New packaging; same great taste: why fossil fuel companies can’t admit the problem is the product

A helpful exercise for staying lucid while working constantly with climate and energy is trying to imagine how precisely the same problem you’re working on would be treated if it were in any other profession.

Here’s an example. Companies extract and sell fossil fuels, which are later burned by their customers, creating the problem of climate change. The first step, extraction and sale, creates emissions, but nowhere near as much as the final step, when the product is burned. Fossil fuel companies are are now focusing on the smaller part while largely ignoring the bigger part.

In a previous post for LobbyWatch, I tried to imagine how this would be received in other industries. “Is it safe to smoke at a tobacco farm? Are on-site buildings at an asbestos mine made out of asbestos? Are lunch breaks at the bullet factory filled with hootin’ and hollerin’ and wild firing of pistols into the air? Is it meaningful when a company that produces something that damages human life refuses to use that thing in the process of producing it?”.

The idea that as long as a dangerous product isn’t created using the same danger it causes it is fine to sell is what is being exploited in the latest ‘climate announcement’ from Australia’s second largest oil and gas producer, Santos. As public pressure on climate mounts (from groups like ACCR and from, well, pretty much everywhere else too), the companies that sell the harmful product are, mostly, changing the packaging instead of changing the product. Santos have done exactly this, announcing they’re bringing forward a “net zero” target from 2050 to 2040, but seemingly changing very little about their core business.

The emissions from digging up fossil fuels

The extraction and supply process for fossil fuels creates a pretty significant quantity of emissions. Part of this is simply because it takes a lot of energy to dig them up, process them and transport them. In Australia, for instance, one of the top usages for fossil gas is just burning it to export more gas. Of all the gas in Australia, 72% is exported, 8.2% is burned for electricity and 7.5% is used to process and transport gas for export.

The emissions that are released in the process of preparing fossil fuel products are referred to as scope 1 and 2, or “operational” emissions. They tend to get most of the focus, despite being the smallest proportion. As I discussed previously on LobbyWatch, it makes sense for companies to focus on reducing these emissions while selling increasing quantity of fossil fuels — it is, in fact, cheaper to get energy from renewables than from fossil fuels, which perversely makes the mining process even more tempting.

It makes sense, then, that the core caveat in Santos’ ‘net zero by 2040’ target is that it only refers to about 21% of the emissions associated with their actions, with the remainder coming from the normal use of the product they sell (“scope 3”):

Source — ACCR media release

If you can understand why a tobacco company setting a target for zero lung cancer deaths inside its packing plant isn’t a bold ambition, you get why this is dodgy.

Let’s focus on this ‘Scope 1 and 2’ plan. How do they plan to reduce those smaller Scope 1 and 2 bars down to “net zero” in twenty years’ time? First, they promise renewables. “In our own operations Santos has installed more than 5.5 megawatts of solar electricity and 4 megawatt hours of battery storage”. That’s a miniscule fraction of the total energy used by Santos. In fact, only about a third of the required reductions have any detail in their recent presentation:

From Santos’ “investor day” presentation

‘Natural’ offsets are, of course, extremely controversial. As I wrote about a similar plan, “Why are Shell promising to pull carbon from the ground, and stuff it back into trees and caves, when they have the option of simply leaving it in the ground?”. A recent article by Bloomberg outlines the many risks associated with tree-planting offsets, too. The vast majority: a hazy blue cloud of CCS and hydrogen, both mostly unproven and both no match for simply not extracting and selling fossil fuels in the first place.

Even the short term ‘operational’ emissions target is nowhere near as impressive as it might first seem. This pre-existing policy targets a 5% reduction in emissions, and from their February 2020 “Climate change performance report”, looks to be on a healthy track:

Squint a little, and you’ll notice a weird caveat: it only applies to their “Cooper Basin and Queensland” projects. As it turns out, these two projects are only a minority proportion of total operations within the company:

From the latest half-yearly report

This current climate target is to reduce emissions by 5%, for just under 40% of the company’s projects, and only for 20% of the total emissions from these projects. These aren’t ambitious numbers.

There are some specific details included in their recent investor presentations, too. “Since 2016, Cooper Basin annual emissions have declined by >200 ktCO2e”. That’s about 0.15% of total Santos emissions (all scopes) since 2016. “GLNG project has planted 1.2 million trees, generating 30 ktCO2e of offset credits”. Putting aside the controversy behind tree-planting offsets, that’s 0.06% of 2018–19’s emissions alone.

