Tue, Apr 23 2024 23 April, 2024

Western Australia net zero plans up the ante

Western Australia net zero plans are in the spotlight as it is to become the third state in the country to legislate its net zero commitment, but the industry-intensive state faces an energy dilemma. 

Road running through hinterland of Western Australia (Photo credit: Adobe Stock/dudlajzov)

Western Australia (WA) is pushing ahead with its own unique climate change mitigation plans, even though the Australian net zero plans initiated in September still lack substance.

Two weeks ago, the WA government said it would soon enshrine into law its previous net zero by 2050 carbon emissions commitment. It also aims at an 80% reduction on 2020 emission levels by 2030 and will announce targets later this year.

Further five-year targets will also be announced, while all targets will apply to the entire economy, including the state’s lucrative oil, gas and mining sectors. It will require the minister for climate action to report annually to Parliament on the state’s net emissions and progress towards net zero.

The WA government is now taking what many are calling a “whole economy” approach to emissions reduction, and will direct its Environmental Protection Authority (EPA) to promote reductions at major projects.

Notably, the EPA will not have the power to interfere with existing major gas projects. However, it will require proponents to demonstrate how emissions will be reduced. It can also make recommendations to the environment minister.

WA Environment Minister Reece Whitby touted the legislation as providing “clarity and certainty to the business community that this is the journey, so you need to come with us, you need to make that investment.”

“When you send a very clear signal to the community and industry alike that this is the way forward, you’re going to stimulate investment in new technologies, new infrastructure, and that in turn will result in economies of scale,” he added.

Australia net zero plans

Every Australian state and territory has at least voiced a commitment to net zero by 2050. But WA’s new move will make it only the third state, joining Victoria and Tasmania, to legislate its net zero commitment.

Similar legislation was passed by the federal government in Canberra in September. However, federal laws include a target to reduce emissions by only 43% by 2030 compared to WA’s 80% benchmark.

It also pushes for net zero by 2050 in line with Australia’s Paris Agreement pledge and  requires the government to provide annual reports tracking progress towards goals and ensure future targets go further.

However, that legislation is not without its critics since it doesn’t include measures to cut emissions in the private sector and for specific companies. As such, it’s generally perceived to be merely symbolic.

Litigious environment

WA is home to half of Australia’s ten operating LNG export projects, including the North West Shelf, Pluto, Gorgon, Wheatstone and Prelude projects. The total export capacity of these five projects totals some 50 million tons of LNG a year. WA accounted for 12% of global LNG exports and 56% of Australia’s LNG exports in 2021.

WA is one of only two Australian states to see emissions increase compared to 2005 levels, according to federal government data. Emissions in WA increased some 20.8% from 2005 levels to 2019 mostly due to strong growth in mining, while exports drove increases in stationary energy and fugitive emissions from fossil fuel extraction.

The state is also a major petroleum and coal producer, accounting for about 70% of Australia’s crude oil and condensate production. There are over 350 operating mine sites across the country, of which approximately one-third are located in WA.

Concern over emissions has created what could arguably be called the most litigious oil and gas sector in the region, if not the world. Numerous legal cases have been filed against the country’s energy heavyweights, including legacy producers Santos and Woodside Energy, postponing and potentially stopping projects completely over various environmental claims.

That litigious environment could actually gain even more momentum going forward, says Simon Molyneux, managing director/CEO at Perth-based Molyneux Advisors. He told Gas Outlook that he “envisages more litigation against development of any resource projects in WA and Australia more widely.”

“More risk, cost and delay damage the image of Australia and WA as a place to invest,” he said, adding that “at the same time, energy development in Australia is beset by vexatious court battles as energy prices rise across the east coast.”

Lack of consequences

The WA legislation is also facing backlash from those on the other side of the argument, since it doesn’t include consequences if goals aren’t met, nor will it prescribe specific targets for individual emitters to reduce their carbon footprint.

Moreover, some are claiming that just the state’s gas projects alone could derail the legislation’s overall impact on carbon reduction.

This problem surfaced in 2019 when the EPA announced its first net zero carbon emissions guideline. That policy could have ended major gas projects like Woodside’s Scarborough and Browse LNG developments, but they remained untouched.

The Association of Australian Petroleum Production and Exploration Association (APPEA),  which represents 60 companies in the country’s upstream oil/gas exploration and production industry, sees carbon sequestration as a key component to help WA lower emissions from its gas sector.

APPEA spokesman Patrick Lion told Gas Outlook that the association is already engaging with the WA government on carbon capture storage (CCS) legislation, while “the oil and gas industry is committed to net zero emissions by 2050, with some companies planning to reach that commitment earlier.”

However, CCS also has its detractors, with most pointing to its expense, but also concerns over the unknown impacts of storage in the long term.

“The primary downside to CCS technology is the additional expense it adds to energy production and the unknown impacts of storage in the long term,” says Grace Parker of the Environmental Law Institute.

“Transportation of captured and compressed carbon requires specially designed pipes that are expensive to build, while producers that seek to compete with cheap natural gas prices—produced by companies that don’t use CCS technology—are reluctant to add this expense, especially without stronger policy incentives,” she argued.

Rock and a hard place

Molyneux sees the WA government as “between a rock and a hard place,” since the state’s main industries provide a large proportion of its LNG and alumina which are industry- intensive.

“They are also global industries, while the state relies on large flows of overseas capital to develop and sustain these industries,” he says. Molyneux explains that with few alternative sources of income or employment, the government doesn’t want to “kill the golden goose.”

However, unlike others he doesn’t attribute WA’s climate problems solely to its LNG and gas sector. “We have to look at whole systems,” he says. “At a global level the use of gas displaces coal. Coal, I think almost everyone agrees, is a far worse source of emissions and air pollutants. We should use gas as a transition fuel. More gas not less, over the next 20-50 years.”

“No LNG from WA means over the horizon more coal is burnt for power generation, and higher overall emissions. [As such] a state law for net zero that derails LNG development could be much worse for the planet,” he says.