As Australia’s largest oil and pure gasoline producer, Woodside Vitality faces rising stress to scale back greenhouse gasoline (GHG) emissions whereas sustaining vitality manufacturing. The corporate makes use of a carbon credit score technique to offset emissions. This helps its targets for decarbonization and reaching web zero.
In 2024, Woodside retired 1.3 million carbon credits. This was practically double the quantity from the yr earlier than. Additionally they managed a portfolio of over 20 million credit. These credit got here from a number of packages, just like the Australian Carbon Credit score Unit (ACCU) scheme, Gold Customary, and Verra.
Carbon Credit in Emission Discount: A Shortcut or a Necessity?
Woodside makes use of carbon credit as a key part of its technique to deal with Scope 1 and a couple of emissions.
In line with its 2024 Annual Reportthe corporate offsets emissions that exceed its web discount targets. As a result of excessive prices of huge applied sciences like carbon seize and storage (CCS) or electrifying LNG amenities, carbon credit stay a good selection.
The corporate acknowledged within the report that:
“The use of carbon credits as offsets remains an important part of Woodside’s approach to Scope 1 and 2 GHG emissions, due to the high potential cost of large scale abatement options. We both originate (i.e. invest in our own carbon projects) and acquire carbon credits, to maintain a diverse portfolio differentiated by underlying abatement method, geography and vintage.”
Some buyers need Woodside to chop again on carbon offsets. Nevertheless, Woodside believes carbon credit are important for tackling hard-to-reduce emissions.
The corporate prioritizes direct emission reductions first, then makes use of credit for remaining emissions. Government pay ties to gross Scope 1 and a couple of reductions. Offsets don’t rely. This method ensures that abatement measures come first.
Web Zero Roadmap: Chopping Emissions Whereas Powering Australia
Woodside’s web zero technique focuses on three essential areas:
- Decarbonizing belongings,
- Bettering vitality effectivity, and
- Investing in lower-carbon options.
The oil firm has set the next emission discount targets:
Scope 1 and a couple of Emissions: Cut back web fairness emissions by direct abatement and offsets. The Australian oil large goals to chop web fairness Scope 1 and a couple of emissions by 15% by 2025 and 30% by 2030utilizing 2016-2020 as a baseline. Woodside goals to do that through the use of carbon capture and storage (CCS) at key websites. They may enhance effectivity and use extra renewable vitality of their operations.
Scope 3 Emissions: Make investments $5 billion in new vitality merchandise and lower-carbon companies by 2030. This may assist cut back 5 million metric tons per yr (Mtpa) of CO2 equal. The corporate is specializing in hydrogenammonia, and renewable energy initiatives. These efforts intention to assist clients decarbonize their provide chains.
Operational Effectivity: Launch emissions discount initiatives to realize a 15% effectivity acquire in LNG operations by 2030. This entails electrifying some processes, slicing methane leaks, and bettering gasoline use.
Woodside reported Scope 1 and a couple of gross fairness emissions of roughly 6.78 million tons of CO2 equal (mt CO2e) in 2024, up from 6.19 million tons in 2023. The rise was largely attributed to the beginning of manufacturing on the Sangomar oil and gasoline subject in Senegal.
But, its web fairness Scope 1 and a couple of emissions have fallen from 5.53 to five.44 mt CO2e as seen under.
The corporate is working onerous to chop emissions. It goals to enhance gear effectivity and optimize processes at its LNG amenities. Moreover, Woodside is evaluating partnerships to develop large-scale CCS initiatives that might retailer hundreds of thousands of tons of CO2 yearly. Additionally it is working extra with renewable vitality suppliers. This may assist add clear vitality to its provide chain and assist its net-zero targets.
Carbon Offset Initiatives and Reforestation Tasks
Along with buying credit, Woodside develops its personal carbon offset projects. The corporate has applied a number of large-scale reforestation and conservation initiatives.
- Australia: Planted 3.2 million biodiverse seedlings on 4,800 hectares in Western Australia. This brings the entire to eight.9 million seedlings throughout 13,000 hectares.
- Paraguay: Funding the reforestation of seven,400 hectares within the Chaco area. This mission goals to generate about 2.4 million carbon credit over 40 years.
- Senegal: They assist mangrove restoration on 7,000 hectares within the Sine Saloum and Casamance areas. This mission is anticipated to provide 1.8 million carbon credit over 40 years.
These initiatives enhance biodiversity and retailer carbon for the long run. Additionally they align with Woodside’s sustainability targets. The corporate estimates that its present offset initiatives will generate round 10 million carbon credit by 2035, serving to to stability emissions from fossil gasoline manufacturing.
Challenges and the Way forward for Carbon Credit in Oil and Fuel
Whereas carbon credit provide a near-term answer for offsetting emissions, the long-term sustainability of this method is debated. Some companies have scaled back on offsetsciting considerations over credibility and effectiveness.
Voluntary carbon credit score issuance declined by 4% in 2024 because of weaker demand. Woodside remains to be dedicated to its offset technique. That is very true for emissions that present applied sciences can’t but eradicate.
The corporate sees the dangers of offsets. And so, it needs to stability utilizing them with slicing direct emissions. Applied sciences like post-combustion carbon seize, hydrogen fueling, and electrification are being studied. Their prices vary from $200 to $500 per ton of CO2making it onerous to deploy them on a big scale proper now.
Woodside has dedicated $500 million towards analysis and growth of those applied sciences over the subsequent decade.
Woodside has teamed up with business and authorities teams to create a carbon storage hub. The objective is to seize as much as 10 million tons of CO2 every year by 2040. This initiative aligns with broader nationwide efforts to transition towards a lower-carbon financial system whereas sustaining Australia’s vitality safety.
Business and Investor Reactions to Woodside’s Carbon Technique
Investor response to Woodside’s local weather technique has been blended. Some shareholders need much less reliance on carbon credit. Additionally they urge a stronger concentrate on slicing emissions immediately.
At Woodside’s 2023 annual assembly, nearly 49% of shareholders rejected the corporate’s local weather plan. This reveals worries about its heavy reliance on offsets. Nevertheless, others assist the method, supplied it’s complemented by clear abatement initiatives and cost-effective offset sourcing.
Regulatory our bodies are additionally rising scrutiny of carbon credit score methods. The Australian authorities is creating new guidelines for carbon credit. These guidelines will make it possible for corporations comply with strict transparency and additionality requirements. This will likely change how Woodside buys and makes use of offsets sooner or later.
Woodside Vitality is weaving carbon credit into its sustainability technique. They use offsets and likewise put money into emission discount applied sciences. With 1.3 million credit retired in 2024 and over 20 million in its portfolio, the corporate stays dedicated to managing its carbon footprint.
Nevertheless, as business requirements evolve and scrutiny on offsets will increase, Woodside’s long-term success will depend upon its skill to scale direct abatement efforts alongside its reliance on carbon credit.
