Australia announces CCS method for Emissions Reduction Fund

The Australian government on October 1 said it has developed an Emissions Reduction Fund (ERF) method to credit abatement from new carbon capture and storage (CCS) projects.

The government will award large-scale CCS projects that capture and permanently store carbon underground with Australian Carbon Credit Units (ACCUs). Each ACCU earned by a CCS project represents one metric ton (mt) of carbon emissions avoided. Projects will be able to sell ACCUs to the Australian government at bi-annual auctions or sell them on the private voluntary market.

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“CCS is a priority under the government’s technology investment roadmap and the new ERF method will incentive emissions reductions from a range of energy-intensive sectors including LNG production, which currently accounts for around 10% of Australia’s emissions,” Minister for energy and emissions reduction Angus Taylor said.

The minister said that this method will position Australia to scale up clean LNG production and make use of its abundant geological storage potential. “It will also support the production of clean hydrogen from existing energy resources like coal and gas,” he added.

Australian oil and gas explorer Santos welcomed the method and said it will begin the process to apply to register its Moomba CCS project with the Clean Energy Regulator and generate ACCUs.

“With the new CCS method now approved, Santos will seek to have the Moomba CCS project registered and generate ACCUs through the Emissions Reduction Fund. Once the project has been registered, we will be in a position to make a final investment decision to proceed.” Santos CEO Kevin Gallagher said. The Moomba CCS project will store 1.7mn mt/yr of carbon dioxide.

Australia’s peak oil and gas body Appea said the Australian government’s decision to approve a CCS method for the ERF has the potential to deliver step-change emissions reductions.

“Australia has a natural competitive advantage to implement CCS with known high quality, stable geological storage basins, existing infrastructure, world-class technical expertise and regulatory regimes (environment protection, carbon accounting and reporting, financial services),” Appea CEO Andrew McConville said. “Low-cost emissions reduction technologies can enhance Australia’s position as a leading energy exporter and ensure international competitiveness in a cleaner energy future.”