OFFSHORE PETROLEUM AMENDMENT (GREENHOUSE GAS STORAGE) BILL 2008
September 17, 2008
Mr CHESTER (Gippsland) (1.17 pm) — It is with pleasure that I join the debate here today. I thank other members for their contributions, which I have followed with a great deal of interest—quite thought provoking contributions they have been. The Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 amends the Offshore Petroleum Act 2006 to establish a system of offshore titles. It will authorise the transportation by pipeline, injection and storage of greenhouse gas substances in deep geological formations under the seabed. I rise to express my general support for the bill and the process it seeks to facilitate—that is, the sequestration of greenhouse gases, primarily carbon dioxide.
In supporting the process, I must report a growing level of scepticism in my own community about the issue of man-induced climate change and the government’s proposed response—particularly the emissions trading scheme. I certainly accept that climate variability is real, but how much of what we are experiencing right now in my particular region can be put down to permanent change and how much to a drought event is a subject of much debate within my community. I also seek to put on the public record the overwhelming need for better education and community understanding of the quite complex issues we are dealing with here and of terms like ‘geosequestration’, ‘carbon capture and storage’ and ‘climate change’ itself. I think we need to involve our communities more in this entire discussion, and there is a great deal of room for a more mature and robust debate around all of these issues and the possible solutions without the need to stereotype people as sceptics or true believers.
There is a great deal of goodwill in my community for action to protect the environment. As a whole, Gippslanders are very passionate about our local environment. We have thousands of volunteers in groups like Landcare who are getting their hands dirty and doing the practical environmental work that is required in our region. We have farmers who are investing in nutrient reduction programs and whole-of-farm plans to improve water quality, which is such a critical issue for the people of Gippsland and the Gippsland Lakes themselves. We have many industries which are investing in technology to clean up their own operations.
I still believe there is a great deal of confusion about climate change, and the government’s proposed response with the emissions trading scheme is cause for concern. We need a proper debate and we need to canvass all the possible solutions. A classic example is the issue of sequestering carbon in the soil. Briefings that I have received on this issue, from my perspective, demand further investigation because of the real prospect we have of improving our agricultural production through better soil conditions while achieving the government’s desired aim to deal with carbon emissions. That has some exciting possibilities for us, and I will be following that up with the industry involved.
If the government were prepared to debate these types of issues in completely good faith, it would start by immediately withdrawing the climate change propaganda campaign which is currently screening on our TVs. This type of television advertising, with its graphic images, is purely designed to do the groundwork for the government’s climate change policies, and I think scaring the community and trying to dumb down the debate in the hope that there will be no resistance to an emissions trading scheme do none of us any great credit. The massive cost and the prospect of job losses that are related to the emissions trading scheme issue are coming at a time when Australia can least afford them.
I am reserving my position on the emissions trading scheme for those very good reasons. We have not seen the economic modelling from the government at this stage and we have very limited knowledge of the direct impacts, particularly as they affect regional communities. I fear that in some regards we are running headlong into an economic disaster which will be most heavily felt in rural and regional communities like my own area, Gippsland. The industries that are going to be most affected by government policy on climate change are those that are primarily located in regional areas.
I may return to that point in a few moments time, but first I want to highlight the potential opportunities that I believe this bill presents in the Gippsland situation. There is no doubt that Gippsland will need to be at the forefront of the research and development to successfully capture and store carbon in the future. We have a strong and vested interest in developing the technology and becoming a major player in this emerging industry. If we can make it work anywhere, Gippsland is going to play a major role in the future.
The Gippsland Basin is obviously a major source of oil and gas for our nation. I am very much a layman when it comes to the issues of geology but, as I understand it, the very same geological formations which have produced the structures for trapping oil and gas beneath the surface make the Gippsland Basin a very attractive proposition for this type of activity. Studies have shown that the Gippsland Basin has the capacity to store very large volumes of carbon dioxide. It possibly goes without saying that the location of the basin, alongside the Latrobe Valley power stations, provides an obvious link for this type of activity. Indeed it is regarded by many in the power and oil industries as the possible solution to the issue of CO2 emissions from brown coal production in the Latrobe Valley.
