Australia's carbon capture and storage plan doomed to fail: report

Existing examples around the world were expensive projects with little revenue.

Australia’s plans for carbon capture and storage (CCS) was warned as a poor investment from a financial perspective, with the Institute for Energy Economics and Financial Analysis (IEEFA) pointing at the poor outcomes from the only two projects operating worldwide and a lack of revenue generated in lieu of a carbon price, a briefing note revealed.

According to the note’s author Clark Butler, it costs more than renewable energy plus firming, and is not meeting its remit due to ongoing leakages in transportation and storage of the carbon it is trying to capture.

“The traditional financial justification for doing CCS was for enhanced oil recovery (EOR) but with oil prices currently well below breakeven for oils sands extraction, the cost of CCS has blown out even more,” Butler said.

Further, there have been no commercially viable examples of CCS anywhere in the world, besides expensive projects that generated very little revenue.

CCS projects attracted massive subsidies due to the lack of pricing signals from emissions trading schemes, but examples of the technology employed in both gas and coal-based power projects in Canada and the US have been unsuccessful to date and even abandoned, the briefing note found.

“If the Australian government wishes to encourage the development of CCS in Australia, in both gas and power, a carbon price would be a much better policy than the subsidisation of uneconomic CCS project proposals,” Butler added.