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Carbon capture and storage method

01 October 2021

Is the Carbon capture and storage (CCS) method suitable for your business?

Are you looking for an opportunity to reduce greenhouse gas emissions from your industrial process, or oil and gas activities by capturing those emissions to be permanently stored underground?

If you have answered yes to these questions the facilities method may be suitable for your business.

The Carbon capture and storage (CCS) method is designed to incentivise projects that involve capturing greenhouse gases that would have been released to the atmosphere and transporting them for injection into underground geological formations for permanent storage.

Guidance available

documentasset:CCS Simple Method Guide – which provides a step-by-step guide on how to register, run and report on a CCS project.

All CCS projects will:

  • involve a new greenhouse gas source. For greenhouse gases generated from an industrial process, this will be a new greenhouse gas capture point. For greenhouse gases extracted from a hydrocarbon field, this will be a new hydrocarbon field.
  • be undertaken under either the Offshore Petroleum and Greenhouse Gas Storage Act 2006 or a law or legislative framework that meets the criteria to be a recognised law of a State or Territory, as set out in the CCS method.

Legislative requirements

You must read and understand the method and other legislative requirements to conduct a CCS project and earn Australian carbon credit units (ACCUs). This includes:

Tools and resources

Quick reference guide to the Carbon capture and storage method

​Contents

Crediting period

The crediting period is the period of time a project can apply to claim ACCUs.

Under the method, all projects will have a 25-year crediting period.

The CCS method allows a longer period between project registration and the crediting period starting than many other methods. For the Carbon capture and storage method, this period is up to 5 years.

Relevant section of the Act:

Relevant section of the Method:

Relevant section of the Rule

Eligibility requirements

There are general eligibility requirements in the Act, which include:

The CCS method requires that a project involve a new greenhouse gas source. For greenhouse gases generated from an industrial process, this will be a new greenhouse gas capture point. For greenhouse gases extracted from a new hydrocarbon field, this will be a new hydrocarbon field.

There is a substitute newness provision in section 11 of the CCS method replacing the standard provision set out in the Act that allows projects to:

  • meet newness so long as a final investment decision has not been made for the project
  • use existing capture points where the project is storing greenhouse gases extracted from a new oil or gas field.

Projects under the method are also required to submit a CCS project plan when registering their project. A CCS project plan’s purpose is to outline how the project will be undertaken and needs to include:

  • all the project’s capture points, pipelines, processing units, and injection points
  • characteristics and operation of the storage site including monitoring and reporting activities
  • how the longer-term risk of abatement reversal from the storage site will be managed
  • information about any workplace health and safety plan covering the operation that is required.

It is a requirement of the CCS method that the project proponent take reasonable steps to implement or oversee the implementation of the project in accordance with a CCS project plan.

Relevant section of the Act:

Relevant section of the Method:

Project activities

A CCS project involves capturing, transporting and injecting greenhouse gases into geological storage sites for permanent storage. These greenhouse gases would have otherwise been released into the atmosphere.

Projects must be operated under either the Commonwealth’s Offshore Petroleum and Greenhouse Gas Storage Act 2006 or a law or legislative framework that meets the criteria to be a recognised law of a State or Territory, as set out in section 5 of the CCS method. Under the definition of recognised law of a State or Territory, the law or legislative framework must require:

  • detailed assessments and technical specifications of the proposed reservoir including its estimated storage capacity and ability to be used to permanently store injected greenhouse gases
  • conditions to be imposed on or attached to the recognised licence, about the greenhouse gases to be injected, including technical specifications of the composition, injection rate, and volume of the greenhouse gases
  • monitoring and regular reporting of greenhouse gases being stored in the reservoir, at a minimum for the duration of the relevant authority
  • assessing the likelihood of greenhouse gas loss and potential migration paths of injected greenhouse gases from the recognised reservoir
  • all risks of greenhouse gas loss from the reservoir to public health and the surrounding environment are identified in a detailed assessment
  • mitigation and management strategies to be developed and implemented to address identified risks
  • criteria for notification of a proposed project and relevant stakeholders to be advised of the proposed project
  • regular review and reporting of project operations.

