The Australian Government is subsidising Ampol's oil refinery at Lytton, in Queensland, to stop the company closing it down. Photo: Andrew Scott

They are NZ and Australia’s two biggest fuel suppliers but, despite their work around biofuels and fast chargers, neither Z Energy nor Ampol has committed to cutting customer emissions.

The flares from the oil refineries they own at Marsden Point and Lytton are just their most visible emissions. But as Australia’s biggest fuel company Ampol bids to buy up its New Zealand counterpart, attention is turning to the emissions of the millions of planes, trains, trucks and cars that they fuel.

Both Ampol and Z Energy have made headlines in their industry’s decarbonisation initiatives:  Z Energy boss Mike Bennetts was photographed with Jacinda Ardern at Z Energy’s biodiesel plant in south Auckland, as she announced her Government’s Clean Car Import Standard and mandatory biofuel blend in all transport petroleum.

Then Ampol chief executive Matt Halliday hosted Australian Prime Minister Scott Morrison at the company’s oil refinery in Queensland last month, ahead of boldly announcing Ampol would move to net zero emissions by 2040, spend $100 million on “future energy” projects and use the refinery near Brisbane to produce green hydrogen.

What do you think? Click here to comment.

But behind the “net zero” headlines is a harsh reality: Ampol has only committed to cut its operational emissions – that’s the climate gases emitted to get its petroleum to the pump. It is taking no responsibility for the other 80 percent of its emissions, resulting from the use of its petrol, diesel and jet fuel.

These are called Scope 3 targets – and in an interview with Newsroom, Bennetts admits neither company has committed to cut them.

Until the past year, fuel companies have resolutely ignored calls to go net zero across Scopes 1, 2 and 3 – but that is changing. Last year BP committed to reducing emissions on an “absolute” basis, which it defines as including Scope 3 emissions. And this year a majority of shareholders at US oil and gas producer ConocoPhillips voted in favour of setting emissions reduction targets that include the use of the company’s fuels.

Then in June, activist shareholders won a ground-breaking court ruling against Royal Dutch Shell: that its carbon intensity targets were inadequate and inconsistent with the 2015 Paris climate agreement. Shell was ordered to reduce the actual emissions of the company and its customers by 45 percent by 2030, on the way to the company’s stated goal of net zero emissions by 2050.

Z Energy chief executive Mike Bennetts and his staff showed Prime Minister Jacinda Ardern around the company’s biodiesel plant at Wiri, in January this year. Photo: Pool/Getty

And in the US, Securities and Exchange Commission chair Gary Gensler is moving the market regulator closer to requiring Scope 3 carbon disclosures from companies, as investor concerns about the material impact of climate change on financial performance continue to escalate. He said last month that many investors are demanding Scope 3 disclosures, and he has asked for recommendations.

David Tong, the Wellington-based global industry campaign manager for Oil Change International, said Z Energy had made no commitment to cutting its scope 3 emissions, but only to reduce its scope 1 and 2 emissions intensity.

Ampol was worse – it did not even have an emissions-intensity based target. And in what might be a worrying indication of its stance to the NZ market, its local subsidiary Gull seemed to have no emissions reductions targets at all. “What confidence does that give us in its present parent company?”

“Investors and regulators like the Commerce Commission should explore options to push oil and gas companies like Z or Ampol to step up their targets in line with the Paris Agreement’s 1.5ºC objective,” he said.

“Difference in New Zealand law compared to the the law in the Netherlands mean that it wouldn’t be possible to bring precisely the same case as in the Shell case in the Netherlands, but there are legal and policy options that are worth exploring.”

Ampol boss Matt Halliday has announced an A$120m investment in future technologies, including 120 taxpayer-subsidised fast-chargers on the company’s forecourts.  Photo: Renee Nowytarger/Ampol

With A$7m in Government subsidies, Ampol plans to built fast chargers on 121 forecourts across Australia.

Asked by Newsroom whether Ampol would commit to reducing its Scope 3 emissions, Halliday refused to make any commitments. “I think we’re pretty clear in our decarbonisation strategy that we’re investing a material amount of money in providing low emissions solutions for our customers – a minimum of $100m by 2025.

“And I really think that the greater scale in a combined business can help both businesses build on their existing work to accelerate momentum. Because ultimately this transition is all about finding and providing low emissions solutions for our customers.”

Z Energy is focused on biofuels and downplays EVs as a standalone solution. Bennetts has told Newsroom that fast chargers on forecourts are not a long-term transition option for Z Energy, because charging takes too long and is better suited to homes, workplaces or perhaps supermarkets.

This week, after the announcement of the $1.97 billion Ampol offer, Bennetts told Newsroom both Z and Ampol had demonstrated their decarbonisation credentials.

“We’ve been at it longer, but they’ve been very active in the last six to 12 months,” he said.

“Neither company has specific targets. But certainly Ampol has announced investments in charging infrastructure and a hydrogen activity next to their refinery in Lytton, Brisbane. They’ve invested in a hydrogen start-up, so they’re just as active as us.”

Gull does not appear to have announced any emissions reductions targets; in its submission to the Climate Change Commission it simply calls for a market-driven response through the emissions trading scheme, and warns against a “singular reliance” on EVs, saying the commission should focus more on other energy sources like biofuels and hydrogen fuel cell technology.

Ampol’s oil refinery on the Fort Lytton headland, near Brisbane. Photo: Monique Cannon

Cindy Baxter, a climate campaigner for Coal Action Network Aotearoa, said to keep warming to 1.5˚C, the world must decarbonise the economy.

“That means every oil company today needs to be looking to cut its emissions, cut production, and diversify, or risk becoming a stranded asset, and any company not considering such a strategy is foolish.

“Opposing climate action is even more short-sighted – and could face legal challenges. We need to see this industry supporting government efforts to fight climate change, everywhere, including in Aotearoa.”

Tong said: “There are good reasons to worry that an Ampol buyout of Z Energy could mean that Z’s carbon pollution goes up across its supply chain. What Z has actually done so far isn’t enough to align its business with the Paris Agreement, but Ampol is markedly worse.

“The reality is that no major oil and gas company comes close to anything like doing what’s necessary to align their business with the Paris Agreement. Despite its leading role in the Climate Leaders Coalition and support for the Zero Carbon Act, this includes Z. It has no concrete plans or targets to cut the emissions from its customers burning the products it sells.”

Tong is the author of an Oil Change International report, published overnight in Washington DC, that says central banks should adapt their asset management practices to exclude from their portfolios all fossil fuel production and fossil fuel intensive consumption sectors, and adapt their regulatory practices to eliminating commercial banks’ exposure to all fossil fuel production.

Newsroom Pro managing editor Jonathan Milne covers business, politics and the economy.

Leave a comment