The Moomba CCS project is much-heralded, too. “By 2050, the phase 1 project has the capacity to capture and store ~44 million tonnes of CO2”. That’s less than the total emissions footprint of Santos for a single year today— before they undergo their significant expansion plans, which dominate their announcement. “Our aim is to increase liquefied natural gas production by another 50% by 2025”, they write — in their climate change report. At maximum capacity and thirty years in the future, this flagship CCS project will still only offset a small proportion of the company’s emissions.

It’s incredibly clear what is going on here. Santos’ climate plan assumes that most of the work is done a decade into the future, instead of right now. It is a nice example of the ‘plump kitty’ I described here in the wild; where a company sets a target but offloads most of the action to the later decades:

Again, this doesn’t even refer to the bulk of the company’s emissions — Scope 3. Things are even worse, when we look at those.

The emissions from burning the product they sell

For Scope 3, Santos have issued a vague promise to ‘work with’ customers to reduce their emissions “by more than one million tonnes per year by 2030 through switching to cleaner fuels”. It’s a strange one, because this seems to simply entail ‘not buying fossil fuels from Santos, and using clean energy instead’. It’s also baffling, because the company also plans to increase its extraction of fossil fuels by nearly 60%, over the next two decades:

Santos Investor Day presentation

Even stranger: the 2040 net zero plan offers to reduce the emissions of Santos’ customers by 1 MTCO2-e per year, by the year 2030. Those scope 3 emissions were nearly 40 MTCO2-e this year; they’ll be higher by 2030. Being extremely generous with assumptions, that’s between a 2–3% reduction in a decade’s time; and less before.

These plans are very, very far from what’s required to ensure global temperatures are kept within accepted ranges. Far deeper cuts and serious action are required, and there must be a fundamental change to the business model of selling a dangerous product.

The tobacco industry parallel is real-time, not historical

Though we don’t hear much about the tobacco industry these days, it’s worth revisiting what they’re up to, because their actions rhyme perfectly with what we’re seeing play out across large fossil fuel companies, like Santos’ climate plans above.

News website Rappler recently reported on an incredible effort by companies like Phillip Morris International (PMI) to shift towards a sort-of e-cigarette named “Iqos”. A key difference is that the Iqos contains cancer-causing tobacco, just in lower quantities than a regular cigarette. Why? “PMI could more easily adapt its cigarette manufacturing to make Heatsticks”, write the authors of the report. Because the tobacco is ingested after “heating” instead of burned, it could marketed as “smoke free”.

By focusing on a “Smoke” free future, Phillip Morris International obscure the fact that heating up tobacco (instead of burning it, which creates smoke) is also highly dangerous. Sound familiar?
The freaky cousin of fossil gas within the tobacco industry: “Smoke free cigarettes”

In fact, the story of Iqos, the ‘transition fuel’ tobacco, contains many parallels to the oil and gas industries. Instagram influencers are paid cash or given benefits to promote the product. Companies are lobbying governments for exemptions for the harm caused. And most significantly, PMI is planning to massively expand its cigarette business:

“It launched a 10-year plan called “Normalization.” Its new objective was to “establish PMI as a trusted and indispensable partner, leading its sector and bringing solutions to the table.”

To achieve this it would “be ‘for’ something,” establishing a “forward-looking, motivational and credible” purpose statement”

Like the tobacco companies, fossil fuel companies are turning to public relations, fake solutions and half-measures to discourage scrutiny while they plan massive expansion of a harmful product. The parallels between the two are astonishing and go far beyond the rhetorical analogies I began this article with.

Less harmful” and “lower emissions” — two key phrases used by the tobacco and the fossil fuel industries.

The most recent phrase: “Carbon neutral LNG”; which is just fossil gas sold with a certificate of a bunch of extra trees planted alongside the massive climate impacts of extraction and use. It’s the Iqos of energy, and it’s increasingly popular among companies like Shell and Total. It’s the “smoke free cigarette” of the fossil fuel industry. Simply transitioning to non-harmful products barely gets a look in here: all energy is dedicated to extended the lifespan of harmful products as long as possible.

Santos needs to recognise that the problem isn’t the packaging, nor the production process. The problem is the product, and the sooner it’s phased out, the happier and healthier we will all be.

Anecdata analysis, research, writing, caffeine. Science, tech and data communications professional in Sydney.