Future Gas Strategy: consultation paper

bp Australia Pty Ltd
A.B.N. 53 004 085 616
717 Bourke Street
Docklands Victoria 3008
Australia

27 November 2023

bp Australia response to the Future Gas Strategy bp Australia (bp) welcomes the opportunity to respond to the Government’s Future Gas
Strategy consultation paper. bp commends the government on the consultation paper which clearly outlines an understanding for the need for an evidence-based and long-term strategy to enable informed decisions. Such decisions will enable the economy to decarbonize and maintain Australia’s reputation as a trusted trade and investment partner.

We endorse the strategy’s four key objectives:

• Support decarbonisation of the Australian economy.
• Promote Australia’s energy security and affordability.
• Enhance Australia’s reputation as an attractive trade and investment destination.
• Help our trade partners on their own paths to net zero.

In addition to responding to relevant questions posed in the consultation paper, the introduction to bp’s submission summarizes key points on the topic.

About bp bp’s purpose is to reimagine energy for people and our planet. Our ambition is to become a net zero company by 2050 or sooner; and to help the world get there too. Globally, bp aims to be net zero across our operations (scope 1 & 2), in our oil and gas production (scope 3) and in the energy products we sell (life-cycle emissions intensity). For each of these we have also set short-term (2025) and medium-term targets (2030). You can read more about our net zero plans and progress in our Net zero ambition report released earlier this year.

Globally, our strategy is to transition from an international oil company to being an integrated energy company. That transition is underway – between 2019 and 2022 the share of our annual capital investment going into what we call out transition growth engines (bioenergy, convenience, EV charging, renewables and power, and hydrogen) grew from 3% to 30% But we also continue to invest in oil and gas – investing in meeting the needs of today’s energy system alongside investing to help scale lower carbon alternatives. We believe that the global

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energy transition needs to be not just rapid enough to meet the Paris climate goals, but also orderly. We aim to:

• Reducing our oil and gas production by 25-30% (from 2019 levels) by 2030 and lowering
emissions while keeping up cash flow by high grading our hydrocarbon portfolio and
growing bioenergy.
• Investing in low-carbon energy to rapidly scale up in solar and offshore wind and develop
new opportunities in carbon capture and clean hydrogen.
• Installing 100,000 EV charging points and opening more than 1,000 new strategic
convenience sites worldwide.
• Progressing five transition growth businesses: bioenergy, convenience, EV charging,
renewables, and hydrogen by 2025.

About bp Australia

All elements of bp’s global strategy are present in Australia.

• We’ve substantial gas interests in Western Australia as a foundation partner of the
Woodside-operated Northwest Shelf Joint Venture and are developing the Browse project
with our joint venture partners. We’re working on ways to decarbonise these operations in
order to provide domestic and export natural gas.

• We’re working with partners exploring the possibility of a Carbon Capture and Storage
(CCS) hub, Angel, off the coast of WA.
• We’ve assumed operatorship of the Australian Renewable Energy Hub (AREH) in the
Pilbara, which is planned to provide green electrons and green hydrogen to help
decarbonise local customers and to provide hydrogen for export.
• We’re transitioning our Kwinana refinery site into a clean energy hub: we’re in front-end
engineering design (known as FEED) on the Kwinana Renewable Fuels project and
exploring hydrogen production as part of H2Kwinana.
• We are working on a further hydrogen project – GERI at Oakajee in the Mid-west.
• We own 50% of Lightsource bp, an independently operated global business with a
significant renewable generation portfolio in Australia.
• And alongside an established B2C and B2B fuels business, we’re rolling out electric
vehicle charge points through our bp pulse brand, and we’re exploring options with
partners to decarbonise heavy transport, including hydrogen refueling.

Notably, bp is both a consumer and producer of gas in Australia.

Key messages on Australian gas policy

• Gas plays a critical role in Australia’s energy transition, and that of our trade partners.
Numerous evidence-based reports recognize the role of gas-powered-generation (GPG)
to firm renewables, to support domestic industry (be it with heating or chemical
feedstock), to heat homes, and to develop and process critical minerals which will
support Australia and the world transition to net zero.

