The Australasian Centre for Corporate Responsibility (ACCR) has filed a landmark Federal Court of Australia claim challenging details around Santos’ net zero emissions by 2040 target.

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 (CCS) and the environmental impacts of blue hydrogen.

Acting on behalf of ACCR, lawyers from the Environmental Defenders Office (EDO), the largest environmental law center in the Australia Pacific, will claim that Santos is engaging in misleading or deceptive conduct in potential contravention of both corporate and consumer law. 

The ACCR alleges that Santos failed to disclose the full impact that their projects could have on the environment in its 2020 Annual Report, which described natural gas as a “clean fuel”. 

It alleges that the report failed to recognise the extraction and processing of fossil gas involves the release of significant quantities of carbon dioxide (CO2) and methane (CH4) into the atmosphere, and that the end-use of natural gas releases material amounts of CO2. 

The ACCR notes that there are alternative energy sources presently available which do not release any or any material greenhouse gas emissions, but Santos does not plan to pursue these energy sources.

Santos’ 2020 Annual Report stated it had a “clear and credible” plan to achieve net zero scope one and two greenhouse gas emissions by 2040, with a large amount of this reduction anticipated to come from future CCS processes and blue hydrogen.

ACCR claims these statements are potentially misleading, as Santos’ net zero plans depend upon a range of undisclosed qualifications and assumptions about CSS processes.

The claim alleges that Santos has firm plans to increase its greenhouse gas emissions through the expansion of its natural gas operations, and has not yet decided whether to proceed with its net zero plans. 

ACCR Director of Climate and Environment, Dan Gocher, said, “Santos’ audacious ‘clean energy’ and ‘net zero’ claims must be challenged in a court of law.

“Santos has perfected the art of greenwashing, and shareholders continue to be misled by Santos’ clean energy claims.

“Santos’ ‘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.

“More than 80 per cent of Santos’ net zero plan relies on carbon capture and storage (CSS). The promise of CCS technology has been used by the fossil fuel sector to justify business as usual for decades.

“Whilst Santos claims it will produce zero emissions hydrogen, recent research has highlighted the carbon intensity of blue hydrogen production, demonstrating that CCS is not a cure-all for the emissions associated with hydrogen produced with fossil gas.

“To date the majority of CCS projects have failed. The technology is expensive and unreliable. As  demonstrated by the Gorgon CCS project, even operating projects struggle to meet CO2 capture targets.

“Santos is planning to increase production by more than a third by 2025-26, which will come at the expense of emissions reductions in the critical decade to 2030.

“Santos has provided no detail on the completeness and permanence of CO2 capture at Moomba, along with how it will manage long-term leakage risk.

“Santos has previously made multiple statements around its intention to use injected CO2 for  enhanced oil recovery (EOR) in the Cooper Basin, which is known to have high CO2 leakage rates. The exact role of EOR in Santos’ strategy must be disclosed to investors.”

EDO Director of Legal Strategy, Elaine Johnson, said, “Our client is taking this action to ensure Santos and other gas companies are held to account for the claims they make about their product and its future in a highly carbon-constrained global economy.

“There are serious questions about the future of the gas industry in the face of the global energy transition. The gas industry has a legal responsibility to be upfront with investors about that.

“Given the seriousness of the risks of continued fossil fuel use, gas companies must be completely transparent about their future planning. Plans should be robust, detailed and open to scrutiny.

“Instead we see ‘net zero’ plans that contain very little detail and which are often contingent for their success on unproven processes, such as carbon capture and storage.

“New gas projects are entirely at odds with what the science says is required to tackle climate  change. Greenhouse gases generated from new gas projects are dangerous pollutants which,  acting cumulatively, pose real and existential threats to people and our environment.

“Claims like those made by Santos need to be based on solid foundations. If companies are telling investors they have a credible pathway to net zero emissions, they need to have robust, sound plans to back them up.

“Companies have a legal obligation to be upfront and honest with investors in their annual reports. This is particularly important to investors who are trying to assess which companies will survive and thrive in a rapidly changing global energy economy.”

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