APA GROUP | 7(c) Climate risk safeguarding
Status
Filed
AGM date
Previous AGM date
Proposal number
7
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
- Net Zero / Paris aligned
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Utilities
Company HQ country
Australia
Supporting materials
- 2025 APA Group shareholder resolutions and supporting statements.pdf Download
Resolved clause
APA’s 2024 Climate Change Policy states that “the science of climate change as assessed by the International Panel on Climate Change is unequivocal,” and that APA is committed to “develop and maintain a climate transition plan, set interim targets, and embed consideration of this goal and climate risks into our business strategy, processes and decision-making, in support of 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’s planned capital expenditure with APA’s climate commitments. Items to be addressed in the report include:
1. Estimates of the scope 1, 2, 3 and end-user emissions that would be added to APA’s total emissions if it proceeds with the construction and operation of full-scale pipelines under consideration for the Beetaloo Sub-basin.
2. Disclosure of how any additional emissions from planned new pipelines would be compatible with APA’s existing emissions reduction targets, including its methane emissions reduction target.
3. Disclosure of APA’s plans to abate or avoid additional emissions, and any plans to use offsets, including estimates of the expected cost of these plans.
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 prior to making a Final Investment Decision (FID) on new large-scale pipelines.
Securityholders therefore request APA Group Limited, in its capacity as responsible entity, to prepare and publish a report analysing the consistency of APA’s planned capital expenditure with APA’s climate commitments. Items to be addressed in the report include:
1. Estimates of the scope 1, 2, 3 and end-user emissions that would be added to APA’s total emissions if it proceeds with the construction and operation of full-scale pipelines under consideration for the Beetaloo Sub-basin.
2. Disclosure of how any additional emissions from planned new pipelines would be compatible with APA’s existing emissions reduction targets, including its methane emissions reduction target.
3. Disclosure of APA’s plans to abate or avoid additional emissions, and any plans to use offsets, including estimates of the expected cost of these plans.
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 prior to making a Final Investment Decision (FID) on new large-scale pipelines.
Supporting statement
Full resolution wording and supporting statement (with footnotes) available at: https://publications.marketforces.org.au/link/636276/
Market Forces' latest APA Group investor briefing available at: https://investorbriefings.marketforces.org.au/link/483381/
________
Considering APA’s commitment to support the Paris Agreement, members are concerned about APA’s ongoing work with Tamboran Resources (Tamboran) and Beetaloo Energy (Beetaloo) (formerly Empire Energy) 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).
Based on disclosures from APA and its partners, two key pipelines appear to be under serious consideration:
- Proposed ~640km Beetaloo to Darwin pipeline, capacity ~1,000 TJ/d.
- Proposed ~1,500km North-East Australia Pipeline (Beetaloo to East Coast), capacity 1,000 TJ/d.
These proposed pipelines would be large-scale, long-life and require high amounts of capital expenditure. To date, APA has struggled with emissions abatement and avoidance, and continues to rely on carbon offsets to meet its emissions reduction targets. This resolution requests that APA demonstrate it has considered emissions in its decision-making processes and has credible plans to manage these emissions without further increasing reliance on offsets. This disclosure will ensure APA has assessed the compatibility of
proposed pipelines with its own climate targets including its claimed Paris support.
APA has already publicly discussed the potential capacity and timeline for the North-East Australia Pipeline. APA has clearly undertaken sufficient planning to produce the estimates requested by this resolution.
Large-scale, long-life
Members are particularly concerned about the large-scale, long-life nature of the Beetaloo pipelines.
Compared to its existing transmission pipeline network, these proposed pipelines would be APA’s:
- equal 2nd largest pipelines by capacity,
- 3rd and 8th longest pipelines by distance.
APA’s partner Beetaloo Energy has previously flagged a potential 42-year economic life for its full-field development, which could see the project operating into the 2070s. APA must consider how it would manage emissions over the entire project lifetime.
High capital expenditure
Using APA’s cost estimates for the Bulloo Interlink (a new build pipeline APA aims to develop from 2027 onwards), APA could be facing costs of more than $6bn to construct the two large-scale Beetaloo pipelines, more than the past 24 years of APA’s total positive free cash flow. These estimates are likely conservative. Using underlying assumptions from leading energy consultancy Rystad Energy could see costs rise to between $8.1bn to $10.5bn.
