Legislative logjam delays carbon capture laws

Laws governing potentially billions of dollars in investments in projects to capture and store carbon dioxide may be delayed until after the federal election, in part because of a rush of other legislation before Parliament, including amendments to the Government's unpopular WorkChoices policy.
"There's a huge strain on drafting resources at the moment," federal Industry Minister Ian Macfarlane told BusinessDay. "We're still keen to get it done and we are working on it."
The carbon capture and storage legislation, contained in an Offshore Petroleum Amendment Bill, was earmarked for the current winter session of Parliament, which runs for another three weeks. Industry and government officials now doubt the new law will be ready in time for members' debate and passage before the election, although Mr Macfarlane is still optimistic it may make it in time.
The likely delay follows last week's announcement by BP and Rio Tinto that they would study a $2 billion plant in Western Australia that would be the world's largest so-called clean coal plant, a move hailed by Prime Minister John Howard as "critical" for the future of the country's carbon-intensive coal industry.
The proposed plant would produce hydrogen to fuel power generators, while 90 per cent of its carbon dioxide emissions would be injected into reservoirs beneath the ocean floor. (Last week, the two companies scrapped a similar $1.2 billion plant proposed for Scotland when they missed out on British Government aid.)
Also affected by any delays is the potential multibillion-dollar Monash Energy project, aimed at converting the Latrobe Valley's greenhouse gas-intensive brown coal resources into liquid fuels. The venture plans to pump resulting carbon-dioxide gases into nearby depleted oil and gas fields under Bass Strait, in a process known as geosequestration.
Prior to submitting the planned amendments, the Government has pledged to give stakeholders a draft of the new laws. Debate is likely to centre on how rights are to be apportioned between existing operators of the oil and gas fields, such as Exxon Mobil, and companies eager to advance carbon storage efforts.
It was important that "the legislation achieved a balance between the rights of petroleum companies already operating offshore and the new wave of organisations seeking space to inject and store CO2," Monash Energy chief executive Roger Bounds said.
Mr Macfarlane indicated such a balance may tilt towards existing oil and gas operators, noting they would reject calls that prior ownership of resource rights shouldn't be a limiting factor for geosequestration: "Sovereign risk has been one of the great things for Australia in attracting oil and gas exploration, so I think preserving that has got to be a priority."
While Mr Macfarlane views the Monash Energy project as primarily an energy-conversion project, officials there were keen to stress the venture — which may involve hundreds of kilometres of pipelines to inject carbon dioxide in offshore basins — would be environmentally unacceptable without a carbon capture component. "It can't go ahead without the carbon capture," a spokesman said.