Open access article. Shareholder climate resolutions fell just short of majority support at today's Santos AGM, and chairman Keith Spence stressed that the company's CCS investments will be unaffected by its COVID scale-back.
Spence told the AGM that a resolution that would require the company to set scope 1, 2 and 3 emissions reductions targets received support from 43.9% of shareholders.
A resolution that would have required the company to review the lobbying activity of its industry associations received 46.35% support.
The Santos board had opposed both resolutions, which were prepared by the Australasian Centre for Corporate Responsibility.
Proxy advisers ACSI, Glass Lewis, ISS, PIRC (UK) and Regnan all recommended in favour of both shareholder resolutions.
Similar resolutions will go before the Woodside AGM at the end of this month.
Spence said the results showed it was "clear that climate change is a very important issue for our shareholders", but defended the board's decision not to develop scope 3 targets.
Gas produced by Santos had multiple end uses, he noted, with some of it combusted, while ethane is also piped to Sydney for the manufacture of plastics. In addition, a focus on scope 3 ignored the benefits of switching from coal to gas as a fuel, he said.
Groundbreaking support for scope 3 resolution
Dan Gocher, director of climate and environment with the Australasian Centre for Corporate Responsibility, said the level of support for a resolution calling explicitly for targets on Scope 3 emissions was "a world first".
"This is further evidence that institutional investors have woken up to the damage a growing gas industry is wreaking on the planet," Gocher said.
The company's peers, including BP, BHP, Royal Dutch Shell and Total "have committed to set targets for their Scope 3 emissions", he added.
Santos aiming for carbon injection at $20 per tonne
Spence told the online AGM that the company was "already taking industry leading action", and revealed new details about the company's carbon capture and storage plans at its Moomba gas plant in the Cooper Basin.
The company is initially planning on an injection cost of $30 per tonne for the pure stream of CO2 that is emitted at the Moomba gas plant, he said.
However, over time "we believe we will be able to drive that down to $20 a tonne", he said.
That is within the ballpark of the current Australian carbon credit price of about $16, with each credit representing a tonne of abatement, he noted.
It is also much lower than the European carbon price, he said.
CCS now core business
Spence said Santos regarded CCS as an exciting opportunity and "vital for the company's future".
For that reason, work on the CCS project was "not even considered for deferment" when the company late last month examined potential pandemic-related cost reductions.
The Cooper Basin could become a sequestration hub for traditional industries like cement, and new industries like steam reforming of methane to produce hydrogen, he said.
"It's an opportunity rather than a burden for the business and we are approaching it with that intent."
Spence added that Santos was keen to see the development of an ERF method for earning carbon credits from CCS projects and said the company was working closely with the government on its low emissions technology roadmap.
If the project could generate credits, then "international markets may also offer a revenue source", he noted.
Spence told the AGM that the company spent about $20 million investigating CCS at Moomba last year, and was spending in the order of $10 million this year on engineering and design work.
The plant would probably initially inject about 300,000 tonnes a year, but could be expanded to 1.7 million tonnes annually, and would cost hundreds of millions of dollars to build, he said.
