Woodside’s Scarborough and Pluto Project undermines the Paris Agreement

Key takeaways

• Woodside’s proposed Scarborough to Pluto LNG project in Western Australia represents a bet against the world implementing the Paris Agreement. This report shows the company’s arguments – that the project is Paris Agreement consistent – are incorrect.
• This is the first study that puts together the total greenhouse gas implications of the entire Scarborough-Pluto project, including its associated and interlinked projects. The results show the emissions are significantly larger than either the company or the state government estimates indicate. To analyse the total greenhouse gas implications for Woodside and for Western Australia (WA), it is important to look at the entire picture.
• Estimates of the total greenhouse gas implications of the Scarborough-Pluto expansion project are spread across several different reports and documents. This report assembles these for the first time.
• The Scarborough to Pluto project is not 1.5°C consistent and consequently is a major stranded asset risk. The project would result in a substantial increase in Western Australia’s greenhouse gas emissions, and a significant lock-in of carbon intensive activity well beyond that of the LNG plant itself.
• Overall, the Scarborough to Pluto project will results in huge domestic emissions increases, rather than decreases. The project scope itself is much larger than the expansion of Pluto LNG capacity, as it involves a massive expansion of domestic gas availability from the Pluto facility from the present maximum 25 T/day to 250 TJ/day, adding more than 20% to Western Australia’s projected gas supply over the next decade.
• The bottom line is that by 2026 the Pluto expansion project, including Scope 1 and Scope 3 emissions, its linked additional domestic gas supply and the co-related H2 Perth project would be emitting about 9.2 MtCO2e/yr, equivalent to around 12.1% of 2005 WA emissions.
• The sheer scale of the Scope 1 and 3 emissions from the Scarborough-Pluto project and in projects linked to it will make achieving 2030 emission targets much harder for Western Australia.
• Unlike other States, Western Australia does not have a 2030 emission reduction, but the State Government has indicated it will develop a target following COP26 in Glasgow. The present Australian target is a 26-28% reduction.
• If a WA target were set as an economy wide 50% reduction in emissions by 2030 below 2005 levels, and the Scarborough-Pluto project emitted at the level estimated in this report the average reduction for the rest of the WA economy would need to be around 60%.
• The total cumulative Scope 1 and 3 emissions from the project are estimated at 1.37 billion tonnes of GHG emissions from 2021-2055 of which close to 20% is projected to be emitted in Western Australia. These emissions are equivalent to 18 and 3.6 years respectively of WA’s 2005 emissions.
• These total cumulative Scope 1 and 3 emissions are 60% larger than the 878 MtCO2e Woodside has reported for the Scarborough project.

Flawed abatement, offset and reduction plans

• Woodside’s proposed “Greenhouse Gas Abatement Plan” (GGAP), accepted by the WA government, does little to reduce emissions in any substantive sense and instead will contribute to increasing emissions in WA.
• A significant fraction of Woodside’s reductions set out in the GGAP are “hot air” as they are taken from an emissions baseline from an earlier, larger project approve in 2006 that was scaled down by 15%, making a substantial part of the claimed reductions a nonsense.
• Much of the proposed emissions reductions are through offsets, without any guarantee that the offsets reduce emissions additionally to what would otherwise have happened.
• Carbon offsets are often used to greenwash fossil fuels, diverting the focus from the critical need to rapidly reduced CO2 emissions from fossil fuels. Evidence suggests offsetting CO2 from burning fossil fuels through tree planting is scientifically flawed.
• Woodside has seemingly not accounted for the expected globally rising price of carbon, and hence a rapidly increasing cost of offsets consistent with Paris Agreement implementation.
• The company’s GGAP results in nearly two thirds – 64% – of emission reductions/offsets not occurring until after 2040, allowing Woodside to produce LNG from Scarborough, effectively unencumbered by emissions reductions restrictions, for most of the field’s 30-year expected life.
• Woodside plans to rely mostly on the use of carbon offsets to meet its Scope 1 emissions reduction targets which would be extremely costly. By 2050, the cost of offsets could range from21% to 71% of Woodside’s LNG export revenue, indicating a likely non-viability of this operation.
• Implicitly, Woodside is essentially asking policymakers, the finance sector, and governments to bet on a massive rollout of carbon capture and storage (CCS), an essentially unproven technology with a history of failures, cost overruns and major deployment delays.
• Woodside does not account for the substantial Scope 3 emissions in its emissions reduction plan.
• Woodside is not factoring in and is in fact massively discounting the likely large Scope 3emissions’ effect on demand for their fossil fuel products, specifically exported LNG.
• Scope 3 emissions are some nine times larger than the Scope 1 emissions from the LNG Plant itself.

Paris Agreement – and IEA Net Zero – inconsistency

• Woodside incorrectly claims the expansion of gas is consistent with the 1.5°C Paris Agreement goal and for the global movement towards net zero by 2050, also incorrectly justified by using International Energy Agency (IEA) scenario data.
• We show that introducing Scarborough LNG into electricity grids of countries decarbonising at a rate consistent with the Paris Agreement would likely raise emissions by several hundred MtCO2e over the period 2026-2040.
• The latest IEA Net Zero Emissions (NZE) scenario data makes it clear that no fossil fuel exploration is required, and this applies to the Scarborough project. (These issues are unpacked in our related “Why gas is the new coal” report).
• Consulting companies have wrongly contributed to the narrative that natural gas has an important and increasing role to play in future energy systems, while avoiding discussion on climate and emissions reductions. Governments have bought into this narrative, which has now been roundly dispelled by the IEA’s NZE scenario.

This report unpacks the role of natural gas in 1.5°C compatible energy transitions using IPCC 1.5°C compatible pathways and the IEA Net Zero and shows that LNG does not have a significant role in decarbonising major economies, and indeed would slow that down.

• The IEA Net Zero report indicates the potential for a collapse in the LNG market from Australia as its major markets begin to implement the Paris agreement.
• Recent developments in Japan and Korea signal and move away from LNG in favour of green hydrogen and removals, confirming the timing of the risks identified in the IEA Net Zero report.
• Policymakers and governments have uncritically approved Woodside’s controversial proposals. The Western Australian government has recently approved the Greenhouse Gas Abatement Program (GGAP) for the Pluto LNG facility, which comprises Pluto’s Train 1 and the proposed Train 2.

Woodside is misreading the international context for LNG under the Paris Agreement

• On the demand side, Woodside’s main LNG markets – Japan, South Korea and China – would phase out gas, following Paris compatible pathways. All three countries would need to drastically reduce their natural gas consumption under pathways which limit warming to 1.5°C, in some cases immediately, but in all cases rapidly after 2030.
• On the supply side, Woodside faces competition from LNG suppliers with lower costs and who are also likely facing further environmental regulations from importing countries with net zero emissions targets and are already investing in other emissions reductions measures.
• Softening, or even collapse in demand for LNG as countries moved towards green hydrogen and renewables would amplify this risk.

Woodside’s Pluto expansions is a bet against Paris Agreement implementation

• Woodside is banking on the world failing to meet the Paris Agreement. The company is asking its investors to bet against the successful implementation of the Paris Agreement. This, in turn, is a bet against the climate.
• Current renewable energy technologies, energy efficiency measures and a rollout of green hydrogen together offer a viable alternative to fossil gas and meet the long-term temperature goal. Such a pathway would present major economic opportunities for Australia.