This yr, a authorities announcement that it might ramp up the extraction and use of fossil gasoline till 2050 and past – regardless of its dedication to a 2050 web zero purpose – sparked a fierce backlash from environmental teams, who say the pursuits of highly effective fossil gas firms have been positioned earlier than folks.
The nation’s political management, in addition to a few of its oil and gasoline producers, nonetheless sees a major function for liquefied pure gasoline (LNG) because the world shifts to wash vitality. Claims that Australian gasoline exports are “clear” have bolstered the enlargement of the LNG business within the north of the continent over the previous decade, although the local weather credentials of gasoline have been more and more challenged. New research have discovered that the fossil gas might be even dirtier than coal.
Woodside Vitality CEO Meg O’Neill on the corporate’s local weather targets: “Our technique has been to not put something out that we aren’t severe about attaining. We don’t put out targets to attempt to placate sure stakeholders.” Picture: Woodside Vitality
Woodside Vitality, Australia’s largest oil and gasoline firm, is taking a measured strategy because it deliberates over whether or not to start out decarbonising its LNG amenities. Chatting with Eco-Enterprise on the sidelines of the Singapore Worldwide Vitality Week final month, the corporate’s chief govt officer Meg O’Neill mentioned technical research have discovered that the majority of its emissions within the 2040s will come from its massive LNG vegetation, however wonders whether or not decarbonising gasoline is the “simplest use of shareholder capital”.
“To keep away from the emissions will price US$200 to US$400 per tonne. It’s not low cost,” she mentioned, including that persevering with to make use of gasoline to exchange coal is a “cost-efficient alternative” for Woodside. “We’re nonetheless very bullish on gasoline and we proceed to spend money on gasoline.”
O’Neill defends Woodside’s local weather credentials and shrugs off criticism that it has been ramping up oil manufacturing – its newest monetary report reveals manufacturing leaping by 20 per cent quarter-on-quarter. She argues that in lots of the Paris Settlement-aligned situations drawn up by Intergovernmental Panel on Local weather Change (IPCC) scientists, gasoline demand continues to be sturdy.
Critics such because the Australasian Centre for Company Accountability, a nonprofit, have argued that the situation Woodside makes use of relies on an outdated mannequin, and permits a bigger function for oil and gasoline in Paris-aligned pathways than is feasible immediately, given the present price of world heating.
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There are a variety of our shareholders who need us to be a very high-quality, cost-efficient, low emissions depth oil and gasoline firm. There are different shareholders who need us to do extra on local weather.
Meg O’Neill, chief govt officer, Woodside Vitality
Woodside’s local weather plan features a discount in Scope 1 and a couple of direct and oblique greenhouse gasoline emissions of 15 per cent by subsequent yr, and 30 per cent by the tip of the last decade. In 2023, the corporate mentioned its Scope 1 and a couple of emissions dropped by 12.5 per cent in comparison with an 11 per cent drop in 2022 – and from utilizing 13 per cent fewer carbon credit.
In April, traders voted towards the plan in what observers mentioned was probably the most emphatic rejection of company local weather coverage by shareholders up to now. The principle objection was Woodside’s dependence on carbon offsets and carbon seize and storage (CCS) know-how and misalignment with the Paris local weather accord.
Woodside has a web zero “ambition” – O’Neill doesn’t use the phrase “goal”; the targets are non-binding – for 2050. She mentioned the corporate has been exploring emissions discount strategies “to know precisely what it would take” to realize web zero by 2050.
Past CCS, Woodside struck a cope with Singapore infrastructure agency Keppel to energy its information centres with hydrogen in October this yr. Earlier this yr, it acquired a “clear” ammonia venture from OCI Group in Beaumont, Texas, for US$2.3 billion. The ability makes use of gasoline as a feedstock and is ready to seize 95 per cent of the emissions from the plant, O’Neill mentioned. The corporate intends to spend US$5 billion on carbon seize know-how by 2030, which O’Neill says will abate or keep away from 5 million tonnes of emissions per yr.