But I again make the point about the need to hasten slowly in relation to the emissions trading scheme, which is inextricably linked to this bill. Carbon capture and storage may be the big ticket item that provides the answer to the issues facing brown coal power generators, but we are several years away from achieving the desired result.
It is in noone’s interest to jeopardise the economic viability of power generators in the Latrobe Valley by moving too fast or placing too heavy a burden on their operations. I refer to comments this week from the Chief Executive Officer of Loy Yang Power, Mr Ian Nethercote, who has flagged his concerns about the future of his industry. I stress that Mr Nethercote does not oppose an emissions trading scheme, but he is seeking a balanced approach. Many in the industry and in the Gippsland-Latrobe Valley hold a similar view.
Mr Nethercote is quoted in the Latrobe Valley Express this week, talking about Professor Garnaut’s supplementary draft report and the recommendation of a $20 per tonne fixed carbon price. He said:
If we look at Loy Yang, we would need to find an extra $1 million a day just to cover permit costs. If we then take that a step further, that means for the Latrobe Valley brown coal sector you need to find about $1.2 billion, that’s if its $20 per tonne. If you take that across the national market, then it comes out to $4 billion a year, the numbers are huge, they’re massive.
I add that to the debate as a point of caution. The people of the Latrobe Valley are just starting to come to terms with what we are saying about the emissions trading scheme and the impact it may have on them and their families’ futures. Mr Nethercote also cautioned that Professor Garnaut’s predicted 40 per cent rise in electricity prices could be underestimating the real impact. Many speakers have made the same point. This is an enormous challenge and the complexity of the issues requires broader community understanding before we progress too much further down this path.
I certainly appreciate that the government is promising structural adjustment packages and compensation to affected households in its green paper. However, the sheer scope of the changes and the impacts are not properly understood in my community. As I said during my inaugural speech a few weeks ago, if we are prepared to give the planet the benefit of the doubt and we accept that climate change is real then we are going to need a strong and sustainable economy to deal with these challenges. We need to be tackling these challenges from a position of economic strength.
I make that point in the context of the Gippsland Coastal Board report referring to the prospect of climate change and a 0.8- metre sea level rise. The board is forecasting events that would require the relocation of a range of highly valued public assets from the low-lying foreshore areas along the Gippsland coast. We will not achieve that unless we are in a strong financial position. If the Gippsland coast is exposed to inundation, large sections of the metropolitan coast will go under as well. It is a frightening prospect if these forecasts are accurate. All levels of government will have to work in partnership to address it. There is a lot riding on these very complex issues.
As the member for Gippsland, my focus is on the Latrobe Valley coal industry. We must retain the commercial viability of the brown coal industry in the valley because we need these companies to work in partnership with governments to invest in the cleaner coal technology that we all talk so much about. It requires a practical, rational and steady approach rather than some of the overblown rhetoric that we have been exposed to throughout the debate in recent times. Having access to an extraordinary natural resource like 500 years of brown coal is a competitive advantage for our nation, one we must be very careful to nurture in the future.
Access to low-cost energy has underpinned growth in my region, and I make no apologies for standing up for the industry and for jobs in my region. We need to keep a firm sense of perspective in this debate. Given that our nation’s contribution to global greenhouse gas emissions is less than two per cent, we need to be extremely mindful of the international effort and who we have on board in this process. Any policy that results in job losses in my region will have an adverse impact on every part of community life throughout Gippsland. I fear that regional communities like Gippsland are very much at the pointy end of government policy in relation to climate change.
For us it is not an abstract debate about turning a few lights off or taking shorter showers. It is about jobs, families and the future of key industries like the power sector, agriculture and the oil and gas industry. As I mentioned, the Gippsland Basin is a major contributor to our nation and this bill has particular relevance to my region. The Longford gas plant, which is located about 10 kilometres from the city of Sale, is responsible for supplying most of Victoria’s gas requirements and about 20 per cent of Australia’s oil and gas supply. Gippsland has a long and proud history of providing resources for our nation, and the oil and gas industry is just one example.
Speaking of the history of the oil and gas industry, I note that 2009 will mark the 40th anniversary of oil and gas production from the Gippsland Basin by Esso Australia. It will certainly be a time of celebration and reflection on the company’s major role in the social, economic and cultural development of the region. I add cultural development quite deliberately because Esso has been a major contributor to community facilities in Gippsland, including the Wellington Entertainment Centre in Sale. Esso is highly regarded as a good corporate citizen in my region and the company is respected for its contributions to Gippsland and our nation.
