The billion-dollar pipeline of government funding for carbon capture and storage has been turned off as Resources Minister Madeleine King declares that gas companies must pay their own way to develop the controversial emissions reduction technology.
Analysis of Commonwealth grant schemes reveals that since 2009, Labor and Coalition federal governments have made funds worth more than $900 million for carbon capture available to large coal and gas companies. Coupled with state schemes such as the $100 million NSW Clean Coal Fund, public money for the technology exceeds $1 billion. But the Albanese government has quietly cut financial support in its past two budgets.
Resources Minister Madeleine King says gas companies making billions of dollars in profits must pay for development of CCS technology.
In the budget delivered last year, Labor ditched the former Morrison government’s $250 million carbon capture and storage fund and last week did not provide any new funds for the technology, which is also barred from the government’s new $2 billion green energy Hydrogen Headstart fund.
King said the federal government could not justify granting more taxpayer dollars to help industry commercialise carbon capture and storage – which traps carbon dioxide emissions produced by factories, power plants or gas fields and buries them underground before they are emitted into the atmosphere.
“When the gas companies are making billions of profits, it’s hard to say to the community that they need to provide funding for [CCS],” she said.
However, the Albanese government is divided over the future prospects for the technology. Prime Minister Anthony Albanese backed its effectiveness and King hailed it as the “single biggest opportunity for the resources sector” to reduce its carbon footprint. However, Industry Minister Ed Husic, when asked this week if the technology had been proven to work, said: “I don’t see any evidence of it”. Climate Change and Energy Minister Chris Bowen says there is strong international demand for green hydrogen produced with renewables, but not for blue hydrogen which uses carbon capture.
The gas industry argues carbon capture and storage is critical for reducing its carbon footprint while supplying energy to back up renewables. But climate activists argue the technology merely prolongs the use of fossil fuels and delays the switch to renewables.
Liquefied natural gas is forecast to earn $91 billion in exports this financial year – three times more than in 2020-21 – after a ban on Russian gas exports following its invasion of Ukraine.
Australia’s energy giants, including Chevron, Santos and Woodside, have set goals to reach net zero emissions, including aspirations to capture the vast greenhouse emissions generated by their gas fields and processing plants.
King said it was up to gas companies to ensure “they can meet their ambitions”. “If the argument was the $250 million was all that was needed, I don’t buy it.”
Santos chief executive Kevin Gallagher said this week that “Australia simply cannot afford to turn its back on the gas industry or to shun the opportunity of new, exciting industries such as CCS”.
The world’s biggest carbon capture project at Chevron’s $80 billion Gorgon gas plant in Western Australia is working at one-third capacity after six years. Santos is constructing its first carbon capture project at South Australia’s Moomba gas plant.
The Labor Environment Action Network (LEAN), an influential grassroots organisation, welcomed the government’s move to ditch public funding for gas companies. “If the industry wants to invest in working out if they can bury emissions effectively they should knock their socks off, but it’s good the public tap has been turned off,” said LEAN co-convener Felicity Wade.
Bowen’s Hydrogen Headstart program is restricted to so-called green hydrogen, which is produced with renewable energy and has no emissions. The fund is not open to blue hydrogen projects, where fossil fuel energy is used to produce hydrogen with the use of CCS to eliminate emissions.
While there is no CCS money available for fossil fuels, the federal government has a $141 million fund to help develop the technology in high-polluting, critical industries such as cement and fertiliser, that have no other commercially viable options to reduce their emissions. Previous federal funds for CCS include the $250 million CCUS Hubs and Technology fund launched in 2021, the $250 million CCS flagships program launched in 2009 and the $200 million National Low Emissions Coal Initiative launched in 2007.