The Australian Government announced yesterday a AUD$4.5 billion Clean Energy Initiative as part of its commitment to ensure 20% of Australia’s electricity comes from renewable sources by 2020.  (All dollars figures referenced in this post are Australian Dollars.)  Under the plan (which includes $1 billion in existing funds), the Government is proposing to spend:

1. $465 million to establish Renewables Australia to support leading-edge technology research and capacity building;
2. $2.4 billion in low emissions coal technologies, including new funding of $2 billion in industrial-scale Carbon Capture and Storage (CCS) projects under the CCS Flagships program.  This program will support the demonstration of industrial-scale projects in Australia, potentially including a carbon dioxide storage hub;
3. $1.6 million in solar technologies, including $1.365 billion in a Solar Flagships Program to help position Australia as a world leader in this technology.  This program will aim to create an additional 1,000 MW of solar generation capacity, which is triple the size of the largest project of its kind currently operating anywhere in the world; and
4. $14.9 million over three years, added to the Government’s Clean Energy Trade and Investment Strategy, to attract productive investment into Australia’s clean energy sector and assist Australian clean energy companies to access international markets through export and investment.

The Government’s announcement follows upon the “Carbon Capture and Storage Initiatives in Australia” event at the Australian Embassy in Washington, DC.  Speakers James McGregor, Energy Systems Manager, CSIRO; Mark Taylor, Senior Associate, New Energy Finance and a representative from the newly-created Global Carbon Capture and Storage Institute (GCCSI), an Australian organization developed to accelerate the deployment of CCS technology globally, discussed CCS projects both in Australia and worldwide.

The Australian experience with CCS research and development is particularly pertinent to the United States because both countries depend heavily on coal-fired generation of electricity. Eighty percent of Australia’s energy comes from coal-fired power stations, accounting for one-third of Australia’s GHG emissions.  While there are 238 CCS projects, excluding lab-scale initiatives, at various stages in twenty-seven countries, both Australia and the United States are likely to require successful CCS technologies to attain the GHG emissions reduction targets contemplated.

Currently, there are sixteen Australian CCS projects in various stages of development.  One especially noteworthy project is the CO2CRC Otway Project in Victoria, which is the most advanced storage demonstration project in Australia.  The project involves injection of CO₂ from a nearby gas well initially into a depleted gas field at a depth of 2km.  The process started in April 2008 at a rate of about 150 tpd, with an injection target of between 50,000 and 100,000 tonnes of CO₂ over two years.  The project includes a substantial program of monitoring and verification. The $40 million project, which is supported by fifteen companies and seven government agencies, involves researchers from Australia, New Zealand, Canada, Korea and the USA.

A second noteworthy project is the Gorgon Project, in Western Australia.  Three major oil companies are planning a sequestration project linked to the Gorgon LNG Project. The separated CO₂ will be injected under Barrow Island to a depth of about 2.3km, with injection of 3.3 million tonnes of CO₂ per year. A total of 125 million tonnes will be injected over the life of the project. The construction phase is planned to commence in late 2009 and take about five years. A data well has been drilled and a major study of the subsurface is underway.

To meet GHG reduction goals, there must be a significant increase in demonstration projects in Australia over the next few years.  The Australian Government has committed itself to reducing Australia’s greenhouse gas (GHG) emissions 60% by 2050, using 2000 emissions levels as the baseline.  United States policymakers would seem to be well advised to follow developments in Australia as public investments in CCS technologies in the United States ramp up.

For further information about this topic, please contact Akin Gump.