Petroleum and Geothermal Energy (Energy Resources) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 2 November 2023.)

The Hon. H.M. GIROLAMO (17:53): I rise to speak on the Petroleum and Geothermal Energy (Energy Resources) Amendment Bill 2023 and indicate that I am the lead speaker for the opposition on this bill. This bill seeks to expand the remit of the existing Petroleum and Geothermal Energy Act 2000 and expand its scope to not be focused on gas. This bill will expand the scope to include items and technology that possibly were not envisioned when this legislation was first established.

The Petroleum and Geothermal Energy Act 2000 is these days held up as a strong example of best practice for a regulatory framework for industry in Australia and we are here again today to assist and update it to ensure it remains best practice by adding on the work also done in 2018 and 2020. In a way, this bill finishes off the good work that was started by former energy minister Dan van Holst Pellekaan. The smooth sailing of this legislation is most likely down to the extensive consultation and industry support for this legislation.

One of the differences between the legislation proposed by the former Liberal government and this bill before us is the introduction of a rent for carbon capture to store regulated substances. Carbon capture is by no means a mature technology and there is a long runway before the industry is settled. We are told by the government that setting these rules now encourages the industry to invest in these technologies, which require significant capital investment.

Right here in South Australia, we have two of the leading companies in the carbon capture space, being Beach Energy and Santos, world leading in this new technology. They would be comforted that the government listened to their concerns and that there is an exemption that applies to carbon dioxide that is produced or sourced within Australia and not imported; that is, Australian-produced carbon dioxide will not be subject to a rent clause.

By aiding and encouraging the use of carbon capture and storage technology, South Australia assists our gas industry to be first movers, and with that first move comes an advantage, and in South Australia that means a massive competitive advantage, we all hope. This has a greater goal too—helping to decarbonise the world and transition to net zero—but that competitive first-mover advantage adds to the make-up of our state's economy as we navigate the transition to a lower carbon economy.

My colleague in the other place, Stephen Patterson, shadow minister for energy and mining and net zero, spoke about the work that Santos and Beach are doing and investing in at Moomba as a joint venture. They have invested heavily, some $220 million in a joint venture project at Moomba for carbon capture and storage. At the time of the announcement, this project was one of the biggest and lowest costing projects in the world, and would safely and permanently store 1.7 million tonnes of carbon dioxide per year in the same reservoirs that have held oil and gas for tens of millions of years.

This is just one project, a world-leading project which sought to and is driving the state's future to net zero. We know there is a commitment by the gas industry to meet net zero by 2050, and this bill assists and probably hurries that goal by expanding the remit of what is possible in South Australia. With this bill, my hope is that there will be more investments in these projects for our great state, and with appropriate measures a strong world-leading framework where South Australia will have a good, solid pathway towards net zero.

The Hon. J.E. HANSON (17:57): I rise to speak in support of the bill, which proposes to amend the Petroleum and Geothermal Energy Act 2000. This legislation has been and, I feel, continues to be recognised as a really effective best practice framework. It is a situation where South Australia is taking significant steps to be a leader for the nation when it comes to energy. It is certainly something that we have seen in this place in regard to national energy grid production.

As former member of this place the Hon. Irene Pnevmatikos might have said, it is really hard to soar like an eagle when you are surrounded by turkeys. I think that still echoes even here today, even as Ms Pnevmatikos has left the building. As with any regulatory framework, part of maintaining the standards of being the eagle, of being best practice, is to review, and improvement has to be undertaken to regularly ensure that legislation is still appropriate and suitable and, indeed, the best practice for its intended purpose.

In South Australia, we recognise the importance of robust—everyone loves that word—regulatory frameworks in our energy sectors. We also enjoy a pretty strong, I feel, reputation for developing and implementing sound frameworks and maintaining them to those eagle best practice standards.

Other aims of the legislation are relevant in making sure that we effectively regulate how our state's resources are developed. That is pretty crucially important, first, obviously, from an economic standpoint. It does not always have to be about dollars, but in terms of an economic standpoint it is important to ensure that opportunity for industry is best facilitated and that that kind of regulatory clarity really gives operators and potential operators a high level of certainty, and the kind of confidence that I think you need to invest in energy projects across our sector.

It does wonderful things. It is being robust; it is being effective in your regulatory frameworks. Those kinds of frameworks are very important from the crucial perspective of safety. Having strong and appropriate frameworks that regulate a sector, and the type of activities in that sector, are going to play a fundamental role in keeping our enterprises across the energy sector operating safely. They play a large part in preventing pretty significant and horrific incidents from happening, incidents that can occur too frequently when you do not have robust regulations on matters that relate to safety.

