The Morrison government has succeeded in passing new legislation that is designed to kick start the production of hydrogen from brown coal, a move that undermines efforts to establish a green hydrogen industry in Australia.
The Offshore Petroleum and Greenhouse Gas Storage (OPGGS) Amendment Bills were passed by the federal Senate this week, and they include measures that remove regulatory barriers to a new carbon capture and storage project in Victoria.
The CarbonNet CCS project forms part of the federal government’s Hydrogen Energy Supply Chain Project, which has attracted an astronomical amount of funding for a pilot plant that will export a negligible amount of brown hydrogen to Japan.
The brown coal gasification project in the Latrobe Valley will see $496 million in funding, including $100 million in taxpayer funds split between the federal and Victorian governments, used to deliver “up to three tonnes of hydrogen gas”, over the project’s life.
Federal resources minister Keith Pitt welcomed the passage of the legislation, seeing it as a new way to prop up Victoria’s ailing brown coal industry.
“The CarbonNet project will provide the required Carbon Capture and Storage for the development of the low emissions Hydrogen Energy Supply Chain Project,” Keith Pitt said.
“CarbonNet has been investigating the feasibility for a commercial-scale, multi-user CCS network in Gippsland, Victoria, and the Bills that passed through parliament removes one of the technical issues around the project.”
With the looming closure of most of Victoria’s brown coal power station fleet, the brown coal resources within the Latrobe Valley face a real prospect of going unused, as there is no real export potential for the brown coal due to its low quality.
A group of Australian researchers warned that Australia may miss a strategic opportunity to establish itself as a leader in hydrogen production by pushing the development of brown hydrogen projects, with many countries making commitments to only purchase certified ‘green hydrogen’.
The legislation passed by the parliament this week clarifies jurisdictional issues, with the proposed carbon capture and storage site, located below the ocean in the Gippsland Basin off the Victorian coast, sitting between both Victorian and federal waters.
“A proposed site straddles the boundary of state and Commonwealth waters and the Bill amends and clarifies the regulatory framework to help unlock the development of more projects in the Latrobe Valley – providing a cost effective pathway to low emissions,” Pitt added.
It is also another intervention from the Morrison government that works to support the fossil fuel industry, while crucial reforms that would work to aid the clean energy sector have been shelved.
The passage of the legislative amendments has received priority consideration in a restricted legislative agenda for the parliament, due to a suspension of sittings caused by Covid-19.
“As Australia emerges from the COVID-19 pandemic and begins the process of economic recovery, it’s even more crucial that we ensure that our regulatory approvals support, not hinder, major projects. These amendments achieve that,” Pitt added.
Local federal member for Gippsland, Darren Chester, made it clear that the government has prioritised support for the brown coal industry, claiming – rather ironically – that it was important to support the fossil fuel sector as his electorate had been hit by drought and bushfires.
“This has real potential to generate new jobs and business opportunities in a regional area that has been suffering with the closure of the Hazelwood power station, drought, bushfires and now the coronavirus,” Chester said.
“It’s great to see a significant new industry being created right here in Gippsland as the Latrobe Valley finds new ways of using its natural resources and continues working towards reducing emissions.”
The Morrison government will oversee up to $300 million being invested in ‘low emissions’ hydrogen production through the Clean Energy Finance Corporation, but it appears likely that at least some of this investment is also destined for projects producing hydrogen from fossil fuels.
A new investment mandate issued to the CEFC by federal energy minister Angus Taylor will seek investments directed to the emerging hydrogen industry but left the door open to the CEFC investing in hydrogen from gas projects.
