2023 offshore greenhouse gas storage acreage release: nominated areas for comment

Submission in response to

2023 offshore greenhouse gas storage acreage release: nominated areas prepared by

Environmental Justice Australia

30 June 2023
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[redacted]

Submitted to:

Department of Industry, Science and Resources
Consultation Hub, Greenhouse Gas Acreage Inbox
Industry House, 10 Binara Street, Canberra ACT 2601
Via email: GHGacreage@industry.gov.au

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Executive Summary

Capturing greenhouse gas emissions for permanent underground storage is a nascent technology that remains at an early stage of development worldwide. It carries known and potentially serious direct environmental risks, as well as the fundamental risk of technical failure resulting in the release of captured emissions to the atmosphere, contributing to harmful climate change.

The release of acreage for bidding represents the moment at which the selected geological formations first become available for preliminary carbon capture and storage (‘CCS’) exploration and appraisal activities, and the Offshore Petroleum Greenhouse Gas Storage Act
2006 (‘OPGGSA’) permitting and environmental assessment framework comes into play.

This framework is the key protective measure in place to manage the immediate and longer- term risks of large-scale CCS projects. It must ensure that CCS project risks are identified and minimised, that the public is able to access information about CCS operations, and that project proponents are appropriately accountable for any liabilities arising from their activities.

We submit that the framework falls far short of this standard. It does not reflect the need for
CCS projects to result in actual emissions prevention, does not adequately protect against the significant immediate and longer-term risks associated with commercial-scale CCS, and does not provide effective measures to ensure that future costs arising from CCS project failure will be fairly and appropriately apportioned.

In these circumstances, we submit that no further acreage should be released for CCS exploration and development, until a robust, best practice regulatory scheme has been developed that addresses the issues we have identified, and comprehensively confronts and engages with the risks of CCS.

Critically, measures must be introduced – whether within the OPGGSA framework or more broadly across government decision-making – to ensure that, to the extent CCS is contemplated in Australia, any application of this technology avoids inadvertently (or otherwise) perpetuating fossil fuel extraction which would otherwise be phased out as is required to address fossil fuel-driven climate change.

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1 Introduction

1. The purpose of this consultation is to assist the Department of Industry, Science and
Resources to determine which offshore areas should be released for bidding by proponents
of potential CCS developments. The apparent policy rationale for the acreage release is
the assertion that ‘CCS is a technology with the potential to reduce emissions from hard-
to-abate sectors’.

2. Capturing greenhouse gas emissions for permanent underground storage is a nascent
technology that remains at an early stage of development worldwide. It carries known and
potentially serious direct environmental risks, as well as the fundamental risk of technical
failure resulting in the release of captured emissions to the atmosphere, contributing to
harmful climate change.

3. Several large offshore CCS projects have been proposed in Australian waters, and the
technology has recently attracted renewed, vocal support from within industry. Although
the financial, social, and technical barriers to large-scale offshore CCS appear to remain
considerable, the rate of exploration and appraisal activities could soon increase.

4. The release of acreage for bidding represents the moment at which the selected geological
formations first become available for preliminary CCS exploration and appraisal activities.
From this point, the permitting and environmental assessment framework of the Offshore
Petroleum and Greenhouse Gas Storage Act 2006 (Cth) (‘OPGGSA’) and its associated
regulations comes into play. This legislative framework is the key protective measure in
place to manage the immediate and long-term risks associated with large-scale CCS
projects.

5. In this context, it is vital that the OPGGSA framework is, from the outset, optimally designed
to ensure that the risks associated with offshore CCS activities are publicly identified,
avoided or minimised, that residual risks are appropriately managed, and that liability for
any future rehabilitation or compensation can be wholly and fairly apportioned.

6. We are concerned that the OPGGSA framework falls short of this standard.

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7. We have taken the opportunity presented by this consultation process to raise several key
issues for the Department’s consideration:

a. The framework provides no assurance that CCS projects will achieve the policy
objective of a net reduction in Australian greenhouse gas emissions.

b. The calculation and attribution of long-term liability for CCS project failure exposes
the Australian public to significant risk.

c. There is inadequate public reporting and transparency around CCS project impacts
and risk management.

8. This is not an exhaustive analysis of the gaps in the OPGGSA framework. Rather, we wish
to highlight several key problems which, given that major CCS deployment appears to be
a real possibility, and that such deployment would carry significant environmental and
health risks, should prompt a review of the framework prior to the release of further acreage
for CCS activities.

