LETA News • In focus: Australia’s low emission technology landscape

Carbon Capture and Storage

In focus: Australia’s low emission technology landscape

Low emission technologies in Australia are entering a period of unprecedented growth. This is thanks to a perfect storm of political will, financial muscle and industrial innovations combining with renewed global interest in the solutions this country can offer.

17 Nov 2020

Key callouts

  • Australia’s government is backing a wide range of low emission technologies
  • Improved public funding is stimulating private investment in low-carbon energy
  • Australia’s geography and industrial infrastructure is attracting global interest

Renewable energy has powered ahead over the past decade. In Australia one in four households now have solar panels, and renewable energy provides about 21% of Australia’s national electricity market. This technology will be critical to a net-zero emissions future.

What has been less visible is the work that has been underway around the world on other low emission technologies (LETs). These are the technologies capable of cutting emissions from the industries that our economy relies on, such as steel and cement. LETs will be critical to decarbonising sectors where other technologies cannot – and they’ve just received a major boost.

Today, Australia’s LET industry is operating in a changed landscape. A supportive government review, bipartisan backing and an investment roadmap have identified almost $2 billion of funds that carbon capture utilisation and storage (CCUS), hydrogen and other emissions-reduction projects across the country can now leverage to help them scale up. This seed funding could unlock billions more.

As a result, global interest is growing in Australia’s potential to produce clean hydrogen, lock away carbon and lower power-sector emissions. And after an extensive effort of exploration and testing, large storage locations for CO2 are attracting considerable interest from investors and governments, globally.

“It’s very exciting where it’s all heading,” Mark McCallum, CEO of Low Emission Technology Australia (LETA), says. “These projects are large-scale and require significant amounts of capital, so having access to carbon credit units, low-interest financing options, as well as grants supported by the government, adds up to a far more attractive investment environment for low emission technologies.”

So what exactly has shifted to make 2020 a potential gamechanger for CCUS? What could be the result? And why are other countries now looking to Australia to lead the way?

Political momentum

For years, there has been a debate in Australia: how best to unlock low-cost carbon abatement − particularly in sectors like industry, transport and agriculture, which have traditionally been harder to decarbonise.

In October 2019, the government commissioned an expert panel − chaired by Grant King, former Business Council of Australia President and Origin Energy CEO − to examine these problems and try to find solutions.

In May 2020, ‘the King Review’ was made public. It recommended 26 ways to stimulate low-cost carbon abatement with CCUS, with fresh ideas for how to leverage investment from the private sector. In its response, the federal government accepted 21 of these ideas. Then in September, Angus Taylor, the Minister for Energy and Emissions Reduction, released the government’s first Low Emissions Technology Statement − a “technology-led” plan to lower emissions, enabling fledgling CCUS projects to access new funding streams.

“The government has identified priority areas where they think they can make the biggest difference,” McCallum says. “And those priorities are largely ours, too.”

But 2020 wasn’t just notable for government support. Australian Labor leader Anthony Albanese also lent his weight to the government’s Technology Investment Roadmap.

“Both sides of politics are seeing this as a priority area,” McCallum adds. “That’s a really good outcome.”

And Australia is not alone in these political shifts. From the UK to the US, governments are signalling support for carbon capture technologies. Experts say China will require CCS to realise its government’s ambitious pledge to become carbon neutral by 2060.

Unlocking growth

In recent years, government incentives have shared risks and rewards on renewables like solar and wind with the private sector. As these sectors have grown, it has become increasingly clear: the state’s balance sheets can open doors.

“If you look at the deployment of renewables, the funding support from similar government schemes has really driven industry investment in them,” McCallum says.

Just as with solar and wind, the Australian Government’s $1.9 billion investment in a new energy technology package is expected to unlock at least $50 billion of additional investment in low-emission technologies and renewables by 2030 − much of it from the private sector, including international partners.

According to its recent statement, the government expects to make an additional $18 billion available in grants and funding, with the aim being to “catalyse $3-$5 of new investment on each dollar”.

