Australia has no alternative to seeking "clean coal" technology, says Federal Energy Minister Martin Ferguson.
"Australia's coal resources alone - assuming the advent of successful clean coal technologies - are so large that they could be significant in the global energy mix for several hundred years," said Mr Ferguson.
Coal and other fossil fuels will continue to provide much of the world's energy for the foreseeable future, Mr Ferguson told about 100 spectators in a windswept paddock near Nirranda South, 240km west of Melbourne.
The minister opened the world's largest demonstration of the deep geological storage of carbon dioxide, the Otway Basin pilot project - partly funded by the New Zealand government and state-owned miner Solid Energy - which will inject 100,000 tonnes of carbon dioxide 2km deep over the next two years.
The gathering of people sheltering from squalls of icy rain in a fancy marquee included executives of Solid Energy, National Party energy Spokesman Gerry Brownlee, and Genesis electricity chief executive Murray Jackson. There were also officials from the Ministry of Economic Development who are planning a new regulatory framework for carbon capture and storage.
Mr Ferguson predicted that the success of the programme would confirm the carbon storage technology as a viable option to reduce the carbon footprint of coal, which generates 80 percent of Australia's electricity.
The $A40 million Otway Basin project would also encourage community acceptance of the technology over the next two years. Project officials predicted enough data would be collected over the next two years to create models able to show that carbon could be injected into secure geological formations and left there for thousands of years.
Carbon dioxide is a major greenhouse gas contributing to global warming, and companies selling and burning coal want to be able to literally bury the unwanted carbon from the process.
Solid Energy chief executive Don Elder told NZPA that it is likely that only tiny, almost negligible, amount of the carbon dioxide pumped underground will escape.
Regulatory matters would be the real issue about carbon capture and storage - such as whether companies injecting carbon had to provide assurances that 99.99 percent of the carbon remained below ground for 10,000, or 100,000 years.
He argued that if 10 percent was lost over 100 years or 20 percent over 1000 years, the technology would still have a beneficial effect on global warming.
"If regulations drive industry towards 99.99 percent storage of 10,000 years, then we will not have carbon capture and storage," he said.
Governments seeking security in such a regime would have to require companies to pay bonds equivalent to the full cost of buying emissions credits.
"There's going to have to be a pragmatic approach - this is a transition solution," said Dr Elder.
