On
the same day that a judgement was handed down in Bushfire
Survivors for Climate Action Incorporated v Environment Protection
Authority [2021] NSWLEC 92 (26 August 2021) ordering
The Environment Protection Authority, in
accordance with s 9(1)(a) of the Protection of the Environment
Administration Act 1991 (NSW), is to develop environmental quality
objectives, guidelines and policies to ensure environment protection
from climate change,
news came of another legal challenge in which the Environmental
Defenders Office
is the the
legal representative of the applicant.
 |
Santos Ltd Cooper Basin facility
IMAGE: Environmental Defenders Office |
Environmental Defenders Office, 26 August
2021:
The
Environmental Defenders Office, acting on behalf of the Australasian
Centre for Corporate Responsibility (ACCR), has filed a Federal Court
case against gas giant Santos over its claims natural gas is “clean
fuel” and that it has a credible pathway to net zero emissions by
2040.
ACCR
will argue the claims – contained in the company’s 2020 Annual
Report – constitute misleading or deceptive conduct under the
Corporations Act 2001 (Cth) and the Australian Consumer Law.
This
is the first court case in the world to challenge the veracity of a
company’s net zero emissions target, as well as the first in
Australia raising the issue of climate greenwashing against the oil
and gas industry.
It
is also a landmark, world-first test case in relation to the
viability of carbon capture and storage, and the environmental
impacts of blue hydrogen, increasingly touted as a key element in gas
companies’ pathways toward net zero emissions.
Santos’
claims – “Clean” gas & a “credible” net zero pathway
Santos
Ltd is one of Australia’s largest gas companies, and the biggest
domestic gas supplier in the country.
In
Australia its major projects include oil and gas extraction off the
coast of Western Australia, as well as in the vast Cooper and
Eromanga Basins that span South Australia and Queensland.
Santos
is also a major player in coal seam gas, developing vast areas of the
Surat and Bowen Basins in Queensland and planning a major new CSG
project around the northern NSW agricultural hub of Narrabri.
In
2019-20, Santos was responsible for approximately 7.74 million tonnes
of CO2 equivalent emissions from its direct operations, with the
end-use of the natural gas it supplied emitting an additional 28.6
million tonnes of CO2 equivalent.
Despite
this, Santos describes itself as a “clean energy” provider in its
2020 Annual Report, stating that natural gas is a “clean fuel”.
It
has also sought to assure investors and the public that it has a
clear and credible pathway to achieve net zero emissions by 2040.
This
pathway is heavily reliant on both carbon capture and storage
(CCS)processes and the production of “blue hydrogen”.
However,
ACCR alleges that Santos failed to disclose that it has firm plans to
increase its greenhouse gas emissions by developing new or existing
oil and gas project including the Barossa, Dorado and Narrabri LNG
projects. ACCR also alleges that Santos failed to disclose that its
net zero plans depend upon a range of undisclosed qualifications and
assumptions about CCS.
In
addition, although blue hydrogen is increasingly touted as a key
element in gas companies’ pathways toward net zero emissions,
scientists and even key gas industry figures have raised questions
over its environmental impacts in comparison to other energy sources.
ACCR
says that these issues call into question whether Santos had
reasonable grounds to assert it has a “clear and credible” plan
to reach net zero emissions by 2040.
On
behalf of ACCR, we will argue that in making the above claims Santos
potentially engaged in misleading or deceptive conduct under both the
Corporations Act 2001 (Cth) and the Australian Consumer Law.
We
are asking the court to grant an injunction requiring Santos to
correct the record publicly on these statements, and prohibit Santos
from engaging in similar misleading or deceptive conduct in the
future.
The
Impact of Greenwashing – Investors & Environment
This
case is about holding gas companies like Santos to account for the
claims they make about their product and future in a low-carbon
world.
Our
client, ACCR, is a shareholder advocacy organisation focused on how
listed companies, industry associations, and investors are managing
climate, labour, human rights and governance issues.
They
are also investors in Santos, taking this action to ensure the
company and others like it fulfil their legal responsibility to be
transparent and open with shareholders like ACCR.
Companies
have an obligation to be upfront and honest with investors – this
is particularly important to investors who are trying to assess which
companies will survive and thrive in a rapidly changing global energy
economy.
Misleading
information can have a dramatic effect on the market, on investors,
and ultimately on the environment.
It
can leave investors vulnerable to major losses. It can skew the
market unfairly in favour of companies failing to adequately respond
to the climate change, and unfairly away from companies that are
acting responsibly.
In
doing so, misleading information about natural gas and the transition
towards a lower carbon economy can obstruct an effective and timely
response to the climate crisis.
A
genuine transition to a low-carbon energy economy is crucial if
Australia is serious about meeting its commitments under the Paris
Agreement and ensuring the world avoids the worst impacts of climate
change.
It’s
essential that energy companies play their part and are upfront and
honest about their role in this crisis and the challenges they face
in adapting to a low-carbon economy.
This
landmark case will help to ensure energy companies like Santos are
held to account for the statements they make to investors and the
public in the face of the global challenge of climate change.
Santos
Ltd
is one of Australia’s largest gas companies and is reportedly
the
biggest domestic gas supplier in the country. This
court case is challenging the veracity of a company’s net
zero emissions target, the viability of carbon capture and storage,
and the environmental impacts of blue hydrogen.
Santos
is also a major player in coal seam gas, developing vast areas of the
Surat and Bowen Basins in Queensland and planning a major new CSG
project around the northern NSW agricultural hub of Narrabri.
The
Motley Fool blog stated on 26 August 2021 that; The
Santos Ltd (ASX: STO) share price slumped today after news broke that
the company is facing a lawsuit. At market close, Santos shares are
down 2.27% to $6.02. It is worth noting that this means the company’s
share price is now at a new low for the 2021 calendar year.
End of trading on Friday 27 August 2021 its share
price fell again to $5.57.
