Addressing Santos’ shareholder meeting in Adelaide on Thursday,Gallagher said driving carbon capture and storage projects was more important than ever as major polluters prepare to face stricter emissions limits under the federal government’s “safeguard mechanism” reforms from July.
Santos chief executive Kevin GallagherBen Searcy
Santos is constructing its first carbon capture and storage project at South Australia’s Moomba gas plant,and is finalising its initial engineering and design on a project in depleted gas reservoirs in the Timor Sea.
The is considered critical to lowering the carbon footprint of Santos’ proposed $5.8 billion Barossa gas project off the coast of northern Australia,which contains high levels of carbon dioxide.
Gallagher told investors on Thursday that carbon capture and storage should provide Santos with a competitive edge over time,but said Australia was falling behind other countries in “recognising the criticality of CCS”. The United States had so far committed more than $10 billion to developing and deploying the technology,and had made tax credits of up to $85 a tonne available,he said.
“The Inflation Reduction Act in the US has positioned the country to grow its liquefied natural gas (LNG) export industry by accelerating the deployment of large-scale CCS,” Gallagher said.
Santos chairman Keith Spence said the lack of government support for carbon capture and storage “threatens Australia’s competitiveness and will push up the cost of decarbonisation for Australian industry and consumers”.
Carbon capture and storage – which traps carbon dioxide emissions produced by gas-processing plants,factories or power stations before they are emitted into the atmosphere and injects them underground – has been a divisive area of climate policy.
Supporters argue it is a necessary and unavoidable component of the world’s decarbonisation goals to avoid the worst and most immediate impacts of global warming. “As the head of International Energy Agency has said,reaching net-zero goals without CCS will be almost impossible,” Gallagher told the meeting on Thursday.
However,carbon capture and storage is strongly opposed by the Greens and environmentalists who argue it diverts focus from shifting the economy to cleaner energy,and fear it could be used to prolong the consumption of harmful fossil fuels.
Questions also remain about the technology functioning at scale ( still operating at just one-third capacity after six years) and there are limitations to the benefits of using carbon capture and storage for LNG imports.
Only the carbon dioxide in the reservoir can be easily captured,while the far greater emissions from the gas burnt to power the giant plants that cool the gas to liquid are still vented to the atmosphere.
Despite soaring fossil fuel prices this year due to the war in Ukraine,Santos and oil and gas producers across the globe are facing rising pressure from climate advocates and institutional shareholders over plans to expand fossil fuel production amid the worsening climate crisis.
Investors are increasingly concerned that and become uneconomic – or “stranded assets” – due to green technology advances,shifts in consumer preferences and sudden changes in government policy.
Activists outside Santos’ meeting in Adelaide protested against the company’s plans to develop the in NSW and the offshore Barossa project.
Market Forces,a climate-focused activist group,said shareholders had delivered a “significant rebuke” at Santos’ meeting,with 10 per cent of investors voting against all three directors standing for re-election.
Almost one in five shareholders also defied the urging of the board and voted in favour of a shareholder resolution calling for oil and gas production to fall in line with global climate goals.
“Investors today delivered a significant rebuke to Santos after shareholders called out the company’s corporate governance and climate action failures,” Market Forces’ Will van de Pol said.
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