The Mineral Resources Rent Tax passed through the House of Representatives last week, but not without negotiations with the Greens and independent MPs.
Perhaps the most significant outcome of negotiations was the announcement of an Independent Expert Scientific Committee to advise state and federal governments about the impacts of large coal and coal seam gas (CSG) projects. The decision is a very welcome one.
Until now, government approvals for CSG projects have been granted on the basis of environmental impact statements (EISs) generated by proponents of the development they are assessing. As a result, and given the large tax revenues coming from the projects, such assessments are hardly likely to have been free of bias.
The problem of bias in the assessment and approvals process is inherent in all resource developments, not just coal seam gas (CSG) and large coal projects.
While there will now be greater scrutiny of new projects, the horse has bolted in Queensland, where four large projects — to mine gas in the hinterland and ship liquified natural gas (LNG) out of Gladstone — have already received state and commonwealth approvals.
With these Queensland CSG projects already going ahead, more accurate assessment of their greenhouse gas emissions by the Australian and state governments is a high priority. The environmental impacts of our big mining and gas projects go to the very core of national and international efforts to tackle climate change.
Greenhouse uncertainties of coal seam gas
The uncertainties surrounding the impacts of CSG are not confined to farmland, water tables and catchments. There are now serious doubts emerging whether a wholesale switch from coal to gas will help curb global climate change.
It’s inevitable there will be some leakage of methane gas during CSG development and processing. In assessing CSG emissions, a multiplying factor is applied to methane, which has many times the global warming potential of carbon dioxide. This multiplier allows us to talk about methane’s warming potential in terms of carbon dioxide equivalents generated in burning.
While methane burns cleaner than coal, the carbon dioxide equivalent of the leakage of gas from wells, pipelines and processing plants must be added to emissions from combustion.
Two pieces of research published earlier this year – one by Richard Howarth and colleagues and one by Tom Wigley – suggest “unconventional” gas (shale and coal seam) is no cleaner than coal. In fact, both pieces of research suggest shale and CSG can emit a greater quantity of greenhouse gas per unit of energy generated.
The researchers’ results are based on data from actual gas developments and coal mines in the US and use recent scientific findings to assess the greenhouse impacts of gas and coal.
In contrast, an “independent” study by energy services provider WorleyParsons, published earlier this year concluded that CSG (mined in Australia and burned in China) will emit just over half the carbon dioxide equivalents of coal.
Because actual data is scarce in Australia, the WorleyParsons forecast of CSG emission levels is taken from forecasts used in the EISs of Australian CSG/LNG proposals. These assume best practice in terms of managing emissions while also using low estimates of the global warming potential of methane.
The truth is, we won’t know the leakage rate of methane from CSG in Australia until projects are operational.
Furthermore, research by Drew Shindell and colleagues suggests the global warming potential of methane is greater than is presently assumed by international organisations, the Australian and US governments and in companies’ EISs.
The global warming factor used by these organisations is one tonne of methane equals 21 tonnes of carbon dioxide equivalent over a 100 year period. According to Shindell and colleagues, that factor should be 32 tonnes equivalent over 100 years, and 105 over 20 years.
This finding has important implications for greenhouse gas reporting by all countries that produce, and will be producing coal seam gas.
The Australian equation
In Australia the consequences of the science are two-fold. First, the Government’s estimates of greenhouse gas emissions by 2020 and 2050 should include the updated factor for methane. It is arguable that the factor of 105 should be used by LNG companies’ when reporting their methane emissions (and indeed used for other emitters of methane) to 2020.
Second, the passage of the Clean Energy legislation means that from next year, tax will be raised per tonne of carbon dioxide equivalent of emissions. The tax on LNG companies will increase with the correct factoring for methane.
The EISs of four CSG companies exporting LNG out of Gladstone suggest their cumulative annual emissions in Australia at peak production will be 35 million tonnes of carbon dioxide equivalent. If the updated global warming factor for methane over 100 years (32 tonnes equivalent) is adopted then this rises to 53 million tonnes of carbon dioxide equivalent a year. The use of the warming factor for methane over the 20-year horizon (105 tonnes equivalent) gives 175 million tonnes a year.
CSG is classed as a trade-exposed industry under the Clean Energy legislation and would be protected from the full impact of a tax increase that results from the adoption of the updated warming potential for methane. But coal mining, which also emits methane, would be exposed to the full impact of such an increase.
Serious faults have been exposed in the EIS and approval process in relation to CSG. These are being corrected, but a review of the methodology for assessing all large resource projects is called for.
Meanwhile, given that large CSG extraction and processing developments will go ahead without further legislative impediments in Queensland, it is incumbent on the state and commonwealth to carefully monitor not only effects on land and water tables but the leakage of methane.
Companies need to make the investments required that will facilitate accurate measurement of gas leaks across all CSG projects. The cumulative emissions must then be factored into national greenhouse accounting.
There should be an updating internationally of the factor applying to methane as a greenhouse gas, based on the scientific evidence. Otherwise greenhouse accounts will not reflect the climate change implications of large increases in the use of LNG.
Where countries have tax or cap-and-trade schemes for greenhouse emissions, the international adoption of an updated factor for methane will increase imposts on producers of coal seam and shale gas, as well as on other large emitters of methane.
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Comments (11)
Tim Roark
Engineer (logged in via email @gmx.com)
Main fundamental problems with the piece:
-Contrary to the claim in this article, neither of the 2 papers (Richard Howarth et al, Tom Wigley) actually discuss coal seam gas production at all. (and incidentally Howarth's high end estimates for methan leakage have been widely criticised.
