The government is seeking feedback on a proposal to regulate carbon capture, utilisation, and storage (CCUS) in Aotearoa.
Investigating technologies that can capture carbon from the atmosphere so we can store it underground or make use of it – such as creating dry ice or making beer – is a key component of the government’s emissions reduction plan.
The government has proposed a regulatory regime for CCUS that would allow industries to access this technology “on a level playing field with other emissions reduction and removal mechanisms to better enable a least cost transition towards net zero emissions.”
Consultation on the proposal closes 6 August 2024.
The SMC asked experts to comment.
Professor Barry Barton, Faculty of Law, University of Waikato, comments:
“Carbon capture and storage (CCS) works, it can be done safely, and there may well be niche applications for it in New Zealand. But it is unlikely to make large contributions to meeting our emissions reduction targets; it is not a magic bullet. It will often be expensive, especially relative to low ETS prices. Much more significant on a national scale are policies to decarbonize transport, electricity, and heavy industry; and to improve housing and energy efficiency.
“For all that, CCS should be available; we need every reduction we can get. The situation is urgent.
“At present we don’t have a legal framework for it CCS, and we should have one; it should not be as difficult (bordering on impossible) as it is under existing laws such as the RMA. We need procedures for flexible long-term permitting and project management. For example, injection must be managed in light of monitoring information as it comes in, and we need clear rules for long-term liability. The legal framework must be designed to be open to a wide range of carbon dioxide removal technologies and practices, not just fossil fuel technologies. Many countries have workable legislation to deal with these matters, and we can draw on their experience. Fortunately, adjusting the Emissions Trading Scheme will not be too difficult.”
No conflicts of interest. I have carried out research contracts funded by the government (2012) and by the Gas Industry Co (2022).
Dr Rebecca Peer, Senior Lecturer in Civil Systems Engineering, University of Canterbury, comments:
“The government’s release of a proposal for a regulatory regime for carbon capture and storage (CCS) is timely. They are right that CCS is present in a lot of international discussions about climate mitigation and meeting our emissions targets. Carbon removals, in the form of capture and storage, are present in every single future scenario from the IPCC that places us near our 1.5-2 ºC targets. And these removals are not small – they are on the gigatonne scale. There’s no doubt that we should be having a discussion about CCS in NZ too.
“NZ is ranked as ‘highly insufficient’ in climate action by the Climate Action Tracker. The reality is that we urgently need to decarbonise. CCUS is one option to help reduce national emissions, particularly for hard-to-abate sectors in the near term. It is good to see the proposed monitoring regime and liability management, which tackle some of the risks related to the permanence of storage and responsibility. It is also positive to see the proposed recognition of emissions mitigation via direct air capture or biomass carbon capture and storage. Neither of these activities is currently recognised as beneficial in the ETS, despite their potential to contribute positively to net emissions reductions.”
No conflicts of interest.
Tim Payn, Principal Scientist, Scion, comments:
“There are a couple of opportunities from the Carbon Capture Utilisation and Storage (CCUS) documents just released for consultation. First is the opportunity presented from the use of sustainably produced biomass for process heat in place of coal or other fossil energy sources. CO2 is a byproduct of heat production – capture and permanent storage of the CO2 removes this from the atmosphere. Growing a subsequent biomass crop and repeating the process multiple times will continue to accumulate permanently stored CO2.
“The document also notes the emerging opportunity for production of synthetic fuels and chemicals from CO2 streams and the potential for NZ to benefit from these technologies. Scion is active in this area, investigating the use of microorganisms to convert CO2 into chemicals and polymers for production of new materials, substituting for fossil carbon; and in production of Sustainable Aviation Fuel from biomass.”
No conflicts of interest.
Associate Professor David Dempsey, Civil and Natural Resources Engineering, University of Canterbury, comments:
“The Carbon Capture and Storage (CCS) policy is partly motivated by short-term natural gas supply issues, which aligns it to other measures like repealing the offshore exploration ban. Timing remains a challenge though – CCS projects can take years to deliver so this may not have a quick impact on gas supplies.
“The CCS regulation as proposed generally aligns with international best practices. The government has clearly sought inspiration from regions like Australia, the US, and Europe which have established regulation and operational CCUS. The proposal addresses major issues like ETS incentives, leakage liability, and risk management – there will probably be some arguments around the margins, but this is not bad as a first cut.
“Concerns about CCS are mainly related to future leakage. This can be mitigated by storing CO2 in proven traps like depleted gas fields or dissolving it in water (like geothermal fields). Leaky wells are a problem, but these can be found and plugged using standard practices. Liability for operational risks ought to sit with storage operators, while long-term liability would transfer to government. The proposal discusses options like having operators pay bonds or contribute to government insurance funds and some other options for aligning incentives.
“But the big question – why should NZ do CCS at all? The gas supply issue needs addressing, but most folk agree that gas will eventually be eliminated, it’s just a question of when. So, what’s the fifty-year proposition for putting in expensive CCUS infrastructure? There are three reasons NZ needs to look at its long-term CCUS capacity.
“First, we’ll always need some domestic production of steel, cement, and hydrogen (for ammonia-based fertiliser). Emissions from these are hard-to-abate because they are produced by chemical reactions. There are green alternatives (green hydrogen used to make green steel) but these might not be able to compete on price with CCUS routes.
“Second, the IPCC assumes the global economy will go emissions negative in the second half of this century by deploying large-scale carbon removal. It’s unlikely that nature-based solutions (forestry, soil carbon) can absorb centuries of fossil fuel use. We’ll need technologies like bioenergy capture or direct air capture to complement these – NZ has some advantages here with our forestry and renewables – but all that CO2 we pull out of the atmosphere needs to go somewhere. CCS reservoirs are a good option.
“Third, there’s scope to grow green methanol and sustainable aviation fuel industries, but both those will require long-term CO2 supply to scale. CCUS and carbon removal, by turning CO2 into a traded commodity at scale, makes it easier for those industries to scale up.”
Conflicts of interest: “I have previously worked under contract for the energy industry. I receive funding from the MBIE to undertake research on underground storage of hydrogen in depleted natural gas fields.”