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ACCU REVIEW SUBMISSION
This submission by CO2 Value Australia (CVA) offers input to the Independent Review of Australian
Carbon Credit Units (ACCU Review) on issues where CVA believes it can add value. These include clarifying the terms Carbon Capture and Storage (CCS) and Carbon Capture and Utilisation (CCU); experience in the development of the Carbon Credits (Carbon Farming Initiative - Carbon Capture and Storage Methodology Determination 2021 (CCS method); and enabling legislation. CVA offers no comments on the Human Induced Regeneration HIR), Avoided Deforestation (AD) and
Landfill Waste Gas (LWG) methods as these are not our areas of expertise. But first we introduce
CVA and declare CVA’s interests here.
CVA & Interests
CVA is a not-for-profit industry policy body based in Canberra. CVA members consider CCU to be one of a range of technology solutions needed to deal effectively and sustainably with climate change. Members include researchers, technology developers and industry. For more background see https://www.co2value.org.au/ . CVA participated in the industry working group development of the CCS method. It is currently involved in development of a Carbon Capture Use and Storage (CCUS) method which is likely to have elements in common with the CCS method.
Some CVA industry members are likely to use any method which supports CCU.
CCS & CCU Terminology
Technology to achieve Net Zero emissions consistent with the Paris Agreement is still evolving and with it the terminology used is also changing. Historically early climate change technology and terminology which describes it has been derived from the oil and gas industry in the USA. The early technology which was promoted widely was CCS meaning permanent geological sequestration of captured CO2.
In recent years CCU has emerged as one of a number of additional Net Zero technologies including electrification, soil carbon, biochar etc. CCU means the transformation of captured CO2 into valuable products. With both CCU and CCS technologies CO2 is captured but with CCS it is buried deep underground while with CCU it is made into useful products. The time captured CO2 is transformed varies – in building materials it is locked away permanently and in other products like synthetic fuels the CO2 is released again when the fuels are consumed and so is effectively recycled.
CO2 Value Australia September 2022
Also in recent years the umbrella term CCUS has emerged. This term can cause confusion but generally is now accepted to mean CCS & CCU not CCS & Enhanced Oil Recovery (EOR) (which is how the term is often used in the USA). More detail on terminology and the problems unclear use of it can be provided if required by the Review.
CCS Method Experience
CVA was one of the industry participants involved in development of the CCS method. Overall our experience was positive and the co-design process reflected well on departmental and Clean
Energy Regulator (CER) staff who managed it.
Staff were generally keen to understand operational implications of the proposed method.
Throughout the co-design process the need for methods to comply with the legislation and regulations to ensure the integrity and credibility of the ERF system was emphasized and that need was acknowledged by industry participants in the process. CVA offers the following observations in respect of our experience with design of the current CCS method, namely industry involvement and the status of CCS technology.
CVA confirms the benefit of industry involvement in method design. If the objective of the ERF is to be achieved methods must be capable of effective implementation. That outcome is more likely if designs are informed by understanding of how they will be applied. Such detailed operational knowledge can only be found in the industries which will use approved methods.
Expertise in this field is limited and ideally scheme and method design will benefit from inputs from all industry, researcher and official stakeholders.
Should compliance of proposed applications of new methods with standards or regulations of the
ERF scheme not be possible ideally potential problems should be identified and dealt with early in the method design process. The best way staff and method proponents can ensure informed compliance with the ERF requirements is for all involved to understand the legislation and regulations and achieving that understanding requires communication.
CVA acknowledges that with government programs the interaction by regulators with those being regulated requires care to ensure transparency and integrity. The challenge for the Review is to assist the Australian Government to develop the overall scheme design to enable meaningful input to method design while ensuring the integrity and rigor of the scheme is not compromised and that these values are seen by all stakeholders to be maintained.
The potential utility of CCS as a Net Zero technology is contested by some stakeholders. CCS advocates argue that it is the only or the main technology capable of significant CO2 sequestration and as such is essential if the goals of the Paris Agreement are to be achieved. The potential role of CCS is acknowledged by authorities including the Intergovernmental Panel on Climate Change
(IPCC) and expert groups such as the International Energy Agency (IEA).
CO2 Value Australia September 2022
Critics of CCS describe it as failed technology and point to closure or underperformance of CCS projects internationally. A recent assessment by the US-based critic the Institute for Energy
Economics and Financial Analysis (IEEFA) says ‘Carbon capture and storage (CCS) is a 50-year-old technology with variable results in capturing and storing carbon dioxide.’ See https://ieefa.org/resources/carbon-capture-crux-lessons-learned .
CVA’s position is that the need for effective Net Zero action has been demonstrated to be urgent and so all technologies which could help reduce emissions released into and/or already in the atmosphere should be considered for use based on evidence. Whether and where CCS might be deployed will depend on the location and circumstances involved and emitters and project proponents will have to make judgements as to whether CCS is the best technology option available. CVA does not agree EOR is a Net Zero technology as it releases more hydrocarbons which when consumed emit further emissions and so should not be eligible for the ERF scheme.
The fact that to date many CCS projects are reported to have not met their full intended performance targets ie in CO2 actually sequestered, is not reason to exclude CCS from the ERF.
The number of ACCUs which approved projects can earn is not determined by the targets in proposed project plans but by demonstrated project performance.
Provided the method design is sound and CO2 which is sequestered is measured accurately and accounted for in compliance with the approved method then the CO2 actually sequestered should be eligible. If approved CCS projects under-perform expectations any ACCUs created by that project will accordingly be lower. The key point here is under any method projects should only be able to claim ACCUs for CO2 sequestered and not for a greater expected or predicted amount. If a project underperforms the consequences fall on the proponents, not the ERF scheme.
Enabling Legislation
As detailed in the Terms of Reference, the current carbon credit scheme has evolved from the earlier carbon farming initiative. CVA acknowledges that changing legislation is time consuming and can disrupt administrative processes which have evolved under the current legislation, but suggests it is timely for the Review to consider whether new legislation is appropriate. CVA does not suggest carbon farming or any other current application determined to be sound should be excluded but only that now might be the time to consider reflecting the much wider scope of the current ERF scheme.
Conclusion
CVA is ready to provide further input where it can add value if that is required. If not it thanks the
Review for the opportunity to provide this submission.
September 2022
CO2 Value Australia September 2022
