A Queensland government-backed company, ZeroGen aims to develop the world’s first commercial-scale demonstration of an integrated gasification combined cycle used with carbon capture and storage technology.

Under the trial, ZeroGen will transport captured carbon dioxide from Carbon Energy’s Bloodwood Creek UCG plant, near Dalby, to the Northern Denison Trough, near Springsure in central Queensland, for injection and storage up to 2km underground.

ZeroGen has been exploring this area since 2006 and deems the geology suitable for the safe and secure storage of large quantities of carbon dioxide.

“This test will demonstrate the technical viability of producing low-emission electricity from UCG,” Carbon Energy said.

“Successfully combining Carbon Energy’s UCG technology and ZeroGen’s CO2 injection capability means that coal-fired electricity emissions could be reduced by up to two-thirds.”

Carbon Energy managing director Andrew Dash said the agreement was a key component of the company’s commercialisation strategy.

He added it would effectively position both companies as market leaders in the production of clean energy and chemical feedstock.

“ZeroGen looks forward to working with Carbon Energy to further develop the CCS industry in Australia, which is widely identified as being essential to ensure the continued and environmentally responsible use of coal in electricity production,” ZeroGen chief executive Dr Tony Tarr said.

Carbon Energy did not reveal a start date for the project in its announcement.

The company recently inked its first offtake agreement for electricity produced at the 5-megawatt power generation unit at Bloodwood Creek.

The contract with Ergon Energy – a Queensland government-owned electricity provider – is worth about $A2 million per year.

First electricity is expected to flow into the local grid by the end of the year, with the facility generating enough power to supply about 4000 homes a year.

Shares in Carbon Energy closed up 6.5c to 50.5c yesterday.