Page 4 - AsiaElec Week 46 2021

AsiaElec COMMENTARY AsiaElec

Chevron to use carbon

credits to make up for

Gorgon CCS shortfall

Chevron and its partners in the giant Gorgon LNG project in Australia will buy carbon credits
likely worth more than $183mn to compensate for failing to meet carbon capture targets

GLOBAL SUPER-MAJOR Chevron and its partners in that the cost could end up being even higher,
the giant Gorgon LNG project on Barrow Island, amounting to well over AUD250mn ($183mn).
Western Australia, have agreed to buy 5.23mn On top of future price fluctuations, Chevron will
WHAT: greenhouse gas (GHG) offsets as a penalty for also have to contend with a shortage of Austral-
The partners in Gorgon failing to meet carbon capture and storage (CCS) ian Carbon Credit Units (ACCUs). The com-
LNG have agreed to buy targets. pany is unlikely to be able to meet its obligation
carbon credits. In the five-year period up to July 2021, with those units alone, and told the state govern-
only 5mn tonnes of carbon dioxide equivalent ment that it would also use other internationally
WHY: (CO2e) were captured using the CCS facility verified carbon units and offsets.
The carbon capture and at Gorgon, out of around 15.3mn tonnes that Additionally, Chevron has announced an
storage project at Gorgon flowed to Barrow Island from offshore gas fields. AUD40mn ($29mn) investment into “lower car-
has failed to meet targets Chevron and its partners are estimated to have bon” projects in Western Australia as part of the
set by the government of missed the goal of capturing a minimum of 80% offset package. No further details were provided
Western Australia. of the emissions from Gorgon by 7.4mn tonnes. on what these projects would be or where in the
The target was a condition of the environmental state they would be located.
WHAT NEXT: approval for Gorgon, set by the government of “We look forward to further discussions with
Australian Carbon Credit Western Australia. the Western Australian Government to develop
Units are in short supply Failure to meet the target occurred in part lower-carbon projects and unlock emissions
and other offsets will because of delays in starting up the CCS facility, reduction potential across the state,” said Chev-
likely be needed. which only began CO2 injection in August 2019, ron Australia’s managing director, Mark Hat-
three years behind schedule, as a result of techni- field, in a statement.
cal issues. The facility also does not yet appear to
have reached full capacity, as it was designed to Test case
capture up to 4mn tonnes per year (tpy) of CO2. Gorgon is seen as a test case for the deployment
of CCS, especially at major fossil fuel-based pro-
Offset package jects. Chevron is working to bring the facility to
Now Chevron has agreed to implement an offset its full capacity, and has captured an additional
package to make up for the CCS shortfall. The 500,000 tonnes of CO2e since July, but critics
super-major announced this week that it would continue to question the technology’s effective-
fulfil its regulatory obligations via the acquisition ness in the context of the energy transition.
and surrender of the carbon offsets. It is aiming “When you consider indirect (Scope 3) pol-
to wrap up the process by July 2022. lution from burning the gas produced by Gor-
Based on the price of carbon offsets on the gon, the CCS technology would have reduced
voluntary Australian spot market, which hit a overall pollution from Gorgon by less than 2%,”
record high of AUD37 ($27) per tonne last week, the Conservation Council of Western Australia’s
5.23mn offsets would cost at least AUD195mn (CCWA) policy and legal director, Piers Ver-
($142mn). However, Reuters has estimated stegen, was quoted by the Australian Financial

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