Santos’ net zero pledge can’t be achieved because of its production targets, court hears

Santos’ road map to net zero emissions was unfeasible because it had set increasingly greater production targets, a group suing the oil and gas giant for alleged ‘greenwashing’ has told a court.

Protesters against Santos’ gas production in 2023.

A net zero “road map” produced by Santos was unfeasible because of increasing oil and gas targets set by the energy giant, the Federal Court has been told.

The Australasian Centre for Corporate Responsibility (ACCR), which is suing Santos for engaging in allegedly misleading or deceptive conduct relating to its “clean energy” claims, said senior executives in the company – including chief executive Kevin Gallagher and former chief operating officer Brett Woods – did not appear to be aware of the problem with the claims.

The ACCR case, brought in 2021 and considered to be one of the first globally to legally test the veracity of a company’s net-zero emissions target, comes as Santos seeks to spur growth in earnings and its share price.

Counsel for ACCR Noel Hutley, SC, told the court in closing arguments Friday that Mr Woods did not acknowledge how Santos would expand production to 120 million barrels (of oil equivalent) by 2030 without any additional emissions.

“This of course is impossible,” Mr Hutley said. “He does not explain how he thought Santos could do that. He does not seem to have considered it and the best inference is he didn’t realise the problem.”

Mr Hutley said Santos had given some “pretty sophisticated undertakings” in relation to its clean energy claims but gave little thought as to how to carry them out.

“It’s not just how much gas is in the ground, but how you get it out and how you transport it,” he said.

“It may be immensely complex to totally re-figure the whole of your portfolio over a period of time to achieve the results that they’re seeking.

“It might be highly uneconomic. It might involve sacrificing many hundreds of millions of dollars’ worth of productive gas. I don’t know. But what we do say is nobody’s thought about it, nobody’s addressed it, and we say there is overwhelming evidence that it was simply undoable.”

A pipe runs into a holding pond at Santos’ Narrabri gas project in northwest NSW.

Mr Hutley also questioned Santos’ submissions regarding the quantity of emissions from its planned future hydrogen plant and its plans to blend that with its traditional gas supplies.

“Santos acknowledges that it was aware of the technical and cost-related challenges of blending more than 10 per cent to 20 per cent hydrogen into existing pipelines but

submits that it was considering ways to overcome these challenges,” Mr Hutley said.

Santos earlier in the hearing denied claims made by ACCR that its 2021 commitment to reduce emissions amounted to greenwashing and had no credible path to achieve its publicly declared commitment.

Under activist pressure, in 2021 the company said gas was a clean energy source before later declaring that it would reduce emissions by 30 per cent by 2030 and reach net zero by 2040. Mr Hutley had earlier presented into evidence an email from former head of sustainability Alicia Genet that he said revealed concerns about the commitment to reduce emissions as it embarked on sustained production growth.

The ACCR has asked the Federal Court to rule that Santos misled the market, and for it to grant an injunction preventing the company from doing so again.

The ACCR has also asked the court to force Santos to “correct” its statement.

Outlining its defence last month, barrister Neil Young for Santos said it was widely known that natural gas emitted substances but it was comparatively free of pollutants compared with coal, which the fuel source was displacing. Judgement in the case has been reserved.

Originally published as Santos’ net zero pledge can’t be achieved because of its production targets, court hears