March 3rd 2012

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Articles from this issue:

CANBERRA OBSERVED: Labor pushes the self-destruct button

QUEENSLAND: Issues facing voters on March 24

EDITORIAL: Beyond the leadership woes: Labor's identity crisis

RURAL AFFAIRS: Huge cost of abolishing national wheat pool

ENVIRONMENT: Rudd's costly carbon capture scheme a dud

ENVIRONMENT: Earth Hour: World Wildlife Fund publicity stunt

INTERNATIONAL AFFAIRS: Western media duped by mirage of Arab Spring

UNITED STATES: Obama's left-wing diplomacy a global failure

STOCK MARKET: From mutual associations to profit-seeking enterprises

CIVILISATION: Has Europe lost its soul?

MARRIAGE: Don't blame gay lobby for decline in marriage

EUTHANASIA: Stacking the deck by suppressing contrary views

CINEMA: Baker Street sleuth's new look

BOOK REVIEW Should America have dropped the Bomb?

BOOK REVIEW A child's imagination is a terrible thing to waste

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Rudd's costly carbon capture scheme a dud

by Peter Westmore

News Weekly, March 3, 2012

One of Kevin Rudd’s favourite environmental projects, the taxpayer-funded Global CCS Institute, is now in doubt with the failure of both the European Union and the United States, and many of the largest greenhouse gas producers, to contribute significant funding to the Institute.

The Australian Government has committed $300 million to the Global Carbon Capture and Storage (CCS) Institute, which was launched by Kevin Rudd, when Prime Minister, at a meeting of leaders of the industrialised world, the G8, in the Italian city of L’Aquila, in 2009.

A government media release at the time said: “The international launch received strong support from world leaders, including President Barack Obama and members of the G8…. The Global CCS Institute is an international initiative, led by Australia, to speed up the development of CCS technology, and reduce the amount of carbon dioxide (CO2) released into the atmosphere. It will play a crucial role in delivering the G8’s goal of developing at least 20 fully integrated, industrial-scale CCS demonstration projects around the world by 2020.”

Unfortunately, not one of the projects has proceeded beyond the pilot plant stage, and according to the ABC’s current affairs program, 7.30 Report, the whole future of CO2 capture and storage is in doubt.

It interviewed Joseph Romm, an environmentalist with the left-leaning Center for American Progress and former assistant secretary in the US Department of Energy during the Clinton Administration. Romm said: “No one has put all the pieces together into one commercial effort ― have it run, kick the tyres, as we say in the States, see what happens to the carbon dioxide…. Almost every major project around the world that has been started in the last few years has either been delayed, stopped or cancelled outright.”

The 7.30 Report looked into a CCS Institute-funded pilot plant at Victoria’s Loy Yang power station, which is experimenting in CO2 capture technology. It concluded that “this tiny pilot is far from the real deal, capturing less than one per cent of Loy Yang’s emissions. And it hasn’t even begun tackling how to store the carbon dioxide underground.”

The report said that the CCS Institute had controversially funded three projects run by large coal companies in the United States, but had declined to provide financial support for Zerogen, a multi-billion dollar clean-coal plant planned for central Queensland.

In December 2010, after investing some $150 million in the project, the Bligh Labor Government pulled the plug on it, after the state’s Auditor-General had issued a report which warned that the $4.2 billion project was “speculative”.

Meanwhile, the European Union’s emissions trading scheme is on the brink of collapse, as the price of CO2 permits has continued to fall.

Supporters of the scheme argue that the price of CO2 permits, which have fallen below €9 ($11), are too low to encourage low-carbon investments, and members of the European Parliament are pushing for the release of fewer carbon credits, to force up the price.

Others, however, are more blunt.

Writing in the German magazine Der Spiegel, Alexander Jung wrote recently: “Emissions trading, the European Union hoped, would limit the release of harmful greenhouse gases. But it isn’t working. The price for emissions certificates has plunged, a development that is actually making coal more attractive than renewable energy.”

He said that over the past six months or so, prices for CO2 certificates have dropped almost continuously, decreasing by about half, to around €8 ($10.60) per tonne, as a result of declining energy use, linked to the European financial crisis.

Five years ago, when Europe was experiencing an economic boom, the European Union gave businesses free certificates for the trading period from 2008 to 2012; companies were forced to buy only a small portion of their emissions credits.

“But soon afterwards, many businesses were forced to scale down production as the financial crisis, and then the debt crisis, took hold in Europe. Germany consumed less energy — 4.8 percent less in 2011 — and industry as a whole required a lower number of certificates than expected,” Alexander Jung continued.

“The steel company Salzgitter AG, for example, ended up with a surplus of around 7.5 million certificates between 2008 and 2010, according to a study by British environmental organisation Sandbag, while ThyssenKrupp’s surplus amounted to about 6 million. Far from being an additional cost factor, say critics, emissions trading has become a source of income for such companies.”

A German emissions trader, Michael Kröhnert, called the collapse in the price of carbon certificates a slaughter, and said he expects it to continue. “The spiral is spinning downward,” he said.

The low price of carbon certificates in Europe contrasts with the high price ($23 per tonne) set by the Gillard Government, in its new carbon tax which takes effect from July 1 this year.

One consequence is that energy-intensive industries, such as steel and aluminium manufacture, will shift off-shore to countries such as China, with the loss of thousands of Australian jobs.

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