We have another 'R' word: things that are less rigorous in regard to safety. Relaxed regulatory standards put our communities at risk, and we certainly want to ensure that safety across energy sector activities is paramount. Other aims of legislation that relate to this important area of South Australian industry include the intention to deliver clarity, certainty, transparency and consistency for operators, producers and prospective participants across our energy production sectors, and to balance multiple considerations that reflect the views, needs and expectations of the industry, of stakeholders and, indeed, of the community.

Keeping our regulatory frameworks contemporary and consistent with best practice is an objective that has been greatly assisted in South Australia by the operation of what was originally known as the oil and gas round table. What a banger of a party that must have been. Now known as the Roundtable for Energy Resources (RER), the round table was pioneered by the late Barry Goldstein and was established in 2010 with an initial focus on the somewhat jauntily named unconventional petroleum sector.

The round table was formed to facilitate communication and strategic cooperation between the government, industry, academia, and a range of stakeholders, and for government to then receive feedback and guidance from them for the advancement of oil and gas projects in South Australia. The round table supported South Australia to become the first state in the nation to launch I think a pretty comprehensive road map for the development of the somewhat jauntily named unconventional gas projects.

The round table now has more than 2,000 representatives from over 1,000 organisations, including industry, government and peak representative bodies for industry, environmental protection and Aboriginal communities. Environmental protection and Aboriginal communities are also people who are included in the round table, along with research institutions and individuals. Membership of the round table is somewhat free and open to all, as long as you bring two people, it seems. If you bring two people with 2,000 representatives of over 1,000 organisations, it is a little bit like the Noah's ark of round tables, really.

The round table meets each year to share and discuss information about contemporary developments in the energy sectors in the context of South Australia's energy transition and agree upon shared priorities which you might have in regard to the action for that. This exercise can, and indeed does, better inform government efforts to sustain energy security and jobs while maintaining sound protections for our natural environment and community. I do not think they mean sound in regard to volume, but nonetheless maybe it does that too. The round table was renamed the Roundtable for Energy Resources in South Australia last year, in October 2022, meaning to reflect a broader focus on decarbonisation, including carbon capture and storage, and increasing prominence—let's hope so—of hydrogen within that landscape.

Energy market challenges in the transition to emissions reduction, increased competitiveness and use of renewables were key themes which were addressed by the round table. I understand that the 2023 round table is to be held pretty soon, and I trust that the members participating will have much to discuss within that, with plenty of recent developments and new prospects on the horizon across the landscape of South Australia's energy sectors.

The bill now before us has come about as a result of the Department for Energy and Mining's most recent review of the Petroleum and Geothermal Energy Act, which was undertaken to identify refinements and improvements that could be made to the act to ensure that it remains fit for purpose and continues to reflect best practice.

I will now outline some of the changes that this bill proposes be made to the Petroleum and Geothermal Energy Act 2000. The act will now be called the Energy Resources Act—someone really used a lot of power to think up that one—to reflect the broader scope of the amended act, which will now cover, in addition to petroleum and geothermal resources, natural hydrogen, underground coal gasification, carbon dioxide and carbon capture and storage. The majority of changes proposed in the bill are administrative in nature. They were subject to public consultation on an issues paper in February 2021, as well as on an earlier draft bill in June 2021 under the previous Liberal government, which was at that time prorogued.

The previous draft amendments have been revised and enhanced, following a further period of public consultation which commenced in November 2022. The main amendments pertain to improvements in efficiency, in clarity and indeed in transparency in relation to the existing regulatory processes and policies. This will ensure that the act maintains its widely recognised status as leading practice, as the eagle, if you like, for its coregulatory approach to licensing and its objective-based approval process or processes.

Under the act, hydrogen will now be a regulated substance. The regulations that this bill will bring in will mean that it will now be extracted and transmitted in pipelines. This is not exclusive to naturally occurring hydrogen; it will include, I would definitely hope, manufactured hydrogen, because we intend to make quite a bit of it. These provisions will allow for new innovations, activities and development in the highly promising hydrogen sector to be accommodated, and hopefully will promote clarity and consistency in the regulation of hydrogen sector activity.