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• Maintaining gas supply is challenging. Blanket moratoriums in some states, a slow and
uncertain approvals environment, and market interventions will likely lead to scarcity of
supply. This in turn undermines tackling the ‘energy trilemma’.

• Decarbonising gas at scale requires Carbon Capture & Storage (CCS). But Australia’s
regulatory framework is immature and duplicative.

• Australia has, and will, continue to benefit from, Liquified Natural Gas (LNG) exports –
especially in Western Australia. LNG has attracted foreign direct investment, created
economic activity, generated royalties, enabled domestic supply, and boosted
Australia’s trade credentials with regional partners. bp Australia responses to relevant consultation questions

Do you use any international and/or domestic forecasts to inform your outlook of the gas market? We want your views on which scenarios best reflect the demand outlook. Are there any limitations or additional factors impacting the demand outlook you would like to note?
AND
What role do you see gas-fired generators playing in supporting Australia’s 82% renewable energy targets and beyond?
AND
What do you see as the role of gas in Australia’s net-zero transformation? bp’s annual publication, Energy Outlook, explores the key trends and uncertainties surrounding the energy transition. Like other similar publications, it uses a number of scenarios which are not predictions of what is likely to happen or what bp would like to happen. Rather they explore the possible implications of different judgements and assumptions concerning the nature of the energy transition and the uncertainties around those judgements. The scenarios are based on existing technologies and do not consider the possible impact of entirely new or unknown technologies.

In summary, the three scenarios are Accelerated, Net Zero, and New Momentum.

Accelerated and Net Zero explore how different elements of the energy system might change in order to achieve a substantial reduction in carbon emissions. In that sense, they can be viewed as ‘what if’ scenarios: what elements of the energy system might need to change if the world collectively takes action for CO2-equivalent emissions (CO2e) to fall by around 75% by 2050 (relative to 2019 levels) in Accelerated and 95% in Net Zero. Both scenarios are conditioned on the assumption that there is a significant tightening in climate policies. Net Zero also embodies a shift in societal behaviour and preferences, which further supports gains in energy efficiency and the adoption of low-carbon energy.

New Momentum is designed to capture the broad trajectory along which the global energy system is currently travelling. It places weight on the marked increase in global ambition for decarbonization in recent years, as well as on the manner and speed of decarbonization seen over the recent past. CO2e emissions in New Momentum peak in the 2020s and by 2050 are around 30% below 2019 levels.

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Figure 1

The prospects for natural gas depend on the outcome of two significant but opposing trends: increasing demand in emerging economies as they grow and industrialize, offset by a shift away from natural gas to lower-carbon energy led by the developed world. The net impact of these opposing trends on global gas demand depends on the pace of the energy transition.

Global demand for natural gas rises over the rest of this decade in New Momentum and
Accelerated driven by strong growth in China – underpinned by continued coal-to-gas switching
– and also by India and other emerging Asia as they industrialize further.

• In contrast, natural gas consumption in Net Zero peaks in the mid-2020s before then
starting to decline. The use of gas within the emerging world grows out to 2030. But this
growth is outweighed by falling consumption in the developed world, given the shift
towards electrification and lower carbon energy.

From the early 2030s onwards, natural gas demand declines in Accelerated and Net Zero as the sustained decline in its use in the developed world is compounded by falling demand in
China and the Middle East, driven by the same patterns of increasing electrification and rapid growth in renewable energy. The decline is only partially offset by the growing use of natural gas to produce blue hydrogen. By 2050, natural gas demand is around 40% lower than 2019 levels in Accelerated and 55% lower in Net Zero. However it is worth noting that in both the
Accelerated and the Net Zero scenarios, a considerable amount of gas is still required.

• In contrast, global natural gas demand in New Momentum continues to grow for much of
the period out to 2050, driven by growing use in emerging Asia and Africa. Much of this
growth is in the power sector as the share of natural gas consumption in power generation
in these regions grows and overall power generation increases robustly. Global natural gas
demand in New Momentum in 2050 is around 20% above 2019 levels.

