MELBOURNE – Australia set rules on Friday for the issue of carbon credits for projects to capture and store (CCS) the pollutant, aiming to spur more such projects and help meet the nation's target to cut planet-warming emissions.
The conservative government views CCS as essential to the future use of gas and coal, the country's second- and third-largest export earners, as carbon dioxide could be captured from gas fields used to produce liquefied natural gas (LNG) and hydrogen and from industries, such as steel- and cement-making, that rely on coal and gas.
"Our north Asian trading partners are relying on gas to reduce their emissions and provide affordable and reliable energy to power their economies," Energy Minister Angus Taylor said in a statement.
CCS and hydrogen development are the two technologies the Australian government is pushing to cut emissions, while resisting international pressure to set a net zero carbon emissions target for 2050.
To meet a net zero emissions target by 2050, the International Energy Agency projects the world would need to capture and store 7.6-billion tonnes a year of carbon dioxide by 2050, up from current CCS capacity of 40-million tonnes a year.
Under the new rules, for each tonne of carbon emissions avoided, CCS projects will earn one Australian Carbon Credit Unit (ACCU), which can be sold by auction to the government's Emissions Reduction Fund or sold on the private market.
ACCU prices hit a high of A$26 ($19) a tonne in September. However In Europe, with tougher emissions rules, carbon credits have traded above 60 euros ($69) a tonne, raising expectations ACCU prices will eventually climb and make CCS projects profitable.
A number of companies, including BP Plc and Glencore Plc, are working on CCS projects in Australia.
Santos Ltd said on Friday it would now apply to register its Moomba CCS project for ACCUs, before making a final investment decision on the A$210-million project.
It aims to store 1.7-million tonnes a year of carbon dioxide in depleted oil and gas reservoirs in South Australia.