2 Offshore CCS status and environmental risks
2.1 Carbon capture and storage remains a nascent technology

9. Of the 30 CCS projects worldwide operating as of late 2022, 21 entail ‘Enhanced Oil
Recovery’ (‘EOR’), where CO2 is pumped into depleted oil reservoirs to extract more oil. 1
In these projects, the permanent storage of CO2 is not the objective; no attempt is made to
ensure the CO2 remains underground long-term, nor is any systematic monitoring of
storage volumes or duration undertaken. As a result, the pool of experiential knowledge
about the effectiveness of CCS as a means of absolute emissions reduction is very small.

10. Further, most of the flagship carbon capture projects - including those for Enhanced Oil
Recovery - have experienced chronic technical difficulties: 2

a. Chevron’s Gorgon LNG plant, WA – Approval of this project was conditional on
the capture and storage of 80% of the waste CO2 from gas processing, or about

1
See Global CCS Institute, 2022 Status Report (2022), 53-54.
2 For further detail, see Bruce Robertson, The Carbon Crux: Lessons Learned (September 2022)
Institute for Energy Economics and Financial Analysis .
11 OPGGSA, S 21.
12 OPGGSA, s 3(b).
13 OPGGSA, ss 290, 357.
14 Australian NDC 2022 Update, 16 June 2022.

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nominated areas for the purpose of exploring permanent offshore storage locations should
be considered in light of Australia’s international obligations as well as the fact that the
current framework provides no clear requirement that CCS projects will result in a net
reduction in greenhouse gas emissions.

27. EJA submits that an evidence-based, target focused framework which allows the Regulator
to assess and identify the rate, duration and volume of CCS that can be captured through
proposed offshore CCS projects is integral to ensuring that future activities carried out
through CCS projects result in a net reduction in greenhouse gas emissions.

4.2 Minimising, quantifying and apportioning future liability

28. As noted above, all CCS projects carry the risk of a CO2 leak, whether from the transport
and injection infrastructure, or whether from the target storage reservoir itself. Such a leak
could have serious localised impacts – such as the significant human health harms of the
2020 explosion of a high-pressure CO2 pipeline in Mississippi, USA – as well as
contributing to the global accumulation of greenhouse gases in the atmosphere.

29. The OPGGSA purports to manage these risks in various ways, but we are concerned that
gaps remain which could expose the Australian public to significant – and unfair – costs in
the event of a technical failure and CO2 leak from an offshore CCS facility.

Calculation of security for long-term monitoring

30. Once a CCS proponent ceases injection, it must apply to the Minister for a site closing
certificate, which triggers the process for transferring responsibility for the monitoring and
management of the site to the Commonwealth. If the Minister is satisfied that injection
operations have ceased (or never took place), the Minister may issue a pre-certificate
notice that describes a program for monitoring the behaviour of the GHG plume and
estimates the costs and expenses of that program. 15 This estimate then forms the basis of
a security paid to the Commonwealth by the proponent to cover monitoring operations
while the site closing certificate is in force.

15 OPPGSA, ss 388, 391.

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31. The Act also provides that costs recoverable by the Commonwealth are limited to expenses
incurred in carrying out the program described in the pre-certificate notice, and are capped
at the estimate provided in that notice. 16

32. It is unclear what recourse the Commonwealth would have to recover costs incurred
outside the monitoring program during the 15+ years prior to the issue of the site closing
certificate – for example, costs in remediating a sudden leak in the reservoir seal.

33. Further, multiple factors make it highly possible that costs and expenses incurred by the
Commonwealth may ultimately exceed the security, including the technical complexity of
CO2 injection in a deep sea environment, challenges in monitoring the behaviour of the
injected CO2 plume, the inherent uncertainties in modelling matters like seismic activity and
CO2 movement, and the possibility of unforeseen events such an earthquake at or around
the injection site. In such circumstances, the Australian public would be left to meet
additional costs. Concerningly, it appears that this would extend to instances in which such
additional costs have resulted from the provision of incomplete or inadequate information
by the proponent, given Commonwealth’s dependence on information provided by the
proponent in the site-closure certificate application in determining the security amount.

15-year assurance period

34. The minimum period of time that must pass before the process for initiating the transfer of
responsibility for a CCS site is 15 years. 17

35. Ideally, CCS should result in the permanent storage of the injected greenhouse gas plume.
Any leakage or other failure means that the emissions prevention objective of CCS has not
been met.

