Santos Ltd., Australia’s second-biggest gas producer, says it can slash the cost of sucking carbon dioxide directly out of the atmosphere, allowing it to manufacture a synthetic version of natural gas that it says would have no climate impact.

The Adelaide-based company is testing technology that could bring the cost of “direct air capture” to just $75 a ton by 2030, far cheaper than current methods, Chief Executive Officer Kevin Gallagher told journalists on Thursday.

Direct air capture is a nascent technology that its proponents argue could one day draw significant amounts of CO2 out of the atmosphere and store it underground, slowing global warming — provided the cost is brought down. So far only a handful of direct air capture projects are up and running and the cost is in the hundreds of dollars per ton of CO2 captured.

But Gallagher said Santos’s technology, which absorbs fluid from the atmosphere and heats it to extract the CO2, is less energy intensive than many existing methods.

“A lot of the technologies around the world require very high temperatures to heat the fluid up for the CO2 to be released,” Gallagher said. “Ours is designed to execute the process at a much lower temperature, at around 75C (167F). If we can achieve that, it means much less energy is required to release that CO2.”

Initially the captured CO2 will be piped into depleted underground gas reservoirs in South Australia for permanent storage, generating carbon credits that could then be sold to companies looking to offset their own emissions. But longer term the CO2 could be combined with hydrogen to manufacture “green methane”, which could replace the fossil fuel without adding to atmospheric CO2 levels, Gallagher said.

If all the steps in the process were made economic, green methane could “possibly” replace Santos’s natural gas production entirely by around 2050, he said.

Drawing gases out of the air for industrial uses is not a new idea. The Haber-Bosch process, invented in the early 1900s, draws nitrogen out the atmosphere and combines it with hydrogen to make ammonia, used in fertilizers and explosives.

But whereas nitrogen makes up 78% of the atmosphere, CO2 accounts for just 0.04%, making direct air capture technology “horribly expensive,” said Timothy Wall, a senior adviser at energy consultancy firm DSS+.

“The advantage of carbon neutral methane” over other green energy sources like hydrogen or ammonia “is you don’t have to build a whole new supply chain, so you save all the capital costs of building a new supply chain,” Wall said, referring to everything from liquefaction plants and carriers to gas-fired power stations. “The challenge is finding a cost effective source of the CO2 to make the methane.”

Capture costs for a large-scale direct-air plant built today are between $135 a ton and $335 a ton, though innovations in technology and scale could push that below $100 a ton by 2030, the International Energy Agency said in a report last year. Locations with high renewable energy potential and expertise in heat and electricity generation technologies are particularly well positioned to drive down costs, including the Middle East, China, and US, the report said.

--With assistance from David Stringer.