Malcolm Turnbull's carbon capture plan has one big problem

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The Turnbull government is in a really tricky position on the issue of climate change.

On one hand certain people within it are perfectly cognisant of the need for action, but on the other they're aware the best way to destroy the current fragile peace within the Coalition is to start actually talking about it. 

Sadly, the long avoidance of the subject has come to an abrupt end with a bunch of things happening at once. 

First up, Donald Trump announced the US was pulling out of the Paris Agreement last week. And sure, he could have done it a few days earlier while actually in Europe, but that would have involved telling other world leaders to their faces rather than taking potshots at them on Twitter.

There's also the ongoing will-we-won't-we dance over the Adani Carmichael mine in Queensland, which everyone agrees is an economic and political nightmare – not least because the survival of the Great Barrier Reef depends on a massive improvement in water quality, which is not code for "loads more dredging spill and coal dust".

There's also the upcoming Finkel Report on the security of Australia's energy grid to be released at the end of the week, which is going to reopen the debate over renewable energy. The Clean Energy Finance Corporation have been investing in renewables on Australia's behalf for years now while yielding a healthy return for taxpayers because, you know, it works. 

And yet in all this we've seen a big announcement from the man with the thankless task of being Minister for the Environment and, more importantly, Energy, Josh Frydenberg.

In a nutshell, the aforementioned Clean Energy Finance Corporation will be allowed to invest in a version of what the government likes to call "clean coal" – carbon capture and storage.

"This is proven technology – technology that should be made to work here in Australia to reduce emissions and help us meet our Paris targets," Frydenberg declared last week. 

Sadly, there are a few problems with the exciting new plan. One is that the supposedly proven technology currently doesn't capture very much carbon, and another is that the storage bit doesn't exist in any form at all. 

Estimates of the efficiency of Chinese experimental plants currently hover between 2 and 6 per cent of emissions being captured.

Carbon capture can, however, do better than that. The poster child of the tech – $1 billion Petra Nova project in Texas – was designed to capture 90 per cent of emissions, but before you get super excited it's worth pointing out that even if it hits that ambitious target it still isn't exactly a beacon of shiny green hope. 

The carbon dioxide is captured not for reasons of wise climate stewardship but to force up oil in the almost-tapped-out West Ranch oilfield. Except that current oil prices don't come close to covering the cost of getting it, which is one of the reasons companies are backing away from CCS.

See, there are two ways to make carbon capture economically attractive. One is for oil prices (or, perhaps more applicable to Australia, coal seam gas prices) to skyrocket, making CCS a worthwhile way of getting that sweet polluting energy-juice.

However, global prices are trending down rather than up, and in any case a high price on oil and/or gas dramatically undercuts the environmental credentials of CCS since it just reuses one climate pollutant to get at larger, otherwise-safely-inaccessible stores of another. 

The other way to make CCS economical is to make capturing carbon itself a money-spinner. This could be achieved by putting a price – or some might say, a "tax" – on carbon, and allowing the market to operate what you could describe as a "scheme" under which companies would "trade" in "emissions".

And this puts the government in a delicate position, given Frydenberg was actively ruling out the government imposing a carbon price, an emissions trading scheme or an emissions intensity scheme (which is the same thing in a different dress) at the same time he was spruiking CCS.

While carbon is without economic value, all carbon capture and storage can realistically be is a way for the coal industry to absorb taxpayer money in return for doing nothing. 

And while that would probably sit well with the more pro-coal members of the government, they'd presumably also notice this is a blatant attempt to set up the conditions for an ETS by stealth. To be fair, that's the only way we're apparently going to get one. 

In any case: can't wait for those conversations to begin in cabinet. Should be a hoot!

The Double Disillusionists are live at Giant Dwarf on June 6 with Andrew P Street and Dom Knight joined by Dee Madigan and Osman Faruqi.