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The range of the difference in global gas demand in 2050 across the three scenarios relative to current levels is greater than for either oil or coal, highlighting the sensitivity of natural gas to the speed of the energy transition.
The International Energy Agency’s (IEA) Outlooks for gas markets and investment recognises that amongst this uncertainty – investment in the global gas system will need to continue:

The total investment requirement in natural gas supply and transport for the remaining decade is USD 280 billion per year, on average, in the STEPS and USD 240 billion in the APS. In the
NZE Scenario, around USD 200 billion is required to maintain output at existing and commission already approved fields.1

The ability for industry to responsively bring such gas to market is constrained. Gas developments typically take time given projects are usually technically and commercially complex. They are further characterised by their capital intensity, the shape of revenue (LNG projects operate for many years before becoming cash flow positive on a discounted basis) and lastly – long production lives. All of these characteristics point to the need for a stable and certain regulatory regime.

In Australia, the following (serial) reports with key messages are instructive:

• The Australian Energy Market Operator (AEMO) east coast Gas Statement of Opportunities
(GSOO) (emphasis added).

o ‘’As identified in previous GSOOs, this 2023 GSOO highlights continued risks of short-
term gas supply shortfalls and long-term gas supply gaps arising from reducing
production from southern Australia. In particular, the risk of peak day shortfalls
continues to be forecast under very high demand conditions in the southern states
from winter 2023’’2

o ‘’… annual physical gas supply from existing, committed and anticipated production is
forecast to be adequate before 2027. Investments are needed in the near term to
ensure operational solutions from 2027, despite falling gas consumption’’3

o Importantly (as recognised in the consultation paper) the AEMO East Coast GSOO also
demonstrates the critical role of gas-powered generation to daily peak demand as
variable renewable energy (VRE) continues to penetrate the mix.

1 International Energy Agency (IEA) Outlooks for gas markets and investment May 2023. Page 9
2
https://aemo.com.au/-/media/files/gas/national_planning_and_forecasting/gsoo/2023/2023-gas-statement-of- opportunities.pdf?la=en
3
https://aemo.com.au/-/media/files/gas/national_planning_and_forecasting/gsoo/2023/2023-gas-statement-of- opportunities.pdf?la=en

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Figure 2

o Underscoring the importance of GPG to deliver daily peak demand the report details
(emphasis added in bold) ‘’While shallow battery storage solutions can contribute some
increase in dispatchable capacity, these will not provide resilience to all reliability risks
in the NEM. As such, while current investment interest is largely focused on shallow
storages, AEMO forecasts currently indicate less regular but more important operation
of gas generation as dispatchable capacity as electricity supply transitions to higher
shares of renewable energy.’’

• The Australian Energy Market Operator (AEMO) west coast Gas Statement of
Opportunities (GSOO) outlines:

Firstly, gas demand in Australia is forecast to increase over the coming 10-year period, as illustrated in the below table, where in 2023 some 1,099 TJ of gas were required per day, compared to a forecast of 1,278 TJ/day in 2032. It should also be noted that this forecast does not include the 125TJ/d demand from the Perdaman Urea project which has taken FID since publishing of the GSOO.

Figure 3

Secondly, forecast supply is tight:

o ‘’Based on forecast demand and expected new and committed supply sources, the
Western Australian (WA) domestic gas market is facing a tight supply demand

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balance between 2023 and 2029, with demand up to 5% higher than potential
supply.’’4

o The ‘tight supply balance’ is more concerning when viewed over a series of WA
GSOO reports. ‘’The 2021 WA GSOO, in comparison, projected supply gaps in 2025
(42 TJ/day), 2026 (85 TJ/day) and 2027 (13 TJ/day).’’

o Figure 4 below illustrates what the AEMO Base scenario gas market balance looks
like if the additional Perdaman demand is included, and foreshadows a growing issue
with demand exceeding supply towards the end of this decade:

Figure 4

• The latest Australian Competition & Consumer Commission (ACCC) gas inquiry report –
September 2023 interim report.

o ‘’If additional uncontracted gas is exported and there is an upswing in GPG demand,
then gas supply could be insufficient to meet demand. It is important to recognise
that GPG demand is dependent on prevailing weather and other uncertainties in the
electricity market. As such demand for GPG fluctuates significantly which poses a
risk to the gas market of a possible surge in GPG demand.’’

