The failed Gorgon carbon capture and storage (CCS) project could be spared more than $100 million in costs after the Morrison government intervened to change the rules around Australian Carbon Credit Units, lowering the bill its fossil fuel company owners are facing, a new report reveals.
The report by the Institute for Energy Economics and Financial Analysis describes the extent of the failure of the Gorgon carbon capture and storage project to make good on its proponents’ claims that it would capture and store 40% of the greenhouse gases produced during extraction of gas from the Gorgon field (the storage would have no impact on the production of greenhouse emissions produced when that gas was used by customers).
As the biggest carbon capture and storage project in the world, the Gorgon facility at Barrow Island was supposed to lead the way in demonstrating the viability of the technology. Instead, it has demonstrated how even the simplest and most straightforward applications of the technology, using existing processes, has failed.
In recognition of its failure, Chevron, which owns nearly half of Gorgon, with Shell and Exxon as smaller shareholders, agreed with the Western Australian government to buy genuine greenhouse gas offsets to the extent of its shortfall in megatonnes of CO2. It has until July to complete this acquisition.
Earlier this year, Chevron faced a bill of nearly $300 million to purchase the necessary 5.23 million tonnes’ worth of offsets if it used Australian Carbon Credit Units, which reached a price of $57 a tonne in January.
Enter the Morrison government. On 4 March, the Clean Energy Regulator (CER), the now-discredited body revealed by whistleblower Andrew Macintosh to be approving worthless emissions reduction projects, changed the rules. The CER, which is controlled by Energy Minister Angus Taylor, in effect unlocked vast numbers of permits to be traded on the open market (despite being tradable, ACCUs are not a carbon price, because the cost of creating them is borne by taxpayers, rather than industry, when they are handed out for emission reduction projects).
The effect was immediate: the price of ACCUs plummeted virtually overnight to just $30 a tonne — potentially saving Chevron around $140 million in permit acquisition costs. Currently the spot price for ACCUs is $29.
Chevron is a major donor to the Coalition. Since 2010 it has handed more than $1 million to Liberal Party branches, along with $280,000 to Labor branches. Gorgon has also received $60 million in taxpayer subsidies for the failed CCS system.
Between when the first gas was shipped from Barrow Island in 2016 and 2020, Chevron has made $37.6 billion in revenue, officially made $1.6 billion in profit, and has paid zero company tax and zero petroleum resource rent tax.
On Sunday, Morrison announced another $130 million in handouts to fossil fuel companies for CCS projects in the Northern Territory, guaranteeing that Australian taxpayers will continue to subsidise fossil fuel companies to sell our resources at colossal profit and massive environmental damage without paying any tax of any kind.
It’s called state capture.
