Australia's Carbon Sequestration Potential

Sequestration is a necessary part of any rapid, urgent decarbonisation, and the sequestration industry represents a huge opportunity for Australia if we get it right. 

The Intergovernmental Panel on Climate Change estimates that around 6 billion tonnes of CO2 would have to be removed per year by 2050 globally, and about 14 billion tonnes per year by 2100 for a 50 per cent chance of limiting global warming to below 1.5°C. 

Strong and urgent emissions cuts, together with growth in carbon sequestration are critical not only to achieve global net zero emissions by 2050, but also to go beyond and reach net-negative emissions to avoid the worst impacts of climate change.  

Carbon sequestration is the capture and storage of carbon.

Carbon is captured through:

  • carbon dioxide removal (CDR), whereby CO2 is removed from the atmosphere (sometimes referred to as negative emissions), or 

  • point source carbon capture, whereby CO2 is separated from other gases at the point of origin (emissions avoidance).

With careful management, carbon sequestration can contribute to both:

  • accelerating decarbonisation in the near term, including to offset emissions sources that cannot yet be reduced; and

  • achieving and sustaining net-negative global emissions, to keep global temperatures within safe limits in the long-term.

Once captured, carbon is then stored in carbon sinks including trees, soil, geological formations (via carbon capture and storage or CCS), long-lived products (via carbon capture and use or CCU) and minerals.

Defining carbon sequestration. The two avenues of carbon capture are represented by the coloured arrows, carbon sinks by the coloured icons, and emissions in grey. Green arrows represent CDR. The blue arrow represents CCUS.
Defining carbon sequestration. The two avenues of carbon capture are represented by the coloured arrows, carbon sinks by the coloured icons, and emissions in grey. Green arrows represent CDR. The blue arrow represents CCUS.

With careful management, carbon sequestration can contribute to:

  • accelerating decarbonisation in the near term, including to counterbalance hard-to-abate emissions; and

  • achieving and sustaining net-negative global emissions, to keep global temperatures within safe limits.

Careful management will ensure that sequestration is durable, avoids adverse impacts and does not delay emissions reductions. The decarbonisation task is to “lower emissions in all sectors of the economy as quickly as we can” to “mitigate as much as possible and sequester the rest” (CCA Strategic Framework, 2022).

The Authority commissioned the CSIRO to report on Australia’s sequestration potential to inform our advice to government on the role of carbon sequestration in supporting increasingly ambitious emissions reduction targets. The Authority partnered with the Clean Energy Regulator to co-fund the CSIRO technical report and the CSIRO-led technology workshops.

Through the Carbon Sequestration Potential project, the Authority aims to:

  • Build an understanding of Australia’s realistic carbon sequestration potential;

  • Contribute to the evidence base to inform the Authority’s advice on the role of sequestration in Australia’s next emissions reduction target and the Government’s policy response; and

  • Raise awareness of the importance of sequestration in the net-zero transformation and of the longer-term need for net-negative emissions.

The sequestration potential project consists of three phases, as follows:

  1. Phase One: CSIRO’s technical report on sequestration technologies;

  2. Phase Two: a series of CSIRO-led technology workshops,

  3. Phase Three: a policy “Insights Paper” authored by the CCA:

Sequestration Project

Findings from this project will inform the Authority’s advice to government in carrying out its legislative responsibilities.

There will be opportunities to engage with the findings of this project through 2023-24 as the Authority undertakes public and targeted consultation across its projects. 

The Authority’s work program across 2023-24 includes providing advice to the Government on Australia’s 2035 emissions reduction target, the 2023 Annual Progress Report to inform the Annual Climate Change Statement, and statutory reviews of the Carbon Credits (Carbon Farming Initiative) Amendments Act 2014 (the ERF) and the National Greenhouse and Energy Reporting Scheme Act 2007 (NGERs), including the Safeguard Mechanism.

The Authority's Insights Paper

The paper, ‘Reduce, remove and store: The role of carbon sequestration in accelerating Australia’s decarbonisation’ contains 23 policy insights as part of a “deep dive” designed to help policymakers, emitters and markets to better understand how sequestration can be scaled-up, accelerated and used responsibly. 
Carbon sequestration is essential in both preventing emissions and removing them from the atmosphere. Australia is endowed with carbon sequestration potential, and further work is needed to map and understand just how much of Australia’s sequestration potential can be realised.
Policy insights from the paper: 

  1. Scaling sequestration in Australia requires developing a carefully designed portfolio of approaches, as no single technology can achieve the levels likely to be needed.

  2. Australia should play a leading role in the development of a science-based sequestration taxonomy and terminology, through the development of national standards and international guidelines. 

  3. Development of a sophisticated modelling capability on sequestration – for example, through a partnership between the Government, industry and academia – would enhance future policy advice and decisions. 

  4. Sectoral pathways and targets for decarbonisation would help build a more rigorous framework for anticipating future sequestration demand, by clarifying the extent to which mitigation is likely to be possible in the future, particularly from production processes in the agriculture and industrial sectors. 

  5. Governments should pursue policies that help ensure there is adequate supply of sequestration to meet demand including policies that: 1) prioritise direct emissions reductions where economically feasible; 2) protect, increase, and renew biological sequestration; and 3) scale-up engineered and geological sequestration, both onshore and offshore. 

