Carbon Captured: Santos emails reveal gas giant orchestrated “Environment Protection” laws

by Rex Patrick | Dec 9, 2023 | Energy & Environment, Latest Posts

In the shadows of the COP28 Climate Summit in Dubai and mega-merger discussions between fossil fuel giants Woodside and Santos, a secret deal and public deceit have been revealed through documents quietly tabled in the Senate. Rex Patrick explains.

The Big Reveal

Only after the Environment Protection (Sea Dumping) Amendment (Using New Technologies to Fight Climate Change) Bill had passed through the Senate last month did the government come clean and release correspondence that shows it had capitulated to the demands of leading fossil fuel producers, Santos and Inpex, in preference to commitments made to the Australian public and the environment.

During the debate in the Senate, led by Senators David Pocock and Peter Whish-Wilson, the cross-bench tried to verify what they had suspected, that is, a deal had been done with Santos; but they were stone-walled. The Government refused to answer their questions, although Senator Wong ultimately spilled some of the beans.

Here’s how it unfolded.

Labor’s Safeguard Mechanism

The Safeguard Mechanism is the Australian Government’s policy for reducing carbon emissions at our largest industrial facilities. It sets limits on their emission – called baselines – which, if exceeded, need to be offset by buying carbon credits, or else penalties apply.

It’s a policy that’s been in place since 2016.

In honouring its climate change promises to the public after gaining power, the Albanese Labor Government made a new commitment to the Paris Agreement parties that Australia would achieve a 43% reduction in 2005 emission levels by 2030, and achieve net zero emissions by 2050.

It proceeded to legislate this target in the Climate Change Act 2022. That’s about where the good news ends.

As a step to actually achieving the legislated target, the Government introduced legislation in the Parliament to modify the Safeguard Mechanism, placing a new requirement on large emitters to reduce their emission baselines each year so that the nation’s target could be met.

Companies that emitted less than their set baselines were to be given Safeguard Mechanism Credits and companies that emitted more than their baseline had to offset their excess emissions by purchasing and surrendering Safeguard Mechanism Credits or Australian Carbon Credits Units.

The changes passed the Parliament on March 30 under a cloud of controversy – the scheme to generate Australian Carbon Credits was being scammed. 

Rex Patrick on Labor’s Safeguard Bill: bigger holes than the Ozone but not beyond repair

Anger in the gas ranks

The week before the Safeguard Mechanism Bill passed through Parliament, Santos went on the warpath. Early on March 21, Santos’ CEO, Kevin Gallagher, called Energy Minister Chris Bowen to express his anger at the Bill and then followed up the call later that night with terse correspondence.

“As discussed, Santos and our Japanese and Korean joint venture partners, JERA and KS E&S, could not accept net zero reservoir emissions from day one of production from the Barossa Gas Project. The earliest this could be committed to would be 2030, to allow time for Santos to develop a [Carbon Capture Storage] option.”

He threatened that Barossa, an offshore gas project 285 kilometres northwest of Darwin, would not go ahead if the mechanism went ahead in its current form:

“Your proposed measure will require the joint venture to reconsider the future of the project in the context of a regulatory regime that, despite the government’s recent rhetoric acknowledging the role of gas in the energy transition and the importance of honouring international LNG trade and investment relationships, appears designed to strangle the economics of gas development and LNG export projects in Australia, even after final investment decisions have been taken.”

He complained that the mechanism virtually mirrored the campaign by a large group of NGOs, the Greens, and cross-benchers to “Stop Barossa Gas”, giving special mention to a tweet by Sophie Scamps the previous day.


He then delivered the king punch.

“If the A$5 billion Barossa gas project was not to proceed; the Darwin LNG project would also have to be mothballed and the life extension project worth another A$1 billion would not proceed. Hundreds of direct jobs would be lost in Darwin along with many more indirect jobs in the local businesses that supply and service DLNG and our offshore gas projects. Government revenue of A$11 billion would also be foregone and Australia’s relationships and reputation in Japan and Korea would be seriously damaged.”

Then, he laid out his demands on the table.

“Santos requests your reconsideration of the proposal. In particular Santos could commit to net zero reservoir emissions from Barossa by 2030 if the Australian government also committed to facilitating the development of Bayu-Undan and other [carbon storage] projects by working constructively towards getting the right regulatory frameworks in place, including those relating to international obligations such as the London Protocol, as a matter of urgency.”

Enter the Japanese

On March 30, the day the Safeguard Mechanism passed into law, Takayuki Ueda, the CEO of Japanese gas giant Inpex, delivered a blunt speech to a private audience in Parliament House suggesting the Government was lagging “far behind” offshore rivals in the race to become a “clean energy superpower.”

Ueda lambasted what he claimed to be Australia’s deteriorating investment climate and Labor’s failure to back carbon capture and storage (CCS) technology.

The Japanese influence campaign didn’t stop with Mr Ueda. The Japanese Government has a goal of ensuring its industry has reliable and inexpensive sources of gas. It would not have been happy about Australia acting unilaterally on toughening the Safeguard Mechanism. On May 21 the Japanese Prime Minister Fumio Kishida met with Prime Minister Albanese at the G7 in Hiroshima. Energy was on the agenda.

