Carbon capture and storage is still years from commercial viability, a parliamentary committee has been told while considering a new avenue of funding it.
Carbon capture and storage is a "propaganda campaign" to promote coal as viable but it's not the lifeline the industry claims it is, energy researchers say.
The federal government is considering legislation that would lift a ban on the Clean Energy Finance Corporation funding carbon capture and storage projects.
Australia Institute research director Rod Campbell told a parliamentary inquiry on Wednesday carbon capture and storage is a "fig leaf" that doesn't actually reduce emissions, it just changed where they were stored.
"In terms of riding to the rescue of the coal industry it's been a complete failure used as nothing more than a propaganda campaign," Mr Campbell said.
Independent expert Simon Holmes a Court said he supported targeted research but right now CCS is high risk and years from commercial viability.
"Given the status of CCS it is difficult to understand why this legislation has come before parliament at this time," he said on Wednesday.
"Cynics might claim that it is nothing more than virtue signalling to the coal lobby."
He said advocates presented it as a lifeline for coal but "that's just not going to happen".
Steve Malss, who heads up the Mineral Council of Australia's Coal 21 Fund, told the hearing the industry had already invested $300 million in CCS research projects along with another $550 million in federal government funding.
While there are no immediate projects or plans to take to the CEFC if the prohibition was lifted, expected from 2022 if the laws pass, the Minerals Council says CCS shouldn't be arbitrarily excluded.
Mr Malss pointed to the ability of CCS to reduce greenhouse gas emissions by up to 90 per cent, while Australian National Low Emissions Coal Research and Development gave the committee a more conservative estimate of "beyond 50 and 60 per cent".
The committee also heard there's potential for deaths if the CO2 concentration reached 10 per cent or higher from leaks at facilities in residential areas.
But CO2CRC chief executive Tania Constable, soon to head the Minerals Council, said CCS was safe.
"At our own test facility in (the Otways in) Victoria, we have proven without a doubt over a period of time that we can safely store CO2 in the ground permanently," she said.
Asked if it was correct a separate facility, due to become operational in Western Australia next year, would not capture five million tonnes of emissions over the next two years as expected, she said every start-up had difficulties.
The Clean Energy Finance Corporation told the hearing leaks would be a key risk for them to consider and any liability would be a matter for the investment agreement.
"We look at all our projects or investments through a commercial lens and we wouldn't propose to invest in a project that we didn't feel were adequately covered," CEFC chief executive Ian Learmonth said.
The committee also heard from almost all witnesses that CCS would require a price on carbon.