Australia's federal carbon compliance market's safeguard mechanism should not be used as "a shield for inadequate" climate considerations in approval processes, lobby group Carbon Market Institute (CMI) said today in response to the extension of Woodside Energy's North West Shelf (NWS) LNG project.
The NWS LNG terminal was provisionally authorised to continue operating until 2070 in Western Australia's (WA) Pilbara region, newly appointed environment minister Murray Watt said last week.
The permits include strict conditions relating to the impact of air emissions levels from the operation of an expanded onshore Karratha gas plant, the minister said. Prime minister Anthony Albanese and climate change and energy Chris Bowen also pointed out the project will need to comply with the safeguard mechanism, which sets out declining scope 1 greenhouse gas (GHG) emissions baselines for the country's largest industrial facilities towards net zero by 2050.
But the extension decision highlights that "reforms to our outdated environmental laws are well overdue," CMI's chief executive John Connor said on 4 June.
"CMI supports a more rigorous assessment framework that would require project approval processes to have regard to the climate impacts of upstream and downstream greenhouse gas emissions associated with significant new developments and regional planning processes, as well as significant development extensions and/or expansions," Connor noted.
Extending the project lifetime beyond 2030 will also place more spotlight on Australia's upcoming 2035 emissions reduction target, he added.
Emissions projection
NWS LNG has been among the top three largest facilities under the safeguard mechanism in recent years. It reported covered scope 1 emissions of 6.09mn t of CO2 equivalent (CO2e) in July 2023-June 2024, the first compliance year of the reformed mechanism, which was far above its baseline of 5.49mn t of CO2e. It surrendered 607,982 Australian Carbon Credit Units (ACCUs) as a result — the largest volume across all facilities.
In its extension proposal submitted to WA's Environmental Protection Authority (EPA) in 2022, Woodside estimated scope 1 emissions over 50 years between 2020-70 would reach up to a cumulative 385mn t of CO2e, with peak annual levels as high as 7.7mn t of CO2e, in case no mitigation activities were carried out. Planned mitigation and use of carbon offsets, however, would result in scope 1 emissions of up to 138.85mn t of CO2e over 2020-70, according to the company.
Woodside has been accumulating ACCUs over the past few years, indicating it held around 12mn units out of a portfolio of 20mn unretired carbon credits as of December 2023, including units yet to be issued and delivered as part of third-party contracts and the company's own originated projects.