Natural hydrogen is hydrogen that occurs naturally underground. It is amazing, I know. It can be produced in a similar manner to petroleum resources. We recognise that natural hydrogen will have a place in our state's hydrogen industry—it is just as well that is does—which is the reason, of course, that we are continuing to lead the nation in enabling exploration licences for natural hydrogen.

The state's natural hydrogen potential has been presented to local, national and international audiences. South Australia has attracted interest from explorers in this promising sector because it is the only Australian jurisdiction currently with a licensing regime in place and offers favourable geology to do so. Combined with the international attention we have been attracting with the Labor government's Hydrogen Jobs Plan, South Australia is becoming widely recognised as an emerging jurisdiction of note for the hydrogen sector.

Carbon capture and storage is the process of capturing carbon in natural underground reservoirs to prevent it from being released out into the atmosphere. Analysis by the Intergovernmental Panel on Climate Change and the International Energy Agency has consistently shown that carbon capture and storage (CCS) is a crucial part of the path towards meeting global climate targets.

CCS is a proven technology, with over 30 large-scale commercial CCS projects now in operation globally. This includes the Gorgon project, for instance, in Western Australia. These facilities successfully capture and store more than 40 million tonnes of carbon dioxide annually. Santos and its venture partner Beach Energy are nearing the 60 per cent mark towards completion in the construction of the $220 million Moomba CCS project in north-eastern South Australia, which will be the third largest dedicated CCS project in the world when it becomes operational next year.

From 2024, the Moomba CCS project will permanently store 1.7 million tonnes per year of carbon dioxide in depleted oil and gas fields in the Cooper Basin. This will represent a cut of more than 7 per cent to South Australia's total emissions. Carbon capture storage projects can include direct air carbon capture as in the case of the Moomba's CCS project. This is a technology that allows carbon to be pulled from the atmosphere and then either stored underground or used for other purposes.

The amendments proposed to the Petroleum and Geothermal Energy Act 2000 in the bill before us also introduce a rent for the use of South Australian natural reservoirs to store carbon dioxide. This will only apply where the carbon dioxide has been imported from overseas. This is an important provision for our community, because without it there would be no benefit to the state and its people arising from carbon sequestration activities that are undertaken in our state by energy enterprises on behalf of other jurisdictions. It is important to note that excluding domestic carbon will ensure that these rent provisions do not disincentivise the storage of Australia's direct carbon dioxide emissions.

I will continue by outlining some of the differences between the 2021 bill of the previous Liberal government that was prorogued and the 2023 bill now before the house. There has been a removal of hydrogen generation licence provisions, which have instead been included in the proposed Hydrogen and Renewable Energy Act, another important regulatory framework which our government is of course proud to have put forward.

In relation to clause 13, we see the inclusion of ministerial power to declare the whole of, or an area of, the state as a competitive tender region, thus removing over-the-counter licence applications in these declared regions. As I have outlined in relation to clause 27, we see the inclusion of rent payable for utilising natural reservoirs to store a regulated substance. As I have also mentioned, in order not to disincentivise domestic carbon sequestration, an exemption applies to carbon dioxide produced or sourced within Australia and not imported from overseas.

Furthermore, in relation to clause 42, we see the inclusion of a ministerial approval for change in control of a licence holder. In considering an application for approval, the minister must have regard to the technical and financial resources of a person who proposes to begin control as a holder of a licence.

In relation to schedule 1, somewhat excitingly, we see the inclusion of transitional provisions to allow the minister to authorise the holder of an existing gas storage licence to undertake operations for the withdrawal of a regulated substance from a natural reservoir in which it has been stored. Hence, an existing gas storage licence may authorise both the storage and withdrawal of hydrogen in and from natural reservoirs.

As I enter the final page of this speech, in what can entirely be regarded as hot air, also in relation to schedule 1 we see the inclusion of transitional provisions to allow the minister to issue a regulated substance tenement that corresponds to an existing exploration, retention or production licence. This will provide existing licence holders rights to explore for and produce naturally occurring hydrogen.

We are fortunate that in matters related to the development and implementation of regulatory frameworks for energy sector activity there has been frequent bipartisan and cross-partisan recognition of the importance of getting it right. While points of disagreement have arisen in the past, this area of legislation and matters relating to it have been revisited often in this place and in the other and have enjoyed reasonable debate and relatively comfortable passage through the parliament. The Malinauskas government seeks to work cooperatively with all members to secure passage of this bill that I now commend to this place.

Debate adjourned on motion of Hon. I.K. Hunter.