A word from the CEO

2023 must be a year of delivery

Welcome to our first newsletter of 2023, a year which has begun with an even sharper focus on delivering long-discussed emissions reductions amid a deeply challenged international energy market and global economy.

Earlier this month the Australian Government made two important announcements that should provide greater certainty on the approaches the nation will take to meeting its emissions reductions targets.

The final report of the Independent Review of Australian Carbon Credit Units (also known as the Chubb Review) and proposed reforms to the so-called Safeguard Mechanism, released on 9 and 10 January respectively, should give greater certainty on how Australian industry and regions will contribute to a net zero global economy.

But that certainty is at least delayed by the position the Federal Opposition may take on the key emissions reduction policies.

Both documents were broadly inline with industry expectations and after protracted climate debates in Australian politics, were seen as critical to enable delivery on long-promised emissions reduction.

Further delays threatened not only Australia’s emissions reduction trajectory but our economic and energy security.

Importantly, both policy announcements strengthen the case for carbon capture and storage as a necessary technology in Australia’s climate response.

Chubb Review

In July 2022, the federal government appointed an independent panel (led by Professor Ian Chubb AO) to review the integrity of ACCUs under Australia’s carbon crediting framework.

The purpose of the Review was to advise on ways to strengthen the integrity of Australia’s carbon crediting framework in contributing to Australia’s emissions reduction targets, and to ensure that the scheme maintains a strong and credible reputation supported by participants, purchasers and the broader community. It was established by the incoming Labor Government, in response to criticisms that the level of abatement under the scheme was overstated, all major methods lacked integrity and the scheme was a fraud on taxpayers and the environment.

The Chubb Review found the ACCU scheme arrangements to be ‘essentially sound,’ incorporating mechanisms for regular review and improvement. It rejected criticisms of the scheme but recommended some changes to clarify governance, improve transparency and enhance confidence in the integrity and effectiveness of the scheme.

The Chubb Report is a net positive for CO2CRC. The overall finding as to the sound integrity of the ERF system for generating ACCUs is beneficial to industry members who will increasingly rely on access to ACCU’s to meet their corporate emissions reductions commitments.

Importantly the report made no negative findings in relation to CCS and highlighted the important potential contribution to limiting the ‘pace and extent of climate change.’

Suggested changes to CCUS methods may limit the scope for enhanced hydrocarbon recovery but support initiatives such as biorefining and production of carbon-negative building materials.

CO2CRC will work closely with government and our members on the detail of the report’s recommendations.

Safeguard Mechanism Reforms

Also in mid-2022, the new federal government announced a review process of the operation of the Safeguard Mechanism (SM), as an arm of its overall climate change policy approach.  With ‘Powering Australia’ policies aiming to cut electricity emissions by doubling the level of renewable energy generation each decade, changes to the SM are intended to address rising emissions from the industrial sector. The overall goal is to meet the government’s tough 2030 emissions reduction target (43% below 2005 levels by 2030).

The SM has been in place since 2016. It provides a legislated framework that limits the emissions of around 215 large industrial facilities (those that emit >100,000 tonnes CO2-e) – covering around 28% national emissions. Emissions limits for individual facilities are known as ‘baselines’ with the sum of all baselines forming the overall emissions constraint for the scheme.

The proposed reforms – likely to be opposed by the Opposition – will introduce higher costs on many trade-exposed industries and impact new investment in those sectors, but in many areas they reflect changes industry, including many CO2CRC members, are already making.

If the Coalition confirms its opposition, the Greens and independent Senators may attempt to force changes to further restrict CCS and other measures open to fossil fuel producers and users.

CO2CRC will remain engaged in political and policy discussions to limit this impact, and remind policy makers that, alongside renewables and increasing investment in hydrogen and batteries, CCUS can make Australia a world leader in decarbonisation technologies and innovation.

And despite ambitions for renewables-only energy supply, carbon capture will, as the IEA’s Fatih Birol has highlighted, be vital to Australia achieving its climate targets and supporting an orderly transition to a low emissions future.

And after decades of debate the time has come for delivery. That remains our critical message for 2023.

Matthias Raab, CEO.

16/01/2023 EU Approves $1.2Bn Scheme For Danish CCS Technology | Rigzone
The European Commission has approved a $1.2 billion Danish scheme to support the roll-out of carbon capture and storage (CCS) technologies.

15/01/2023 Efforts to commercialize carbon capture tech accelerating in Japan | The Japan Times
Moves to commercialize carbon capture and storage (CCS) technologies are accelerating in Japan.

12/01/2023 Carbon credits: Why Chris Bowen’s plan won’t work without carbon capture (afr.com)
The Albanese government cancelled $250 million of federal grants for carbon capture in October as it refocused funding away from big fossil fuel producers and instead pledged $141 million over 10 years toward carbon capture projects linked to “hard to abate” industries such as cement, steel and aluminum.

9/01/2023 Carbon credit scheme fraud claims ‘overstated’: Chubb review
Claims that Australia’s carbon credit scheme has been defrauded by business and landowners have been exaggerated and the system is “essentially sound”, a government review led by former chief scientist Ian Chubb says.

3/01/2023 CCS to gain momentum in 2023 – ING (pemedianetwork.com)
Global deployment of carbon capture and storage (CCS) technology is expected to pick up speed in 2023, but growth will not accelerate significantly until 2025, when the completion of more projects is forecast to triple current capacity, according to analysis by Dutch bank ING.