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South Korean energy utility SK E&S faces a "greenwashing"
complaint over its $3.6 billion Barossa LNG supply project that is
under construction in the Timor Sea off Australia's Northern
Territory.
Seoul-based Solutions for Our Climate (SFOC) filed a complaint
22 December with the Korean Fair Trade Commission (FTC). It accused
SK E&S of falsely claiming to produce "CO2-free" LNG and
"eco-friendly" blue hydrogen from the Barossa project, which will
be equipped with carbon capture and storage technology.
"There is no such thing as 'CO2-free LNG'," said Dongjae Oh, a
researcher at SFOC who added in a 22 December statement that SK
E&S has oversold its CCS technology as "a silver bullet."
Even with functioning CCS, he said "any new gas development
project will undeniably add massive amounts of greenhouse gas
emissions to the atmosphere."
FTC will decide by February
According to SFOC legal officer Counsel Jihyeon Ha, the FTC will
decide whether to proceed with an investigation around February.
According to the FTC process, Jihyeon said the
competition regulator may impose corrective measures such as
stopping SK E&S from running related ads, or refer the case to
its prosecution arm.
"If the FTC does not take sufficient legal action against SK
E&S, and SK E&S remains status quo, we will discuss
internally what further legal steps to take," Jihyeon told Net-Zero
Business Daily in an 23 December email.
SK E&S, which did not respond to a Net-Zero Business
Daily request for a comment on the legal action, is not the
largest stakeholder in the project though.
What's at stake with Barossa
Australian natural gas firm Santos is the operator of the
Barossa project with 50% stake, with SK E&S holding 37.5%.
Japan's largest power generator JERA has a 12.5% stake in the
project, which is not expected to begin producing gas until the
first half of 2025.
The Barossa field, which is 300 kilometers north of Darwin,
Australia is intended to replace production from the Bayu-Undan
field currently supplying dry gas to a liquefaction facility in
Darwin.
It will consist of a Floating Production, Storage and Offloading
vessel, subsea production wells, supporting subsea infrastructure,
along with a gas export pipeline tied into the existing Bayu-Undan
to Darwin LNG pipeline.
At the end of March, Santos announced a final investment
decision for Barossa that also would kickstart a $600 million
investment in Darwin LNG and pipeline tie-in projects, which will
extend the facility's life for around 20 years.
Large carbon footprint
The Barossa project has come under fire from SFOC and other
groups that argue only the GHG emissions from the downstream LNG
liquefaction will be captured while the GHGs released during
extraction of the gas will be ignored.
SFOC points to South Korean company's own submission to the
Export Import Bank of Korea, which revealed the project would
produce anywhere from 3.5 million metric tons (mt) to 3.7 million
mt of LNG each year, while yielding 3.9 million mt of GHGs annually
during production and transportation.
National Assembly member Jang Hye-young, who made the SK E&S
GHG data public after receiving it from the Export-Import Bank of
Korea, has questioned the need for the project. She cited
International Energy Agency projections of a 55% decline in gas
demand through 2050 in its May report, which also said no new
oil and gas exploration projects should be undertaken across the
world if a "narrow" path to achieving net-zero carbon emissions by
2050 is to be successfully navigated.
South Korea has committed to a carbon neutrality goal and in
October President Moon Jae-in confirmed that Asia's
fourth-largest economy will aim to cut its GHG emissions by 40%
compared with 2018 levels by 2030.
When factoring in the end-use consumption of gas, SFOC said
Barossa is expected to produce a total of 13.5 million mt in annual
GHGs.
Despite the "CO2-free LNG" slogan, SFOC said SK E&S plans to
capture up to 2.1 million mt of GHGs at Barossa, which is only 16%
of the estimated annual emissions.
High emissions compared with peers
A separate analysis carried out in March
by the Institute of Energy Economics and Financial Analysis (IEEFA)
revealed that the carbon content of the Barossa gas was about twice
that of the next highest gas resources currently being converted to
LNG in Australia.
Adding the venting and combustion emissions at the Darwin LNG
plant (2.05 million mt tons of CO2 a year) to the Barossa offshore
emissions of 3.38 million mt of CO2 per annum results in a grand
total of 5.4 million mt annually to produce 3.7 million mt of LNG
each year, the nonprofit research group said.
"This makes the Barossa to Darwin project 'a CO2 emissions
factory with an LNG by-product'—a truly questionable investment
in a rapidly evolving market," the IEEFA wrote.
Posted 23 December 2021 by Amena Saiyid, Senior Climate and Energy Research Analyst
RT @SPGlobal: Many nations have set #NetZero Emissions by 2050 as their climate goal. Will be enough minerals to meet the requirements? Joi…
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