Industry Research and Development (International CCUS Research Partnerships Program) Instrument 2023

EXPLANATORY STATEMENT

Issued by the authority of the Minister for Climate Change and Energy

Industry Research and Development Act 1986

Industry Research and Development (International CCUS Research Partnerships Program) Instrument 2023

Purpose and Operation

Section 33 of the Industry Research and Development Act 1986 (the Act) provides a mechanism for the Minister to prescribe programs, by disallowable legislative instrument, in relation to industry, innovation, science or research, including in relation to the expenditure of Commonwealth money under such programs.

The Minister for Industry and Science has delegated the Minister’s power under subsection 33(1) to the Minister responsible for administering the Climate Change Act 2022, under subsection 33(6) of the Act to prescribe the International CCUS Research Partnerships Program (the Program). This is currently the Hon Chris Bowen MP, Minister for Climate Change and Energy.

The statutory framework provided by section 33 of the Act enables a level of flexibility to provide authority for Commonwealth spending activities in relation to industry, innovation, science and research programs. This allows the Government to respond quickly and appropriately to the need to implement innovative ideas and pilot programs on an ongoing basis and as opportunities arise. Prescribing programs in legislative instruments provides transparency and parliamentary oversight of Government programs and spending activities, whilst reducing administrative burden on the Commonwealth.

Once a program is prescribed under section 33, subsection 34(1) allows the Commonwealth to make, vary or administer arrangements in relation to activities under the prescribed program. Arrangements may include contracts, funding agreements or other arrangements, and may provide for money to be payable by the Commonwealth to one or more third parties. The power conferred on the Commonwealth by subsection 34(1) may be exercised on behalf of the Commonwealth by a Minister or an accountable authority of a non-corporate entity, or by their delegate (under section 36).

The purpose of the Industry Research and Development (International CCUS Research Partnerships Program) Instrument 2023 (the Legislative Instrument) is to prescribe the Program.

The funding for the Program has been secured through the Department of Climate Change, Energy, the Environment and Water (the Department) October 2022-23 Budget. The Program provides $9.5 million as part of the Australian Government’s commitment to deliver a program of international collaboration and joint research and development on carbon capture, utilisation and storage (CCUS) technology with Japan (RITE; Research Institute of Innovative Technology for the Earth) and the Republic of Korea (KIGAM; Korea Institute of Geoscience and Mineral Resources), as part of the Strategic International Partnerships Measure. The Program is part of the Australian Government’s investment in international collaboration on clean investment with key strategic partners and delivers on Australia’s obligations under the United Nations Framework Convention on Climate Change, the Paris Agreement and the Kyoto Protocol, as well as agreements under the Low and Zero Emissions Technology Partnership Memorandum of Understanding between Australia and the Republic of Korea.

The objectives of the Program are to:

• advance the development and innovation of CCUS technologies, with the goal of accelerating the production and uptake of clean energy to reduce emissions and helping to enable new economic opportunities, including negative emission technologies and low emissions steel
• foster greater collaboration of businesses and research institutions in Australia with those in the Republic of Korea and Japan
• leverage private and non-Commonwealth funding of clean energy technologies and projects in Australia.

Eligible activities under the Program include:

• research and development of CO2 injection, storage, measuring, monitoring or verification technologies
• trialling, demonstration, construction or installation of CCUS equipment
• prototype development or field testing of CCUS equipment
• modelling, monitoring and assessing the performance, quality and reliability of CCUS technologies and its affected geologies
• process design and engineering
• project planning
• knowledge sharing activities, including workshops.

Ineligible activities include funding for carbon capture, utilisation and storage research and development activities for the extraction of coal, oil or natural gas.

Funding authorised by this Legislative Instrument comes from Program 1.1 Reducing Australia's greenhouse gas emissions, Outcome 1, as set out in the Portfolio Budget Statements 2022-2023, Budget Related Paper No. 1.3, Climate Change, Energy, the Environment and Water Portfolio (Portfolio Budget Statement October 2022-23 (dcceew.gov.au)) at page 37.

The Program will be delivered by the Business Grants Hub in the Department of Industry, Science and Resources which specialises in the design, management and delivery of similar programs.