These publications report a concerning dynamic that reinforces the importance of an orderly energy transition, as highlighted above, and can be simply articulated as:
• Reducing supply without also reducing demand inevitably leads to price spikes.
• Price spikes lead to economic volatility compromising affordability.
• There’s a risk that volatility will undermine popular support for the transition – an
outcome which nobody wants.

We seek to help avoid that outcome by investing in today’s energy system as well as investing in our transition, and the energy transition.

4
https://aemo.com.au/-/media/files/gas/national_planning_and_forecasting/wa_gsoo/2022/2022-wa-gas-statement-of- opportunities.pdf?la=en

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How will the expected trends in demand from gas-fired generators impact other gas users?

Overall, declining gas supply (evidenced by numerous reports) and unchanged or growing demand will predictably impact price. Market interventions to constrain resulting price impacts, would likely dampen investment in Australia’s gas system.

Western Australia is instructive in that as it transitions to 80% renewable power, the resulting
20% will be gas – however this 20% represents a significant increase in the amount of gas consumed in GPG to today.

However, acknowledging the growing role of GPG to meet daily peak demands in winter (to offset the reduction of generation from VRE), presents an opportunity for other gas users to leverage ongoing investment in supply and infrastructure for flexible (that is, off peak) gas usage.

What should government do to consider managing these impacts and to mitigate energy peaks caused by regional or seasonal variations?

While we acknowledge the importance of addressing such issues, they are the symptom of a broader issue of gas scarcity. A focused effort from government needs can address the underlying cause with stable policy and efficient processes to enable gas producers to bring supply to the market. bp notes other levers available to the government to address the specifics of peaks in regional / seasonal variations include:

• Incentivizing investment in increased gas storage;
• Incentivizing investment in flexible delivery infrastructure (regasification units);
• Promoting flexibility within the gas production and export system; and
• Incentivizing investment in increased pipeline capacity (to both move and linepack
molecules).

What is the role of offshore acreage releases in the context of consumer demand and emissions targets? What factors should the Australian Government consider when releasing acreage?

Offshore acreage releases continue to be a vital mechanism to underpin future supply. No gas discovery is infinite therefore, if no exploration is taking place, it follows that future supply will diminish.

Given the wide variation in global gas demand under various scenarios, and Australia’s natural resource endowment - Australia should continue to identify and provide opportunity for exploration and discovery of the resource requirements of the future. When considering future resource requirements, the Government should have a regional focus, mindful that key trading partners in the region rely on Australian gas for their energy security, and plan to do so for some time to come.

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How could the offshore petroleum regime be improved to meet the objectives of the strategy?
Policy stability is important, including fiscal policy and this is key to meet maintain Australia’s reputation as an attractive trade and investment destination.

Australia as a producer plays a key role in the region. Reducing supply from Australia is likely to cause a higher reliance in the region on LNG from other gas exporting nations, which relative to Australia’s focussed commitments, are less likely to impact decarbonisation goals. We also note the contribution Australia’s energy export makes to regional stability.

What are some of the opportunities for gas production in Australia in the medium (to 2035) and long term (to 2050)? How could these necessary developments support decarbonisation consistent with achieving emissions reductions goals? bp among other partners is a proponent of the Woodside-operated Browse project proposing to develop the Brecknock, Calliance and Torosa fields located approximately 425 km north of
Broome in the offshore Browse Basin.

In 2018 the Browse project partners selected the Browse to North West Shelf Project development concept to progress into the concept definition phase. The proposed development concept includes two Floating Production Storage and Offloading (FPSO) facilities, delivering gas via a 900km pipeline to the existing North West Shelf Project onshore facilities for processing into 11.4Mtpa of LNG and domestic gas.