Beetaloo pipelines emissions growth
The scale of the Beetaloo pipelines raises serious concerns about their incompatibility with APA’s existing commitments to emissions reduction and the Paris Agreement. Based on APA’s current pipeline emissions intensity, the development of two 1,000 TJ/d pipelines
would increase annual methane and scope 1 and 2 emissions by 46% from current levels. Operating those pipelines for 30 years could result in end-user emissions of approximately 1 billion tonnes of carbon dioxide equivalent. The Intergovernmental Panel on Climate Change has concluded that developing new gas fields like Beetaloo is incompatible with global climate goals.
To date, APA has struggled with abatement and avoidance on its existing pipeline network. Since FY21, more than 91% of APA’s gas infrastructure emissions 'reductions' have come from offsets and lower gas volumes.
Existing abatement levers are already challenged
APA has struggled with both its compressor electrification and methane management projects, which APA hopes will account for ~50% of its gas infrastructure emissions reductions by 2030. APA has highlighted “it is likely that remote compressor sites which are
not close to an electricity grid will not be commercially viable to electrify.” APA’s Wallumbilla electrification project is a testament to these difficulties with FID delayed in part due to “increases in capital costs... largely associated with bringing electricity to the site and market escalation of capital costs." Cost estimates for emissions reduction activities to 2030 have escalated by between 58% to 66% compared to estimates provided in the 2022 Climate Transition plan.
APA has also flagged difficulty with methane abatement as “reducing compressor methane abatement costs to within our internal carbon abatement price represents a challenge." APA’s difficulties managing methane emissions are evidenced by an emissions increase of 14% since FY21, despite gas volumes remaining relatively stable.
Concerns over offset use
Members are deeply concerned that the development of large-scale pipelines will drive greater reliance on unreliable and expensive carbon offsets. Recent academic research covering one-fifth of all carbon credits issued to date found just 16% of issued credits
constituted real emissions reductions.
Prior analysis of peer-reviewed academic research found that the 36,300 offsets APA retired in FY22 and FY23 for its gas infrastructure target failed to increase forest growth cover, and thus failed to represent genuine abatement.
In FY24, APA retired 32,008 offsets for its gas infrastructure target that uses the REDD+ and IFM methods. Academic research into the efficacy of these methods casts doubt on the reported levels of abatement. Research from Berkeley “found that current REDD+
methodologies generate credits that represent a small fraction of their claimed climate benefit,” and for the IFM method, “analysis identifies important areas where the protocols deviate from scientific understanding… risking significant over-estimation of carbon offset credits.”
Ongoing reliance on carbon offsets, particularly to manage the huge potential emissions from the Beetaloo pipelines, could pose substantial greenwashing and legal risk for APA. EnergyAustralia’s recent Federal Court case demonstrates this risk, with the company
settling and acknowledging that "burning fossil fuels creates greenhouse gas emissions that are not prevented or undone by carbon offsets."
Considering APA’s struggles with emissions abatement and avoidance to date and the substantial potential increase in emissions resulting from the Beetaloo pipelines, APA can significantly reduce its risk exposure by meeting the disclosure requests outlined in this resolution.
We encourage members to vote in favour of Resolution 7(c).
Market Forces' latest APA Group investor briefing available at: https://investorbriefings.marketforces.org.au/link/483381/
________
Considering APA’s commitment to support the Paris Agreement, members are concerned about APA’s ongoing work with Tamboran Resources (Tamboran) and Beetaloo Energy (Beetaloo) (formerly Empire Energy) 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).
Based on disclosures from APA and its partners, two key pipelines appear to be under serious consideration:
- Proposed ~640km Beetaloo to Darwin pipeline, capacity ~1,000 TJ/d.
- Proposed ~1,500km North-East Australia Pipeline (Beetaloo to East Coast), capacity 1,000 TJ/d.
These proposed pipelines would be large-scale, long-life and require high amounts of capital expenditure. To date, APA has struggled with emissions abatement and avoidance, and continues to rely on carbon offsets to meet its emissions reduction targets. This resolution requests that APA demonstrate it has considered emissions in its decision-making processes and has credible plans to manage these emissions without further increasing reliance on offsets. This disclosure will ensure APA has assessed the compatibility of
proposed pipelines with its own climate targets including its claimed Paris support.
