Santos had no credible climate plan and it knew it, activist group alleges, as inaugural case begins

A court challenge, the first of its type, testing the veracity of Santos’ net-zero emissions statements has the potential to have landmark ramifications for companies.

The Moomba gas project in South Australia’s far north where CO2 is being injected underground.

Santos had no credible plan to meet its 2040 net-zero emission targets pushed by chief executive Kevin Gallagher and it knew it, the Australian Centre for Corporate Responsibility has alleged in Federal Court.

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 amid a defining period for Santos which is desperate to spur growth in earnings and its share price.

Santos denies the allegations.

Under activist pressure, in 2021 the company said gas was clean energy before later declaring that it would reduce emissions by 30 per cent by 2030 and reach net zero by 2040.

In opening court arguments on Monday, barrister Noel Huntley for the ACCR said Santos was adamant about the nature of its plan and had assured the market that it went beyond “ambition”. But the ACCR said those statements were inaccurate.

“The reality of this case is that the so-called plan was not a plan at all. It was a series of speculations without the kind of modelling that is reasonable for statements of this kind,” Mr Huntley told the Federal Court.

The ACCR has asked the Federal Court to rule that Santos “misled” the market and grant an injunction preventing the company from doing so again. The ACCR also asked the Federal Court to force Santos to “correct” its statement.

Outlining its defence, 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.

Mr Young said the strengthened climate goals came amid a strategy to target new gas developments that had lower carbon dioxide levels and a commitment to deliver its carbon capture and storage project, under which carbon dioxide that would otherwise be emitted is piped underground.

Santos and its project partner, Beach Energy, earlier this month announced that its carbon capture and storage project, at Moomba, has begun injecting CO2. Initial results had showed the project was capable of meeting its target of sequestering 1.6 million tonnes of carbon dioxide.

By injecting the captured CO2, the joint partners will be able to abate all of the gas from the Moomba gas plant in South Australia’s far north that would have otherwise been released. By storing it underground, Beach and Santos will earn carbon credits, which both can then use to meet their own emission reduction targets or sell into the open market. Whichever option, the commencement of Moomba will be lucrative for both companies.

But by hitting full capacity, Santos and Beach can counter allegations that the technology is unviable. The reputation of carbon capture and storage has been badly damaged by the underperformance of Chevron’s own Gorgon facility in Western Australia, although it insists it is making progress in improving the injection rates.

Santos will on Tuesday finish its opening testimony before witnesses are called.

Beach Energy chief executive Brett Woods, a former Santos executive, is expected to appear on Tuesday. Ying Luo, a former Santos executive and now chief adviser at Cooper Energy, will also appear this week.

Hearings are expected to last for two weeks before closing arguments in mid November.

Although inconvenient, Santos will hope to win its second major court case in 2024, effectively clearing the legal hurdles that have caused headaches at the South Australian company.

In early 2024, a Federal Court Justice rejected a claim by Tiwi Islander Simon Munkara, who had sought an injunction against the gas giant’s plan to develop a 262km pipeline for its $5.7bn Barossa LNG development in waters off the Northern Territory, that it would ­irreparably damage cultural associations with the sea.

Santos recently said the Barossa development was more than 80 per cent complete.

Originally published as Santos had no credible climate plan and it knew it, activist group alleges, as inaugural case begins