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Supplying critical fuels more sustainably

Santos aims to deliver superior shareholder returns whilst being a global leader in the transition providing cleaner energy and clean fuels that are affordable and sustainable as we help the world decarbonise to achieve Net Zero.

We will transform to become a cleaner energy and clean fuels business, build around our existing infrastructure by developing natural gas for backfill to meet ongoing customer demand and grow through developing clean fuels projects such as hydrogen. Where possible, we will combine natural gas developments with Carbon Capture and Storage projects to reduce carbon emissions from our own production and create a carbon solutions business, help third parties, including our customers, to reduce their emissions and enable future hydrogen and other clean fuels projects.

Reporting our progress on addressing the climate challenge

Since 2018, Santos has published annual climate change reports that align with the recommendations of the G20’s Task Force on Climate-related Financial Disclosures (TCFD). The latest 2022 Climate Change Report outlines Santos’ climate transition strategy and action plan as we work to become a net-zero emissions energy and fuels business by 2040, in step with the goal of the UN Paris Agreement on climate change.

Read more in the 2022 Climate Change Report here.

Our journey to net-zero emissions by 2040

Santos will maintain a disciplined approach to capital management through the energy transition by sustaining our existing long-life natural gas assets to meet ongoing customer demand, building around our existing infrastructure and growing our investment in decarbonisation and clean fuels where we have a competitive advantage. Climate transition investments will meet our disciplined investment criteria, be demand led by our customers and consistent with our low-cost operating model.

We will:

  1. Supply natural gas to meet customer demand for critical feedstocks for a wide range of manufactured goods including polymers and fertilisers, direct heating for households and industries such as steel and aluminium, and to displace coal and firm renewables in electricity generation, helping our customers reduce their emissions.
  2. Reduce our own emissions through innovation in low-emissions technologies, energy efficiency, integrating renewables, deploying CCS, and investing in high-quality nature-based carbon offset projects. While not the primary means of reducing our carbon intensity, offsets may be needed to help us achieve our net-zero goal. We will generate credits that are real, measurable and verifiable, and as customer demand grows, we aim to establish a portfolio of offsets to enable carbon-neutral sales of our energy products and potentially create a new revenue stream.
  3. Invest today to deliver cleaner fuels tomorrow, leveraging existing infrastructure and developing CCS, direct air capture, new low-emissions technologies and hydrogen production to enable large-scale emissions reduction in our own business and help third parties, including customers, to reduce their emissions.
  4. Work with customers, investors, technology developers and governments to help build new cleaner energy, clean fuels and carbon markets. Santos will work with our stakeholders to advocate for regulatory frameworks that drive demand shifts, set standards for clean fuels and carbon markets, and enable the economic development of carbon abatement and affordable, reliable, lower-emissions energy and fuels on the supply side.

Climate Transition Action Plan

The decarbonisation initiatives set out in our Climate Transition Action Plan provide a pathway for Santos to achieve our climate change targets and grow our business through Carbon Capture and Storage and clean fuels projects.

Santos’ carbon mitigation hierarchy is avoidance first, followed by reduction and offsetting.

The Climate Transition Action Plan sets out how we envisage materially reducing emissions within our operational control and delivering value for shareholders through the energy transition by offering carbon solutions and partnering across our supply chain to produce cleaner energy and clean fuels that will reduce our customers’ emissions.

Read our Climate Transition Action Plan

*This Climate Transition Action Plan is designed to be read in conjunction with the explanatory text available here.

Supporting a sustainable and just transition

When examining our climate-related risks and the pace of the energy transition, we are also mindful of a ‘just transition’. As a result, we take into account not only business issues, but the implications of our actions for customers, employees and the communities where we operate.

Over the next 30 years, the energy transition demands a structural shift in the way that the world generates energy, but a just transition also requires attention to energy security and affordability. Further, the Paris Agreement acknowledges the need to balance the reduction in emissions with the imperatives of a just transition of the workforce and the creation of decent work and quality jobs in accordance with nationally defined development priorities.

As we transition to the delivery of lower-carbon energy, Santos recognises that new technologies and alternate approaches will change the way we currently conduct our business. We are committed to ensuring a just transition for our customers, our employees and the communities where we operate and who benefit from our operations.

Case studies

Centred around the Moomba Gas Plant, the Moomba CCS project is a commercial large-scale hub for the capture and geological storage of CO2. The project will deliver material greenhouse gas emissions reduction at the Moomba facility of approximately 1.7 million tonnes per annum.