These criteria are to provide assurance that the regulatory framework whether specifically for CCS or not, is sufficiently robust to ensure the safety and permanence of the stored greenhouse gases. The method notes that the following state-based laws are recognised laws of a State or Territory:

  • the Greenhouse Gas Geological Sequestration Act 2008 (Vic)
  • the Offshore Petroleum and Greenhouse Gas Storage Act 2010 (Vic)
  • the Greenhouse Gas Storage Act 2009 (Qld)
  • the Petroleum and Geothermal Energy Act 2000 (SA).

Relevant sections of the Method:

Exclusions

The CCS method notes 2 related activities that are excluded from creating abatement under the method:

  • Activities that have the effect of enhanced oil or gas recovery.
  • Storage of carbon dioxide captured via direct air capture technologies.

Relevant section of the Method:

Abatement calculations

Abatement is calculated by working out the net abatement amount, which is the amount of relevant greenhouse gases captured at each capture point reduced by:

  • project emissions,
  • methane captured that would have been oxidised in the absence of the project, and
  • a 3% buffer that is withheld to mitigate the risk of abatement being reversed (risk of reversal withholding).

The project proponent may apply to have the withheld ACCUs returned to them following the completion of the site closure process required by the relevant regulatory body. This generally occurs when the site operating licence is surrendered to the appropriate regulatory body after injection has ceased and the regulatory body is satisfied that the greenhouse gases have been permanently stored and the site can be closed. The number of ACCUs refunded is reduced for any storage site fugitive and monitoring emissions that have occurred since the end of the crediting period. The project proponent has 25 years from the end of the crediting period to apply for the withheld ACCUs. If the site is not closed by this time, the withheld ACCUs can no longer be applied for.

Relevant sections of the Method:

Relevant sections of the Rule:

Reporting requirements

In addition to the reporting requirements of the Act and the Rule, the method also sets out the following method-specific requirements for offset reports and these specify requirements during the crediting period and requirements during the extended accounting period. The extended accounting period is the period from the end of the 25-year crediting period until site closure (as required by the relevant regulatory body) or when a further 25 years has passed, whichever occurs earlier.

Additional reporting requirements during the crediting period include:

  • a description of how the components used to calculate the net abatement amount have been calculated, including the capture related emissions
  • any material changes to the manner of the project’s operations or project locations, including where the project is operating differently from what was set out in the CCS project plan
  • a description of any additional regulatory approvals that were required for the changes.

Additional reporting requirement during the extended accounting period include:

  • any storage site fugitive emissions that have occurred during the reporting period
  • any material changes to the behaviour of the greenhouse gases in the storage site that increases the risk of fugitive emissions being released during the extended accounting period.

Relevant section of the Act:

Relevant section of the Rule:

Relevant sections of the Method:

Monitoring requirements

In addition to the general monitoring requirements of the Act, CCS projects must meet specific monitoring requirements in the method. Section 36 of the method lists these requirements and section 37 sets out requirements if a project proponent fails to monitor a parameter and allows the proponent to make a conservative estimate based on relevant data in some circumstances. The project proponent must take steps to minimise the time period for which an estimate is used.

Relevant section of the Act:

Relevant section of the Method:

Record-keeping requirements

See the record keeping requirements of the Act and the Rule.

Relevant section of the Act:

Relevant section of the Rule

Audits

Audits are an important requirement of the Emissions Reduction Fund and provide assurance over the integrity of ACCUs. All projects receive an audit schedule when the project is declared and must provide audit reports according to this schedule. A minimum of 3 audits will be scheduled, however, due to the likely volume of abatement generated by projects under the CCS method, it is likely that additional audit reports will need to be undertaken.

For example, all offsets reports where the report for a period claims more than 100,000 t CO2-e of abatement must be accompanied by an audit report.

For more information on the audit requirements, see the Act, the Rule and the audit information on our website.

Relevant section of the Act:

Relevant section of the Rule:


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