Optimum Business Models of Carbon Capture Storage for Emitters, Capturers, and Injectors in Eastern Australia

Abstract

Abstract. This study evaluates the economic feasibility of carbon sequestration projects in Queensland, aimed at managing carbon dioxide (CO2) emissions from private coal-fired power plants. In Australia, the federal government issues Australian Carbon Credit Units (ACCUs) based on sequestered CO2 quantities, incentivizing emissions reduction. Under the Safeguard Mechanism, facilities emitting over 100,000 tons of CO2 annually must meet progressively tighter baselines, reduced by 4.9% per year from July 2023. This is expected to drive growth in ACCU demand and prices. By using publicly available well and geological data, we develop dynamic reservoir models to assess sequestration potential in Queensland. Three business models—integrated, merchant, and tolling—are tested under varying CO2 injection rates and ACCU price scenarios involving emitters, capturers, and injectors. Our analysis indicates that CO2 injection exceeding 3 million tons per annum (MTPA) meets commercial viability, with emitters showing interest once ACCU prices approach A$120/t. At 5 MTPA, emitters can feasibly engage even at A$100/t under the tolling model, which also offers flexible compensation structures maintaining a positive net present value at ACCU prices as low as A$80/t. We further propose models in which injectors receive service fees for CO2 storage, allowing emitters to secure ACCUs for compliance under the Safeguard Mechanism. Overall, these findings highlight the potential economic advantages and adaptability of sequestration projects, providing viable pathways for industry to align with government emissions targets.