The program, announced in the federal budget last night, will support the development of industrial-scale demonstration projects for CCS technology in Australia, including a carbon dioxide storage hub with pipeline infrastructure, as well as integrated CCS projects to demonstrate a range of technologies to capture carbon dioxide from coal-fired power stations.
Projects will be subject to a competitive process, with the government contributing up to one-third of the cost.
Together with the existing $400 million National Low Emissions Coal Initiative and the Cooperative Research Centre for Greenhouse Gas Technologies, the federal government says the new CCS Flagships program will complement the recently launched Global CCS Institute.
The program will support the demonstration of two to four large industrial-scale coal-fired power plants, which may include a carbon dioxide storage hub and which will be built using clean technology.
But the government will cut the Coal Mine Methane Reduction Program by the middle of next year, to save $4.2 million over the former life of the project. Existing contractual commitments will be honoured, according to the government.
But it’s a mixed bag for coal companies on the infrastructure front. While the government tips its $1.5 billion spend on the Hunter Expressway to reduce freight congestion in the region, there’s no joy for coal producers who have been pushing for government investment in Queensland ports.
Western Australian miners have won a $389 million investment to increase iron ore freight capacity through Geraldton, and the government will also kick in $50 million to expand Darwin’s bulk freight capacity.
But there doesn’t appear to be any similar investment in Abbot Point in Queensland, which has been seeking $1.75 billion from Infrastructure Australia for expansion.
Minerals Council of Australia chief executive officer Brendan Pearson said the new budget continued a trend of successive budgets that devoted more spending to short-term consumption than addressing Australia’s export capacity constraints.
He also said there were exceptional financial circumstances this time around that had “clearly necessitated expenditure on initiatives to stimulate the economy over the short term”
“The budget papers make clear that Australia’s economic recovery, and its ability to pay off the Commonwealth $188 billion of debt, will be heavily dependent on the minerals industry and resources exports,” Pearson said.
“Insufficient investment in Australia’s export infrastructure and both human and capital productivity would only serve to hinder the economic recovery as would new costs or taxes.
“In particular, there are significant remaining gaps in export chains.”
The Construction Forestry Mining Energy Union has welcomed the budget’s measures to “clean up the coal industry” and reduce carbon emissions.
“The onus now is on industry, including the country’s mining giants and power companies, to match the federal government and help safeguard the future of the mining sector against dangerous climate change,” CFMEU national president Tony Maher said.
Macquarie Private Wealth noted there were no new spending initiatives on infrastructure announced in the budget it labelled “Swan’s debt dive”
Macquarie said the $22 billion of investment in the three infrastructure funds of Building Australia, Education Investment and the Health and Hospitals Fund were announced in last year’s budget and effectively reannounced in this budget.
Of the $8.5 billion to expand land transport networks, Macquarie said most was targeted towards passenger rail and road.
Treasurer Wayne Swan’s budget presents a record deficit of $57.6 billion.
Macquarie said the deficit came as no surprise.
“It is worth highlighting, however, that the expected rise in the overall level of government debt across the next four years is set to rise to over $300 billion,” it said.
“As a result, net new government debt issuance is forecast over the next three years at $58 billion, $52 billion and $50 billion respectively.”