The Department of Environment, Science and Innovation said the CTSCo Surat Basin project by mining giant Glencore was not suitable to proceed due to potential impacts on groundwater resources.
Glencore had planned to inject and store 330,000 tonnes of carbon dioxide from a coal power station into a deep aquifer of the basin.
The department said it carefully considered the project's environmental impact statement (EIS) that involved a "rigorous" three-year assessment against strict regulations in Queensland's environmental protection act.
"The assessment found that the Precipice Sandstone aquifer in the Great Artesian Basin, where the project had proposed to inject captured CO2 for storage, is not a confined aquifer, which is a strict requirement of the regulation," the department said in a statement.
"The assessment also found that CO2 injected into the aquifer could migrate, likely causing irreversible or long-term change to groundwater quality and environmental values if the project were to proceed.
"The department's final decision on the EIS acknowledges the importance of the Great Artesian Basin to multiple stakeholders and makes it clear that other carbon capture and storage projects will not be viable in the Great Artesian Basin."
The basin intersects four Australian states and territories and holds one of the largest underground freshwater reservoirs in the world, with an estimated 65 million gigalitres of water.
About 70 per cent of its area is beneath Queensland.
Agriculture, local government and farming stakeholders welcomed the decision.
AgForce, Queensland Farmers Federation and the Local Government Association of Queensland want a joint state and federal moratorium to stop any further proposals.
"So, while we celebrate this state government decision, our thoughts now immediately go to how to best protect the GAB into the future from such environmental threats," AgForce CEO Mike Guerin said.
"Protecting it properly can only be achieved through more robust federal policy, with the current review of the Environmental Protection and Biodiversity Conservation Act (EPBC Act) a critical component of that".
Nationals leader David Littleproud said he previously moved an amendment to the federal act so both the federal and Queensland governments undertake appropriate assessments of carbon sequestration projects.
He said the Nationals support carbon sequestration projects as a method for the coal and gas industries to abate their emissions, but only in the appropriate place.
"The Great Artesian Basin is an important water source for farmers and communities in Queensland. It's imperative we protect it and that proper, thorough assessments are undertaken for any sequestration project," said Mr Littleproud.
"While we support carbon capture storage, it has to be in the appropriate place. The technology is emerging and we support that, but it has to be done at an appropriate pace where we have confidence in the approval process."
4°C