Gas producer’s net zero pledge challenged in court by activist

Example of natural gas pipes Source: JWN Energy

Australian oil and gas producer Santos Ltd. will be challenged in court on its claim to have a “clear and credible” path to net zero greenhouse gas emissions from its operations, in a case brought by a climate activist group. 

The Adelaide-based company engaged in misleading or deceptive conduct when it said in its 2020 annual report that natural gas provides clean energy, the Australasian Centre for Corporate Responsibility alleged in proceedings filed to a federal court on Wednesday. The group also called into question Santos’ plan to reach zero emissions by 2040.

Climate campaigners are increasingly taking the legal route to challenge big fossil fuel producers. In July, Royal Dutch Shell plc was ordered to slash emissions faster than planned, while Australia’s government was instructed to consider climate change in mine approvals.

While some producers have faced general skepticism over their green goals in the past, the Santos case is the first to legally challenge the validity of a company’s plan to reach net zero, according to the ACCR. 

“Santos has perfected the art of greenwashing, and shareholders continue to be misled by Santos’ clean energy claims,” Dan Gocher, director of climate and environment at ACCR, said in a statement. The group’s ‘clean energy’ and ‘net zero’ claims “pose a major risk to investors as it becomes increasingly more difficult to differentiate between companies taking genuine action versus those relying largely on offsets or unproven technologies,” he added. 

A spokesman for Santos said it would not be appropriate for the company to comment on matters before the court. 

Santos’ roadmap to net zero relies heavily on carbon capture and storage technology, which ACCR said was unproven, expensive and unreliable. The group also said the extraction and processing of fossil gas involves the release of “significant quantities” of carbon dioxide and methane.

Santos has said it will make an investment decision later this year on its Moomba CCS project in South Australia, which plans to store 1.7 million tons of carbon dioxide in deep underground wells. That compares with Santos’ operational emissions of around 5 million tonnes CO2-equivalent in fiscal 2020. 

Santos is in talks with Oil Search Ltd. on a merger that would create a top 20 global oil and gas producer with annual production close to 120 million barrels of oil equivalent. Santos chief executive officer Kevin Gallagher said earlier this month that the enlarged group would be better positioned to manage the transition to clean energy. 

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