Australia to involve carbon capture, storage for credit

The Australian government has released plans to issue Australian domestic carbon credits to operators of carbon capture and storage (CCS) projects.

The Australian upstream sector has advocated for such projects in order for the industry to reduce its greenhouse gas (GHG) emissions as well as proponents of producing hydrogen from fossil fuel sources.

Canberra has released a discussion paper where it proposes to include a CCS methodology that would be accepted for the issuance of Australian carbon credit units (ACCUs) under Australia's emissions reduction fund (ERF).

CCS can underpin new low emissions industries such as hydrogen, as well as reducing emissions in hard to abate sectors such as cement production and steel manufacture, the Australian government said in its discussion paper Carbon Capture and Storage Method 2021.

The ruling conservative coalition government outlined its plans to include CCS in the domestic carbon credit scheme last year when Canberra released its technology roadmap to reduce Australia's GHG emissions through technology, which was largely focused on CCS and hydrogen and had little emphasis on renewable energy and battery storage.

ACCUs are only issued through the ERF, which is a federal government-backed fund. The credit units are issued to carbon abatement projects that qualify under the ERF and can be used by the project operator to offset their own GHG profile or sold to other Australian entities that are seeking ways to reduce their GHGs. The ruling Liberal-National party government does not want to create a carbon market and never talks about a carbon price, even as it is increasingly advocated by the upstream industry.

Australian independent Santos has admitted that the economics of its proposed CCS plant at Moomba in the onshore Cooper Basin in South Australia is contingent on the acceptance of CCS projects in the ACCU scheme. Santos plans to build a CCS facility capable of storing 20mn t/yr of CO2e.

Moomba is economic at a carbon price of A$30/t ($23/t) of CO2e, which is above the current ACCU price of around A$19/t, Santos has said.

The ERF is overseen by the Clean Energy Regulator (CER). Canberra provided A$40mn of additional resourcing in to the CER in the 2020-21 fiscal year budget to 30 June to halve the development time of new ERF methods to less than 12 months. In addition to CCS, new methods under development this year include blue carbon, soil carbon, biomethane or green gas, and plantation forestry, the Australian energy minister Angus Taylor said in a statement.

The government is seeking feedback on its CCS methodology proposal before the closing date on 27 July.

By Kevin Morrison