-The difference between shale gas and coal seam gas production is significant and equating the two with regard to methane leakage is technically invalid.
Minor correction is that only 3 (not 4) major CSG/LNG projects have been approved in Queensland.
Colin Hunt
(Honorary Fellow in Economics at University of Queensland)
That is so, but Table 2 of Howarth et al. shows that even conventional gas, which has lower emissions than CSG still has a leakage rate of 1.7-6.00% (compared with 3.6-7.9% for shale). To this leakage rate for conventional gas needs to be added well-head and any fracking leaks, which would increasing the range above 1.7-6.00%.
We won't know what the leakage rates will be until the projects get underway.
But Howarth and Wigley suggest that a leakage rate at the low end of the range (2% in both cases) puts gas on a par with coal for life cycle CO2 equivalent emissions - adopting an updated global warming potential for methane.
I agree, only 3 projects have been approved, with Arrow in the offing. Nevertheless, the forecasts quoted for the cumulative emissions of four Gladstone CSG/LNG projects, of 35 million tonnes of CO2e at peak production (Australia Pacific LNG Project EIS, 2010, pp. 36,37), are for four projects, including Arrow.
Tim Roark
Engineer (logged in via email @gmx.com)
I agree the high level methodology appears robust, though couldn't comment on the global warming potential of methane (105 vs 21). Its just a question of the accuracy and applicability of emissions estimates. (I question why CSG would have higher emissions than conventional)
I would suggest that applying estimates of average US emissions to the QLD projects will likely overestimate the reality considerably, perhaps by an order or magnitude. A bit like comparing the fuel efficiency of an old Kingswood…
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Colin Hunt
(Honorary Fellow in Economics at University of Queensland)
Tim, your comments are very apt.
However, there appears to have been consderable haste in the development of the Queensland gas fields - witness their rather rugged dealings with landowners - because I believe the companies need to move quickly to access sufficient gas to meet large LNG contracts by 2014, and soon after. There is also an issue of increasing exposure to possible collapse of world prices of natural gas, due to oversuppy, unless production, processing and export is pushed ahead…
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Oliver Roberts
PhD (logged in via email @gmail.com)
The author of this piece alerts us that the AGW effect of Qld's CBM-LNG projects may be greater than estimated in their EIS's. Those EIS documents follow guidelines specified by government agencies, which change as consensus on the appropriate parameter values for environmental impacts evolve. Most importantly, these document sare open to public review. Our EIS and NPI reporting regimes are in advance of those in most countries.
Central to his argument is that the effective global warming potential…
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Colin Hunt
(Honorary Fellow in Economics at University of Queensland)
Agreed, the consumption of coal seam gas is unlikely to be impeded while the science of the global warming potential of methane is debated.
I don't know when the science will be settled. However, its it rather disturbing to contemplate that official forecasts of the increase in global temperatures due to anthropocentric activities, that assume a relatively low impact of methane, could be seriously wrong - and the global efforts to mitigate climate change even more inadequate.
Colin Hunt
(Honorary Fellow in Economics at University of Queensland)
Thanks Chris. Yes, we are dealing with two issues. First, the amount of fugitive emissions at well (including during 'fracking'), in piping gas to LNG plant, in cooling and liquefying the gas, plus transferring LNG to vessesl for export. These are 'Scope 1' emissions. The EIS of Australia Pacific LNG (2010, pp.36,37) forecasts cumulative Scope 1 emissions of 35 million tonnes from 4 Queensland projects (including Arrow). But this forecast assumes best practice and, moreover, the warming factor applied…
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Gideon Polya
(Cessional Lecturer in Biochemistry for Agricultural Science at La Trobe University)
Excellent article by Dr Colin Hunt. We both have PhDs from Flinders University, his in Sociology, 1994, and mine in Biochemistry, 1969 (indeed I think may have been the first person to start and finish a PhD at Flinders).
As pointed out by Dr Hunt, the finding of Drew Shindell and colleagues (NASA's Goddard Institute for Space Studies) that methane (CH4) has 105 times the global warming potential (GWP) as carbon dioxide (CO2) on a 20 year items scale and including impacts on atmospheric aerosols…
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Gideon Polya
(Cessional Lecturer in Biochemistry for Agricultural Science at La Trobe University)
Correction: Dr Colin Hunt got his PhD in Social Sciences, not Sociology.
Chris McGrath
(Senior Lecturer at University of Queensland)
Thanks for an interesting article Colin.
You're only talking here about the direct emissions during the extraction process (i.e. scope 1 emissions) aren't you?
Have you seen any calculations of the emissions from the burning of the CSG by end-users (i.e. scope 3 emissions) from the proposals in Queensland?
David Arthur
n/a (logged in via email @fastel.com.au)
The atmosphere already has substantially higher [CO2] than any time in the Pleistocene ice core records of atmospheric [CO2]. The major trouble with coal seam gas is that it is still a fossil fuel.
There is already climate science suggesting that we need to get atmospheric [CO2] back to between 300 and 350 ppm as quickly as we can manage - less CO2 than 300 ppm may see the world start to cool more than we'd like, and more than 350 ppm is contributing to adverse sea level rise and ocean acidification.
I expect that this climate science will be widely understood before 2020, meaning that there will be strong pressure to curtail whatever coal seam gas industry has already been developed.