Yesterday, Australia's first carbon storage project was launched at the site.

About 150 people braved severe winds to see Federal Minister for Energy and Tourism Martin Ferguson and State Minister for Energy and Resources Peter Batchelor officially open the geosequestration plant.

About 100,000 tonnes of carbon dioxide will be injected into a depleted natural gas reservoir two kilometres below the Earth's surface at the site over the next two years.

The greenhouse gas will be captured from coal-fired power plants and transported to Nirranda.

Mr Batchelor said the project "mimicked" nature.

He said oil and gas had been safely stored underground for millions of years. "The world-class subsurface carbon dioxide monitoring of this project puts Australia at the forefront of research into reducing greenhouse gas emissions," he said.

The minister congratulated the local community which he said had been actively involved in starting the project.

"They haven't just sat back. They have served on the reference group and have been incredibly helpful," he said.

"Clearly the local people can understand the vision and opportunities that this project has to offer."

Mr Batchelor said China and India had taken interest in Australia's technology to combat global warming.

He said the Nirranda project was no exception.

"This is not just a project for Nirranda and the south-west. It's one for the whole world."

Mr Ferguson said there was "no single solution" to reducing Australia's carbon footprint and the Government had invested in various technologies to cut greenhouse gas emissions.

He said, however, the Nirranda project was exciting.

"Not only will this be Australia's first carbon dioxide capture and storage demonstration plant, it will be the world's largest demonstration of deep geological storage.

"All these innovations put Australia at the leading edge of clean coal technology."

The Nirranda project has been developed through CO2CRC, a co-operative research centre for greenhouse gas technologies.