Appendix d progress towards Australia’s emissions reduction goals

Appendix D6 Fugitive emissions

D6.1 Fugitive emissions overview

Fugitive emissions are greenhouse gases emitted during the extraction, production, processing, storage, transmission and distribution of fossil fuels such as coal, oil and gas. Fugitive emissions do not include emissions from fuel combustion.

Australia’s fugitive emissions were 41 Mt CO₂-e in 2000 and increased to 48 Mt CO₂-e in 2012 (Treasury and DIICCSRTE 2013). This represented 7 and 8 per cent of Australia’s total emissions in 2000 and 2012, respectively (Figure D.27). Almost three-quarters of 2012 fugitive emissions were from the coal industry, with the balance from the oil and gas industry.

The Treasury and DIICCSRTE modelling (2013) projects fugitive emissions will increase relative to 2000 levels by 2030 under all scenarios. Growth ranges from an 8 Mt CO₂-e to 59 Mt CO₂-e increase under the high and no price scenarios, respectively (Figure D.27). The projected increase reflects growth in coal and LNG production, driven by strong global demand for Australia’s energy resources. The scenarios project a wide range of possible future fugitive emissions levels in 2030 (Figure D.28).

Figure D.27: Fugitive share of Australia’s emissions, selected years, 1990–2030

 

Source: Climate Change Authority calculations using results from Treasury and DIICCSRTE 2013

Figure D.28: Historical and projected fugitive emissions, 1990–2030

 

Note: Upper and lower line bounds illustrate the range of modelled outcomes.

Source: Climate Change Authority calculations using results from Treasury and DIICCSRTE 2013

D6.2 Fugitive emissions outcomes, contributors and drivers

Figure D.29 shows the projected fugitive emissions outcomes for each modelled scenario. All scenarios project a steep increase in emissions to 2020, but diverge in the decade post-2020. By 2030, emissions are projected to be 21 per cent above 2000 levels in the high scenario and 144 per cent above in the no price scenario. This reflects the potential for strong incentives to enhance the economic attractiveness of emerging emissions reduction processes, such as the oxidisation of ventilation air methane in coal mining.

Future fugitive emissions are projected to be driven by growing coal and gas production in response to increased global energy demand. If there is increased global action on climate change, production of fossil fuels (particularly coal) is projected to grow at a slower rate (Treasury and DIICCSRTE 2013). This effect is incorporated in all the scenarios modelled and is most pronounced in the high scenario.

D6.2.1 Coal industry

Fugitive emissions in the coal industry depend on the level of coal production and the greenhouse gas content of the coal seams being mined. ClimateWorks (2013, p. 36) notes that some of the more emissions-intensive mines generate up to 0.8 t CO₂-e of fugitive emissions per tonne of coal produced.

Underground mines are typically more emissions-intensive than surface mines because deeper coal seams are subject to greater pressures, which prevents the natural escape of emissions through cracks and fissures (US EPA 2006a, p. 1). In Australia, underground coal mines are around seven times more emissions-intensive than surface mines on average—they contributed 19 per cent to Australian coal production in 2010–11 but 62 per cent of coal fugitive emissions (DCCEE 2012).

Between 2000 and 2012, Australia’s raw coal production increased by 36 per cent (BREE 2013b), while fugitive emissions from coal increased by 24 per cent (Treasury and DIICCSRTE 2013), suggesting improved emissions intensity.

Although price incentives for emissions reduction are projected to affect the emissions intensity of production, growth in Australia’s fugitive emissions will continue to be driven largely by global demand for Australian coal. For example, BREE (2012, pp. 36, 51) projects total black coal production to increase from 11,700 PJ in 2012–13 to 18,000 PJ in 2049–50, and domestic black coal consumption to decrease from 1,200 PJ to 478 PJ.

Figure D.29: Contributors to fugitive emissions, selected years, 1990–2030, and to change in emissions relative to 2000 levels

 

Source: Climate Change Authority calculations using results from Treasury and DIICCSRTE 2013

D6.2.2 Oil and gas industry

Fugitive emissions in the gas industry include gas venting, gas flaring and losses associated with the transmission and distribution of gas.

