
provide funding on the scale that CCS projects have required to date.
Mr Holmes à Court commented:
...the largest loan that CEFC has ever made is in the order of
$200 million, and $200 million is pretty much what we spent on the feasibility
of Queensland's ZeroGen project, so the orders of magnitude for these projects
are well above anything that the CEFC normally looks at.
There is also concern that the addition of CCS as a possible investible
technology would dilute the CEFC's focus. The Australian Conservation
Foundation (ACF) noted that the projects financed by the CEFC to date 'are
forecasted to reduce Australia's annual emission by 11.1 million tonnes of
C02-e'. The ACF argued that a contributing factor to the CEFC's success to date has
been 'its adherence to a narrowly defined investment mandate, focused on
promoting investment in clean, renewable technologies'. Mr Roderick Campbell from The Australia Institute also commented that the need
for the CEFC to acquire knowledge about CCS technologies would be a 'drain' on
the limited resources of 'a relatively small body'.
It was also questioned whether the CEFC has adequate resources to invest
in CCS technologies in addition to its existing work. This evidence can be
divided into two categories:
- First, as noted above (paragraph 2.35), AGL Energy argued that
the government should provide the CEFC with 'appropriate incremental funding'
to facilitate investments in CCS technologies so as not to detract from the
types of investments it currently considers.
- Secondly, The Australia Institute expressed concern that once CCS
is a possible investible technology, the CEFC's investment mandate could be
changed to reserve part of the CEFC's investment finance for investments in CCS
projects only, reducing the potential funding available for renewable energy or
energy efficiency technologies.
Finally, it was questioned whether the CEFC is the most appropriate
entity for supporting the successful development of CCS. The Australia
Institute acknowledged the potential of CCS technology, such as in industrial
applications 'where zero emission alternatives to production processes are not
yet known'. However, the Institute argued that, when CCS technologies 'are a little more
advanced', whether the CEFC should invest in these technologies would be 'better
addressed as part of a wider review of our environment and energy bodies rather
than tacking something onto the CEFC now'.
The committee supports amending the CEFC Act to remove the prohibition
on the CEFC investing in CCS technologies as proposed by this bill. Fundamentally,
the committee supports the bill because it considers the public interest would
be better served by a more technology neutral approach to energy policy.
CCS is a proven low-emission technology. In the committee's view, the
prohibition on the CEFC investing in CCS technologies is arbitrary and inappropriate
given the expert advice that a wide range of technologies is needed to achieve
the emissions reductions required under the Paris Agreement. A more technology
neutral approach to the CEFC Act will ensure that the widest possible range of
cost-effective low-emission solutions can be considered by the CEFC, noting
that it would still be for the CEFC to decide, independent of government and
with commercial rigour, whether to invest in any suitable projects involving
The committee recommends that the bill be passed.
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