The Australian government accepted a new rule on Friday, October 1st to award carbon capture credits for emissions reductions to new carbon capture projects. With that move the country became the first in the world to offer credit units to such projects, acting as a catalyst once again for the acceleration of carbon capture development.
The credits called Australian Carbon Credit Units (ACCUs) can be earned by the projects for every ton of emissions they avoid. Each ACCU represents one ton of carbon emissions eliminated by the project.
The credit units earned by carbon capture plants could be sold to the Australian Government at auctions or at the voluntary carbon offset market. According to Angus Taylor, the new rule will support investments in large-scale carbon capture and storage (CCS) hubs across the country.
In September, the price of ACCU was $26 ($19 US dollars) a ton. In Europe carbon credits have traded above 60 euros ($69) per ton which hints the future direction of ACCU price and that it will eventually spike to make CCS projects profitable.
A Way To Avoid Net Zero Goals
The conservative government also sees carbon capture technology as critical to the future use of gas and coal – the country’s second and third largest export earners. Industries like steel and cement-making, LNG and hydrogen production are still highly reliant on coal and natural gas.
“Our north Asian trading partners are relying on gas to reduce their emissions and provide affordable and reliable energy to power their economies,” said Energy Minister Angus Taylor.
To resist international pressure to set net zero emissions goals for 2050, Australia is expanding green technologies like CCS and hydrogen, aiming to cut emissions and provide long-term revenue streams.
As the world would need to eliminate 50 billion tons of CO2 equivalent emissions per year to become carbon neutral, carbon capture investments are essential for the industry to have a shot at achieving that. The International Energy Agency projections are that the world will have to capture and store 7.6 billion tons a year of CO2 by 2050 which is far greater than the current capacity of 40 million tons a year.