APA GROUP | Report analysing APA Group's capital expenditure with its own climate commitments
Status
Filed
AGM date
Previous AGM date
Resolution details
Company ticker
APA.AX
Lead filer
Resolution ask
Report on or disclose
ESG theme
- Environment
ESG sub-theme
- Climate change
- GHG targets / emissions
- Methane
- Net Zero / Paris aligned
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Utilities
Company HQ country
Australia
Resolved clause
Securityholders note APA Group’s position that the Paris Agreement’s climate goals are “fundamental to reducing the adverse impacts of climate change” and its commitment to “being part of the successful transition to a Net Zero economy”. Securityholders also note APA Group’s position that its Climate Transition Plan is “aligned with the Paris Agreement.” Securityholders therefore request APA Group Limited, in its capacity as responsible entity, to prepare and publish a report analysing the consistency of APA Group’s planned capital expenditure with its own climate commitments and a Paris-aligned scenario in which global energy emissions reach net zero by 2050. This disclosure will enhance securityholders' ability to adequately manage their own net zero portfolio emissions ambitions. The report should include disclosure of the APA Group’s plans to manage emissions from new gas infrastructure including potential Beetaloo basin pipelines and how these new assets are compatible with the APA Group’s existing climate commitments. Specific items to be addressed include:
1. Estimates of the scope 1, 2 and 3 emissions that would be added to the APA Group’s total emissions if it proceeds with the construction and operation of large full-scale Beetaloo pipelines under consideration for Empire Energy and Tamboran Resources.
2. Disclosure of how any additional emissions would be compatible with the APA Group’s existing gas infrastructure emissions reduction targets/goals, including its methane emissions reduction target.
3. Discussion of how the APA Group plans to abate or avoid any additional Beetaloo pipeline emissions, including estimates of the expected cost of these abatements considering the scale of the proposed pipelines.
4. Disclosure of the level of offsets the APA Group expects to use to manage any additional Beetaloo emissions in order to meet its existing emissions reduction targets.
5. Estimate the end-user emissions these pipelines would enable.
The report should be overseen by a committee of independent directors of the responsible entity, omit proprietary information, and be prepared and published at reasonable cost by the end of June 2025.
1. Estimates of the scope 1, 2 and 3 emissions that would be added to the APA Group’s total emissions if it proceeds with the construction and operation of large full-scale Beetaloo pipelines under consideration for Empire Energy and Tamboran Resources.
2. Disclosure of how any additional emissions would be compatible with the APA Group’s existing gas infrastructure emissions reduction targets/goals, including its methane emissions reduction target.
3. Discussion of how the APA Group plans to abate or avoid any additional Beetaloo pipeline emissions, including estimates of the expected cost of these abatements considering the scale of the proposed pipelines.
4. Disclosure of the level of offsets the APA Group expects to use to manage any additional Beetaloo emissions in order to meet its existing emissions reduction targets.
5. Estimate the end-user emissions these pipelines would enable.
The report should be overseen by a committee of independent directors of the responsible entity, omit proprietary information, and be prepared and published at reasonable cost by the end of June 2025.
Supporting statement
APA Group (APA) “acknowledges the impact of human-induced climate change” and recognises that the science of climate change is “unequivocal”. APA has also stated its Climate Transition Plan is “aligned with the Paris Agreement”. Members have already voiced significant discontent with this climate transition plan, with 21% voting against it in 2022.
Considering APA’s commitment to Paris alignment, members are concerned about APA’s ongoing discussions with Tamboran Resources (Tamboran) and Empire Energy (Empire) regarding the development of large gas pipelines connecting unconventional gas projects in the Beetaloo Sub-basin to Darwin and the East Coast gas market (referred to hereafter as the Beetaloo pipelines). These are:
Tamboran:
Proposed 1600 km Beetaloo to East Coast pipeline with capacity of 500 million cubic feet per day (mmcf/d) “or more”, connecting into APA’s South West Queensland Pipeline
Proposed ~480 km Beetaloo to Darwin pipeline of ~1,000 TJ/d (terajoules per day; ~980 mmcf/d)
Empire:
Proposed ~770 km Beetaloo to East Coast pipeline “in excess of” 476 mmcf/d connecting into APA’s Carpentaria Gas Pipeline
These would be significant undertakings for APA. The Australian government estimates an average pipeline construction cost of $1.53 million per kilometre. Using this estimate, which is pre-cost inflation, the pipelines would cost APA $4.4bn, more than the last seven years of APA’s combined free cash flow.