On this interview, O’Neill, who has overseen the rebranding of Woodside Petroleum to Woodside Vitality throughout her six and a half years with the corporate since becoming a member of from ExxonMobil, talks about how expanded oil and gasoline manufacturing stacks up with international local weather targets, shareholder activism, and why the corporate just isn’t investing in renewable vitality.
A latest Worldwide Vitality Company report mentioned there’s an excessive amount of funding in new coal, oil and gasoline, and too little in vitality effectivity and methane emissions discount. From Woodside’s perspective, the place are the alternatives for emissions discount in oil and gasoline?
Our methane emissions depth is lower than 0.1 per cent of our complete produced hydrocarbons. So we’re already beating the goal that many others within the business have set. We lately signed a partnership with Japan Organisation for Metals and Vitality Safety to work with the Japanese Authorities on methane emissions discount by the liquefied pure gasoline (LNG) worth chain.
We’ve got finished technical work to know what’s required to decarbonise present LNG amenities, as a result of as we have a look at our asset life cycle, those who will probably be on-line within the 2040s largely would be the huge LNG vegetation. That’s the place the majority of our emissions will come from. It goes to be an necessary dialog we could have with the management workforce and we are going to interact shareholders on it. Is it going to be the best use of shareholder capital [to decarbonise Woodside’s gas plants] or are there different issues we will do? To keep away from the emissions will price US$200 to US$400 per tonne. It’s not low cost.
However hasn’t there been shareholder urge for food for a quicker decarbonisation?
It’s a blended bag. There are a variety of our shareholders who need us to be a very high-quality, cost-efficient, low emissions depth oil and gasoline firm. There are different shareholders who need us to do extra on local weather.
As administration, our job is to check out a spread of situations round how the world may strategy the vitality transition, and to make choices that may guarantee Woodside is resilient whatever the pathway that the world finally ends up on.
We’ve got seen various oil and gasoline firms, as an example Shell and extra lately BP, enjoyable their local weather targets. What do you make of this backsliding?
Woodside’s technique has been to not put something out that we aren’t severe about attaining. We don’t put out targets to attempt to placate sure stakeholders. That’s why now we have we’ve bought a little bit of focus focus from some activists as we’ve not promised issues that we don’t have line of sight to ship.
The plus of that’s not having to stroll again any over-promises that we’d have made just a few years in the past. I’m assured that our technique round driving the vitality transition, balancing funding in oil, gasoline and new vitality is an strategy that may serve the corporate, our shareholders and the planet.
What are your ideas on the tempo of the vitality transition in the intervening time, notably in Asia Pacific, and the way we will keep on observe with the targets of the Paris Settlement?
One of many issues that has grow to be clear over the previous few years is that, past vitality transition, governments additionally want to consider vitality safety and vitality affordability.
We noticed that in 2022 when Russia invaded Ukraine and vitality costs around the globe spiked due to the availability disruptions in Europe. Governments have taken a step again to work in direction of a extra balanced strategy – to make sure dependable and reasonably priced vitality, whereas additionally engaged on decarbonisation. Every nation could have their very own web zero targets, with differing dates, as they attempt to cut back or restrict greenhouse gasoline warming to lower than 2°C and aspire to 1.5°C.
Is it getting harder for Woodside to draw and retain expertise, given a rising environmental consciousness notably amongst younger folks? How does the vitality transition have an effect on your attraction as an employer?
In Australia, we’re certainly one of a number of main firms that runs a graduate consumption programme, and it continues to be orders of magnitude oversubscribed. We proceed to achieve success in attracting new expertise popping out of college.
Our attrition price is sub-five per cent, so we proceed to do job of retaining workers. We’re a worldwide firm. In locations just like the US, Mexico and Senegal we’re seen as an employer of alternative. We provide our staff in these nations an opportunity to do one thing that’s actually revolutionary and necessary for nationwide prosperity.
Evidently Woodside’s employer model attraction is spectacular, given the extreme public strain the corporate has been underneath in latest occasions, as an example for greenwashing emissions discount claims and for local weather targets not deemed formidable sufficient?
I feel now we have been actually clear about not greenwashing.
