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Carbon capture caught in a rut?

Posted February 14, 2012 21:36:00

Carbon capture has been offered as one answer to climate change but is Kevin Rudd's $300 million CCS project giving value for money for Australia?

Source: 7.30 | Duration: 9min 22sec

Topics: energy, electricity-energy-and-utilities, climate-change, federal-government, federal---state-issues, public-sector, states-and-territories, world-politics, activism-and-lobbying, programs-and-initiatives, environmentally-sustainable-business, australia, vic, traralgon-3844


CHRIS UHLMANN, PRESENTER: As Prime Minister, Kevin Rudd had many visions. The one was to make Australia a world leader in clean coal. So an institute was created to develop technology that would capture and store carbon from power plants. The government committed $315 million to the Global CCS Institute, but as Michael Atkin reports, its critics argue it has failed to attract major investment from its global members, and the money spent has achieved little.

MICHAEL ATKIN, REPORTER: In Victoria's Latrobe Valley, research yes are trying to turn the carbon capture dream into reality. This project is exploring the best way to stop gases from Loy Yang power station entering the atmosphere.

ERIK MEULEMAN, CSIRO: In this final plant, the post-combustion capture plant, we capture the carbon dioxide.

MICHAEL ATKIN: But this tiny pilot is far from the real deal, capturing less than one per cent of Loy Yang's emissions. And it hasn't even begun tackling how to store the carbon dioxide underground.

ERIK MEULEMAN: What I would like to see: that we at least get as soon as possible one plant to show that this technology is working.

JOSPEH ROMM, CENTRE FOR AMERICAN PROGRESS: No one has put all the pieces together into one commercial effort - have it run, kick the tires, as we say in the States, see what happens to the carbon dioxide.

MICHAEL ATKIN: Carbon capture and storage, or CCS, takes the emissions from power stations and other sources, compresses the CO2 into liquid and stores it in deep geological formations, or old oil and gas fields. But the enormity of the task hit home last year, with 11 major projects hitting the wall.

JOSEPH ROMM: Almost every major project around the world that has been started in the last few years has either been delayed, stopped or cancelled outright.

MICHAEL ATKIN: CCS was seen as the great climate hope, offering major polluters a green makeover.

CORPORATE VIDEO, GLOBAL CCS INSTITUTE: Carbon capture and storage can reduce emissions from power plants and industry to almost zero.

KEVIN RUDD, FORMER PRIME MINISTER: For a major coal producer like Australia, finding ways to reduce carbon emissions from coal is a clear priority.

MICHAEL ATKIN: In 2008, the Australian Prime Minister created a new body to lead the way: the Global CCS Institute. Its brief was to get the industry moving by assisting projects and bridging knowledge gaps.

KEVIN RUDD: It is our aim to see major CCS projects become a reality, and for them to contribute to solving one of the greatest challenges that confronts our generation.

MICHAEL ATKIN: And the start-up was cashed up, with $100 million a year in federal seed funding. Dr Peter Cook was alongside Kevin Rudd at the Institute's launch, but shortly afterwards the world-renowned CCS scientist wrote to the Prime Minister warning a new body was unnecessary.

PETER COOK, CCS RESEARCHER: I was suggesting that we had a more collaborative approach to it and to build on existing organisations, rather than necessarily setting up a new organisation.

MICHAEL ATKIN: The Department of Prime Minister and Cabinet says it has no record of the letter. Brad Page has been in charge of the Global Institute for the last five months. He concedes the Rudd Government funding was too much, too soon.

BRAD PAGE, CEO, GLOBAL CCS INSTITUTE: I think history has shown that the Institute was actually unable to spend that sort of money upfront.

MICHAEL ATKIN: At the G8 summit in 2009, Kevin Rudd took to the world stage to relaunch the Global Institute. Other government and industry players were expected to get on board.

KEVIN RUDD: In many respects, the eyes of the world are on L'Aquila.

BARACK OBAMA, US PRESIDENT: Hold on, Kevin, you have back-up here. Come on, guys.

(crowd laughs)

KEVIN RUDD: It's good that we all hunt in packs.