The Moomba CCS project is a global leader on full lifecycle emissions reduction cost when benchmarked against other CCS projects. The projected cost per tonne of CO2 is less than US$24 per tonne. Moomba CCS has inherent advantages that make it an ideal site for capturing and storing CO2, including:

  • Concentrated CO2 emissions source enables low-cost capture: The capture component of a CCS project can typically be up to 70-80 per cent of total project cost.[1] This is because the CO2 being sequestered usually contains a high proportion of impurities, requiring capital-intensive technology for removal. The Moomba Gas Plant has established facilities for natural gas processing from which concentrated CO2 is a by-product. This removes the need for the project to deploy capture technology.
  • Short distance to high-capacity, well known geological systems: The use of depleted oil and gas reservoirs distinguishes the Moomba CCS project from others in operation globally. Most other dedicated CCS projects store CO2 in deep saline aquifers. The Cooper Basin is the geological system in which CO2 will be stored. Having been a petroleum-producing basin for more than 50 years, there is a high level of understanding of the basin geology. Vast amounts of data and knowledge acquired through production operations have been used to select the best sites for CO2 storage. The geology, production history and underground gas storage history provides confidence in injectivity and storage capacity as well as our ability to safely and permanently store CO2. These are all important factors in selecting cost-effective and suitable storage reservoirs.
  • Regulatory framework: The Moomba CCS project has the advantage of being in South Australia, a state which has legislation and regulations in place to enable CCS projects. This provides confidence to make a long-term, long-life investment. In addition, the Australian Government has approved a new CCS method to enable CCS projects to generate Australian Carbon Credit Units (ACCUs) through the Emissions Reduction Fund. Australia’s Clean Energy Regulator will oversee the method, guaranteeing the integrity of ACCUs. The Moomba CCS project is the first CCS project registered with the Regulator.

The Cooper-Eromanga basins, where Moomba is located, have the potential to store 20 million tonnes of CO2 per year for more than 50 years, the equivalent of taking approximately one third of light duty vehicles (cars and light commercial vehicles) off Australian roads every year.[2]

Footnotes:

[1] House of Representatives Standing Committee on Science and Innovation, 2007: https://www.aph.gov.au/parliamentary_business/committees/house_of_representatives_committees?url=scin/geosequestration/report.htm

[2] Department of Industry, Science, Energy and Resources, October 2021: https://www.industry.gov.au/sites/default/files/October%202021/document/australias_emissions_projections_2021.pdf

Australian-based manufacturer and supplier of plastics, Qenos, has partnered with Santos to conduct a feasibility study into the use of hydrogen to dramatically reduce carbon emissions at Qenos’ Port Botany operations. The study will explore opportunities for Santos to provide clean energy solutions to Australia’s sole manufacturer of polyethylene and leading supplier of world-class polymers which are the building blocks of essential everyday products in key packaging, agriculture, water, mining and waste management industries.

The study will investigate the use of up to two petajoules of hydrogen per annum as a clean burning fuel for process energy, complementing the ethane feedstock that has underpinned the Port Botany operations for the past 25 years.

It will also assess using hydrogen in an advanced recycling project that Qenos is currently progressing to help solve Australia’s plastic waste problem and will put Santos and Qenos at the leading edge of the circular economy in Australia.

Qenos Chief Executive Officer Stephen Bell said the study was an important step in Qenos’ plans to eliminate carbon emissions and deliver a more sustainable business.

“Our advanced recycling project will put us on the path to a circular economy, using plastic waste as a feedstock in addition to ethane. The potential to use clean-burning hydrogen in this project is also very exciting,” Mr Bell said.

“This partnership is a great example of collaboration across the value chain to deliver better outcomes for our customers. With plastic use in Australia set to double by 2050, I am delighted Santos and Qenos are working together to explore new supply arrangements and ways of reducing emissions within Australia’s manufacturing industry.”

Santos Managing Director and Chief Executive Officer Kevin Gallagher said, “Santos is proud to be playing our part in assisting manufacturers to reduce their emissions. We will continue to work with our customers along all parts of the value chain to help them reduce their emissions through new technologies and cleaner fuels.”

Additional information

Santos has a policy position to report annually on the company’s climate change governance, strategy, risk management and targets and metrics in a transparent manner aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

This is Santos’ fifth Climate Change Report referencing these disclosure recommendations. EY has provided assurance over disclosures in relation to the TCFD, recommendations presented in this report, including the assumptions and approach supporting the scenario analysis. The Assurance Statement can be found on page 63 of Santos’ 2022 Climate Change Report.

The Board of Santos has ultimate responsibility for the approval and oversight of strategy. This includes approval of our Climate Change Policy and oversight of its implementation. Board members bring a diversity of skills and experience, including consideration of climate change risks.

The Board has a process to ensure directors are kept informed on climate change issues via input from the senior leadership of the company as well as through independent advice when considered appropriate. The Environmental, Health, Safety and Sustainability Committee (EHSS Committee) supports the Board in overseeing Santos’ climate change program and performance.

Management, under the leadership of the Chief Executive Officer, is responsible for delivering the strategic direction and goals approved by the Board. These include implementation of climate-related targets and policy positions, identification and management of risks and opportunities, and reporting on these topics to the Board directly and/or through the relevant Board Committees. Santos has also established the role of Executive Vice President ESG. Reporting to the Chief Executive Officer, the role is an Executive Committee role with accountability for oversight of climate targets and climate-related matters across the company, including setting standards, monitoring and auditing performance across the business, maintaining a risk register, and internal and external reporting.