Energy-intensive businesses to be rewarded for capturing carbon and storing it

Energy-intensive businesses like the LNG sector will be rewarded for capturing carbon and storing it away under a new credits scheme designed to help Australia reach net zero before 2050.

The Federal Government will set up a cash-for-carbon scheme that will see energy-intensive businesses like the gas sector rewarded for capturing carbon emissions and storing it away.

The announcement, to be made by Energy and Emissions Minister Angus Taylor, comes amid the Prime Minister’s wrangling of the Coalition to get to a position on net zero before a major climate summit in Glasgow.

The new Emissions Reduction Fund method will allow the government to award large-scale carbon capture projects with tradeable “Australian Carbon Credit Units” — effectively a unit of value that can sold to the government or on the private market.

One ACCU is the equivalent of one million tonne of carbon dioxide equivalent stored or avoided by a project.

Energy and Emissions Minister Angus Taylor. Picture: NCA NewsWire / Gary Ramage

Mr Taylor said the new method would incentivise emissions reductions from “a range of energy-intensive sector including LNG production” which currently makes up around 10 per cent of Australia’s emissions.

It would also “support the production of clean hydrogen” from resources like gas and coal.

“This world-first, government-developed method will position Australia to scale up clean LNG production and make use of our abundant geological storage potential,” Mr Taylor said.

“We have worked closely with industry to develop this methodology, which we expect will help unlock new projects across Australia, create new jobs and generate billions of dollars in economic activity.

“Our north Asian trading partners are relying on gas to reduce their emissions and provide affordable and reliable energy to power their economies.”

Mr Taylor’s reference to north Asian trading partners, which include India, came as Mr Morrison said he was committed to achieving a “practical energy technology partnership” with India that enabled “zero carbon energy technologies”.

In a briefing to Indian media, Mr Morrison stressed that Australia had long been an energy exporter of “traditional resources” — namely coal — to India, and that would continue.

“But, in addition to that, a whole new line will open up now, we believe, in these new energy technologies and new fuel sources,” he said.

Mr Taylor said the government had also tasked the Clean Energy Regulator to look into five new cash-for-carbon capture methods including through emissions reductions using electric vehicle refuelling infrastructure and hydrogen.