Santos 2021 Climate Change Report
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1 Climate Change Report Santos Climate Change Report 2021 CEO Statement Report highlights Contents 4 About us Industry-leading targets NTO SA S 6 CEO statement + Santos to achieve net-zero emissions by 2040. NET-ZERO 8 Executive summary + 26-30 per cent reduction from 2019-20 EMISSIONS 12 Introduction emissions and emissions intensity by 2030. + Reduce customer emissions by more than 16 Metrics and targets 2 0 4 0 one million tonnes per annum by 2030. Santos’ strategy and 22 climate change 46 Governance and risk Resilience and opportunity Zero-emission Zero-emission technologies: 54 technologies: carbon clean hydrogen in a lower-carbon future capture and storage (CCS) + Pathway to cleaner fuels + Moomba CCS Project ready for enabled by low-cost CCS. We acknowledge the Traditional final investment decision: the + Established new Midstream Owners of the land on which our world’s second largest CCS Infrastructure and Low-carbon project with lowest unit cost at Fuels division. operations exist and on which we less than A$30 per tonne. work. We recognise their continuing + Ability to store 1.7 million connection to land, waters and tonnes of CO2 per annum with culture. We pay our respects to their potential of up to 20 million. Reducing operational Elders past, present and emerging. emissions santos.com/sustainability + Emissions intensity reduced 20 per cent in the past 5 years. Nature-based offsets + Stringent management and Disclaimer: This report contains forward looking statements that are subject + West Arnhem Land Fire to risk factors associated with the oil and gas industry. It is believed that reporting of emissions. the expectations reflected in these statements are reasonable, but they Abatement project – ongoing may be affected by a range of variables which could cause actual results + Continuing integration of renewable investment in a world-leading or trends to differ materially, including but not limited to: price fluctuations, energy in Cooper Basin operations actual demand, currency fluctuations, geotechnical factors, drilling and carbon offset project. production results, gas commercialisation, development progress, operating building on 5.5 megawatts of solar results, engineering estimates, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and electricity and 4 megawatts of regulatory developments, economic and financial market conditions in various countries, approvals and cost estimates. The report does not purport to battery storage already installed. represent the views of Santos’ joint venture partners across operated or non-operated assets. Santos Climate Change Report 2021 About us 5 Dili Papua New Guinea About us PNG LNG Port Moresby Timor-Leste Barossa BAYU-UNDAN Santos Darwin DLNG locations Dorado BARROW ISLAND VARANUS ISLAND NINGALOO Dampier DEVIL CREEK PYRENEES MACEDON Gladstone GLNG ARCADIA FAIRVIEW SCOTIA ROMA Roma WALLUMBILLA BALLERA Brisbane MOOMBA Australia Narrabri NARRABRI WILGA PARK BIBBLEWINDI LEEWOOD Perth PORT BONYTHON Sydney Adelaide Canberra Office locations Operated facilities Non-operated facilities Melbourne Planned project location Planned Carbon Capture and Storage Santos operated acreage 0 250 500 1000 Hobart Santos non-operated acreage KM Santos Climate Change Report 2021 CEO statement 77 ANTO CEO S S NET-ZERO statement EMISSIONS 2 0 4 0 It is with great pleasure I present the 2021 Santos the emission reductions required to limit global Climate Change Report, which outlines our commitment temperature rise to under 2 degrees.2 to managing climate risk and delivering a sustainable business model in a low-carbon world. With low-cost growth opportunities across our We are proud to introduce portfolio, Santos is in a strong position to take As a proudly Australian energy producer, Santos has new emission reduction advantage of the role that natural gas will play in improved the lives of people throughout Australia regional and global decarbonisation. And gas is and Asia for more than 65 years by providing safe, targets, placing us once just the beginning of the journey. clean, reliable products. With assets spanning Australia, Papua New Guinea and Timor-Leste, our focus is again at the forefront of the In parallel, at Santos we are evolving our business to continuing and expanding this mission through cleaner, energy industry in meeting drive deeper emission abatement through our leading low-cost fuels. position in the critical technology of CCS. This will the climate challenge: drastically lower our operating emissions and provide Critical within this vision is management of emissions. permanent, low-cost CO2 abatement for other industries. This, our fourth annual climate change report referencing Eventually, it will unlock production of zero-emission the recommendations of the G20’s Task Force on Santos will reduce its hydrogen produced from natural gas, by sequestering Climate-related Financial Disclosures (TCFD), continues Scope 1 and 2 emissions the CO2 emissions released during the process. our track record of transparent reporting of our climate change commitments and actions. 