Coal seams in Australia often contain large volumes of gas and in many cases mixed gas conditions prevail where coal seam gas (CSG) consists of a mixture of carbon dioxide (CO2) and methane (CH4) While in most coalfields of the world CH4 is the dominant gas, in Australian coalfields either of the two gases can be the dominant gas The occurrence of large volumes of CO2 in Australian coal seams provides valuable insights into the mechanism of long term storage of CO2 in coal seams. Australia is also a major producer of CSG, otherwise known as coalbed methane (CBM) Some of the CSG fields in Australia are among the most productive fields in the world and some coal seams have been drained for more than a decade For coal seams where the gas content is approaching the residual content, the remaining gas may be released if the production is stimulated by injecting CO2 In this paper the results from observations of mixed gas conditions in coal seams and laboratory measurements of gas storage and diffusion properties of coals from Sydney Basin coalfields in Australia are reported While the gas content data show that CH4 and CO2 have similar upper limits, the adsorption data show higher storage capacities for CO2 than for CH4 Therefore, the CO2 undersaturation in coal is more pronounced compared to CH4 and this seems to be a common aspect of CSG in coal, at least for the coalfields studied The reasons for CO2 undersaturation in Australian coals and its effect on potential for CO2 storage are assessed and discussed in this paper Crown Copyright (C) 2010 Published by Elsevier B V All rights reserved