The Hydrogen Supply Chain project in Victoria’s Latrobe Valley provides a blueprint for this style of funding. Here, $50 million in Federal Government money is being matched by $50 million in state funds and $400 million in industry investment. The result is that the new technologies being developed are getting cheaper to run. Another example is Glencore’s Carbon Transport and Storage Company (CTSCo) Project in Queensland’s Surat Basin. If approved, it will seek to leverage Federal funding for a $120 million industry investment.

Local but global

But domestic finance is just one section of Australia’s CCUS jigsaw; to see the bigger picture, you have to look globally. Knowledge from around the world is coming together to unlock solutions. High-emissions sectors like fertiliser, previously considered ‘hard-to-abate’, are now potential Australian success stories − if CCS is added.

“We’ve had CCS attached to fertiliser plants in both Canada and the US now for some time,” Brad Page, CEO of the Global CCS Institute, says. “So we know how that works − it can be done. What CCS can do for the cement industry is also very interesting.”

America’s CCS sector − which has flourished in recent years following government tax incentives − has also shown how companies can innovate if state and private support are aligned. By looking to the world for ideas, Australia is building its own nexus of best-practice solutions.

“We can become a hub for other nations to accelerate their own journeys,” McCallum says.

Working together

These new partnerships are not just about knowledge sharing.

Australia and Germany have signed a new agreement for a joint feasibility study to investigate a hydrogen supply chain between the two countries. Singapore is investing in Australian CCS development. And Japanese companies are deeply involved in the Latrobe Valley project − building test ships to test the transportation of hydrogen, and the facilities needed to make it work.

China’s increasing interest in CCS is also generating new opportunities, which could be set to expand. LETA is investing in Glencore’s CTSCo Project in partnership with Chinese technology providers, and will partner with the US government to develop the near zero-emissions power technology, the Allam Cycle.

Natural assets

But investors and governments aren’t just interested in Australia’s growing expertise. The nation’s unique geography and history is also proving crucial.

Australia is rich in natural resources: not least an estimated 6% of the world’s coal reserves, and 2% of its natural gas. And rather than fuels of the past, this abundance is increasingly being seen as an asset for the future − for three key reasons.

Firstly, as a fuel. As interest grows in hydrogen as an alternative zero-emission fuel for power-hungry industries such as cement and steel, the government and corporations are trying to figure out how to manufacture it both cleanly and cheaply. Hydrocarbons such as coal, when combined with CCS, can create lower-cost ‘blue’ hydrogen with no greenhouse gas emissions, helping balance environmental and financial goals.

The second attraction of Australia is storage, the sometimes ignored ‘S’ in CCS. Here, Australia’s history of hydrocarbon extraction is an asset, as it has created ready-made storage facilities, deep underground, where carbon can be safely and permanently locked away. With sites like the vast Surat Basin, Australia also has the scale to store near the site of extraction.

The final, vital piece of Australia’s CCS jigsaw is its infrastructure; not just roads, pipes and plant, but people too. Communities in places like Brisbane, Toowoomba and Gladstone have a long history of working with hydrocarbons, giving investors the chance to make the best use of this existing infrastructure.

Before 2020, Australia’s first commercial-scale carbon capture hub, based in Queensland, was already being established. It now looks likely to flourish.

“Australia could be positioned incredibly well,” Page forecasts. “You’ve got very good sets of geological storage resources, good opportunities for hubs and clusters, and high-emission sources of industry all congregating together.”

Stars aligning

Australia has invested the time to lay strong foundations for CCS and other LETs, and this painstaking work is now paying off.

“Extensive and critical work has been undertaken to identify safe and permanent CO2 storage locations,” says Mark McCallum.

“Technologies have been tested and refined to ensure that they work. We are now at a critical juncture that we are confident will see large-scale capture of industrial emissions in the near future.”

Domestic and international governments are tapping into Australia’s research and are putting money behind it. New and emerging partnerships and projects with companies including CarbonNet, CTSCo and Santos are pioneering new ways of using and storing carbon.

CCUS industries now seem poised for a period of acceleration. The stars of politics, industry and pressing environmental need are aligning worldwide. And within this landscape, Australia now seems uniquely placed to reap the rewards.

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