Browse represents a key opportunity to:
• Underpin domestic gas supply for Western Australia’s power generation, industrial, and
future critical minerals activity;
• Enable continued exports to key trading partners who rely on Australian LNG for their
energy security;
• Enable ongoing energy trade between partners to evolve into decarbonised energy, such
as hydrogen; and
• Underpins the investment to decarbonise North West Shelf infrastructure.

Figure 5 below represents what the WA gas market balance could look like if further supply comes on from potential Perth Basin developments and the Browse project. It highlights the importance of developing these potential projects as well as the need to bring on additional supply of gas.

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Figure 5

As the existing North West Shelf is in decline, in the event Browse does not proceed in a timely manner - production will dramatically decline and cease by 2035.

How feasible, and at what scale, are alternatives to natural gas for the electricity sector?
You may wish to consider renewable gas alternatives for peaking generation, for example, biomethane and low-emissions hydrogen and other forms of grid-firming technologies like batteries and pumped hydroelectricity. What barriers exist to using these alternatives?

We believe hydrogen has a critical role in helping to decarbonise the Australian economy and ultmately achieve net zero – it’s complementary to electrification and will be pivotal in the decarbonisation of hard-to-abate industrial and transportation sectors where electrification is not commercially or technically feasible.

Our 2023 Energy Outlook shows a global increase in demand for low carbon hydrogen as the world takes action to reduce emissions. The uptake is relatively slow in the period to 2030, reflecting the long lead time to develop projects and the need for considerable policy to incentivize its use in place of lower cost alternatives. However, demand increases rapidly in the following decades, with demand increasing by a factor of about 10 in the period from 2030 to
2050.

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Figure 6
Here in Australia, low carbon hydrogen will also have an important role in allowing Australia to meet its emissions reduction goals. For example, the Australian Industry Energy Transition
Initiative indicates Australia’s heavy industry alone needs some 140kt of clean hydrogen each year by 2030, with demand increasing rapidly in the following decades.

At bp, we’re excited by the potential for Australia to be a major green energy producer and a green energy exporter. We believe that there is an opportunity to produce domestic energy at globally competitive costs, and that this will be an enabler for value-added products. By combining the renewable energy and resources that we have in abundance, we can expand the breadth of high value, low carbon products available for export and have tangible impacts on decarbonisation both domestically and globally.

But Australia’s low carbon hydrogen industry is in its early stages and has many challenges to overcome. These challenges include:

• Buyers need green pricing now to make strategic decisions, well before production
projects have taken final investment decisions
• Undeveloped supply chains make estimating project economics difficult,
• A lack of supporting infrastructure such as transmissions, ports, roads and housing;
• A requirement of initial government support to overcome the cost differential between
clean hydrogen and grey hydrogen/natural gas.
• While Australia has excellent skills and capabilities to leverage, the workforce remains
undeveloped; and
• A regulatory environment which is still evolving.

We see an important role for government in overcoming these challenges:

• The Commonwealth government to set policy, facilitate project-based trade links, and
create best-practice approval frameworks for regulators,
• State and local governments to prioritise access to land, develop enabling infrastructure,
reform power markets and contribute to important demand-side initiatives,

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• Educators to engage with businesses to understand the future workforce skills – and put
in place curriculum today for talent tomorrow. bp welcomed the decision to refresh the National Hydrogen Strategy, as well as the announcement and swift implementation of the Government’s $2 billion Hydrogen Headstart program.

Are there alternatives that businesses can use instead of gas (for example electrification, hydrogen, biomethane or circular economy inputs)? What barriers exist to using these alternatives? How can the substitution of gas be accelerated?
AND
What factor/s influence your willingness to adopt electric appliances or processes? How could governments support small businesses to decrease gas consumption?

Willingness to adopt alternatives to gas are inevitably driven by the availably of feasible technologies and the economics that underpin them. Alternative options for industrial users are often misunderstood – the following use of gas by Australian industry is insightful.

• Only 8% is for temperatures beneath 150 degrees Celsius (relatively easy and economical
to electrify)
• 72% is for temperatures above 150 degrees Celsius ie gas-fed furnaces (very difficult to
electrify)
• 20% of gas used in industry is for feedstock, typically for ammonia and derivative products
(i.e. ammonium nitrate explosives and fertilisers).5

Australian LNG in the world’s Net Zero transition

What do you see as the role of gas in Australia’s net-zero transformation?
AND
How can Australian LNG accelerate global decarbonisation without compromising energy security or affordability?

