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Greenhouse Gas emissions of Projected LNG Projects

QUESTION NO. 339

Senator Ludlam asked the Minister representing the Minister for Climate Change and Energy Efficiency, upon notice on 6 December 2010:

With reference to my question without notice asked to the Minister representing the Minister for Climate Change and Energy Efficiency on 27 October 2010 (Senate Hansard, pp 922-4) and the additional information incorporated on 16 November 2010 (Senate Hansard, pp 24-5):

(1) Can the projected annual greenhouse gas emissions listed below for the following new liquefied natural gas (LNG) projects be confirmed:

(a) the Gorgon Project on Barrow Island, Western Australia, currently under construction by the Australian subsidiaries of Chevron, ExxonMobil and Shell- 5.45 mtpa to 8.81 million tonnes per annum (mtpa) (depending on whether geo-sequestration occurs), according to pp 30-1 of the report Gorgon Gas Development Revised and Expanded Proposal: Barrow Island Nature Reserve, Chevron Australia Pty Ltd, Report and recommendations of the Environmental Protection Authority (Environmental Protection Authority Perth, Western Australia, Report 1323);

(b) Woodside's Pluto LNG Project on the Burrup Peninsula - 4.1 mtpa, according to p. 23 of the report, Pluto LNG Development, Burrup Peninsula: Woodside Energy Ltd, Report and recommendations of the Environmental Protection Authority (Environmental Protection Authority Perth, Western Australia, Report 1259);

(c) the Browse Basin hub proposed at James Price Point - 7.1 mtpa to 32 mtpa, (depending on whether 11 mtpa or 50 mtpa of LNG is produced) according to pp 81-2 of the document, Browse LNG Precinct, Public Information Booklet (Western Australian Department of State Development);

(d) Chevron's Wheatstone Project proposed at Ashburton North - 10 mtpa to 15 mtpa (once at 25 mtpa of LNG production), according to p. 5 of the document, Wheatstone Project: Environmental Scoping Document (Chevron Australia Pty Ltd); and

(e) Shell's Prelude Floating LNG Project - 2.3 mtpa, according to p. 169 of the document, Prelude Floating LNG Project: Draft Environmental Impact Statement (Shell Development (Australia) Proprietary Limited, EPBC 2008/4146).

(2) Will the projects listed above, if fully developed (and assuming Gorgon partly geo-sequesters its emissions), alone add up to 58.85 mtpa of additional greenhouse gas emissions to Australia's national total, equivalent to a 11 per cent increase on current total national greenhouse gas emissions.

(3) Will greenhouse gas emissions from just the proposed Browse Basin gas processing hub at James Price Point be equivalent to 2 per cent to 6.5 per cent of Australia's total national greenhouse gas emissions, as described on p. 2 of the document, ‘Browse LNG Precinct Factsheet 06' (Western Australian Government).

(4) Does the Government intend to apply a carbon price to the LNG export industry, in particular, high-emitting projects such as the Browse Basin hub.

(5) Is the Government aware that apart from the Gorgon Project, the proposed LNG projects listed above do not currently have plans to capture and store their CO2 emissions.

(6) Which minister will be responsible for a response from Government should proponents of high greenhouse gas emitting projects seek a repeat of the precedent established by the Government over the Gorgon Project whereby taxpayers are made liable should CO2 sequestered underground leaking.

Senator Wong - The Minister for Climate Change and Energy Efficiency has provided the following answer to the honourable senator's question:

(1) The Department of Climate Change and Energy Efficiency (the Department) has examined the source documents provided for each of the projects referenced in the question and noted the points below in relation to emissions estimates for each project.

The Government does not support the unqualified use of these referenced emissions outcomes as a basis for estimating future emissions in Australia. Each of these projects are at different stages of scoping and development. It would be misleading to simply aggregate these emission estimates as a representation of medium-term emissions from the liquefied natural gas (LNG) sector. To do this would ignore the fact that many projects could be subject to delays or may not be fully developed, which largely depends on the global supply and demand outlook for energy. The Department does not publish project specific estimates of emissions from future projects due to the commercial sensitivity of this information.

