Santos Drops $450 Million Australian Sequestration Plan - Carbon Prices Too Low - Bloomberg

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March 3 (Bloomberg) -- Santos Ltd., Australia’s third- biggest oil and gas producer, suspended its Moomba carbon- storage project, a victim of weak government support and plunging prices for permits to release greenhouse gases. Credit prices to emit carbon dioxide into the atmosphere are too low to underpin the investment planned for central Australia’s Cooper Basin, Matthew Doman, a spokesman at Adelaide-based Santos said today. Santos has estimated the project would cost more than A$700 million ($450 million).

Governments and energy companies worldwide are revising plans to build underground storage for carbon dioxide, the main gas blamed for global warming, because stalled economies and lower permit prices are making them less attractive.

“It just doesn’t make sense for them to go ahead with these prices,” said Gary Cox, vice president of commodities in Australia for Newedge Australia Pty in Sydney. Cox’s last trade of domestic allowances, covering 50,000 tons of carbon dioxide for delivery in 2011, was at A$21 a ton, compared with prices as high as A$24.75 last year, he said.

In Europe, European Union emission permits for delivery in December have dropped about two-thirds from the 30.53-euro ($38.47) a ton price reached on July 1 last year. Carbon-capture projects become viable when industrial pollution costs about $50 (40 euros) a ton, more than three times the current over-the-counter price in Australia, London School of Economics professor Nicholas Stern said in January.

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http://www.bloomberg.com/apps/news?pid=20601081&sid=aD.xwLibhEWA&refer=australia