Australia looks to use clean energy funds for carbon capture

The Australian government said on Tuesday it would introduce legislation to allow clean energy funds to back carbon capture and storage projects, a move that could see such money going to coal-fired plants even as the nation combats climate change.

Environment and Energy Minister Josh Frydenberg said the government was seeking to amend the mandate for the Clean Energy Finance Corp (CEFC), which up to now has been limited to giving loans to wind, solar, bioenergy and energy storage projects.

CEFC's mandate is to help cut carbon emissions and promote new technologies.

"This amendment that we're introducing only applies to carbon capture and storage," Frydenberg told reporters in Canberra.

However, if carbon capture and storage (CCS) technology is attached to a high efficiency-low emissions coal-fired power station, a gas-fired power plant or an industrial plant, that would be eligible for funding from the CEFC, he said.

CEFC would have the final say over what CCS projects get funding, he noted.

Australia's conservative government wants a "technology neutral" approach to promoting stable power supply, seeing coal- and gas-fired power as essential to back up wind and solar energy when the wind is low and the sun is down.

"The decision that the government's made is significant because it removes one of the barriers to CCS, which has been around the financing of it," said Brad Page, chief executive of Melbourne-based Global CCS Institute.

He said CCS technology could be retrofitted to existing coal-fired, gas-fired and industrial plants, not just attached to new plants.

The Australia Institute, a think tank opposed to coal, said it did not make sense to take money from renewable energy to back CCS, as previous funding had not yielded much over the past two decades.

The announcement on the legislation comes about 10 days ahead of a highly anticipated report by Australia's chief scientist on what steps the country needs to take to ensure power and gas supplies are secure, reliable and affordable, while also cutting carbon emissions.

The report was commissioned last year by the government following a string of blackouts and price spikes in the state of South Australia, which relies on wind and solar energy for more than 40 percent of its power.

After a decade of uncertainty over Australia's carbon policy, major miners, like BHP, manufacturers and the power industry have called for a carbon price and emissions trading to help companies make investment decisions on new power stations.

Prime Minister Malcolm Turnbull reiterated on Tuesday, however, that the government would not pursue an emissions intensity scheme, a system that would set limits on how much carbon a site could emit and give tradable credits to those that emit less than the limit.

Two world-leading clean energy projects have opened in the south Indian state of Tamil Nadu.

Two world-leading clean energy projects have opened in the south Indian state of Tamil Nadu.

An industrial plant is capturing the CO2 emissions from a coal boiler and using the CO2 to make valuable chemicals. It is a world first.

And just 100km away is the world's biggest solar farm, making power for 150,000 homes on a 10 sq km site.

The industrial plant appears especially significant as it offers a breakthrough by capturing CO2 without subsidy.

Built at a chemical plant in the port city of Tuticorin, it is projected to save 60,000 tonnes of CO2 emissions a year by incorporating them into the chemical recipe for soda ash - otherwise known as baking powder. 

Here's how it works: 

1.  The plant operates a coal-fired boiler to make steam for its chemical operations.

2.  CO2 emissions from the boiler's chimney are stripped out by a fine mist of a new patented chemical. 

3.  A stream of CO2 is fed into the chemicals plant as an ingredient for soda ash - a compound with many uses, including the manufacturing of glass, detergents and sweeteners.

Zero emissions

The owner of the chemicals plant, Ramachadran Gopalan, told a BBC Radio 4 documentary: "I am a businessman. I never thought about saving the planet. I needed a reliable stream of CO2, and this was the best way of getting it."

He says his operation has now almost zero emissions. He hopes soon to install a second coal boiler to make more CO2 to synthesise fertiliser.

The chemical was invented by two young Indian chemists. They failed to raise Indian finance to develop it, but their firm, Carbonclean Solutions, working with the Institute of Chemical Technology at Mumbai and Imperial College in London, got backing from the UK's entrepreneur support scheme.

Their technique uses a form of salt to bond with CO2 molecules in the boiler chimney. The firm says it is more efficient than typical amine compounds used for the purpose. 

They say it also needs less energy, produces less alkaline waste and allows the use of a cheaper form of steel -  all radically reducing the cost of the whole operation.

The firm admits its technology of Carbon Capture and Utilisation won't cure climate change, but says it may provide a useful contribution by gobbling up perhaps 5-10% of the world's emissions from coal. 

Lord Oxburgh, former chairman of Shell, and now director and head of the UK government's carbon capture advisory group, told the BBC: "We have to do everything we can to reduce the harmful effects of burning fossil fuels and it is great news that more ways are being found of turning at least some of the CO2 into useful products."

Solar farm

Meanwhile, the nearby giant Kamuthi solar plant offers a marker for India's ambition for a rapid expansion in renewables.

It is truly enormous; from the tall observation tower, the ranks of black panels stretch almost to the horizon. 

Prime Minister Modi is offering subsidies for a plan to power 60 million homes with solar by 2022 and aims for 40% of its energy from renewables by 2030. 

For large-scale projects, the cost of new solar power in India is now cheaper than coal. But solar doesn't generate 24/7 on an industrial scale, so India has adopted a "more of everything" approach to energy.

The firm behind the solar plant, Adani, is also looking to create Australia's biggest coal mine, which it says will provide power for up to 100 million people in India. Renewables, it says, can't answer India's vast appetite for power to lift people out of poverty. 

And questions have been raised recently as to whether India will stick to its renewables promises now President-elect Donald Trump may be about to scrap climate targets for the US.

At the recent Marrakech climate conference, China, the EU and many developing countries pledged to forge ahead with emissions-cutting plans regardless of US involvement. But India offered no such guarantee.

Some environmentalists are not too worried: they think economics may drive India's clean energy revolution.