Australian upstream firms will be able to receive funds from the Australian government for injecting carbon dioxide (CO2) into carbon capture and storage (CCS) projects, following the inclusion of CCS in Australia's emissions reduction fund (ERF) whereby upstream firms will be issued Australian carbon credit units (ACCUs) by a government agency.
The move is likely to see a number of CCS projections be sanctioned including the 1.7mn t/yr of CO2 equivalent (CO2e) Moomba CCS project in the onshore Cooper basin in South Australia, which is operated by Australian independent Santos that said that the Moomba CCS plant's viability was contingent on the ability to be issued ACCUs.
Santos will today start the process to apply to register its Moomba CCS project with the Clean Energy Regulator (CER), which oversees the ERF and the issuance of ACCUs, Santos said. Canberra released plans in June to issue ACCUs in CCS projects.
Australian ACCUs are priced at around A$26/t ($18.80/t) of CO2e, which means Santos will be paid around A$44.2mn a year based on current prices if the Moomba plant operates as intended and at capacity. ACCUs are only issued through the ERF, which is a federal government-backed fund. The ACCUs are largely issued at present 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.
CCS facilities have a poor track record globally as well as in Australia, but have been strongly advocated by oil, gas and coal producers.
Chevron operates the largest CCS project in Australia through its CCS facility at the 15.6mn t/yr Gorgon LNG venture in Western Australia, but has been unable to store the volume of CO2e it promised. The CCS plant was expected to hold 4mn t/yr of CO2e, but Chevron has only injected around 2.5mn t/yr of CO2e or 37.5pc below the expected annualised rate.
The CER will work on another five methodologies to be included in the ERF over the next 12 months, that include transport through the emissions reductions created by electric vehicle (EV) charging and hydrogen refuelling infrastructure as well as hydrogen, including injection of hydrogen into the gas network, and the use of hydrogen in electricity generation or other uses, such as low carbon steel.
The other methodologies that are to be included in the ERF are integrated farm method, which allows separate ERF land-based activities to be combined on the same land; carbon capture use and storage (CCUS or carbon recycling), including in the production of industrial and building materials like insulation or concrete and savanna fire management, which will update an existing methodology.
The Australian government will also progress further research and technology development to support the development of future ERF methods, including recognition of different sources of agricultural waste as feedstocks, to support an enhanced biomethane; livestock feed technologies and direct air capture technologies, which absorb carbon from the atmosphere, Australian energy minister Angus Taylor said in a statement.
Australia's gas sector accounts for around 10pc of the country's total GHG emissions or around 53mn t of CO2e last year. Australia is the world's largest LNG exporter with around 80mn t/yr in shipments.
