Offshore Petroleum and Greenhouse Gas Storage (Cross-boundary Greenhouse Gas Titles and Other Matters) Amendment Bill 2021

June 9, 2021

I rise to speak on the Offshore Petroleum and Greenhouse Gas Storage (Cross-boundary Greenhouse Gas Titles and Other Matters) Amendment Bill 2021. In so doing I express the opposition’s support for this technical but important piece of legislation, largely because it mirrors a piece of federal legislation that was introduced by the federal coalition in December 2019 and passed in the federal Parliament with Labor’s support in 2020. I am advised by the federal government that this bill presented to the Victorian government does indeed mirror the federal legislation, and for those reasons alone I have no hesitation in supporting it. But there are some important policy matters that the legislation covers, which I will outline in my remarks this evening. Keith Pitt, the federal Minister for Resources, Water and Northern Australia, remarked that it will strengthen protections for the environment, the industry and the Australian government taxpayers—that is the federal legislation, which the Victorian legislation is seeking to replicate.

The bill amends the Offshore Petroleum and Greenhouse Gas Storage Act 2010 to support the framework for cross-boundary greenhouse gas storage in the commonwealth’s Offshore Petroleum and Greenhouse Gas Storage Act 2006, which was amended in 2020. These amendments essentially have sought to allow effective title administration and regulation of the greenhouse storage formation that straddles the boundary between state waters, Northern Territory coastal waters and commonwealth waters. These amendments also enable the unification of adjacent commonwealth greenhouse gas titles where the holder of the titles has reasonable grounds to suspect that there is a geological formation that straddles the two title areas. Upon the granting of the title, the title area becomes commonwealth waters for all purposes of this act, but this could only happen with the consent of the relevant state, which is why we have this bill before us this evening.

The bill will result in strengthening the powers of the National Offshore Petroleum Safety and Environmental Management Authority during an oil pollution emergency originating in commonwealth waters. In current commonwealth and state offshore greenhouse gas storage legislation, the injection and storage of a greenhouse gas into a storage formation, usually deep saline aquifers or depleted oil or gas fields, is only permitted when the formation is wholly situated in the relevant title area. This ensures the formation in its entirety can be effectively regulated, taking into account the movement of an injected greenhouse gas through the formation. It is considered more efficient and effective than a formation being covered by a single title to ensure that the titleholder is solely responsible for injection and storage operations, monitoring and, in the long term, closure of the site.

Decisions regarding the granting, reviewing and imposition of conditions on cross-boundary titles will be made by a cross-boundary authority consisting of the commonwealth and Victorian ministers. The bill will enable the Victorian minister to make the required decisions under the commonwealth act, supported by information sharing, delegation and administrative provisions. As these titles will all be granted under the commonwealth act, the Victorian coastal waters that form part of the relevant title will be taken to be commonwealth waters for the duration of that title. Those areas will be managed under the commonwealth act for the duration of the title and will revert to regulation under the Victorian act when the title expires.

There is great relevance for CarbonNet in this legislation. Australia’s abundant natural resources mean it could be one of the first countries to create a hydrogen export industry, helping to generate a significant number of Australian jobs and lay the foundations for a new hydrogen industry. This bill aims to help realise this opportunity for Australia. The federal coalition government has invested $96 million in the CarbonNet project, which is investigating the potential for establishing a commercial-scale carbon capture and storage network in the Latrobe Valley in Victoria. CarbonNet has commenced its stage 3 work program, which includes drilling and appraisal, obtaining a declaration of storage and an injection licence and finding a commercial structure and financial model to attract private sector investment and confirm interest in operating a CCS service. CarbonNet’s preferred storage site overlaps both commonwealth and state greenhouse gas titles. This bill provides the mechanism to regulate the likely storage formation that straddles state and commonwealth boundaries. CarbonNet is progressing its work looking at CO2 storage. In January 2020 the first appraisal was completed at the prospective CO2 storage site, Pelican, off the shore of South Gippsland. Commercial-scale hydrogen production from brown coal requires CCS infrastructure such as that being investigated by CarbonNet at the Pelican site.

The recently announced Australia’s National Hydrogen Strategy highlights the economic opportunity the hydrogen export industry presents for both Victoria and indeed Australia. The CarbonNet project will facilitate the Hydrogen Energy Supply Chain project, which aims to produce hydrogen from brown coal resources and requires suitable carbon capture and storage resources. This is the cheapest way to produce clean hydrogen. The government has invested $50 million in the world-first $500 million Hydrogen Energy Supply Chain pilot project aimed at producing hydrogen from brown coal in Victoria’s Latrobe Valley and liquefying and transporting hydrogen to Japan. The HESC is a world-first pilot project aiming to safely produce and transport clean hydrogen from Victoria to Japan, and this is a very important project that I note has support from both the commonwealth and the Victorian governments. The Victorian government has funded this initiative to the tune of $50 million; the commonwealth, $50 million as well, along with the Japanese government at $166 million. HESC presents an opportunity for Australia to establish a new hydrogen export industry and develop its own domestic hydrogen supply by using the Latrobe Valley’s abundant brown coal reserves. It provides the potential for new jobs based on brown coal in the Latrobe Valley.

On 11 December 2019 Kawasaki Heavy Industries, the lead HESC consortium partner, launched the world’s first liquefied hydrogen carrier in Kobe, Japan, and the Australian chief scientist, Dr Alan Finkel, was in Kobe to mark the achievement of that project’s milestone. The pilot project will inform the feasibility of constructing a commercial plant, and a final investment decision is slated for approximately 2025. Successful carbon capture and storage will be a necessary condition for the pilot project to progress to full commercial scale, which is a huge opportunity for both Victoria and indeed the nation.

This bill, as I said at the outset, is a technical piece of legislation but is legislation that has bipartisan support and support in both the federal Parliament and indeed this state Parliament. It is an important piece of legislation that will hopefully see greater investment in carbon capture and storage and interrelated industries off the shores of South Gippsland and indeed in parts of the Latrobe Valley. I am very supportive of this piece of legislation. I know that the members for Gippsland South and Gippsland East have a great interest in this. I know the member for Gippsland South will be speaking on this piece of legislation later, and he too is supportive of it. In conclusion, it is a technical piece of legislation that has our support, and hopefully it has a speedy passage through this place and indeed the other place.