CLEAN coal technology will face extraordinary price hurdles over the next 10 years, a major stocktake of all the world's carbon capture and storage projects has found. The report, prepared by the Global Carbon Capture and Storage Institute, finds the cost increase to coal electricity generation if fully-fledged clean coal technology is installed will be up to 78 per cent.
If the technology is widely introduced, price increases in generating electricity are likely to significantly increase household power bills.
The report, which looked at all global carbon capture and storage projects around the world, found that it will only be competitive with other energy sources if a high carbon price exists.
That would mean a carbon price of between $61-$112 a tonne, and between $80-90 a tonne for the large-scale technology needed for the massive NSW and Victorian coal plants.
Treasury estimates that under the Government's emissions trading scheme of a 15 per cent 2020 emissions reduction target, the carbon price will hit $80 a tonne in real terms in 2038.
The institute's chief executive, Nick Otter, said yesterday it was crucial for a commercial scale clean coal project to be operating by 2014, with fully commercialised plant existing by the early 2020s.
He said as more demonstration projects lead to fully commercial projects the costs for carbon storage should come down as the technology develops and technology blips are ironed out.
''Governments need to provide short-term incentives to investors, but in the long term there will have to be a long-term framework, and that will include things like a carbon price.''
The Government will spend $2.4 billion over nine years developing two to four commercial scale carbon capture projects. A spokesman for the Resources Minister, Martin Ferguson, said a shortlist of projects will be released by the end of the year.
Professor Richard Hillis, the head of the University of Adelaide's Australian School of Petroleum, said it was natural that carbon capture and storage would take some time to develop and be initially expensive.
''If you think of the oil industry, when it first began it didn't develop in a matter of weeks, it took decades, and carbon capture will go through the same process,'' he said.
The institute was established by the Rudd Government and includes the US, Britain and Japan, along with a number of major resource companies, among its members.
The report released yesterday found there were 213 active or planned carbon capture projects around the world for coal, gas and oil, with 61 planned to capture, transport and store carbon. Just seven projects were operating at present, none of which captures carbon from coal.
Under Treasury modelling, the Rudd Government is largely relying on clean coal technology to reduce emissions for the electricity sector. In 2008 coal-fired electricity accounted for 36 per cent of Australia's total emissions.
Treasury figures obtained by the Australia Institute, under the Freedom of Information Act, show coal-fired emission do not significantly reduce until 2033, when Treasury assumes carbon capture and storage is installed in power plants.
The Australia Institute's executive director, Richard Dennis, said the figures showed the Government's scheme would do nothing to reduce emissions from coal-fired electricity unless clean coal technology is ready in 2033.