Why did the Santos (STO) share price lift on Monday?

Today was a good day on the ASX for the energy producer.

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The Santos Ltd (ASX: STO) share price spent today in the green despite no news released by the company.

However, awareness of the company's carbon capture and storage (CCS) projects increased today.

On Friday, the Australian Government announced the Emissions Reduction Fund would provide carbon credits for CCS projects. Carbon credits can be used to offset an entities emissions or sold on the private market.

Santos welcomed the decision. It will now begin working to register its Moomba CCS Project with the Clean Energy Regulator.  

As a result of CCS's recognition as a viable method of reducing emissions, Santos' up and coming project is back in headlines today. The extra attention might have boosted the company's share price higher.

The Santos share price finished Monday's session trading at $7.08, 1.72% higher than its closing price on Friday.

That's a slightly better performance than that of the broader market. The S&P/ASX 200 Index (ASX: XJO) was up 1.1% while the All Ordinaries Index (ASX: XAO) gained 1%.

Let's take a closer look at the latest news around the energy producer.

Santos to receive carbon credits for Moomba

The Santos share price was up on Monday amid more attention on its upcoming CCS project.

The Moomba CCS Project is a disused gas reservoir that will soon store 1.7 million tonnes of carbon emissions each year.   

Under the Emission Reduction Fund, CCS projects like Moomba will now be eligible to receive carbon credits.

For every tonne of carbon stored in a Santos' CCS project, the company can receive one carbon credit. Carbon credits can be used to offset companies' emission outputs. They can also be sold for profit.

Right now, the spot price of an Australian carbon credit is around $26.

Despite the government's announcement and Santos' acknowledgement of the changes, the Santos share price fell 2.2% amid the broader market sell-off on Friday.

However, it picked up again today.

Commentary from management

Santos CEO and managing director Kevin Gallagher welcomed the news, saying:

The Australian Government's focus on CCS and other low-emission technologies sets Australia up to capitalise on our natural assets and become a carbon storage superpower, building on the position we have established as an energy superpower over more than half a century.

With the new CCS method now approved, Santos will seek to have the Moomba CCS Project registered and generate ACCUs through the Emissions Reduction Fund. Once the project has been registered, we will be in a position to make a final investment decision to proceed.

Minister for Energy and Emissions Reduction Angus Taylor also spoke of the changes to the fund:

[T]he new Emissions Reduction Fund method will incentive emissions reductions from a range of energy-intensive sectors including LNG production, which currently accounts for around 10 per cent of Australia's emissions…

This high-integrity method will position Australia to scale up clean LNG production and make use of our abundant geological storage potential.

Santos share price snapshot

Today's gains included, the Santos share price is 10% higher than it was at the start of 2021.

It has also gained 44% since this time last year.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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