7.30 Report - 19/06/2006: Coal industry develops clean technology

KERRY O'BRIEN: The Prime Minister has recently argued that nuclear energy is cleaner and greener than fossil fuels. He says it's one of the main reasons he's opened a debate about whether Australia should have nuclear power. But the coal industry counters that it is developing a new type of clean coal technology that will dramatically reduce greenhouse gas emissions. Power stations using this non-polluting form of coal technology could come on stream in the next four to five years. But does it all add up financially? Peter McCutcheon reports. PETER McCUTCHEON: In a Brisbane laboratory, engineer Dr Joe da Costa is working on cutting-edge technology that could stop greenhouse gas pollution. He's perfecting one of the world's smallest sieves that can separate carbon dioxide from hydrogen. This means, in theory, a non-polluting source of power from that much-maligned fossil fuel, coal. Many people think of coal as a dirty 19th century-type technology. Do you think that's about to change? DR JOE DA COSTA, CENTRE FOR FUNCTIONAL NANOMATERIALS, QLD UNI: I think it is changing already. PROFESSOR IAN LOWE, AUSTRALIAN CONSERVATION FOUNDATION: The coal industry really is in a position where it has to reinvent itself if it wants to survive. PETER McCUTCHEON: Australia is at the forefront of research for clean coal technologies. But the jury is still out on how and when this technology will be moved from the laboratory to widespread industrial use and a key challenge will be how to provide financial incentives for the coal industry to change. PROFESSOR JOHN QUIGGIN, ECONOMIST, QLD UNI: What we need is to give industry a price signal that carbon emissions are costly and then let industry work out the best way of reducing emissions. PETER McCUTCHEON: Clean coal technology basically boils down to capturing carbon dioxide and storing it somewhere else. And to some extent, industry can already do this. The Queensland Government-owned CS Energy recently applied for Federal funding to convert this decommissioned power station into an almost greenhouse gas-free energy producer. But there's one big obstacle to widespread use of this technology. It's simply too expensive. DR KELLY THAMBIMUTHU, CENTRE FOR LOW EMISSION TECHNOLOGY: Those cost figures we currently estimate as being 50 per cent more, say, than the price of electricity than it would producing electricity without CO2 capture. PETER McCUTCHEON: Dr Kelly Thambimuthu is the chief executive of the recently-established Centre for Low Emission Technology in Brisbane. His centre is focusing on the single most expensive part of clean coal technology - how to capture carbon dioxide emissions. Dr Thambimuthu is liaising closely with CSIRO scientists in looking at ways of turning coal into a gas and extracting separate streams of hydrogen and CO2. DR KELLY THAMBIMUTHU: Two-thirds of the cost of capture, transfer and storage is in the capture area. DR JOE DA COSTA: I just want to show you one of those membranes to make here. PETER McCUTCHEON: Can I touch it? DR JOE DA COSTA: Sure. PETER McCUTCHEON: The centre is also taking a keen interest in Dr da Costa's tiny sieve which separates carbon dioxide at the molecular level. And there's billions of holes in this? DR JOE DA COSTA: Yes, that's right. PETER McCUTCHEON: And can you really design a sieve that small on a large industrial scale? DR JOE DA COSTA: We can. We have the technology here. We're taking the technology to a stage in three years that it will be able to compete against those conventional mature technologies. VIDEO: Instead of burning coal, coal gasification opens new possibilities. PETER McCUTCHEON: But how far away are we from turning science fiction-type animations like this one, presented to a 2004 International Energy Agency conference, into reality? Well, according to Dr Thambimuthu, it all depends on how much society is willing to pay for its electricity. DR KELLY THAMBIMUTHU: If they were willing to tolerate that higher cost now, we could implement the first solutions, say, within a five-year time frame. PETER McCUTCHEON: Within five years? DR KELLY THAMBIMUTHU: Within five years, provided that we are willing to tolerate a higher cost. PROFESSOR IAN LOWE: I certainly think we can use coal more cleanly than we have in the past and clean coal has to be better than dirty coal. PETER McCUTCHEON: Environmentalists cautiously welcome but are reluctant to wholly embrace clean coal technology, with concerns about mining practices and the safety of underground CO2 storage. But Australian Conservation Foundation President Ian Lowe agrees one of the biggest hurdles to overcome is an economic one. PROFESSOR IAN LOWE: But at the moment we don't charge for releasing carbon into the atmosphere and so it is more costly to use coal in a clean way than it has been to use it in a dirty way, just polluting the atmosphere. So until the technology is proven and until there are economic incentives to use it, we're probably not going to see it happen. PETER McCUTCHEON: There is no financial incentive for industry to move from dirty to clean technology, is there? PROFESSOR JOHN QUIGGIN: That's right, and in the case of carbon emissions there's no reason at all, unless we have some, either a carbon tax or an emissions trading scheme, even if it was very cheap, there'd be no pay-off to industry for adopting it. PETER McCUTCHEON: Nonetheless, with close to $1 billion in combined funding from Federal, Queensland and Victorian Governments, industry is working closely with scientists to fine-tune clean coal technology. For this meeting of the research and investment committee to the Centre for Low Emission Technology it's a question of when, not if, this new technology is introduced. Coal may never be as clean and green as renewable energy sources like wind and solar. But while researchers like Joe da Costa work on cheaper ways of capturing greenhouse gases, coal may still be a major source of power well into the 21st century. Do you think in your lifetime you will see clean coal technology used on a large industrial scale? DR JOE DA COSTA: Yes, I think for the next 20 years, those ones are going to be in place already. PETER McCUTCHEON: 20 years away? DR JOE DA COSTA: Yeah.