The Global Carbon Capture and Storage Institute will Monday seek industry applications for its first annual funding round of up to A$50 million, with a tight deadline for applications of Jan. 8.

The Australia-based institute, which earned high praise from U.S. President Barack Obama at its official launch in April, aims to fast-track development of commercial-scale technology designed to capture greenhouse-gas emissions and sequester them underground--a process that would potentially reduce the environmental impact of burning dirty fuels such as coal for power generation.

It is a key plank of Australian Prime Minister Kevin Rudd's strategy to green up Australia's economy, which currently relies on fossil fuels for some 90% of power generation, making it the developed world's biggest per capita polluter.

For heavily-industrialized countries like Australia and the U.S., carbon capture and storage technologies offer a potential silver bullet that could allow them to reduce carbon emissions while also ensuring the continued viability of cheap fossil fuel-based electricity generation.

But the technology is not yet commercially viable and governments worldwide are allocating billions of dollars toward carbon capture and storage projects to help bridge a gap in commercial funding.

The Australian government has committed A$100 million annually to support the activities of the Global CCS Institute, which aims to help meet a Group of 8 goal of having at least 20 fully integrated commercial-scale projects operating globally by 2020.

"We want to engage with those projects with the greatest need, which face real obstacles to their success, and towards which we can have an immediate impact," the institute's Chief Executive Nick Otter told Dow Jones Newswires late Thursday.

Although the institute's initial funding round is small compared with the money being injected into the sector globally, it is promising to engage with firms on an ongoing basis, which could see funding commitments stretch out over multiple years.

The not-for-profit institute has the backing of more than 30 world governments, 130 corporations and other non-government groups, which may see the funding pool grow in the longer term.

Member countries include the U.S., Japan, Germany, France, South Korea, Canada, Italy and the U.K., while corporate backers include mining heavyweights BHP Billiton Ltd., Rio Tinto Ltd., StatoilHydro ASA, Toshiba Corp., Xstrata Coal Pty Ltd., Mitsui & Co., Mitsubishi Corp. and General Electric Co.

So far, the institute has identified some 55 active or planned projects worldwide, including the Gorgon and Browse liquefied natural gas projects in Western Australia state.

In August, the federal and Western Australia state governments agreed to assume joint responsibility for any future claims arising from plans to capture and store emissions at the multibillion-dollar Gorgon LNG project--a move that cemented final investment approval from the Gorgon partners Chevron Corp., Exxon Mobil Corp. and Royal Dutch Shell PLC.

The project, located about 200 kilometers off the northwest coast of Australia, will be the world's biggest geological storage operation, as carbon dioxide gases emitted during the LNG extraction process are injected two kilometers underground in a bid to reduce the environmental impact of the venture.

Prime Minister Rudd's efforts to reduce carbon emissions were dealt a blow earlier this week, however, when the country's upper house Senate blocked a government plan to cut emissions by at least 5% compared with turn-of-the-century levels by 2020.

Rudd appeared earlier to have the votes locked in to secure his carbon program's approval, after reaching a deal with Australia's then-opposition leader Malcolm Turnbull last week that provided billions of dollars of compensation to affected industries in return for conservatives' support.

But the deal fell apart Tuesday when the main opposition Liberal Party voted 42 to 41 to oust Turnbull in favor of the conservative faction leader, Tony Abbott--who described the plan as a "great big tax".

Rudd wanted Australia to introduce, in July 2011, a market-based carbon trading program, similar to one operating in Europe since 2005, that would have forced the nation's biggest polluters to pay for their greenhouse-gas emissions.

Ultimately, it also would have led to an active market in trading carbon emission permits, sending a price signal to firms mulling the commercial viability of energy and resources projects, including those which, like Gorgon, sequester emissions.

The government has vowed to reintroduce its carbon plan for a third time in February in the hope of winning over enough opposition lawmakers to push it through Parliament.

 
   -By Rachel Pannett, Dow Jones Newswires; 61-2-6208-0901; rachel.pannett@dowjones.com
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