A drumbeat of Japanese concerns and complaints followed including even bizarre threats that Japan would turn away from Australia and look to Vladimir Putin’s Russia to supply more gas.  

Kevin from Santos loves public hand-outs, loathes tax, lashes Labor’s little gas price limit as “Soviet”

The Japanese were especially adept at fuelling alarmist reporting in the Australian media. Santos, too, turned up the pressure. Alarm bells were quickly ringing throughout the Australian Government. 

Moving in for the Kill

By early June, confident advocacy was hitting its target, Santos moved in for the kill. 

This time Gallagher wrote to the Bowen on letterhead. He hit him in the opening paragraph:

“There are real concerns about the retrospectivity of recent policy changes in Australia, the threat to energy security for their economies and availability of large-scale CCS providing a CO2 sequestration solution for their economies.”

He again pressed for the facilitation of a Bayu-Undan CCS Project. Amongst demands related to this, he impressed upon the Minister:

“Australian Government action is urgently needed to ratify amendments to the London Protocol.”

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What’s the London Protocol you might ask?  It’s the foundation of the dirty deal that followed.  

The fossil fix is in

Sixteen days after Santos sent its letter of instruction to the minister, an Environment Protection (Sea Dumping) Amendment (Using New Technologies to Fight Climate Change) Bill was tabled in the House.

The explanatory memorandum for the Bill clearly stated:

“The Act implements Australia’s international obligations under the 1996 Protocol to the Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter 1972 (the London Protocol).”

Champaign bottles would have been popping in Gallagher’s office.

The Bill passed through the House on August 3, heading for the Senate.

Sovereign abatement

In the interlude between the Bill passing the House and being debated in the Senate, the Government did some shoring up of international relations.

Albanese again met up with his Japanese counterpart Fumio at the G20 in New Delhi and again talked about cooperation on energy. 

By the time ministers Chris Bowen and Madeleine King met with Japan’s Minister of Economy, Trade and Industry, Yasutoshi Nishimura, in early October, Albanese’s sentiment about cooperation had been converted into a more substantial commitment, with agreement on the Safeguard Mechanism “to move forward together.”

There were to be no sovereign surprises again. 

Senate stone-wall

When the Sea Dumping Bill, which permits Australia to export (and import) carbon dioxide for the purpose of storing it under the ocean floor, was finally debated in the Senate in early November, Greens’ Senator Peter Whish-Wilson (who didn’t have access to the Santos correspondence, but had done a bit of reading between the lines on a number of media articles) repeatedly asked Minister Jenny McAllister:

“Is this legislation and the timing of this legislation designed to facilitate the Barossa gas project”.

McAllister ducked and weaved. 

“… the government’s motivation in bringing forward the legislation is to meet our obligations as a party to the London protocol, … “

She refused to engage directly with his question 

Whish-Wilson tried several times across several days. He was repeatedly stone-walled.

Senator Pocock was stone-walled too. He suspected what was going on and at one time in the debate labelled the Bill the ‘Santos Amendment Bill’.

Pocock tried throughout the debate to find out who Minister Bowen had consulted with in the preparation of the Bill. But his representative in the Senate, McAllister, wasn’t saying anything. 

Why be forthcoming with the Senate? It only represents the people.

Penny didn’t get the memo

On the last full day of debate on the Bill, Senator Foreign Minister Penny Wong returned from China and Japan and attempted to take charge of the Senate as the Coalition supported a filibuster on the Bill, for its own ulterior purposes.

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After the Government had tried all week to conceal the true motive for the Bill, and the deal they’d done with Santos, Wong accidentally laid truth to bear. Clearly tired from her international travel, and frustrated at the Liberals for delaying the Bill, she shouted at Senator Birmingham:

“… do you know what you’ve been doing? You said no to Santos. You then said no to Woodside. You’ve said no to INPEX. You’ve said no to Korea. You said no to Japan!”

Wong hadn’t got the non-disclosure memo.

Almost three weeks later McAllister tabled the Santos correspondence.

Roll on emissions

The problem with all of this is that the CCS technology that is intended to store carbon emissions from the Barossa Field into the depleted Bayu-Undan field in Timor-Leste waters doesn’t actually work. Gallagher’s letter says as much.

Santos will proceed with the project, not dealing with their emissions. They’ll dangle CCS technology around as a future emissions solution and they’ll also use it to delay expenditure on remediating Bayu-Undan.

And they’ve got the Government captured – hook, line, and sinker.  

Prime Minister Albanese has taken great pains to assure Tokyo that Australia would continue as “a reliable supplier of energy for Japan.” It is, he says, “a very good relationship.”

At the COP28 climate talks in Dubai meanwhile, Minister Bowen is in lockstep with the Japanese spruiking “abatement,” which is code for CCS, as the miracle tool that will allow massive carbon emissions to continue in an overheating world.  

That Australian Government commitment sets up Santos CEO Gallagher nicely for his merger discussions with Woodside. 

Meanwhile, the Earth burns … and carbon capture and storage still don’t work.

Rex Patrick is a former Senator for South Australia and earlier a submariner in the armed forces. Best known as an anti-corruption and transparency crusader -

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