WA Carbon Fiasco: Pilbara plant to blow more CO2 than Safeguard Mechanism will save

by Callum Foote | May 1, 2023 | Energy & Environment, Latest Posts

Add Chevron’s carbon capture disaster to Woodside’s Browse Basin climate bomb and now the Perdaman fertiliser plant in the Pilbara and Western Australia is going to burn a giant hole in the Labor government’s Safeguard Mechanism. Callum Foote reports.

An emissions disaster is unfolding in WA which comes at a high cost not only for the climate but also for taxpayers. First came revelations that US oil giant Chevron is achieving record exports from its Gorgon gas project but its carbon capture and storage (CCS) facility continues to struggle. This leaves Gorgon as Australia’s largest industrial carbon polluter.

Second bit of bad news out of the West: at Woodside’s annual meeting last week the board took a drubbing from shareholders
over the investment case for its Scarborough project in the Browse Basin. Climate Energy Finance financial modelling shows a $63bn  hit to the Safeguard Mechanism in 2050.

Then there is the Perdaman fertiliser plant. Located in the Pilbara region of Western Australia, and the beneficiary of half a billion in government subsidies, Perdaman is ready to open. Its production however will blow through more CO2 emissions than the entire Safeguard Mechanism will supposedly save by 2030, according to experts.

Also in the Pilbara is Perdaman’s urea facility, to be located close to Aboriginal rock art proposed for World Heritage listing at Murujuga, has been given the green light to start construction. Tanya Plibersek gave the construction the go ahead last August, despite strong Indigenous opposition.

Perdaman is a multinational group based in Western Australia with an opaque ownership structure and at least ten subsidiaries or related companies in various industries, ranging from shopping centres, fertilisers and related industries to healthcare.

Perdaman’s Founding Chairman and Managing Director, Vikas Rambal, was born in Delhi and moved to Western Australia in 2000.

The urea plant began construction this week, with production expected to begin within four years.

The WA premier backed the project with over $250 million in subsidies, but prohibited any more industrial development in the area due to concerns raised over aboriginal heritage sites in the existing Murujuga National Park.

Construction starts on WA’s Burrup amid outcry

A subsidy bonanza

Global environmental think tank Climate Analytics tallied the government subsidies for the project at over half a billion dollars.

The $530m comes in the form of infrastructure funding as various grants, loans and subsidies from State and Commonwealth Government.

This includes total funding from the Northern Australia Infrastructure Fund (NAIF) of $255 million and a further $255 million from the WA State Government.

$364m of the funds have been allocated to the Dampier Port to construct a new cargo wharf to accommodate Perdaman urea exports. $140m is to go to the Water Corporation for the Burrup Seawater Supply Scheme upgrade to supply the project with desalinated seawater, and $25m from Main Roads WA for works on Burrup Road to accommodate the Perdaman project.

Woodside windfall

Experts also see the Perdaman fertiliser plant as being a windfall for gas giant Woodside.

According to senior researcher at Human Rights Watch, Sophie McNeil, it is

important also to recognise the massive climate implications of the Perdaman fertiliser plant going ahead.

The Burrup plant would be supplied by gas from Woodside’s nearby Scarborough project. Hence, “the Perdaman proceeding is also a big win for Woodside Energy’s climate-wrecking plans,” she said.

This comes the same week that Woodside CEO, Meg O’Neil, was forced to respond to investor unrest over plans to expand its fossil fuel operations at its AGM in Perth.

Woodside’s chairman, Richard Goyder, also told shareholders that it had only made the decision to invest $18bn in the Scarborough offshore gas project in Western Australia and related projects “because of the fiscal and regulatory certainty that Australia has always offered in the past.”

The Perdaman Group has had a large gas purchase contract with Woodside Petroleum’s Scarborough gas project since at least 2018.

Enormous emissions

According to Mark Ogge, Principal Adviser at The Australia Institute, the project

Will cause more CO2 emissions than the entire Safeguard Mechanism will supposedly save by 2030.

The facility will generate around 200 million tonnes (MtCO2e) of greenhouse gas emissions over its lifetime, including Scope 3 emissions according to Climate Analytics’ analysis. This is about the same as the total cumulative emissions savings from all facilities under the Australian Government’s proposed reforms to the Safeguard Mechanism by 2030.

The Total annual emissions from this urea fertiliser project (Scope 1 and 3) will emit emissions equivalent to about 3% of 2021 emission levels in Western Australia.

According to Climate Analytics’ CEO Bill Hare, “The inception of this new fossil gas urea fertiliser facility represents a lost opportunity to base new fertiliser production capacity on green hydrogen/ammonia in a region with likely the lowest cost of renewable energy in the world. This contrasts starkly with the initiative in Queensland to convert a fossil fuel-based urea factory to one driven by green ammonia with a very substantial reduction in greenhouse gas emissions.”

Safeguard Mechanism is great … for big polluters and landowners, not so much for the planet

Callum Foote was a reporter for Michael West Media for four years.

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