Between 2000 and 2012, fugitive emissions from natural gas production decreased 18 per cent and emissions from natural gas transmission and distribution increased by 55 per cent (Treasury and DIICCSRTE 2013). Overall, fugitive emissions from the gas industry remained steady over the period, despite natural gas (and ethane) production doubling between 2000 and 2012 (BREE 2013b). Oil production decreased over this period; however, its relatively small contribution to emissions means it is not driving changes in emissions.

The Grattan Institute (2013, p. 4) identifies several trends driving increased demand for gas, including:

• 
  economic growth in China, India and the Middle East, leading to increased energy demand generally
  
• 
  several countries changing their policies on nuclear power, notably Australia’s major trading partner Japan, following the Fukushima nuclear incident, leading to increased demand for alternative energy sources
  
• 
  climate change concerns making gas-fired power plants more attractive, as they emit less greenhouse gases than coal-fired power plants.
  

These factors contribute to a strong growth outlook—Australian gas production is projected to increase by 184 per cent between 2012–13 and 2049–50 (BREE 2012), considerably larger than the growth in domestic consumption.

D6.3 Progress in fugitive emissions reduction

D6.3.1 Coal industry

There are several emissions reduction technologies the coal industry could use to reduce fugitive emissions, though their implementation may require a price incentive or technological maturation. The US EPA (2006a, p. 2) identified three main measures:

• 
  degasification to capture methane
  
• 
  enhanced degasification to capture low-grade methane and purify it
  
• 
  oxidisation of ventilation air methane (when methane in a mine’s ventilation air is oxidised to generate heat or produce electricity).
  

A price incentive could encourage uptake of these technologies. For example, ClimateWorks (2013) estimates reducing emissions from ventilation air methane oxidisation costs about $17/t CO₂-e. A price incentive could also drive a shift in Australian coal production towards less gassy mines.

The level of coal mining activity will be the main driver of fugitive emissions. The Treasury and DIICCSRTE (2013) suggests Australia’s coal production level will be more responsive to global action to reduce emissions than to Australia’s domestic price incentive. With strong global action on climate change, domestic coal production is projected to be flat from 2020 before falling towards the end of that decade. With weaker action, Australia’s production is projected to continue to grow.

D6.3.2 Oil and gas industry

The US EPA (2006b, p. 2) identified three main fugitive emissions reduction measures for the natural gas industry:

• 
  Equipment changes and upgrades—including pneumatic control devices, which operate valves and control pressure, flow or liquid levels. These devices can be retrofitted or replaced to ‘bleed’ less natural gas into the atmosphere, or used with compressed air instead of pressurised natural gas (Copenhagen Consensus on Climate 2009, p. 22).
  
• 
  Changes in operational practices—including avoiding the venting of methane before pipeline maintenance or repairs. This may mean recompressing the gas during maintenance and repairs or using surge vessels, which clear the pipeline of methane for short periods (Ecofys 2009, p. 27).
  
• 
  Direct inspection and maintenance—including identifying and addressing leaks across the natural gas transmission and distribution network. Infrared cameras can find methane emissions and, if coupled with emissions measurement technologies such as pressure sensors, allow leaks to be tracked and rectified (Clean Air Task Force 2009, p. 16).
  

CCS could significantly reduce fugitive emissions from oil and gas extraction and processing, though it is not yet widespread (IEA 2013, p. 19). The Gorgon LNG project in Western Australia is expected to capture and inject as much as 3.4 Mt CO₂ annually from 2015 (Chevron 2013). Queensland LNG projects are unlikely to use CCS.

The demonstrated reserves of coal seam gas (CSG) in Australia are substantial and estimated to be 31 per cent of Australia’s gas resources (BREE 2013a), with deposits concentrated in Queensland and New South Wales. The CSIRO and Department of the Environment are undertaking a project to gather preliminary field measurements of fugitive emissions from CSG. This is a first step to establishing methods for assessing Australia-specific fugitive emissions from CSG (CSIRO 2013).