June 22, 2024


As far as bonanzas go, a claim this week that Australia could pull in almost $600bn by storing carbon dioxide from other countries is one that puts even the Aukus nuclear submarine deal in the shade.

The oil and gas industry lobby group Australian Energy Producers made the claim, reported in the Australian, pointing to a study carried out by global energy analysts Wood Mackenzie.

AEP’s chief executive, Samantha McCulloch, said Australia could become “a decarbonisation powerhouse” if governments smoothed the way with favourable policies and more cash handouts to the industry.

But the analysis the statements were based on, and reported uncritically, relied on some heroic assumptions about the size and scale of a future carbon capture and storage (CCS) industry that should come with heavy doses of scepticism.

Who wins?

The statements were based on non-peer reviewed research from Wood Mackenzie and published in AEP’s annual journal.

But before we get into that, we should note one thing.

When the Australian reported that “Australia could generate nearly $600bn in revenue”, what we are actually referring to is revenue for the organisations proposing carbon capture and storage projects. Right now, that’s mostly oil and gas companies.

There is clear vested interest here. If fossil fuel companies want to be able to keep selling their product as the world lowers emissions, then pushing carbon capture and storage allows them to continue to sell their oil, gas and coal and then make a return on capturing and storing the waste.

The “nearly $600bn” figure was based on Wood Mackenzie’s estimate that Australia has enough capacity in depleted oil and gas fields and saline aquifers to store about 9.8bn tonnes of CO2. The analysis then assumed carbon storage projects could get between US$33-39 a tonne of CO2.

So 9.8bn tonnes multiplied by 39 gives an estimate of US$385bn (or $577bn in Aussie dollars).

Wood Mackenzie analyst Stephanie Chiang, who wrote the report, told Temperature Check the revenue figure was “based on our internal CCS cost model”.

Gigantic scale

But what should really stop us in our tracks is the gigantic scale of the CO2 storage the headline figure is based on – 9.8bn tonnes.

Right now, there is only one CCS project actually working in Australia (the much-troubled Gorgon CCS plant) and one more under construction (Santos’s Moomba project).

According to the government and industry funded research organisation CO2 CRC, there are a further 16 projects being proposed.

If all 18 were up and running by 2030 (forgetting the sizeable engineering and cost challenges carbon capture and storage projects have faced in recent years), this would mean Australian projects could store 33m tonnes of CO2 each year.

If you ran all of those 18 projects continually, it would take almost 300 years to capture 9.8bn tonnes. Even with a dramatic upscaling of capacity, that suggests the “almost $600bn” in revenue would take an awfully long time to accrue.

But the Wood Mackenzie analysis also suggests the Australian taxpayer should stump up about $550m to help the industry build three CCS hubs.

That would be added to the estimated $1.3bn of taxpayer cash already given to CCS research and projects since 2003.

Cost competitive?

Not mentioned in the AEP media release or in the reporting in the Australian was that the Wood Mackenzie analysis also said it “may be difficult [for Australia] to compete on distance and cost” when it comes to CCS. Why?

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Because according to the research, in a scenario where emitters in Japan and South Korea were looking to transport and store captured CO2, it would cost about US$87 a tonne of CO2 to use an Australian project compared with US$66 to send it to carbon storage projects in Malaysia or Indonesia.

The analysis said: “This is significant, especially when Japanese and South Korean emitters, such as from the power generation and steel production sectors, would already be facing capture costs of over US$90/tCO2.”

Chiang said: “But of course, not all CO2 emissions may be captured and not all may be stored in Australia.”

Matthias Raab, chief executive of CO2 CRC, said: “I don’t think that in 10 years’ time we will have a $600bn industry. That’s too fast. But I do think we have to be open enough as an industry because CCS will take up a larger and larger proportion of our emissions reduction [in the future].”

Transition costs?

Political scientist Bjørn Lomborg wrote a column in the Australian last week that attacked solar and wind power and batteries as being too expensive, unreliable and environmentally damaging.

The same column has been running in outlets around the world – from Die Welt in Germany and the New York Post, to outlets in South Africa, Brazil and Malaysia and elsewhere – since early April.

“Despite us constantly being told that solar and wind are now the cheapest forms of electricity,” wrote Lomborg, “governments around the world needed to spend $US1.8 trillion on the green transition last year.”

Political scientist Bjørn Lomborg wrote a column in the Australian last week that attacked solar and wind power and batteries. Photograph: Martin Godwin/The Guardian

But the BloombergNEF report that Lomborg has referenced for this $1.8tn figure is not solely government spending but, according to a Bloomberg spokesperson, is “investment from all sources, not just government money. The vast majority will be private sector financing and consumer purchases”.

The spokesperson said the figure should not be characterised as a price tag, but was rather money spent on projects that were “sufficiently economically viable” to secure investment.

A spokesperson added: “It is also worth noting that the $1.8tn number is inclusive of electric vehicles, heat pumps, grid, CCS, hydrogen and other sectors as well – not just wind and solar.”

Attacking solar and wind

Lomborg attacked solar and wind for being intermittent, and said if Germany suffered a five-day wind drought in winter “when solar contributes very little” then the country would need batteries to back up the grid “for a minimum of 120 hours”.

Except, what Lomborg does not say is that Germany, to the south of his own native Denmark, is not relying on batteries alone to store electricity from renewables, or to keep its electricity supply reliable as it decarbonises.

The German government last year outlined its strategy for storing renewable energy, pointing to 30 existing pumped hydro facilities with the same power capacity as the country’s batteries, most of which (by capacity) are in homes.

But Germany is also building gas plants to sit on standby, and can import electricity from other countries.

Lomborg also complained the cost of recycling “spent wind turbine blades and exhausted solar panels” was never considered and that “thousands of enormous blades” were overflowing a small Texas town and, in Africa, solar panels and batteries were being dumped.

While it’s true there are concerns about the waste streams from renewables, it’s also true the industry and governments around the world are working on recycling options.

Columbia Law School’s Sabin Center for Climate Change Law has produced a report “rebutting 33 false claims about solar, wind and electric vehicles”.

That report points to research suggesting that unless recycling options are scaled up, by 2040 there will be about 61m tonnes of solar panel waste and 14m tonnes of turbine blades.

But how does that compare with other waste streams? Research in the journal Nature Physics last year suggested that without decarbonisation, the planet would produce about 45,550m tonnes of coal ash and 70,350m tonnes of municipal waste by the year 2050.

The researchers from the US government’s National Renewable Energy Research Laboratory wrote that “we globally produce and manage approximately the same mass of coal ash per month as the amount of PV module waste we expect to produce over the next 35 years.”

“Compared another way, globally we will generate up to 440–1,300 times more mass of municipal waste than PV module waste by 2050.”



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