CHAIR—Welcome. These are public proceedings. The committee may agree to a request to hear evidence in camera or may determine that certain evidence should be held in camera. All evidence to the committee is protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence, and that may be held as contempt by the Senate. It is also contempt to give false or misleading evidence. If you object to answering a question, you should state the grounds on which you object to answering the question and the committee may decide that they want to insist on your answering the question. If they do so, you may request that the evidence be given in camera. I now invite you to make an opening address.
Dr Reed—Thank you. The Centre for Low Emission Technology is based near Brisbane. Dr Kelly Thambimuthu, who is our CEO, is appearing by teleconference. Some of you may not be familiar with the Centre for Low Emission Technology. It is an unincorporated joint venture of these partners: the Queensland government, CSIRO’s Energy Technology Division and its Energy Transformed Flagship program, the Australian Coal Association Research program, other industrial partners including Stanwell Corporation Ltd and Tarong Energy, and the University of Queensland. Our mission is to progress the development of enabling technologies for the low-emission production of electricity and hydrogen from coal. A key part of this technology is gasification with carbon capture and storage. It turns out that this technology is also amenable for use to make liquid transport fuels from coal, and that is going to be the focus of my talk this morning.
A PowerPoint presentation was then given—
Dr Reed—I will give a short presentation on basically why you should be looking at liquid transport fuels from coal and how it is done. I will put forward a proposal for your consideration and then list some of the benefits that might accrue to Australia from proceeding with this.
First of all: why should you make liquid transport fuels from coal? Liquid fuels, for example, have the best energy density to amenity ratio; that is why they are currently preferred for transport purposes. They are easy to store, transport and distribute, and they are relatively clean and easy to use. In terms of chemistry, if you look at the number of atoms of hydrogen and the number of atoms of carbon in these different fuels you will see that the hydrogen to carbon ratio in natural gas is near 4:1; for coal it is below 1:1; oil falls somewhere in the middle at about 2.5: 1; and biomass, for example bagasse waste from sugarcane growing, has a ratio of somewhere around 2:1. This means that if you want to produce oil products from these different sources, in the case of natural gas you are starting with an advantage. That is a very good fuel for making a synthetic oil. In the case of coal or biomass you have to at some stage capture carbon. The technology that we are promoting has the capacity to capture carbon and therefore match the carbon footprint—the amount of carbon that is emitted to the atmosphere—of conventional oil refining.
As I said, natural gas has high amenity value and it is particularly good for static uses because you have to have a certain infrastructure in place to distribute natural gas. Although it is quite cheap here in Australia at the moment, it does not take too much foresight to see that it is likely to go up in price. It is certainly more than twice the price it is in Australia in the United States, and it has gone a lot higher on occasions. So it is likely that the price of natural gas will be forced up in the future because it is an internationally traded material.
With regard to energy crops, the previous speaker spoke about bioethanol, which is certainly another option for liquid transport fuels. But here I am talking more in terms of crop residues that can also be converted by the gasification route into transport fuels. In any case, energy crops divert land and water resources from food into fuel production, which may be undesirable, and there is also the risk that crop disease could interfere with your fuel supply if you become too highly dependent on using biomass as your source of energy. On the other hand, Australian coal resources are, as I am sure you are all aware, very large, easily accessible, very secure and cheap to mine. The key to using those to make transport fuels is the gasification technology. It is the best way of combining coal resources with carbon capture.
How do you do it? This first diagram here shows you basically what you have to do. You mix coal with oxygen and steam, you react them in a gasifier at high temperature, you then process the gas in various ways which we are working on in the development work we are doing at the Centre for Low Emission Technology and then you take this gas mixture and you put it through what is known as a Fischer-Tropsch synthesis, where you react the gases to produce liquid products. An inevitable by-product of that process if you start with coal is that you also make carbon dioxide, so you have to do something about that and that means capturing the carbon dioxide and storing it in some form of geological storage.
This basic technology of coal to liquids has been used in South Africa by SASOL since the 1950s. It was originally developed in Germany but since the 1950s they have been using it in South Africa for strategic reasons because of the apartheid restrictions on oil imports. They built quite large plants there for turning coal into liquid products, and those plants are still operating today. At the oil price we see today of greater than $US40 a barrel, those plants are very economic.
Senator JOYCE—What is F-T?
Dr Reed—It is an acronym for Fischer-Tropsch, the catalytic reaction that makes liquids. The products that it makes are as clean in use as those from conventional oil or a natural gas to liquid technology, and they perform well. You can also turn natural gas into liquid products using a rather similar technology. The gasification technology that is used in South Africa has a number of drawbacks. It will not take the whole of the coal output from the mine—it needs coarse coal; it will not take the fine material. There are also a number of environmental obstacles to using that more widely. The residues are leachable, and so forth. All of these things would be obstacles to using the SASOL-Lurgi gasification technology more widely, and particularly here in Australia. Modern entrained flow gasifiers, which have been developed primarily for power generation purposes, are much better suited to CO capture and storage, and they do not have the same drawbacks in terms of coal acceptance and environmental emissions performance.
What we are proposing for our own purposes for the electricity market is to build a pilot plant facility to test Australian coals and the gas processing developments we are working on at the Centre for Low Emission Technology. The plant would be about five megawatts in scale and we would use modern, entrained flow, oxygen blown gasification technology. The part that we are proposing at the moment is shown here in this yellow box. It is the gasifier with parallel gas cleaning trains. One would be a conventional wet scrubbing system and the other would be a dry system because reducing water usage in this technology is a prime issue. We intend to submit this proposal to the federal government’s National Collaborative Research Infrastructure Strategy scheme. We are currently out to tender for outline designs and costings, and we intend to submit that prop