Woodside, Santos and Fortescue head to COP26

SANTOS CEO Kevin Gallagher is heading to COP26 where he is likely to face off with fellow Australian resources giants Woodside and FMG as they attempt to sway political leaders over hydrogen, carbon offsets and the role of oil and gas.

Clash of the titans

Clash of the titans

Fortescue founder Dr Andrew Forrest and the head of his Future Industries division, Julie Shuttleworth, are set to appear in person, while Woodside CEO Meg O'Neill and her climate chief Tom Ridsdill-Smith will attend remotely. Gallagher's in-person presence at the talks was confirmed by the AFR this afternoon.  

Each company has already been clear this week what their agendas will be. 

Gallagher told participants of the SEAOCC conference in Darwin on Wednesday that the opening up of international carbon markets needed to happen in order for Australia to create a viable CCS industry. 

"Australia has a competitive advantage in carbon storage and international trading in carbon credits could pave the way for Australia to become a carbon storage superpower - just as we have established our position as an energy superpower over the last half century," he said. 

"One of the most important outcomes that COP26 could deliver is the implementation of Article 6 of the Paris Agreement to facilitate bilateral or multilateral carbon trading between countries." 

Article 6 is one of the most complex aspects of the Paris Agreement, as it would allow countries struggling to meet their emissions reduction targets to purchase emissions reductions from other nations that have already cut their emissions more than the amount they had pledged.

World Resources Institute analysis notes the article "could help the world avoid dangerous levels of global warming or let countries off the hook from making meaningful emissions cuts."

Gallagher told SEAOCC that carbon prices in some countries are much higher than in Australia, and the ability to sell Australian Carbon Credit Units to countries such as Japan and Korea could incentivise more CCS projects to be developed.

Santos is on the cusp of developing its Moomba CCS site in the Cooper Basin which is looking to take third-party emissions and store it in underground reservoirs. It also wants to develop its Bayu-Unan gas field in Timor Leste as a CCS hub.  It would need to be able to earn CCUS in Timor-Leste jurisdiction, however. 

In an op-ed published in Economist Impact earlier this month, Woodside's Tom Ridsdill-Smith echoed Gallagher's sentiment, noting global progress on developing Article 6 has been "painfully slow," adding that policy makers were having to make conscious choices of picking technological winners instead. 

"The challenge of the energy transition is hard and uncertain enough, without limiting technology options based on whatever assumptions policymakers make today," he said. 

"Policy measures must be geared towards supporting the broadest range of emissions reduction technologies available." 

He noted hydrogen and carbon capture and utilisation featured heavily in major net-zero scenarios, however the technology has yet to be proven at commercial scale; and industry needed confidence that a market would be waiting for them when and if they do decide to build them. 

"Building partnerships across the value chain so that producers, users and infrastructure providers collaborate and understand each other's needs will de-risk investments and does not rely on government fiscal support," he said. 

In 2019 Woodside was looking to a mangrove project in Myanmar as a form of carbon offset. 

FFI's Shuttleworth, meanwhile, has argued that there is not enough time for her rival's "wait-and-see" approach, arguing that green hydrogen was a solution the world needed now to bring down emissions as quickly as possible. 

"We must take action now to stop the planet from cooking and embrace green hydrogen so the world can lower emissions faster," she said, announcing the company had joined the UN Race to Zero Coalition. 

The Coalition is made up of businesses, cities and institutions looking to halve their emissions by 2030. Forrest's FMG is looking to FFI to reach 100% emissions reduction across Scope 1 and 2 by 2030. 

Santos, meanwhile, intends to get there by 2040, and Woodside by 2050. 

Fortescue is looking to get governments to agree to an accreditation scheme for hydrogen that differentiates renewable-based production with that based on fossil fuels with carbon offsets. 

"Absolute zero is critical because we can't be relying on offsets as a cheat's way of decarbonising," Shuttleworth told the AFR. 

Grattan Institute energy director Tony Wood told Energy News earlier this week that "the business community will be the one that leads on this". 

A growing series of reports, each focused on a key discussion point for the energy sector, brought to you by the Energy News Bulletin Intelligence team.

A growing series of reports, each focused on a key discussion point for the energy sector, brought to you by the Energy News Bulletin Intelligence team.


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