Capturing CO2 from stationary sources such as power stations and petroleum processing plants and storing the CO2 into deep geological formations can potentially reduce greenhouse gas emissions in Australia. The cost of capturing CO2 could vary from below US$30 to above US$70 per tonne of CO2 avoided for coal-fired power stations typical of the stations used in Australia. In addition, storage costs can vary from below US$5 to above US$20 per tonne of CO2 avoided. These figures are based on capturing and storing pure CO2. Capturing other greenhouse gases in addition to CO2 might lower the unit costs of capture significantly. However, this needs to be balanced against the consequent increase in storage costs.
As regards capturing CO2 from petroleum extraction activities, the corporate income tax and Petroleum Resource Rent Tax ("PRRT") regime in Australia could potentially have large effects on the economics of CO2 capture and storage depending on the situation. If capture and storage attracted full income tax and PRRT relief, the after tax cost of CO2 capture and sequestration could be less than 50% of the before tax cost. However, such tax savings would be offset by benefits that might arise from any future carbon tax or carbon credit trading.