  6. Australia should play a leading role in developing a sequestration standards framework to enable different forms of sequestration to be classified against an agreed set of attributes and inform how they may best be used, particularly for counterbalancing emissions. 

  7. For emissions to be counterbalanced via sequestration, carbon should be stored in a quantity and for an amount of time appropriate for the nature of the emissions. Further work is needed to explore alternative approaches to global warming potential for determining equivalence of different types of emissions and removals in policy instruments. 

  8. The Government should prioritise the development of long-lived geological and mineral storage technologies. 

  9. Measures to restore CO2 released from carbon sinks should be reviewed and enhanced as appropriate. 

  10. Policies to incentivise sequestration should take account of trade-offs and unintended consequences for food and water security, the environment, and communities. 

  11. Australia should prioritise sequestration approaches that make optimum use of resources (land, energy, and water) for the volume of carbon stored. Addressing market imperfections would enable markets to better resolve trade-offs in an economically efficient way. 

  12. Public investment in sequestration should leverage co-funding opportunities by aligning with areas of non-carbon benefits and product use. 

  13. Australia should invest in scalable and durable sequestration technologies that leverage Australia’s non-arable-land, geological storage capacity and renewable energy resources. 

  14. Carbon dioxide removal should be included as a distinct category in national decarbonisation plans, emissions reporting, projections, and the Authority’s annual progress reports. 

  15. The development of carbon dioxide removal technologies be accelerated with support from existing agencies such as the Australian Renewable Energy Agency and, the Clean Energy Finance Corporation, or new institutions. 

  16. Australian governments should work together to develop a mature, streamlined and coordinated legislative and regulatory framework for onshore and offshore geological storage. 

  17. Governments should explore risk-sharing approaches for Investments in sequestration technologies with high up-front costs, including coinvesting in subsurface basin analyses for geological sequestration and keystone storage and transport infrastructure. 

  18. Strategies for collaborative information sharing should be developed to encourage broader industry progress, for example, Government partnering with industry to develop high quality data on geological injection and storage potential at sub-basin scale. 

  19. Australia needs a plan for effective and efficient deployment of sequestration and a climate policy suite that mitigates moral hazards. To be effective, sequestered carbon used to counterbalance emissions from activities elsewhere should remain stored for time periods appropriate for the nature of associated emissions activity. To be efficient, access to sequestration for counterbalancing emissions should be prioritised for emissions with no near-term decarbonisation options (hard-to-abate emissions). 

  20. The government’s net zero plan, and the Authority’s Annual Progress Reports should include sequestration and identify how it will be delivered and used overtime. 

  21. Separate targets for emissions reduction and removal should be set to help incentivise future demand and help guard against sequestration being used to delay emissions reductions. 

  22. Compliance markets and Commonwealth procurement policies could incentivise development of quality sequestration by favouring engineered forms of sequestration and net-zero and carbon capture-derived products, and drawing on market mechanisms including advance market commitments, contracts for difference and concessional loans. 

  23. Consistency across international, national, and subnational regulatory approaches will be needed to enable cooperation, trade, and cross-border movement of CO2.

The Sequestration Potential Project adds to growing evidence recognising the importance of sequestration. 

Other evidence includes: 

Phase 1 findings

The CSIRO technical report, ‘Australia’s Carbon Sequestration Potential’, provides a framework for understanding estimates of carbon sequestration, which comprises three categories:

The report provides estimates of technical and economic potential, but not of realisable potential. It is important to note that the economic potential of each technology cannot be summed to provide an indication of what sequestration can actually be achieved in Australia in total – understanding realisable potential is required for this step.

The report identifies the need for new modelling and analysis to estimate the realisable potential for sequestration in order to inform the Authority’s advice on the role sequestration may play in Australia’s next emissions reduction target. Realisable sequestration is what matters for emissions reduction.

The CSIRO’s findings include:

  • A portfolio of technologies will be needed to achieve significant scaling-up of carbon sequestration in Australia. Individually, no single technology would be sufficient on its own.

  • Identifying which technologies are ultimately the most desirable will require resolving the trade-offs between the social, environmental, and economic uses of shared resources.

  • Engineered approaches can provide more secure and longer-lived storage than nature-based approaches but are currently more costly. Nature-based approaches are shorter-lived and more vulnerable to environmental impacts, but they offer numerous environmental and economic co-benefits, particularly for Australia’s regions and First Nations peoples.

  • Where gaps between current sequestration and potential are large, they point to areas of opportunity to unlock potential through reshaping regulation, changing incentives and/or leveraging co-benefits.

  • Potential sequestration for many approaches is limited by resource competition. For example, biological approaches can place demands on arable land and on water, creating trade-offs between sequestration and other objectives such as food production. It is important to understand limiting factors so that effort can be prioritised in technologies with the most likely impacts.

  • Rigorous assessment of trade-offs will require further analysis and modelling. There is a need to determine estimates of the realisable potential, taking in a wide range of constraints including resource competition. 

  • A new national analytical capability is required to estimate the realisable potential for sequestration, to identify and assess best-value portfolios of options, and to guide design and implementation of incentives.

CSIRO report on the outcomes of the technology workshops is expected in May 2023 and will be accessible here shortly thereafter.