The federal government set rules on Friday for the issue of carbon credits to large-scale CCS projects to help meet the nation’s emissions reduction target.
The decision is certainly a win for oil and gas company Santos, which has been lobbying government for a carbon credit scheme, saying a proposed carbon capture and storage (CCS) project at its Moomba gas well in South Australia depended on whether or not it would attract carbon credits.
Energy Minister Angus Taylor lauded the scheme as a global first, saying credits could be sold back to the government through its $4.5 billion emissions reduction fund or to companies on the voluntary market, and would allow Australia to increase production of liquified natural gas (LNG).
“Our north Asian trading partners are relying on gas to reduce their emissions and provide affordable and reliable energy to power their economies,” Taylor said in a statement.
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The government’s plan to cut emissions is based largely on CCS and hydrogen development, and it has so far resisted international pressure to set a net zero 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,” Reuters said.
“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.”
A number of companies, including BP and Glencore, are working on CCS projects in Australia. Following the announcement on Friday, Santos said it would apply to register its Moomba CCS project for ACCUs before making a final investment decision on the A$210 million project.