Santos lifts emission reduction targets in net zero push

Santos has vowed to make a 30 per cent cut from its Scope 1 and 2 emissions by 2030, at the top end of a previous 26-30 per cent range set in November 2020.

Santos chief executive Kevin Gallagher has vowed to make a 30 per cent cut from its Scope 1 and 2 emissions by 2030.

Santos has boosted its climate targets and introduced a new pledge requiring emissions to be offset before it signs off on new offshore greenfield energy projects while maintaining new gas supply is needed to meet surging demand.

The South Australian producer, which sealed a $21bn takeover of Oil Search in December, has vowed to make a 30 per cent cut from its Scope 1 and 2 emissions by 2030, at the top end of a previous 26-30 per cent range set in November 2020. Scope 1 and 2 emissions refer to pollution directly emitted as part of a company’s operations, and those released by core parts of its supply chain such as energy generation.

It plans a 40 per cent decrease by 2030 in emissions intensity – a target which measures the amount of greenhouse gas emissions per barrel of oil and gas produced – compared with a previous 26 per cent target.

Customers’ pollution will be reduced by 1.5m tonnes of carbon dioxide a year from a prior 1m tonnes by the end of this decade.

Final investment decisions on new offshore greenfield projects from 2025 will also now require abatement or reservoir emissions being offset in a nod to increasing pressure from investors and activists worried that sanctioning new oil and gas fields is at odds with the energy industry meeting the Paris climate change accord.

The International Energy Agency has declared that no new oil or gas fields or coal mines should be opened up if the world is to reach net-zero emissions by 2050 prompting the Investor Group on Climate Change to say the statement had put a “nail in the coffin” of claims that companies and governments should expand the fossil fuel industry.

However, Europe’s supply squeeze amid Russia’s invasion of Ukraine and tight supplies of LNG across Asia, the major buyer of Australian gas, underlined the need for more gas supplies according to Santos.

“This year’s Climate Change Report comes as countries around the world are finding that energy and fuel price stability and supply security risks, remain critical considerations on the journey to Net Zero. With natural gas playing a central role in decarbonising energy markets and balancing renewable energy, more investment is needed to ensure supply can keep pace with demand and to diversify supply sources,” Santos chief executive Kevin Gallagher said.

Calls by activists for oil and gas assets to be sold would simply result in less transparent producers such as national oil companies taking up the slack in the system, Santos said, leading to a worse outcome.

“Companies like Santos, which are publicly listed, subject to ESG scrutiny by their investors and which report transparently on carbon emissions and their climate transition plans, are best placed to supply critical fuels such as oil and gas more sustainably, striving for lower emissions intensity and better environmental outcomes,” Mr Gallagher said.

“Divesting assets and driving investment in new supply to less transparent producers will not reduce global emissions or advance the transition to net zero.”

Shareholder group Market Forces said Santos must drop its plans for major oil and gas expansions this decade.

“Santos claims to support the climate goals of the Paris Agreement. But its plans to spend billions on increasing oil and gas production completely undermine this claim, and will actually see the company’s overall emissions increase over the next decade,” Market Forces asset management campaigner, Will van de Pol, said.