The Carbon Loop #003
45Q, WACCUS, Leakage and Dumpage
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Optimism ..
Hey, so .. did anything big happen this last month?
Anyone notice any major changes that have the potential to increase carbon emissions and undermine global efforts to fight climate change?
Hmm .. let .. me .. think ..
Oh! — in totally unrelated news — hah — it’s so unrelated that I don’t even know why I’m thinking about this just now — citizens of the United States elected Donald Trump President again!
Initial reports suggest he’s going to play things with a fairly straight bat and try not to rock the boat for now.
But despite the potential for the President to unwind some of the government incentives that have promoted the United States as an incredibly attractive place for green capital, Wood Mackenzie suggest that any reforms to the Inflation Reduction Act or other government programs are unlikely to have too brutal an impact on CCUS Projects —
Trump’s executive branch has little power to outright eliminate assorted IRA provisions, like enhanced 45Q credits and project funding, and bipartisan support for CCUS makes it unlikely that a Republican Congress will target these incentives in an unwinding of the IRA. However, other administration priorities, like a reversal of SEC emissions reporting and EPA power emissions reduction requirements, could have cascading effects on near-term CCUS adoption.
In the base case outlook for US Energy, Wood Mackenzie expects CCUS capacity to reach 80 Mt by 2030.
And other articles suggest that a complete dismantling of the IRA would be likely to hurt Republican voters. Which might seem counter-intuitive given recent campagn rhetoric, but a win is a win, I guess. From the ABC —
This complicates the path for Trump in unwinding it. The IRA has many fans within his own party, politicians who see their home towns and counties benefiting from new manufacturing projects and jobs.
The IRA also offers carrots to fossil fuel companies to implement technologies to curb their emissions, such as carbon capture and storage.
"It means on the one hand, we are paying industry to get cleaner … it also of course means that there are champions for the IRA in fairly unusual places," said Mr Wagner.
And while we’re being optimistic, let’s also consider that any walking back of tax incentives in the US will hopefully then make investment returns of similiar projects in Australia more competitive. Australia now has an opportunity to double down on its decarbonisation credentials at a time that announced-but-not-yet-funded projects in the U.S. face uncertainty.
In Peru, where he is attending the Asia-Pacific Economic Co-operation summit, the prime minister said Trump’s plans for unwinding climate change policy was just one area of change that world leaders would consider at APEC and next week’s G20 meeting in Brazil.
“Given Australia’s position in the world and the resources that we have, there are potential benefits if there are changes in US policy,” Mr Albanese said on Friday (AEDT).
We will all have to wait and see how this plays out.
But I choose to remain optimistic.
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Taxonomy of Carbon Leakage ..
There are two consultation papers out now that might be relevant to CCUS folks.
The first is from Australia’s Department of Climate Change, Energy, the Environment and Water, and relates to Carbon Leakage. Which is not as gross as it sounds.
The short version is, carbon leakage refers to the potential for carbon-intensive industries to relocate overseas to jurisdictions that do not have the same level of decarbonisation requirements as Australia. That’s bad, because the carbon still goes into the atmosphere (and does not respect lines drawn on a map) but Australia misses out on the jobs and economic activity associated with the industry.
For most projects right now, CCS is simply an added cost to an existing business model, and so the prospect of industry leaving Australia to continue emitting in a jurisdiction that doesn’t require CCS is very real.
If this is you or someone you know — you can respond to the Consultation Paper before it closes on 3 December 2024.
Australia’s Carbon Leakage Review
The second is from the Australian Sustainable Finance Institute and relates to a new Sustainable Finance Taxonomy.
The short version is, the AFSI would like to develop a framework that outlines what’s necessary to call a practice or product ‘green’. That way, lenders, investors, suppliers, customers, and people in the cheap seats throwing shade can trust in the taxonomy and don’t have to do as much of their own due diligence when evaluating whether to do business with that ‘green’ operation.
My personal view is that CCS might be slipping through the cracks of the proposed taxonomy — but perhaps I’m wrong?
If you’re interested, you can respond to the request for comments before it closes on 1 December 2024.
Australian Taxonomy Second Public Consultation Paper
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More Sea Dumping Stuff ..
If you thought ‘carbon leakage’ sounded a bit much, now let’s move on to ‘sea dumping’.
Australia has accepted the 2009 amendment to the London Protocol, and it came into force on November 7 this year.
The ‘Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter’ (or the ‘London Protocol’ for short) is one of the first global conventions to protect the marine environment from human activities and has been in force since 1975. Its objective is, well you might have guessed from the name, to prevent marine pollution by dumping wastes and other matter into the sea.
In 1996, this London Protocol was modernised to provide for some ‘acceptable wastes’, including carbon dioxide streams from CCS technologies.
By ratifying the London Protocol, Australia has become part of an international framework for offshore carbon sequestration which, importantly, is a key step in a future cross-border carbon storage value chain. There’s a long way to go - but this is a big milestone.
They could perhaps consider a better name, though.
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WACCUS R A OK ..
The Western Australian Government has released its first CCUS Strategy Document, and announced significant funding for two major CCUS Projects.
The Action Plan is mostly a statement about what will happen in the future, and understandably, comes across as marketing a new potential industry for Western Australia. So we still wait to see how the action listed are to be implemented.
But that’s fine with me - the document paints an exciting future. A new regionally significant industry that Australia can be proud of.
And speaking of something to be proud of, congratulations to the folks at AGIG, MEPAU and WES, who have received a significant lick of funding. A cool $15M to AGIG for the development of an onshore carbon transmission network in the Pilbara, which should unlock major CCS Projects in the region, and $11M to MEPAU and WESCEF to develop the Cygnus CCS Hub in the MidWest.
These are major signs of support from the WA Government, demonstrating Premier Cook’s willingness to embrace CCS as a legitimate decarbonisation strategy.
I’m still making my way through the strategy document, but some snips below —
Western Australia is well placed to become a world’s leader in CCUS, leveraging our existing infrastructure, highly skilled workforce, and suitable geological formations.
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Momentum is building in the deployment of carbon capture, utilisation and storage (CCUS) globally, as governments and industry recognise the potential of CCUS to reduce emissions at a large-scale and help meet their emissions reduction targets as part of a suite of decarbonisation technologies.
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To reach domestic and global net zero by 2050, there will be an important role for CCUS in the decarbonisation mix as part of a suite of low emissions technologies. In Western Australia, CCUS will have a key role in particular in decarbonising our hard-to-abate heavy industries.
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There is an economic opportunity for Western Australia to leverage its advantages to become a world leader in CCUS. This includes our highly skilled workforce, existing infrastructure, suitable geological formations, and globally recognised energy ecosystem.
Carbon Capture Utilisation and Storage Action Plan
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