The scale of the volumes added to the east coast grid could also mean a need to upgrade the Carpentaria Pipeline, South West Queensland Pipeline, Moomba Sydney Pipeline and potentially the Victorian Transmission System, adding further cost.
Beetaloo pipelines would drastically increase APA’s emissions
The scale of the Beetaloo pipelines raises serious concerns about their incompatibility with APA’s existing emissions reduction commitments. Using APA’s current pipeline emissions intensity, annual scope 1 and 2 emissions from transporting Beetaloo gas would reach ~440kt CO2-e by 2030. This would cancel out the abatement implied by APA’s 2030 30% gas infrastructure emissions reduction target (166kt CO2-e) nearly three times over.
APA’s ability to build these pipelines while meeting its emissions targets therefore depends on its ability to avoid or abate additional scope 1 and 2 emissions through various technological solutions. However, APA has not yet shown it can credibly implement these even on its existing portfolio of pipelines.
Existing abatement levers are already challenged
APA has flagged issues with its compressor electrification projects, meant to account for up to 20% of its 2030 gas infrastructure emissions reductions, due to “infrastructure costs related to establishing renewable energy microgrids and complex, long-distance grid connections”. APA has further said “it is likely that remote compressor sites which are not close to an electricity grid will not be commercially viable to electrify”. APA’s proposed east coast pipeline for Tamboran would be among its longest to date, and both the Tamboran and Empire east coast pipelines would run entirely through areas classified as the highest level of remoteness (“very remote”) by the Australian Bureau of Statistics.
APA has also flagged potential complexities and the need for significant resources for methane measurement and reporting, meant to account for up to 40% of its 2030 emissions cuts. The remote location and sheer scale of the Beetaloo pipelines would make it technically challenging for APA to adequately manage its methane emissions in line with its emissions targets.
Reliance on problematic carbon offsets is too high
APA currently expects as much as 45% of its 2030 gas infrastructure emissions reductions to come from “opportunities yet to be evaluated and offsets”. APA claims to use “high-quality carbon offsets” that “represent genuine abatement.”
Peer-reviewed academic research seriously questions these claims. A study by Macintosh, Butler, Larraondo et al analysed 182 afforestation projects registered as Australian Carbon Credit Units (ACCUs). The study found that 41% showed negligible increases in forest cover over the period analysed, while over 42% lost forest cover.
None of the 36,300 tonnes of offsets retired by APA for its gas infrastructure target in FY22 and FY23 were associated with projects that showed increases in forest growth cover. This means that none of APA’s relevant offsets have been shown to represent genuine abatement.
In light of these revelations, members are concerned with APA’s planned reliance on offsets to meet its emissions reduction targets, which would likely increase if the Beetaloo pipelines are built.
Beetaloo would result in unacceptable end user emissions
APA takes a “whole-of-economy perspective to lower emissions”, as have APA’s members in already requesting a scope 3 emissions reduction target that is inclusive of end-user emissions. Market Forces estimates based on Empire and Tamboran’s initial production forecasts that these pipelines could enable the release of 1.1 billion tonnes of CO2-e in end-user emissions over the projects’ lifetimes. In 2030 alone the three pipelines would enable over 47 million tonnes CO2 equivalent (mtCO2-e) of end user emissions, representing a 76% increase on APA’s group-wide end-user emissions of 62 mtCO2-e in FY23.
Modelling by the International Energy Agency shows that to meet the 1.5°C goal set out in the Paris Agreement, which APA claims to be aligned with, global emissions from gas use need to fall 23% by 2030. Members thus request an assessment of the end-user emissions the Beetaloo pipelines would enable.
The Beetaloo pipelines present a serious threat to APA’s climate commitments, and by extension those of its major securityholders. To allay these concerns and to justify its claimed Paris alignment, the scheme must present a credible plan to avoid or abate the significant emissions associated with these pipelines. We encourage members to vote in favour of this resolution.
