The body representing Australia’s upstream oil and gas industry has backed calls for carbon capture and storage (CCS) projects to be made eligible for carbon credits.

In its submission to the Australian government’s draft CCS method for the nation’s Emissions Reduction Fund (ERF), the Australian Petroleum Production & Exploration Association (APPEA) said the technology had the potential to “deliver a step-change” to Australia’s emissions reductions.

Are you missing out on ACCELERATE?
Gain valuable insight into the global oil and gas industry's energy transition from ACCELERATE, the free weekly newsletter from Upstream and Recharge.

“This is a chance Australia shouldn’t miss. CCS can help Australia to not only meet, but beat our emissions-reduction targets,” APPEA chief executive Andrew McConville said.

“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).”

What is the ERF?

The ERF is a voluntary government scheme that aims to provide incentives for the adoption of new practices and technologies to reduce emissions.

CCS is one of five priority methods being developed in 2021 under the ERF, with the other methods including blue carbon, soil carbon, biomethane or green gas, and plantation forestry.

Public consultation opened last month on the government’s draft method for CCS projects to participate in the ERF and generate Australian carbon credit units (ACCUs).

Each ACCU will represent one tonne of carbon dioxide equivalent emissions stored or avoided and can be sold to the Australian government, companies, state governments or other private buyers.

In order for a CCS project to qualify for ACCUs under the draft method, all relevant infrastructure within the project, including capture facilities, pipelines and the storage site or sites, must be located in Australia.

The draft also notes that while most emissions-avoidance methods allow for a crediting period of seven years, CCS projects will be allowed a crediting period of 25 years to recognise the very large upfront and ongoing costs of the projects, and because they are not expected to generate any revenue other than ACCUs.

Scheme will help stimulate CCS Down Under

Santos chief executive Kevin Gallagher stated earlier this year the ability for CCS projects to generate ACCUs was essential for his company to proceed with its proposed US$155 million Moomba CCS development in South Australia.

McConville claimed in his statement on Wednesday the ability for CCS projects to generate ACCUs would encourage more projects, create jobs and reduce emissions.

“With scale and experience, the cost of CCS will decrease, creating the potential to deliver competitive, large-scale abatement for existing industries and new industries such as hydrogen and ammonia,” he said.

“Australia needs low-cost carbon abatement to maintain its position as a leading energy exporter and ensure international competitiveness in a cleaner energy future.”

McConville also noted that 19 CCS projects are currently in operation around the world, along with another four under construction.

These 23 projects, combined, will have the capacity to capture and permanently store roughly 40 million tonnes per annum of CO2, according to McConville.