(a) The Department confirms the estimate of 5.45 million tonnes per annum (mtpa) CO2 equivalent (CO2-e) is explicitly referenced on page 31 of the Gorgon source document referenced in the question.

The Government notes that the Gorgon project has received environmental approval on the basis that geosequestration occurs as designed.

(b) The Department confirms the estimate of 4.1 mtpa CO2-e is explicitly referenced on page 23 of the Pluto source document referenced in the question. The Department notes that the referenced document refers to a development scenario of two trains, each with a 6 mtpa LNG capacity. The Department notes that the current design scenario of the under-construction first train has a design capacity of 4.3 mtpa LNG. Final investment decisions for a second and third train, each with the same capacity, have not been made.

(c) The Department confirms the estimate range of 7.1 to 32 mtpa CO2-e (depending on whether 11 mtpa or 50 mtpa of LNG is produced) can be determined from the source document referenced in the question. The Department notes that the source document at page 8 states the following in relation to the 50 mtpa LNG production scenario:

(i) "The Department of State Development established the basic requirement of the Master Plan to allow for: A total of up to 50 million tonnes per annum of LNG capacity; and provide for multiple proponents to build and operate LNG facilities in the Precinct."

(ii) It is important to recognise the distinction between aspirational and ‘central-estimate' production scenarios. This difference is particularly demonstrated by the wide range in possible output of this project.

(d) The Department confirms the estimate of 10 to 15 mtpa CO2-e over the life of the project should the project achieve its full 25 mtpa LNG capacity is explicitly referenced in the source document referenced in the question.

(e) The Department confirms that the forecast estimate of 2.3 mtpa CO2-e is explicitly referenced in the source document.

(2) The aggregate of the emissions estimates referenced in part (1) is 58.85 mtpa CO2-e, assuming these projects are fully developed as stated in the question. This quantum of emissions is equivalent to 11 per cent of national greenhouse gas emissions levels in 2009-10, excluding emissions from the Land Use, Land Use Change and Forestry activities under article 3.3 of the Kyoto Protocol, for which data is not yet available (Source: Quarterly Update of Australia's National Greenhouse Gas Inventory June Quarter 2010).

As stated in the response to part (1), the Government does not support the unqualified use of these referenced emissions outcomes as a basis for estimating future emissions in Australia. Each of these projects are at different stages of scoping and development. It would be misleading to simply aggregate these emission estimates as a representation of medium-term emissions from the LNG sector. To do this would ignore the fact that many projects could be subject to delays or may not be fully developed, which largely depends on the global supply and demand outlook for energy.

(3) The source document referenced reports that the indicative emissions scenarios for the Browse precinct development represent between 2.0 and 6.5 per cent of Australia's domestic emissions. As highlighted in the responses to parts (1) and (2), and without prejudice to this project, the Government does not support the unqualified use of these referenced emissions outcomes as a basis for estimating future emissions in Australia. Such an approach ignores the fact that many projects are often the subject of delays or may not be fully developed.

(4) The Government believes putting a price on carbon is the most effective way of tackling climate change. The options for developing a carbon price mechanism, including issues such as coverage, are the subject of consideration by the Multi-Party Climate Change Committee (MPCCC). The Australian Greens are represented on the MPCCC.

(5) The Government has not mandated the capture and storage of CO2 emissions from every future LNG project developed in Australia, or Australian waters. The implementation of a carbon price in Australia will be the most efficient and effective way to reach our emission reduction goals.

(6) The Government's decisions in relation to the Gorgon Project were whole of government decisions. Those decisions result from the unique circumstances surrounding that project and do not establish any precedents for the treatment of future projects.

Future projects falling entirely within Commonwealth jurisdiction would be governed by the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (the Act), and decisions would be made by the Minister responsible for administration of the Act.  

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