Santos sued over ‘clean energy’ claims in Federal Court amid $21bn merger with Oil Search
Santos has been served with a legal claim accusing it of engaging in misleading or deceptive conduct over its clean energy claims.
Santos has been sued by a green group over its claims natural gas provides “clean energy” and that it has a credible plan to achieve net zero emissions by 2040, sparking a furious response from one of Australia’s top oil and gas analysts who described the lawsuit as lunacy.
The Australasian Centre for Corporate Responsibility filed the legal claim in the Federal Court on Thursday accusing Santos of engaging in misleading or deceptive conduct, potentially contravening both corporate and consumer law.
The case is centred on Santos making statements that natural gas is both a clean fuel and that it provides clean energy to users. Those claims are disputed by the ACCR which said the company releases significant amounts of carbon dioxide into the air and that alternative energy uses are available that do not release any emissions which Santos fails to produce.
The second claim hinges on Santos assertion it has a “clear and credible” plan to achieve net zero scope 1 and 2 greenhouse gas emissions by 2040, partly predicated on its carbon capture and storage plan at Moomba and the prospect of ‘blue’ hydrogen supplied by gas.
The statements are misleading, according to the legal case, as Santos has firm plans to increase its greenhouse gas emissions through the expansion of its natural gas operations and its net zero ambitions depend on undisclosed qualifications and assumptions over carbon capture and storage.
“This is the first court case in the world to challenge the veracity of a company’s net zero emissions target, and a world-first test case in relation to the viability of carbon capture and storage and the environmental impacts of blue hydrogen,” the ACCR said in a statement.
The lawsuit prompted a furious response from one of the industry’s top energy analysts, Mark Samter, who described the ACCR action as lunacy and questioned which energy sources could replace the global use of gas.
“Wow, this energy transition stuff is going to be easy if we had only all chatted to the ACCR first and found out that there are already alternative energy sources that can immediately replace, presumably at the same cost (given their strong focus on human rights also), all fossil fuel production,” said Mr Samter, an analyst with MST Marquee.
“Let’s be really, really clear about it. If you just smash the producers who are publicly listed and can he held to account (and try and bully lenders, insurers and service providers not to deal with them), you aren’t going to stop hydrocarbon production, you are just going to force prices massively higher, hurting the poorer nations who can’t transition as quickly, and force production into the hands of those with lots of money and little ethics.
“If you actually want to fix the problem you need to address demand – that will by definition solve the supply side as they will have no market to sell to.”
Santos said it would not be appropriate for it to comment on matters before the Court.
The legal action comes as Santos looks to wrap up a $21bn merger with Oil Search that would lift its gas exposure in Papua New Guinea. In March, Santos approved a $4.7bn Barossa gas project in the Northern Territory, with production ensuring the Darwin LNG plant remains running as supplies from old fields run out.
Santos in November committed to net zero emissions by 2040 in a move that was seen hiking pressure on its Australian oil and gas rivals to boost their commitment to tackle climate change.
It also plans to “actively work” with customers to reduce their Scope 1 and 2 emissions by more than one million tonnes of carbon dioxide by 2030, with a grander goal of net zero emissions a decade later.
Santos will rely on a giant ‘carbon sink’ at Moomba, which can permanently store 1.7m tonnes of carbon dioxide a year when separating gas from Cooper Basin fields at Moomba but can be massively expanded with the potential to store up to 20 million tonnes a year for up to 50 years. That could attract both gas supplies and also big industrial manufacturers that want to reduce and bury their carbon emissions underground.
Still, critics argue there are relatively few large-scale CCS projects up and running around the world and those on a large scale such as Chevron’s Gorgon development have failed to hit targets in early operations.