MICHAEL ATKIN: While leaders may rush to fill podium space, the Institute's 330 international members haven't been in a hurry to bankroll it. Only minor donations have come from the US Government and European Commission, totalling around $4.6 million. One former Global Institute employee, who was asked not to be identified, says insiders are frustrated it has failed to prove its worth.

FORMER GLOBAL CCS INSTITUTE EMPLOYEE: If the institute had a robust program that would see projects move forward, why wouldn't governments or companies put their hands up and say, "We will put money into it"?

MICHAEL ATKIN: Industry critics say the Global Institute has been a disappointment because it has underspent on projects. Financial reports obtained by 7.30 reveal it has $145 million sitting unused in its coffers. So far, it has given just $37 million for CCS projects around the world, including for this coal plant in West Virginia.

JOSEPH ROMM: I certainly don't understand why Australia would be funding projects in other rich countries.

MICHAEL ATKIN: Mountaineer is one of three US projects run by corporations with billions in assets and annual revenue.

JOSEPH ROMM: If they are interested in the technology, they should be pursuing it by themselves.

MICHAEL ATKIN: All three American projects have now been scrapped or placed on hold. The former Global Institute employee says internal division was rife about funding rich companies.

FORMER GLOBAL CCS INSTITUTE EMPLOYEE: Multibillion dollar projects really don't benefit from the type of funding the institute is able to offer. There were a lot of views within the Institute and beyond that felt that CCS projects and the governments from countries where these projects are based should be funding them on their own.

MICHAEL ATKIN: The Canadian power company TransAlta has received $5 million from the Global Institute. It plans to retrofit this coal plant, but the project's future is in doubt.

DON WHARTON, VICE PRESIDENT, TRANSALTA: This may be simply a one-off demonstration project of a technology that ultimately can't make an economic business case.

BRAD PAGE: The funding the institute provides to projects is not about causing projects, in the end, to be built. We simply don't have the budget that big. In fact, we have always been a knowledge acquirer and a knowledge sharer.

MICHAEL ATKIN: Financial reports obtained by 7.30 show maintaining a global presence has proven costly. In the last two financial years, the Global CCS Institute has spent $7.4 million on travel and meetings, $11.3 million on contractors and consultants, and almost $6 million on administration.

BRAD PAGE: We are getting the organisation slowly but surely into a more steady state, where we can cut back on some of those travel costs.

MICHAEL ATKIN: While the Global Institute was funding international projects, Australia's big CCS hope was collapsing. ZeroGen was a multibillion dollar clean coal plant being planned for central Queensland. In December 2010, ZeroGen fell over.

KELLY THAMBIMUTHU, FORMER BOARD MEMBER, ZEROGEN: I won't hide my disappointment in that sense. Then every little bit would have helped.

MICHAEL ATKIN: Dr Kelly Thambimuthu, a former board member, believes the Global Institute didn't do enough.

KELLY THAMBIMUTHU: They could have come in and facilitated things, like financing at the difficult end of the spectrum.

MICHAEL ATKIN: Dr Thambimuthu believes the Institute should have simply bankrolled ZeroGen at whatever cost, to make sure it proceeded, but that is not our role.

MICHAEL ATKIN: Lack of results is allowing political support to fade away. The Gillard Government has slashed industry assistance. The Opposition wants to scrap the Global Institute, and the Greens don't want CCS to receive any taxpayer money.

BRAD PAGE: The vast majority of our funding comes from the Australian Government. From this year it is in decline. If we don't do something to bolster that and manage the organisation responsibly, then it would not have a future.

MICHAEL ATKIN: You have the likes of Xstrata and Woodside as members of the Global CCS Institute. Why don't they think it's worth giving money to you?

BRAD PAGE: At this stage, nobody has required them to pay anything to the Institute.

MICHAEL ATKIN: But like CCS technology, time may be running out for the Global Institute to prove its worth.

(to Brad Page) Is it going as fast as some said 10 years ago it would go?

BRAD PAGE: Probably not. But that's not to say it isn't progressing. It is not dead in the water. It is clearly a winning technology. And we will continue working at it.

CHRIS UHLMANN: The Energy Minister Martin Ferguson was unavailable for interview tonight.