Gas has a key role to displace coal-based power generation, firm renewables (therefore enabling growth in renewables) in the grid by dispatchable power generation, supporting both today’s industries important to the economy and tomorrow’s industries such as critical mineral extraction and refining. bp’s 2023 Energy Outlook provides a global overview of the period to beyond 2030, illustrated below.

LNG trade increases robustly in the near term but the range of uncertainty widens post 2030, with continuing demand for LNG in emerging markets as they grow and industrialize, offset by falling import demand in developed markets as they transition to lower carbon energy sources.

• LNG trade grows strongly over the first 10 years of the outlook, increasing by around 60%
in New Momentum and Accelerated and by a third in Net Zero.

5
ACIL Allen analysis of DCCEEW (2022) and of https://arena.gov.au/assets/2019/11/renewable-energy-options-for- industrial-process-heat.pdf

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• Much of this growth is driven by increasing gas demand in emerging Asia (China, India, and
other emerging Asia) as these countries switch away from coal and, outside of China,
continue to industrialize. LNG imports are the main source for this growing use of natural
gas, accounting for 65-75% of the increase in gas consumed in emerging Asia out to 2030
across the three scenarios.

• European LNG imports also increase materially out to 2030 in New Momentum and
Accelerated, reflecting the fall in Russian pipeline imports and persistent natural gas
demand.

• The range of uncertainty in LNG trade increases materially post 2030. Imports of LNG
increase by around 30% between 2030 and 2050 in New Momentum, whereas they fall by
around 40% over the same period in Accelerated and Net Zero.

Figure 7

Australia will need to compete in this dynamic. bp’s Energy Outlook detailed that “Australian
LNG exports decline post-2030 in all three scenarios reflecting increasing costs and constraints on upstream gas production in Australia.”, giving further credence to the government’s Future
Gas Strategy consultation.

LNG exports have enabled an incredible history of reliably providing energy to Australia’s key trading partners (many of whom have also invested in the Australian LNG industry). Looking ahead, reliably continuing this supply is critical to enable Australia to leverage our reputation and relationships to take advantage of our natural endowment as a green energy superpower and pivot to lower carbon energy exports.

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What are the major barriers and opportunities for new supply? How can the Australian
Government prioritise, mitigate or manage these?

We believe the greatest barrier to bringing gas developments to market is an uncertain and prolonged approvals regime.

Importantly, this is not a call for weaker regulation, Australia’s policy setting should reflect best practice. Nor is it about constraining judicial review of decisions, which are an important feature of Australia’s regulatory framework. Rather, clarity (especially on consultation) for all stakeholders, enabled by a simpler framework that removes duplication between government departments and jurisdictions. bp does, and Australian industry should, welcome rigorous standards using fair processes.
However, the issue today is that this standard is continually changing, and industry and regulators alike are unclear where it is. This uncertainty poses the greatest risk we see to large- scale energy projects. In addition to foregoing critical foreign investment, we’ll miss treasury revenues, weaken the resilience of our economy, and those of key trading & security partners.
The acknowledged supply imbalance will further impact energy prices amidst cost-of-living challenges, undermining support for our NetZero target.

Despite widespread understanding there is inadequate urgency to address this issue. At best, orthodox policy reform (in some cases, measured in years) is viewed as the solution. This challenge of meeting needs of various State and Commonwealth regulators is contributing to resourcing pressures – not just for government and industry but also for impacted stakeholders and is having knock-on impacts through the supply chain from the resulting delays. Urgent support for further process review and streamlining – a multi-agency approach to mapping approval pathways & timeframes would be helpful for everyone.

