Coalition eyes funding for carbon capture

"We are looking into this,'' he said.

"We have put a lot into CCS and we are looking at the next steps.''

Glencore believes government policy should be extended to support all low emission technologies, including HELE and CCS.

— Glencore spokeswoman

A Glencore delegation, led by chief executive officer Ivan Glasenberg, visited Canberra last week and proposed that a high efficiency, low emissions (HELE) coal-fired power station that also sequestered carbon, should be part of the energy mix.

"Glencore is a multi-commodity business. We produce the metals that are used in renewable energy and thousands of other products people use every day,'' a spokeswoman said.

"We also produce coal which we believe will continue to be used, particularly in developing economies where demand for secure and affordable baseload energy is growing.

"Glencore believes government policy should be extended to support all low emission technologies, including HELE and CCS which can co-exist with renewables."

Glencore said it was already working on applying CCS technology to the Millmerran power station in Queensland and storing the carbon in the Surat basin.

"There is an enormous opportunity in Australia to demonstrate that HELE technology with CCS can be used either for new build or retrofit of existing coal and gas power plants to materially reduce emissions,'' the company said.

It is understood the reaction was mixed, with senior members of the government explaining the preference was to extend the life of existing coal-fired power stations rather than facilitate the construction of new ones.

Political tensions

The pressure from the coal and gas sector is rivalled by political pressure over climate change, which has exploded on the back of the drought and seemingly endless bushfires. While CCS may have a case, the government is reluctant to facilitate the construction of a coal-fired power station.

Tensions between Senator Canavan and Scott Morrison reportedly erupted last month when the pair clashed over a pre-election promise by Mr Morrison to consider a feasibility study into the government underwriting a new HELE plant in Queensland.

Senator Canavan was frustrated over the lack of progress in implementing what was a promise designed to placate the Nationals, who were worried about Mr Morrison's pre-election focus on hydroelectric power.

Santos executives were in Canberra last month seeking assistance for it to sequester carbon captured from its gasfield operations in the Cooper Basin.

Santos, along with BHP, the cement industry and carbon sequestration companies have previously argued that "geological'' storage of carbon should be eligible for Australian Carbon Credit Units (ACCUs) in the same way that ACCUs were issued for "biological'' storage of carbon in tree-planting schemes.

The estimated gross cost of sequestering carbon is between $60 and $80 a tonne, which is considered expensive.

Senator Canavan said three weeks ago that while CCS was worthy of consideration "there is a whole lot of detail that [Energy Minister Angus Taylor] in particular will have to work through with the industry.

''I would say at this stage of the CCS development stage, that ACCUs by itself would not be sufficient to attract or get that over the line.''

The government last tried to embrace CCS in 2017 when then-energy minister Josh Frydenberg sought to extend the mandate of the Clean Energy Finance Corporation to invest in the technology. But the Senate blocked the legislation

The CEFC is a $10 billion taxpayer-funded loan facility established by Labor to invest in the development of renewable and clean energy sources.