APPEA says more carbon capture support will help create hydrogen industry

The federal government should open up more exploration acreage to allow oil and gas companies to search for carbon capture sites, according to the industry’s peak lobby group.

The Santos plant at Moomba, where the company will build a $220m carbon capture and storage facility. Picture: Kelly Barnes

The federal government should open up more exploration acreage to allow oil and gas companies to search for carbon capture sites, and offer tax breaks to companies looking to produce hydrogen, according to the industry’s peak lobby group.

In its submission to the federal government ahead of the March 29 budget, the Australian Petroleum Production and Exploration Association says the federal government should extend its December decision to open up five new areas in Commonwealth waters earmarked for greenhouse gas storage exploration.

Federal authorities should also rewrite oil and gas legislation to allow companies to test potential greenhouse gas storage reservoirs through exploration and development approval and renewal permits, APPEA says.

“When combined with natural gas, carbon capture and storage can lead to a large-scale hydrogen industry, resulting in more jobs and more export dollars for Australia – a more prosperous economy,” the APPEA submission said.

“Creating a new hydrogen industry will help cut Australia’s emissions, will help lower the cost of energy and can help create new manufacturing opportunities.”

The submission is likely to raise the ire of advocates of “green” hydrogen, such as mining billionaire Andrew Forrest, who has run a vocal public campaign around the globe aimed at convincing voters and politicians that only hydrogen created solely from renewable energy projects – rather than “blue” hydrogen made from natural gas – can be a solution to global climate change.

Federal and state government support for carbon capture and storage projects has long been criticised by environmental groups who argue they have to date had only limited success in reducing carbon emissions and their promotion by the industry is merely a tactic used to extend the use of fossil fuels as a major global energy source.

The approval for a $220m carbon capture project at Santos’ Moomba gas plant as the first CCS project allowed to generate carbon credits under the federal government’s emissions reduction fund (ERF), underpinning its development, also attracted heated criticism from environmental groups.

But the APPEA submission argues that blue hydrogen and ammonia can be a key to long-term energy transition, saying the development of both the natural gas industry and new technology could “drive economic recovery, create jobs and reduce emissions”.

“The industry is well placed to utilise existing infrastructure to develop further resources to provide domestic energy security to Australian homes and businesses, convert some of this existing infrastructure to develop hydrogen projects whilst also playing our part in the transition to a low emissions economy,” the submission says.

“There is no pathway to energy security and a decarbonised economy without natural gas.”

In addition to opening up more exploration for deep wells to store captured carbon dioxide, the APPEA submission recommends reduced tax write-off periods for new energy technology and carbon capture projects.

It also argues for introduction of new tax breaks for new energy projects including immediate tax deductions for feasibility studies, engineering and design work and construction of pilot plants – moves that would also benefit would-be renewable energy companies such as Dr Forrest’s Fortescue Future Industries.

“Such treatment should extend to the cost and operation of a pilot facility of a new energy project. This will encourage frontline testing of new technologies and fast track Australia’s role in the energy transition,” the APPEA submission says.

Originally published as APPEA says more carbon capture support will help create hydrogen industry