A stable investment environment will have a large reward. It will ensure that the capital, skills and relationships embedded within today's gas sector can participate fully in the Australian energy sector's transition. This is important for three key reasons:
• Existing investors are well-placed to provide large volumes of capital, which will be
needed to transition to net zero.
• The gas sector, and particularly the LNG sector, has close trading ties with Australia's
major trading partners, and these partners are likely to remain key buyers of Australia's
energy and energy-intensive commodities.
• The skills and infrastructure that underpin today's gas sector will be very valuable during
the transition to lower-emissions energy and energy-intensive commodities such as low-
emissions gases, green ammonia and green steel.

How can the Australian Government better communicate and provide more transparency to local communities regarding gas projects?
AND
What opportunities exist to improve engagement and consultation processes with industry?
AND
How can all levels of governments better support the industry to engage with First Nations people and community groups?

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Key to successful consultation is early engagement and establishment of trusting, respectful relationships. However, under the current approval framework, consultation is largely project specific and lead by industry once projects are well defined.

There’s an opportunity for a more strategic approach involving the Australian Commonwealth and relevant state Governments taking a more active role providing information to communities about activities generically and the regulatory process. In doing so governments would gain a thorough understanding of local sentiment and be in an informed position to address community concerns and build community awareness about the role of gas. Consultations could commence much earlier in the process (for example at the time of acreage release).

A government-led consultation effort could provide added benefits in that:
• Information could be centrally located and easily accessed (delivering efficiencies).
• A collaborative approach would address current concerns around ‘over-consultation’ and
‘consultation fatigue’.
• Government is better placed to understand and talk to the direct and indirect cumulative
impacts of activities (including with other industries).

Bp has been engaging collaboratively with industry peers to identify opportunities to improve engagement and consultation processes. Working within the current regulatory framework, opportunities for improvement include:

• Reforms to the current legislation to clarify requirements for industry and stakeholders and provide greater process certainty.
• Development of a framework for industry consultation that identifies key principles and a methodology designed through a consultative process.
• Collaboration of information and sharing of consultation materials to enable more consistent and easily accessible information.

In addition, there are opportunities through government-led consultation and leveraging off public strategy / positions such as this Future Gas Strategy. This would enable earlier engagement, understanding and addressing of issues in consideration of stakeholder needs.

Lasty, there could be improvements gained in a review of the current mechanisms in place for stakeholders to lodge complaints and /or appeals. The current complaints / appeals handling processes should be reviewed to address the impacts to approval timelines and certainty.

What action is your industry or company taking to reduce greenhouse gas emissions and does gas use have a role to play?

At bp our ambition is to be a net zero company by 2050 or sooner and to help the world get to net zero. To support this ambition in Australia, we have set ourselves several aims including:

• Reducing our own operational (Scope 1 and 2) GHG emissions through technologies
targeting leaks, venting, flaring and the use of fuel gas
• Supporting carbon capture and storage opportunities
• Improving our efficiency in power consumption, managing demand, and substituting for
lower carbon power generation.

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• Increasing our investments in renewable businesses in Australia and globally, and
• Continuing to advocate for policies that support Net Zero.

Our view is that gas will remain part of the Australian and global energy mix for decades to come. This means the production, supply and use of natural gas must be decarbonised as fully and quickly as is practical to meet the Paris climate goals. Australian policy can support this transition by:

• Providing incentives at home to reduce emissions from the production, and from shipping
(including partnering with other countries);
• Consider further policies to drive uptake of low carbon shipping (noting the Government’s
upcoming transport decarbonisation roadmaps);
• Supporting development of technologies to reduce the emissions from end use – for
example, by investing in industrial applications of CCS to reduce domestic emissions and
support industry-wide learning and costs reductions; and develop policy frameworks that
would allow Australia to provide ‘CCS as a service’.
• Support the development of low carbon alternatives like low carbon hydrogen and
renewable fuels.
• Work collaboratively with other governments to encourage them to implement policies that
support the transition to low carbon alternatives, drive efficiencies, and deploy CCS.

As introduced bp, like other gas producers, is a key proponent of decarbonised gas (green hydrogen and CCS) projects – including four in Western Australia. With insights to the global energy system, commercial relationships across the region, and technical capabilities and experience, we are well placed to develop and scale these technologies.

