More than 100,000 tonnes of CO2 is expected to be reinjected at the rate of about 3 million cubic feet per day.

The Australian government hopes the A$30 million project, involving 40 Australian and overseas researchers, will lead the way in cutting greenhouse gas emissions, increasing energy efficiency and increasing the use of renewable energy.

“While a few similar projects exist in the Northern Hemisphere, the CO2CRC project will be the first in Australia to demonstrate geological storage and monitor the CO2 before, during and after its injection in deep geological formations,” CO2CRC chief Dr Peter Cook said.

The project will simulate the capture of CO2 from a power station, transport the CO2 several kilometres by pipeline and store it 2km beneath the Earth’s surface.

Over the one-to-two year period the CO2 is injected, scientists will monitor the behaviour of the gas in an effort to demonstrate the safety and effectiveness of the technology, Cook said.

Chevron, the United States’ second largest oil company, plans to use the geosequestration technique at it’s A$11 billion Gorgon liquefied natural gas project in Western Australia.

Australian industry minister Ian Macfarlane said the Otway Basin geosequestration project was a timely example of the new technologies that will be discussed this week in Sydney by the six members of the Asia-Pacific Partnership on Clean Development and Climate, which includes the US, China and Japan.

“Carbon dioxide capture and geological storage, or geosequestration, is one of several innovative fossil fuel technologies being pursued by Australia and I will certainly be promoting its potential in all bilateral government and business talks,” Macfarlane said.