“The Emperor has no clothes!” – should we invest in CCS?

The federal government will shortly vote on whether to significantly increase taxpayer funding of carbon capture and storage (CCS) technology in order to support ‘business as usual’ for the fossil fuel industry. Would this be a wise public investment?

In May 2020 the Australian government released its ‘Technology Investment Roadmap Discussion Paper’ (TIR) in which it attempted to ‘pick winners’ in the business of electricity generation and hydrogen production from methane gas. Unsurprisingly, the winners were the fossil fuel industry whose interests are well represented on the National Covid-19 Coordinating Commission whose job it is to assist the government in pulling Australia out of the pandemic-induced recession.

In order to keep generating electricity from methane and maintain at least the appearance of Australia keeping to its 2015 Paris Agreement of net zero greenhouse gas emissions by 2050 it is necessary to capture and store waste carbon dioxide (CO2) gas generated by the processes. CO2 is already at a level in the atmosphere 48.6% above the pre-industrial average and a 1982 forecast from oil giant Exxon predicted that this figure would be 100% by 2060.

CO2 is the most prevalent of a cocktail of atmospheric gases that trap heat and increase earth’s temperature. This heat trap has led to a present average global temperature rise of 8% above the pre-industrial average – but 11% for Australia.

Unfortunately for the government the CCS process has not to date delivered the results as presented in the TIR.

In 2009 consultants to the fossil fuel industry, WorleyParsons, delivered a comprehensive report on the status of CCS to the Global CCS Institute. With the assistance of major global lawyers, Baker and McKenzie and leading global risk consultant, Det Norske Veritas, the 160-page report explained in considerable detail the technical, risk management and legal challenges of capturing CO2 and sequestering it in perpetuity.

A 2018 a report on the production of hydrogen from methane gas found that ‘The most substantial risk associated with CCS is the leakage of CO2 from storage sites. There is little encounter with geological deposition of natural gas and CO2 for time interval of almost 10-20 years but a long term deposition of hundreds or thousands of years is not proven.’ The report concluded that ‘This paper gives deep insight about production of hydrogen through steam methane reformation process and why it should not be continued in future.’

In March 2019 the International Energy Agency advised that CCS “…remains well off track to reach the 2030 Sustainable Development Scenario…..”

In June 2020 the West Australian cabinet supported the state’s Environmental Protection Authority in levying a $100 million fine on Australia’s only commercial scale CCS project, Chevron’s Gorgon project for its failure to capture emissions in the first 5 years of operation.

The crucial point about storing CO2 so that it does not leak into the atmosphere is that it must be stored in perpetuity. It must never be released into the atmosphere that will remain replete with excess CO2 for millennia because a fifth of the CO2 released today will still be in the atmosphere in 3020. The WorleyParsons report makes it clear that we then have the monumental task of ensuring that the CO2 remains locked away in perpetuity because leakage of the billions of cubic metres to be stored could result in death or injury to people or animals or trigger serious climate disruptions. The report advised that the cost of maintaining the sequestered CO2 and, should leakage occur, payment for any damage caused, or payment of a future carbon price would fall to future taxpayers as the potential cost would be too high for any one organisation to bear. Of course these future taxpayers would have received absolutely no benefit from the electricity or hydrogen generated centuries beforehand.

Therefore, if CCS were ever to be implemented at any scale it would implicitly create a significant intergenerational liability and one that future generations would be reluctant to bear – if they were given the choice.

It is important to note that globally the great majority of capital invested in CCS to date consists of taxpayers’ funds. Indeed the World Bank has stated that, ‘Leveraging finance from the private sector is attractive for the further deployment of CCS projects but so far high costs and risk associated with CCS projects tend to restrict this option.’

To summarise:

· If CCS is not successful then a significant amount of mainly public money will have been wasted plus design and construction resources and time not spent on developing low emissions technologies.

· If CCS is successful then it will leave a legacy in perpetuity of maintenance costs and significant risk should the gas escape into the atmosphere.

Globally, (but apparently not in Australia) the focus is clearly on rapidly and permanently decarbonising our economies and climate. Research for the 6th report of the Intergovernmental Panel on Climate Change is revealing concerning information on accelerating climate sensitivity to CO2 emissions. Johan Rockström, Director of the Potsdam Institute for Climate Impact Research, has said “It gives even stronger argument to step out of this Covid-19 crisis and move full speed towards decarbonising the economy.”

In November last year Dr Fatih Birol, Executive Director of the International Energy Agency stated, “The world urgently needs to put a laser-like focus on bringing down global emissions. This calls for a grand coalition encompassing governments, investors, companies and everyone else who is committed to tackling climate change”.

Asking the question, “If it were my money would I spend it on this project?”, I think it is high time that an independent body such as the Australian Competition and Consumer Commission take a close look at the proposed investment in CCS.

The former leader of the parliamentary caucus of the Australian Greens, Senator Christine Milne’s, sartorial assessment of ‘the Emperor’ was kinder than mine. She called CCS “a fig leaf”.

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John Bushell is a Sydney based retired value and risk management consultant.

His experience includes facilitating studies in the public and private sectors on a wide variety of projects and product development including road and rail infrastructure and process engineering investments. His focus with clients has been to ensure that project or product 'value' and 'risk' are understood together so that clients do not wind up unwittingly 'buying risk'.

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