There are now 21 offshore platforms and installations in Bass Strait which feed a network of 600 kilometres of underwater pipelines and keep the oil and gas flowing 24 hours a day. I digress for a moment to reflect on the fact that Gippslanders have not always enjoyed the direct benefits of the oil and gas industry. It does seem bizarre that many towns in my electorate, including my hometown of Lakes Entrance, have missed out on reticulated natural gas. It is an issue that I intend to work on hopefully in partnership with and with genuine support from the relevant state and federal ministers. This bill talks a lot about environmental issues. Natural gas provides a cheaper and more efficient energy source, which is particularly important for communities like Yarram in south Gippsland and Orbost and Lakes Entrance in the east. As we are all aware, we have an ageing population. The opportunity to provide cheaper and cleaner energy is a critical issue, particularly for older Gippslanders.
Bottled gas is prohibitively expensive for those on pensions or low incomes and they are often left with the only alternative of wood heating, which obviously becomes a bigger issue in their advancing years. Natural gas reticulation to more towns in Gippsland is a challenge for the future that I hope the state and federal governments are willing to work with me to resolve. It is more environmentally friendly and has obvious economic benefits for my community. If we are able to build the eastern gas pipeline to take gas from Longford to Sydney, then we should be building the infrastructure to allow the economic and environmental benefits to flow to Gippsland communities along the route.
I am certainly pleased to say, however, that the state Labor government has provided natural gas to Bairnsdale. Under that state government program, we have seen real benefit to businesses such as Patties Foods in Bairnsdale and to the Bairnsdale Hospital. There is still more work to be done to continue the rollout of this very efficient and effective form of energy. I think allowing Gippsland to share in the benefits of the oil and gas industry in our region is an issue for us all. Having said that, although the direct benefits from oil and gas have not flowed directly to every household in Gippsland, I must stress that there have been overwhelming positives for my community. Oil and gas production in Bass Strait has contributed over $200 billion to gross domestic product over its life, and ExxonMobil’s Bass Strait operations have been responsible for generating approximately $300 billion in federal government revenue in real terms.
Another reason why I am standing here to debate this bill is that protecting the future of the oil and gas industry in Gippsland is so critical to us. I have had the opportunity in the past to view oil and gas production up close, and it is something I would encourage other members to do if they get the chance.
The offshore platforms are quite remarkable places. They are both a work site and a home for up to 80 people at a time. The platforms operate in a hostile environment in Bass Strait but they are equipped with a few home comforts for the men and women when they are off duty—gymnasiums, rec rooms and those types of things. Having shared a meal with workers on a platform several years ago, I can attest to the fact that their kitchens are well equipped to meet the demands and the workers are well fed. Long may their vital work continue, along with that of their colleagues in the brown coal industry.
I would like to take up some points made by other members in their contribution to this debate. This bill provides for access rights for the geosequestration process. We will need to have appropriate systems in place to protect the rights of existing users. That obviously includes oil and gas producers. They must have the security to continue to invest with confidence. I have followed the debate with interest and I am heartened by the assurance of those opposite that there is certainty for investment in the future for the oil and gas sector. But for me in the Gippsland electorate there is also the issue of certainty for the commercial fishing industry, which is already finding it difficult to access fishing grounds due to the excised areas around oil and gas platforms. There is a potential layer of friction there in the future, which we will need to resolve. Further activity in the region— it might be related to this bill or it might be in relation to the oil and gas industry itself—is going to have an impact on the important role played by the Lakes Entrance fishing fleet in helping to feed our nation.
I agree with other members who have made the point that we really do need to get this legislative framework right and ensure that we do not discourage further investment in other industries with existing users in the offshore regions. I believe we are all very mindful of the need to act responsibly on this critical issue. In my mind, acting responsibly certainly includes protecting our energy security for the future. I commend the previous speakers and the Minister for Resources and Energy on the approach they have taken to this legislation. I also commend the previous minister for the work he undertook in this area.
As I and many others have mentioned, there is no question that this is an incredibly complex area. I get the feeling that there will be many more debates on this and related topics in the months and years ahead.
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