APA has already publicly discussed the potential capacity and timeline for the North-East Australia Pipeline. APA has clearly undertaken sufficient planning to produce the estimates requested by this resolution.
Large-scale, long-life
Members are particularly concerned about the large-scale, long-life nature of the Beetaloo pipelines.
Compared to its existing transmission pipeline network, these proposed pipelines would be APA’s:
- equal 2nd largest pipelines by capacity,
- 3rd and 8th longest pipelines by distance.
APA’s partner Beetaloo Energy has previously flagged a potential 42-year economic life for its full-field development, which could see the project operating into the 2070s. APA must consider how it would manage emissions over the entire project lifetime.
High capital expenditure
Using APA’s cost estimates for the Bulloo Interlink (a new build pipeline APA aims to develop from 2027 onwards), APA could be facing costs of more than $6bn to construct the two large-scale Beetaloo pipelines, more than the past 24 years of APA’s total positive free cash flow. These estimates are likely conservative. Using underlying assumptions from leading energy consultancy Rystad Energy could see costs rise to between $8.1bn to $10.5bn.
Beetaloo pipelines emissions growth
The scale of the Beetaloo pipelines raises serious concerns about their incompatibility with APA’s existing commitments to emissions reduction and the Paris Agreement. Based on APA’s current pipeline emissions intensity, the development of two 1,000 TJ/d pipelines
would increase annual methane and scope 1 and 2 emissions by 46% from current levels. Operating those pipelines for 30 years could result in end-user emissions of approximately 1 billion tonnes of carbon dioxide equivalent. The Intergovernmental Panel on Climate Change has concluded that developing new gas fields like Beetaloo is incompatible with global climate goals.
To date, APA has struggled with abatement and avoidance on its existing pipeline network. Since FY21, more than 91% of APA’s gas infrastructure emissions 'reductions' have come from offsets and lower gas volumes.
Existing abatement levers are already challenged
APA has struggled with both its compressor electrification and methane management projects, which APA hopes will account for ~50% of its gas infrastructure emissions reductions by 2030. APA has highlighted “it is likely that remote compressor sites which are
not close to an electricity grid will not be commercially viable to electrify.” APA’s Wallumbilla electrification project is a testament to these difficulties with FID delayed in part due to “increases in capital costs... largely associated with bringing electricity to the site and market escalation of capital costs." Cost estimates for emissions reduction activities to 2030 have escalated by between 58% to 66% compared to estimates provided in the 2022 Climate Transition plan.
APA has also flagged difficulty with methane abatement as “reducing compressor methane abatement costs to within our internal carbon abatement price represents a challenge." APA’s difficulties managing methane emissions are evidenced by an emissions increase of 14% since FY21, despite gas volumes remaining relatively stable.
Concerns over offset use
Members are deeply concerned that the development of large-scale pipelines will drive greater reliance on unreliable and expensive carbon offsets. Recent academic research covering one-fifth of all carbon credits issued to date found just 16% of issued credits
constituted real emissions reductions.
Prior analysis of peer-reviewed academic research found that the 36,300 offsets APA retired in FY22 and FY23 for its gas infrastructure target failed to increase forest growth cover, and thus failed to represent genuine abatement.
In FY24, APA retired 32,008 offsets for its gas infrastructure target that uses the REDD+ and IFM methods. Academic research into the efficacy of these methods casts doubt on the reported levels of abatement. Research from Berkeley “found that current REDD+
methodologies generate credits that represent a small fraction of their claimed climate benefit,” and for the IFM method, “analysis identifies important areas where the protocols deviate from scientific understanding… risking significant over-estimation of carbon offset credits.”
Ongoing reliance on carbon offsets, particularly to manage the huge potential emissions from the Beetaloo pipelines, could pose substantial greenwashing and legal risk for APA. EnergyAustralia’s recent Federal Court case demonstrates this risk, with the company
settling and acknowledging that "burning fossil fuels creates greenhouse gas emissions that are not prevented or undone by carbon offsets."
Considering APA’s struggles with emissions abatement and avoidance to date and the substantial potential increase in emissions resulting from the Beetaloo pipelines, APA can significantly reduce its risk exposure by meeting the disclosure requests outlined in this resolution.
We encourage members to vote in favour of Resolution 7(c).
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