26-30 per cent by 2030 This proven technology can produce clean hydrogen for half the cost of hydrogen created with electricity Our first report in 2018 set a benchmark for climate and to net-zero by 2040. (electrolysis), while using half the volume of water. change action in three key areas: Our existing LNG customer base in Asia will be the hydrogen customers of the future, and as they transition i. Ambition - we set a net-zero 2050 aspiration. to new clean fuels, Santos will transition with them. ii. Transparency - we were an Australian leader in This transition is supplemented by our continued releasing a report aligned with recommendations investment in operational efficiency, renewables of the TCFD. integration and the highest quality nature-based carbon offset projects to reduce our emissions on iii. Performance - we expanded our Energy Solutions the journey to net-zero. team, tasked with driving wide-ranging and Santos’ role in this low-carbon journey is built around Since our last report, the impact of the COVID-19 progressive emission reduction opportunities. natural gas, which produces half the greenhouse gas pandemic has given Santos’ mission even greater Santos’ commitment to clean, low-cost fuels across the 1 energy horizon positions the company to not just be This approach embedded climate change management emissions of coal when used to generate electricity. relevance. As the world continues to respond and resilient, but to thrive in a low-carbon future. within our business strategy and has delivered clear It is the perfect partner for renewable energy sources establish a pathway to recovery, cleaner fuels are central results, reducing our emissions intensity and and can be made even cleaner with carbon capture in addressing two key objectives: lifting the developing commercialising step-change abatement technologies. and storage (CCS), eventually allowing low-cost world from poverty and reducing emissions to meet zero-emission hydrogen, a fuel of the future. global climate change goals. Gas is critical to a clean recovery, with coal-to-gas KEVIN GALLAGHER switching able to contribute almost 10 per cent of Managing Director and Chief Executive Officer February 2021 1. IEA, The Role of Gas in Today’s Energy Transitions, 2019. 2. IEA, The Role of Gas in Today’s Energy Transitions, 2019. Santos Climate Change Report 2021 Executive summary 99 Executive METRICS AND TARGETS + Santos has set a new medium-term target to + Santos has set a new long-term target of achieving summary reduce Scope 1 and 2 emissions and emissions net-zero Scope 1 and 2 emissions by 2040. intensity by 26-30 per cent by 2030 from our + This strong ambition is enabled by excellent progress 2019-20 financial year baseline in keeping with against previous targets and commercialising of Australia's Paris Agreement commitment. step-change technology in CCS. + In addition, the company has a further medium-term + Santos transparently reports its greenhouse gas Santos’ strategy is built around five core asset hubs by 2040.4 Clean hydrogen demand is expected to increase target to reduce customer Scope 1 and 2 emissions emissions, including fugitive emissions. in Australia, Timor-Leste and Papua New Guinea. more than 20 times by 2030 to 18 million tonnes and by more than 1 million tonnes per annum by 2030 It recognises the intrinsic role of natural gas, carbon over 100 times by 2040 to 75 million tonnes.5 This is through direct switching to cleaner fuels. capture and storage (CCS) and the potential for clean equivalent to 215 million tonnes of oil, and more than the hydrogen as an alternative energy source in a global current global output of wind and solar energy today. future where temperature increase is limited to well below 2 degrees Celsius. Aligned with our strategy, Santos is positioned to be STRATEGY a leading domestic and export supplier of natural gas In this future, modelled by the International Energy Agency and liquified natural gas (LNG) with progressively lower (IEA) as the ‘Sustainable Development Scenario’ (‘SDS’), emissions through our world-leading CCS project. + Climate change considerations, reducing global + Santos’ natural gas-focused portfolio is economically global natural gas demand is forecast to grow to a quarter Moving forward, these core capabilities enable us greenhouse gas emissions and improving air quality resilient under all the International Energy Agency’s of global energy demand and remain strong for at least to accelerate development of clean, zero-emission are intrinsic to our strategy. World Energy Outlook 2018 scenarios. two decades. This is driven primarily by demand growth hydrogen, to fulfill future needs of our customers. + Natural gas has a key role to play in a lower-carbon + Santos’ CCS project is ready to execute, delivering a in the Asia Pacific region,3 where Santos operates and future as it produces 50 per cent less greenhouse gas technology critical to global climate goals at globally markets our products.