36. As noted throughout this submission, CCS for the purpose of permanent storage (as
opposed to Enhanced Oil Recovery) is still a nascent process, and there is a dearth of
long-term monitoring data about the effectiveness of this technology. In these
circumstances, and given the myriad of ways in which storage could fail over time and the
liability to which the Australian public would then be exposed, we are concerned that 15
years is insufficient to provide adequate assurance that the CCS process has been
successful.

16 OPGGSA, s 398.
17 OPGGSA, s 399.

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Extent of potential liability

37. Under the OPGGSA, the Commonwealth must indemnify former CCS proponents in
relation to liabilities arising from acts done (or omitted to be done) in the course of
operations authorised by their CCS licence. 18 There is no cap – at least within the
OPGGSA framework – on the scale of the potential sum of public money that could be
required of the Commonwealth under this indemnity, and no explicit exclusion within the
legislation of liabilities arising from the negligence or wilful misconduct of the former
licence-holder.

38. While there are sound policy reasons for ensuring that there are avenues for redress for
persons who may be adversely affected by a failed CCS project in the event that the
licence-holder no longer exists, this is achieved by section 401, which transfers liability to
the Commonwealth in such circumstances.

39. We are concerned that given the extent of the potential damages that could arise from, for
example, a large-scale CO2 leak near a commercial fishery or other vulnerable ecosystem,
in circumstances where offshore CCS is still a very early-stage technology, these
provisions expose the Australian public to potentially very significant liabilities.

40. Further, it should be noted that these liabilities for damages arise in addition to the costs
of whatever rehabilitation or remediation work required to address the leak. There is no
express provision in the OPGGSA framework for the Commonwealth to recover
rehabilitation costs from the proponent in the event of a serious leak, and while this issue
may be covered in individual indemnity agreements, this is not guaranteed, providing the
public with no assurance that such costs would be fairly apportioned.

4.3 Accountability and transparency

41. In light of the fact that the development of CCS technologies and strategies remains at the
early stages, there is a paramount need to ensure that the processes and guidelines within
the OPGGSA framework to approve exploration and injection permits are open and
transparent.

18 OPGGSA, s 400.

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42. While preliminary project and impact information is published through the initial
environmental plan process under the Environment Regulations, 19 very little information
about the ongoing conduct of CCS activities is made available to the public.

43. By way of example, under section 420 of the OPGGSA, a holder of a greenhouse gas
assessment permit is required to provide a monthly report to the Regulator about the
exploration activities and operations carried out in the block that is the subject of the
permit. 20 Further, the provisions within Schedule 1 and 2 of the GHG Injection Regulations
sets out specific information that must be provided in support of an application under Part
2.1 of the GHG Injection Regulations for the declaration of a part of a geological formation
as an identified GHG storage formation. 21

44. Despite the inclusion of such broad reporting obligations for GHG permit and licence
holders (including those outlined above), the decision to publish the reports or information
produced as a result of those reporting requirements, is discretionary. 22 We understand
that, in practice, this discretion is not used. To ensure transparency during the application
process for GHG assessment permits 23 and GHG injection licences, 24 EJA submits that
the OGGPSA framework should incorporate a robust reporting framework which ensures
that the Regulator or Minister regularly publishes information relating to the scope and
objectives underpinning applications. Such reporting should also outline how CCS
exploration and injection activities measure up against appropriate emissions reduction
benchmarks.

45. In that respect, in order to ensure that the processes by which permits and licences are
approved and maintained by titleholders remain open and transparent, EJA submits that
the Department should take the following actions:

a. Support an amendment to s 465 of the OPGGSA which imposes a positive statutory
duty on the Regulator to regularly publish information regarding the monitoring of
the behaviour of GHG stored in offshore areas; and

19 Reg. 9ab. EJA notes that NOPSEMA publishes submitted environment plans submitted for offshore energy activities.
20 OPGGSA, s 420.
21 OPGGSA, Part 2.1.
22 OPGGSA, s 465.
23 OPGGSA, Part 3.2.
24 OPGGSA, Part 3.4

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b. Consider the establishment of baseline targets or requirements which outline how
the Regulator will measure and monitor the capture and storage of GHG through
offshore CCS projects.

5 Conclusion
46. EJA thanks the Department for its consideration of this submission. We welcome any
questions or requests for further material arising from this submission.

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