The Economics of CO₂ Capture and Geological Storage

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.