Considering APA’s commitment to Paris alignment, members are concerned about APA’s ongoing discussions with Tamboran Resources (Tamboran) and Empire Energy (Empire) regarding the development of large gas pipelines connecting unconventional gas projects in the Beetaloo Sub-basin to Darwin and the East Coast gas market (referred to hereafter as the Beetaloo pipelines). These are:
Tamboran:
Proposed 1600 km Beetaloo to East Coast pipeline with capacity of 500 million cubic feet per day (mmcf/d) “or more”, connecting into APA’s South West Queensland Pipeline
Proposed ~480 km Beetaloo to Darwin pipeline of ~1,000 TJ/d (terajoules per day; ~980 mmcf/d)
Empire:
Proposed ~770 km Beetaloo to East Coast pipeline “in excess of” 476 mmcf/d connecting into APA’s Carpentaria Gas Pipeline
These would be significant undertakings for APA. The Australian government estimates an average pipeline construction cost of $1.53 million per kilometre. Using this estimate, which is pre-cost inflation, the pipelines would cost APA $4.4bn, more than the last seven years of APA’s combined free cash flow.
The scale of the volumes added to the east coast grid could also mean a need to upgrade the Carpentaria Pipeline, South West Queensland Pipeline, Moomba Sydney Pipeline and potentially the Victorian Transmission System, adding further cost.
Beetaloo pipelines would drastically increase APA’s emissions
The scale of the Beetaloo pipelines raises serious concerns about their incompatibility with APA’s existing emissions reduction commitments. Using APA’s current pipeline emissions intensity, annual scope 1 and 2 emissions from transporting Beetaloo gas would reach ~440kt CO2-e by 2030. This would cancel out the abatement implied by APA’s 2030 30% gas infrastructure emissions reduction target (166kt CO2-e) nearly three times over.
APA’s ability to build these pipelines while meeting its emissions targets therefore depends on its ability to avoid or abate additional scope 1 and 2 emissions through various technological solutions. However, APA has not yet shown it can credibly implement these even on its existing portfolio of pipelines.
Existing abatement levers are already challenged
APA has flagged issues with its compressor electrification projects, meant to account for up to 20% of its 2030 gas infrastructure emissions reductions, due to “infrastructure costs related to establishing renewable energy microgrids and complex, long-distance grid connections”. APA has further said “it is likely that remote compressor sites which are not close to an electricity grid will not be commercially viable to electrify”. APA’s proposed east coast pipeline for Tamboran would be among its longest to date, and both the Tamboran and Empire east coast pipelines would run entirely through areas classified as the highest level of remoteness (“very remote”) by the Australian Bureau of Statistics.
APA has also flagged potential complexities and the need for significant resources for methane measurement and reporting, meant to account for up to 40% of its 2030 emissions cuts. The remote location and sheer scale of the Beetaloo pipelines would make it technically challenging for APA to adequately manage its methane emissions in line with its emissions targets.
Reliance on problematic carbon offsets is too high
APA currently expects as much as 45% of its 2030 gas infrastructure emissions reductions to come from “opportunities yet to be evaluated and offsets”. APA claims to use “high-quality carbon offsets” that “represent genuine abatement.”
Peer-reviewed academic research seriously questions these claims. A study by Macintosh, Butler, Larraondo et al analysed 182 afforestation projects registered as Australian Carbon Credit Units (ACCUs). The study found that 41% showed negligible increases in forest cover over the period analysed, while over 42% lost forest cover.
None of the 36,300 tonnes of offsets retired by APA for its gas infrastructure target in FY22 and FY23 were associated with projects that showed increases in forest growth cover. This means that none of APA’s relevant offsets have been shown to represent genuine abatement.
In light of these revelations, members are concerned with APA’s planned reliance on offsets to meet its emissions reduction targets, which would likely increase if the Beetaloo pipelines are built.
Beetaloo would result in unacceptable end user emissions
APA takes a “whole-of-economy perspective to lower emissions”, as have APA’s members in already requesting a scope 3 emissions reduction target that is inclusive of end-user emissions. Market Forces estimates based on Empire and Tamboran’s initial production forecasts that these pipelines could enable the release of 1.1 billion tonnes of CO2-e in end-user emissions over the projects’ lifetimes. In 2030 alone the three pipelines would enable over 47 million tonnes CO2 equivalent (mtCO2-e) of end user emissions, representing a 76% increase on APA’s group-wide end-user emissions of 62 mtCO2-e in FY23.
Modelling by the International Energy Agency shows that to meet the 1.5°C goal set out in the Paris Agreement, which APA claims to be aligned with, global emissions from gas use need to fall 23% by 2030. Members thus request an assessment of the end-user emissions the Beetaloo pipelines would enable.
The Beetaloo pipelines present a serious threat to APA’s climate commitments, and by extension those of its major securityholders. To allay these concerns and to justify its claimed Paris alignment, the scheme must present a credible plan to avoid or abate the significant emissions associated with these pipelines. We encourage members to vote in favour of this resolution.
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