(Bloomberg) -- Santos Ltd., Australia’s second-biggest natural gas producer, plans to build a carbon storage business that would permanently bury 14 million tons of emissions a year by 2040.
That’s equivalent to half of its scope 3 footprint — the pollution produced when customers burn its fuel — last year, the company said in a statement on Tuesday.
The plan for the new business — intended to handle emissions from third parties, including some of Asia’s top polluters — follows the start of the producer’s Moomba carbon capture and storage facility in South Australia last month.
“The strong outlook for CCS demand growth gives us a high level of confidence in setting our new carbon storage growth target to build and operate a commercial carbon storage business,” Santos Chief Executive Officer Kevin Gallagher said in the statement.
Fossil fuel producers have for years touted carbon capture as a tool to tackle climate change, but the technology has had limited success so far with only about 50 million tons of capacity in operation, according to the International Energy Agency. Energy-sector emissions increased by 410 million tons last year, IEA data show.
A wide range of companies are advancing more than 830 proposed projects that could capture a combined 410 million metric tons a year of carbon dioxide by 2035, BloombergNEF said this month. However, only about half of that capacity has a high likelihood of actually coming online.
Santos, based in Adelaide, will also update its capital allocation framework and target returns to shareholders of at least 60% of all-in free cash flow from 2026, it said.
“The market outlook for LNG into Asia, domestic gas in Australia and liquids remains strong out to 2040 and beyond,” Gallagher said. “2024 is set to be another peak consumption year for hydrocarbon fuels globally, making it increasingly clear that decarbonization of their production and use is critical.”
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