We’re very clear about what we intend to do, and really centered on doing what now we have mentioned we intend to do – and we do not make false guarantees.
We’re very disciplined in our strategy to our local weather associated commitments and we spend numerous time with our staff speaking about what we’re doing and serving to them perceive why they need to be actually proud to work for the corporate they’re working for. We actually are protecting properties heat in Japan and Korea within the bitter winter nights – and I’m happy with that.
Wind and photo voltaic couldn’t do this. In Korea, the times are very brief within the winter. The photo voltaic depth is poor when it’s chilly. And when it’s chilly, it’s typically nonetheless. You’ve bought to have a frequently obtainable gas to maintain properties heat. And pure gasoline – when you examine it to the options – is the bottom emissions depth supply of thermal vitality.
A blue ammonia and hydrogen facility in Beaumont, Texas, underneath building. Woodside acquired the power from fertiliser maker OCI Group in September 2024. Picture: Woodside Vitality
Not all renewables are intermittent, as an example hydroelectric energy or geothermal vitality. Does Woodside have any plans to maneuver into renewables?
Given the dimensions of Woodside – we’re about 5,000 staff – now we have to be very centered on the place now we have functionality and abilities. So we’ve centered our new vitality technique on hydrogen, ammonia and CCS. We consider these are applied sciences that now we have the flexibility to scale.
We lately acquired an ammonia plant in Beaumont, Texas from OCI International [the 1.1 million tonne ammonia and hydrogen project was acquired by Woodside for US$2.35 billion in September]. In some methods it’s a typical ammonia plant, however with the carbon dioxide that’s produced from hydrogen manufacturing being sequestered. We’ve bought contracts with Linde and ExxonMobil to sequester the carbon popping out of that venture – about 95 per cent of the CO2 created within the plant will probably be sequestered.
Carbon seize, use and storage has acquired criticism for being an costly and ineffective local weather resolution. What do you say to these claims?
First off, it’s very efficient.
The world’s been injecting CO2 into underground formations for many years, beginning within the US, but in addition in Norway, which has been operating an offshore CCS venture for 20 years now.
In an Australian context, Gorgon [Chevron’s CCUS facility located at a liquefied natural gas plant in Western Australia which is the world’s largest] has sequestered a complete of 10 million tonnes as of earlier this yr. [Note: The US$3.2 billion project has faced criticism for repeatedly missing carbon removal targets.]
The know-how works. In case you return to the science of the IPCC, it’s very clear that there isn’t any pathway to web zero with out CCS at scale.
We’re agency believers that that is a vital know-how. Relating to price, I feel the world is beginning to realise that every one of those decrease carbon options include a better price. That’s a little bit of the problem that I feel is affecting the tempo of the vitality transition.
Governments are grappling with protecting vitality reasonably priced, particularly for working class households who’re already scuffling with inflation. That’s the stability that every one of us try to seek out within the vitality transition.
However the price of renewables has come down dramatically, and in lots of elements of the world are actually cheaper than fossil fuels…
Renewables are an necessary a part of the vitality transition. What I feel is necessary to keep watch over, although, is to make it possible for these are firmed renewables [clean energy sources that deliver a consistant output, ensuring a reliable supply of electricity].
Folks need energy 24/7; business wants energy 24/7. Constructing photo voltaic farms and wind farms is ok. However you’ve bought to have one thing to handle the influence on the grid and guarantee that you’ve got the facility that the client needs when the client needs it. That’s additionally a subtlety (of the vitality transition) that many governments are beginning to realise.
Indonesia is one nation the place there was numerous speak of the necessity to improve the grid to allow renewables additions…
Australia’s bought the identical form of situation. Taking a look at Australia, you’d suppose it’s bought unbelievable photo voltaic depth, nice wind depth, and in lots of jurisdictions, fairly a little bit of land that’s unoccupied. However there are nonetheless struggles with issues like getting transmission permitted and dealing by the neighborhood session. So there’s fairly a little bit of enabling infrastructure that’s going to be required for the transition to occur. And there’s an necessary function for governments to play in that area.
This interview has been edited for readability and brevity.
