The Federal Government will lift a legislative prohibition on the Clean Energy Finance Corporation (CEFC) in order to allow them to invest in carbon capture and storage (CCS) technologies.
Federal Minister for the Environment and Energy Josh Frydenberg said access to finance is one of the barriers to investment in CCS and a change to CEFC legislation will provide a significant signal of support and reduce risk for potential investors.
This move aims to demonstrate the Government’s commitment to a technology neutral, non-ideological, approach to national energy policy. Mr Frydenberg said removing the prohibition will allow the CEFC to support a wider range of low emissions technologies and thereby reduce emissions at lowest cost.
The CEFC released a statement outlining its continued support for the development of a resilient, balanced and secure energy system in Australia, through the deployment of eligible clean energy technologies across diverse areas of the economy.
Under the CEFC Act, its investments include renewable energy, energy efficiency and low emissions technologies. To date, the CEFA has invested more than $3.3 billion in eligible clean energy projects, with a total project value of $8.3 billion.
The majority of existing large-scale CCS projects globally are in the industrial sector, including in natural gas, fertiliser, hydrogen, and iron and steelmaking. In Australia, there are several industrial pilot CCS projects either in operation or at a planning stage.
APPEA Chief Executive Dr Malcolm Roberts said access to CEFC financing could help overcome some of the capital and financing obstacles facing some CCS projects.
“CCS is seen as one of the pathways to the continued use of fossil fuels in a low-carbon economy,” Dr Roberts said.
“Accelerating the roll-out of CCS projects could assist in reducing emissions from the generation sector. Allowing these projects to access CEFC financing, subject to appropriate investment tests, would offer tangible support for this potentially important technology.
CCS technology has been acclaimed by the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA) as critical to enabling the world to meet its emission reduction targets.
CCS is a proven technology being deployed globally with 17 large-scale commercial CCS facilities already in operation storing around 30 million tonnes per annum of carbon dioxide.
In Australia, the Gorgon LNG project in Western Australia will soon become one of the world’s largest CCS projects when it begins sequestering up to 4 million tonnes per annum in carbon dioxide in the coming year.
There are also significant opportunities for the application of CCS technologies outside of the energy sector.
The International Energy Agency has stated that CCS is the only option available to significantly reduce emissions from some major industrial processes, such as iron and steel production, cement production, and natural gas processing.
The CEFC’s ability to invest in CCS technologies will complement other low emissions investment by the Federal Government including more than $3 billion worth of wind, solar and storage projects.