The Program is a closed, non-competitive grants program aimed at providing support to CO2CRC Limited (ABN: 56 117 183 516). The Program is administered by the Department in accordance with the requirements of the Commonwealth resource management framework, including the Public Governance, Performance and Accountability Act 2013 and the Commonwealth Grant Rules and Guidelines 2017.

CO2CRC Limited has been identified as the appropriate recipient because:

• it has a well-established record of researching and demonstrating CCUS since 2003, where it was initially established under the Commonwealth’s Cooperative Research Centres Program
• it operates a diverse portfolio of projects to develop and trial innovations in CCUS technologies that can contribute to industrial decarbonisation efforts in Australia and around the world
• it has amassed technical expertise, deep connections with industry, research and international partnerships to advance innovations in CCUS domestically and globally, while focusing on commercial adaptability through cost-effectiveness
• the nature of the grant activity is specifically dependent on the expertise and facilities at CO2CRC Limited, including its unique testing facilities at the Otway International Test Centre (OITC), which provides companies and research organisations with viable CO2 storage geologies and equipment to test CCUS technologies at scale
• CO2CRC entered into collaborative research partnerships with RITE (Research Institute of Innovative Technology for the Earth) and KIGAM (Korea Institute of Geoscience and Mineral Resources) in 2021 and 2022 to advance CCUS technologies with an emphasis on field trials at the OITC.

Spending decisions will be made by the Program Delegate, taking into account the recommendations based on assessment by departmental officers and the Business Grants Hub against the grant opportunity guidelines.

The Program Delegate is a Senior Executive Service employee from the area of the Department with responsibility for CCUS policy. This ensures that the Program Delegate has relevant expertise in and understanding of CCUS matters, and is able to perform relevant functions in accordance with the Commonwealth resource framework.

The Program will not have selection criteria or be subject to merits review. Merits review of the Program is not appropriate because decisions will relate to the provision of a one-off, non-competitive grant to a certain service provider over other service providers. The Administrative Review Council has recognised that decisions of this nature should be excluded from merits review (see paragraphs 4.16 to 4.19 of What decisions should be subject to merits review? available at https://www.ag.gov.au/legal-system/administrative-law/administrative-review-council-publications/what-decisions-should-be-subject-merit-review-1999).

Persons who are otherwise affected by decisions or who have complaints about the Program will be able to provide feedback to the Department. The Department investigates any complaints about the Program in accordance with its complaints policy and procedures. If a person is not satisfied with the way the Department handles the complaint, they may lodge a complaint with the Commonwealth Ombudsman.

Statutory preconditions to the making of the Legislative Instrument 

Subsection 33(2) of the Act prescribes statutory preconditions for the making of a legislative instrument under section 33(1). Subsection 33(2) provides a program may only be prescribed under subsection 33(1): (a) to the extent that it is with respect to one or more legislative powers of the Parliament; and (b) if it is not a program to subsidise the extraction of coal or natural gas.

For the purposes of paragraph 33(2)(a) of the Act, the ‘Statement of the Relevance and Operation of Constitutional Heads of Power’ section of this Explanatory Statement outlines the extent to which the Program is with respect to one or more of the legislative powers of the Parliament.

For the purposes of paragraph 33(2)(b) of the Act, the Program is not a program to subsidise the extraction of coal or natural gas. In particular, subsection 5(3) of the Legislative Instrument provides that the program does not provide funding for carbon capture, utilisation and storage research and development activities for the extraction of coal or natural gas, which would include activities such as enhanced petroleum recovery.

Statement of the Relevance and Operation of Constitutional Heads of Power

For the purposes of subsection 33(3) of the Act, the Legislative Instrument specifies that the legislative power in respect of which it is made is the following:

External affairs power

Section 51(xxix) of the Constitution gives the Commonwealth Parliament power to make laws with respect to ‘external affairs.’ The external affairs power supports legislation implementing Australia’s international obligations under treaties to which it is a party. Australia has obligations relevant to this legislative instrument under the following treaties:

The UNFCCC includes a range of obligations on Australia to take domestic actions that reduce Australia’s emissions of greenhouse gases. Relevantly, it provides that parties shall:

The Kyoto Protocol includes obligations on Australia to take action to reduce emissions. For example, Article 10(b) requires parties to formulate, implement and report upon climate change mitigation and adaptation programs.

