Australia’s CCS and Carbon Price Policy GCCSI Regional Members Meeting

8 June 2012, Tokyo, Japan

Presented by Wayne Calder

Department of Resources, Energy and Tourism

The need for action

• Australia faces significant environmental, economic and social costs associated with global climate change

• Countries around the world are already taking action to cut CO2 emissions and 32 countries already have emissions trading schemes

• The Australian Government has committed to reducing CO2 emissions by at least 5 per cent compared with 2000 levels by 2020

• New Australian target to cut CO2 emissions by 80 per cent below 2000 levels by 2050

Australia’s Clean Energy Future

How the carbon price works

Transitional Arrangements

•$8.6 billion Jobs and Competitiveness Program includes assistance for:

• Emissions Intensive Trade Exposed Industries

• Strongly affected electricity generators

• Planned retirement of highly emissions intensive generators

•The $1.26 billion coal sector jobs package will assist the most emissions intensive coal mines

•The $70 million Coal Mining Abatement Technology Support Package will develop and deploy fugitive emissions reduction technology

• Australian support for CCS precedes a carbon price and includes:• Funding for the CO2CRC since 1999

• Coal industry contributions to the COAL 21 initiative since 2004

• Membership of CSLF and Asia Pacific Partnership

• Callide Oxyfuel and other capture projects

• Significant funding for R&D, demonstration projects and to establish the Global CCS Institute over 2008 and 2009

• Why does Australia support CCS?– Heavy reliance on coal for power generation

and growing profile of gas/LNG developments

– Responsibilities as a major international energy supplier

– Alongside energy efficiency and renewable energy, CCS is required to make deep emissions cuts at least cost to the economy

Australian CCS Policy

ENHANCING AUSTRALIA’S ECONOMIC PROSPERITY

CCS Policy Elements in Australia – the puzzle

Legislative Certainty

Storage

R&D

Project Demonstration

Stakeholder Engagement

Knowledge- Sharing

CommunityAcceptance

Australian Government funding

• Major government funding support flows from:– CCS Flagships program ($1.7 billion)– National Low Emissions Coal Initiative ($370 million),

established in 2008

– National CO2 Infrastructure Plan ($61 million)

– Global CCS Institute ($315 million)

• With additional support flowing from other programs.

Gorgon LNG Project3.5 Mtpa

CCS Flagships & commercial scale projects

Collie South West Hub 2.4 to 7 mtpa

Callide Oxyfuel Project 10 Ktpa

Wandoan CCS project1 Mtpa

CarbonNet 3 – 5 Mtpa

The Gorgon Project

The Collie South West Hub

• Major industrial area of WA generating 25 MT of CO2 p.a.

• Sequestration of 300,000 tonnes of CO2 in bauxite residue

• Storage of up to 6.5 MT of CO2 per annum for 40 years being investigated

CarbonNet Project

20 km

Post Combustion Capture

Pre Combustion Capture IDGCC

Pre Combustion CaptureIGCC

Concept route only

Pipeline

Callide Oxyfuel Project Background

• Project involves retro-fitting oxy-combustion technology to a 30 MW unit of the Callide A power station in Queensland and the capture and geological storage of 10,000 tonnes of CO2 per annum.

• Collaborative Project involving Australian and Japanese Governments and industry including CS Energy, JCOAL, Xstrata Coal, Schlumberger, IHI, Mitsui, and JPower.

Status

• Generation of electricity by oxy-firing commenced in March 2012. Project expected to start capturing CO2 around the end of 2012.

Challenges

• Proving Oxyfuel technology at scale and obtaining access to a suitable storage site.

Summary• A carbon price will commence in Australia on 1 July 2012

• The policy is designed to transition the economy to a low carbon future and to incentivise investment in least cost abatement

• CCS policy and programs precede the introduction of a carbon price and will complement long term abatement targets

• Demonstrating CCS at commercial scale is critical to future deployment

• Planning for and implementing demonstration projects requires consideration of all elements of the CCS puzzle and generates valuable knowledge

Thank you

ENHANCING AUSTRALIA’S ECONOMIC PROSPERITY