The feasibility study carried out on the ZeroGen project concluded that electricity prices would burst due to unaffordable costs of the project, leading the Queensland state government to not pursue its commitment to fund the Integrated Gasification Combined Cycle power station equipped with CCS.

Yet, the technology is ready and only lacks financial incentives. Funding for CCS represents 37 percent of the funding under the Australian government’s $5 billion (€3,8 bn) clean energy initiative.

Under the restructuring the state government proposes that ZeroGen will be transitioned into an independent entity, owned and run by industry and dedicated to the accelerated development and deployment of CCS.

Now the state will have to go back to the drawing board with the intention to “identify storage locations as it is the critical first step in the process towards the development of Carbon Capture and Storage capacity in Queensland.”

“This shows one thing: Australia cannot be serious about CCS and at the same time avoid introducing a price on CO2 emissions. Of course it will be terribly expensive to finance CCS only with public subsidies, and the increase in the estimated cost of ZeroGen has more to do with the failure to introduce a price on CO2 emissions than with any bad surprises on CCS. We need to find the right balance between carrots for first mover investments and sticks to prevent the bill falling with tax-payers. Australia should look to the UK government’s fresh power market reform proposals,” reacted Eivind Hoff, director of Bellona Europa.

Access the press release here.