How can Australia support the potential for cost-effective, safe and verifiable CCS projects, including for the gas sector, other industries and our region?
AND
How can the Australian Government better communicate and provide more transparency to local communities regarding CCS projects?

Achieving deep global reductions in CO2 emissions will require a mix of technologies and solutions. We, like other experts such as the IPCC and IEA, believe that CCUS has a critically important role.

CCS is based on a well-understood technology that has been in use since the 1970s.
International Energy Agency, the CCUS facilities currently in operation around the world have a collective capacity to capture more than 40 MtCO2 each year.

The Intergovernmental Panel on Climate Change (IPCC) has indicated that CCS is one of a suite of solutions that can help deliver net zero and net-negative emissions.

In our 2023 Energy Outlook, we see CCUS playing a central role in enabling rapid decarbonization trajectories: capturing industrial process emissions, acting as a source of carbon dioxide removal, and abating emissions from the use of fossil fuels.

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Figure 8
CCUS can be used to reduce the emission associated with the production and use of natural gas. Given the ongoing role for natural gas over the coming decades, we need to focus on ways to reduce emissions from its production, distribution and use. For example, the Browse
Joint Venture has determined that a CCS solution to abate Browse reservoir CO2 is feasible and has incorporated it into the development concept.

We anticipate natural gas will be needed to support the rapid uptake of intermittent renewables. CCUS can be used to reduce the emissions associated with this firming.

CCUS can also be used to decarbonize hard-to-abate industries like steel and chemicals.

It can also be used with natural gas to produce low carbon hydrogen, which our analysis indicates may be more cost-effective initially than low carbon hydrogen produced from renewable energy, particularly in those locations that don’t have access to abundant local renewable energy.
Given Australia’s natural advantages in the storage of emissions, it can support the decarbonisation of those countries that do not have the same access to renewable energy or viable CCS sites by providing CCUS as a service. This can help reduce the cost to Australia through scale. It can also be an avenue to reduce Australia’s scope 3 emissions. For example, many major industrial point emitters in the Asia-pacific region do not have access to viable CCS. Japan, Korea, Taiwan, and Singapore all have emission reduction ambitions that will likely need the support of other countries including by providing CCS as a service. Japan’s Ministry of Economy, Trade and
Industry estimates that Japan may need to capture and store 140-240mtpa of CO2 by
2050, and is targeting 6- 12mtpa of CCS by 2030.

Importantly, CCUS can also be used with biomass for power generation and with technologies that capture carbon from the atmosphere to provide negative emissions.

We understand that it can be confusing for some in the community to understand the technology and the important role it will play in support of Australia’s and the global transition.

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The IEA has stated the importance of CCUS as (emphasis added):

CCUS is an important technological option for reducing CO2 emissions in the energy sector and will be essential to achieving the goal of net-zero emissions.6
Australia should remain ‘open’ to CCUS operating alongside other abatement options. Policy that can support collaboration with our trading partners on CCUS as a service; and policy that incentivises negative emissions technologies including CCUS. bp commends the government on the recent passing of the Environment Protection (Sea
Dumping) Amendment (Using New Technologies to Fight Climate Change) Bill 2023 as a foundation to advance these opportunities.

What are your long-term business and investment plans beyond 2035? How might these affect local economies, employment and communities? bp has a proud history of investment and participation in the success of Australia’s gas producing industry. As with all commercial decisions, investment and participation beyond
2035 is based on the competitiveness of Australia with other projects in bp’s portfolio – consistent with its strategy.

As gas producing basins plateau and ultimately decline, in the event further developments do not take place – the enabling infrastructure (i.e. liquification and export plants) with related workforces / economic activity will be reduced.

A clear example is Northwest Shelf related infrastructure– where in the absence of timely gas from the Woodside-operated Browse development (currently pre-FEED), LNG trains will inevitably and gradually switch off.

Closing remarks bp commends the approach taken in the Future Gas Strategy consultation. We look forward to continuing to work with the Government on the important role that gas will play as the world works toward net zero emissions.

6
https://iea.blob.core.windows.net/assets/181b48b4-323f-454d-96fb-0bb1889d96a9/CCUS_in_clean_energy_transitions.pdf

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