The Paris Agreement was entered into by the parties to the United Nations Framework Convention on Climate Change to enhance its implementation. Under the Paris Agreement, Australia has a ‘nationally determined contribution’, comprising a 2030 emissions reduction target of 43 per cent below 2005 levels and net zero emissions by 2050. Australia’s greenhouse gas emissions reduction targets, which reflect its nationally determined contribution, have been legislated in the Climate Change Act 2022. Relevantly, Article 4.2 of the Paris Agreement provides that ‘[e]ach Party shall prepare, communicate and maintain successive nationally determined contributions that it intends to achieve” and that “[p]arties shall pursue domestic mitigation measures, with the aim of achieving the objectives of such contributions’. Article 10 also includes obligations to strengthen cooperative action on technology development and transfer.

For the purposes of the above obligations in the UNFCCC, the Kyoto Protocol, and the Paris Agreement, the Legislative Instrument will support the reduction of greenhouse gas emissions through the development of technology for the capture and storage of carbon dioxide.

Further details on the Legislative Instrument are set out in Attachment A.

Consultation

The Department has engaged with the Business Grants Hub in the Department of Industry, Science and Resources, and CO2CRC Limited regarding the design and delivery of the Program.

In accordance with section 17 of the Legislation Act 2003, the Attorney-General’s Department and the Department of Industry, Science and Resources have been consulted on this Legislative Instrument.

Regulatory Impact

The Office of Impact Analysis considers the grant program is unlikely to have a more than minor impact on the Australian community. As such, the preparation of an Impact Analysis (IA) is not required (OIA23-05316).

Other

The Legislative Instrument is compatible with the human rights and freedoms recognised or declared under section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. A full statement of compatibility is set out in Attachment B.

ATTACHMENT A

Details of the Industry Research and Development (International CCUS Research Partnerships Program) Instrument 2023

Section 1 – Name of Instrument

1. This section specifies the name of the Legislative Instrument as the Industry Research and Development (International CCUS Research Partnerships Program) Instrument 2023.
    

Section 2 – Commencement

2.      This section provides that the Legislative Instrument commences on the day after registration on the Federal Register of Legislation. 

Section 3 – Authority

3.      This section specifies that the Legislative Instrument is made under section 33 of the Industry Research and Development Act 1986 (the Act).

Section 4 – Definitions

4.      This section provides for definitions of terms used in the Legislative Instrument.

Section 5 – Prescribed Program

5.      This section prescribes the International CCUS Research Partnerships Program (the Program) for the purposes of subsection 33(1) of the Act.

6.      The purpose of the Program is to provide funding to CO2CRC Limited for carbon capture, utilisation and storage research and development activities with partners from Japan and the Republic of Korea. The Program does not provide funding for carbon capture, utilisation and storage research and development activities associated with the extraction of coal, oil or natural gas.

Section 6 – Specified Legislative Power

7.      This section specifies that for the purposes of subsection 33(3) of the Act, the power of the Parliament to make laws with respect to external affairs (within the meaning of paragraph 51(xxix) of the Constitution) is specified, as that power relates to measures to give effect to Australia’s obligations under one or more of: the Kyoto Protocol (particularly Article 10); the Paris Agreement (particularly Articles 4 and 10); and the United Nations Framework Convention on Climate Change (particularly Article 4).

ATTACHMENT B

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Industry Research and Development (International CCUS Research Partnerships Program) Instrument 2023

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The purpose of the Industry Research and Development (International CCUS Research Partnerships Program) Instrument 2023 (the Legislative Instrument) is to prescribe the International CCUS Research Partnerships Program (the Program). The Program provides $9.5 million to CO2CRC Limited for the purposes of developing a program of international collaboration and joint research and development on carbon capture utilisation and storage (CCUS) technology with partners from Japan (RITE; Research Institute of Innovative Technology for the Earth) and the Republic of Korea (KIGAM; Korea Institute of Geoscience and Mineral Resources).

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

The Hon Chris Bowen MP

Minister for Climate Change and Energy