He also wrote in The Australian that Mr McGowan ‘must sort out the confusion’ and confirmed to the Australian Financial Review he had encouraged his peers to complain. The opinion piece ran in the paper on the same day. Credit:The West Australian The next day executives of Woodside, Chevron, Santos and Shell met with the Premier and immediately afterwards the Premier confirmed the EPA would withdraw the guidelines pending "consultation" with industry. Woodside executive Meg O'Neill arriving at WA's Parliament House for the meeting with the Premier. Credit:Philip Gostelow The Australia Institute has now estimated what the EPA's requirements could have meant for Woodside if applied to its two currently operating WA projects, Pluto and the North West Shelf in the Pilbara.

It took profits from Woodside’s 2018 annual report and compared them to the current cost of a federal government carbon credit and the two projects’ publicly reported carbon emissions. North West Shelf Gross Profit $AUD1.165b (total sales revenue minus operational costs, not counting capital depreciation, last financial year)

1.3 million tonnes of CO2 (17 per cent of NWS’ total as Woodside is 17 per cent owner, sole operator.)

$13.87/tonne to offset 1.3 million tonnes of CO2 = $17.7 million, 1.5 per cent of gross profit. Pluto Gross profit $AUD2.18b

1.8 million tonnes of CO2 (90 per cent of Pluto’s total, as Woodside is 90 per cent owner, sole operator.)

1.8 million tonnes of CO2 (90 per cent of Pluto’s total, as Woodside is 90 per cent owner, sole operator.) $13.87/tonne to offset 1.8 million tonnes of CO2 = $24.5 million, 1.1 per cent of gross profit.

TAI further calculated that even if the much higher shadow carbon prices being used by BP and Shell came to pass ($AU56 a tonne), the cost would only rise to 6.2 per cent of NWS gross profits and 4.6 per cent of Pluto’s. In its annual report Woodside said its “high margin, low cost” projects were generating cash flow for the business. That ready flow of cash gives it some resilience against the risks of transition to a low-carbon economy, as shown in research released in November from UK-based CDP. The Carbon Disclosure Project, a voluntary disclosure platform for carbon risk to inform investors, ranked the world’s top 24 oil and gas companies, ranking their readiness for transition. The report showed the company was well placed to cope with risk, whether ‘transition’ risk such as electric vehicles destroying oil demand, or ‘physical’ risk from climate change.

But it ranked very poorly – 18th of the 24 biggest oil and gas majors – in terms of its proactive steps towards opportunities, such as investing in low carbon assets, research and development and embracing innovative technologies. The report placed Woodside as similar to Russia’s Gazprom, and nowhere near industry leaders such as Equinor and Shell, in terms of seeking opportunities. Woodside also ranked 11th out of the 24 in climate governance, the ranking for action on emissions reductions strategies. Institute climate and energy program director Richie Merzian said being such a low-cost, high margin producer Woodside was actually an ideal candidate to invest in the offset market. “This report is more proof that they can afford to pay,” he said.

Woodside has already told investors it faces climate change-related risks “including changes in product demand, carbon pricing, uncertainty surrounding future regulatory frameworks and increased stakeholder expectations” in its annual report. The Norwegian government recently instructed its sovereign wealth fund, the Norwegian Oil Fund, to divest itself of its 1.4 per cent share in Woodside. While the fund is also shedding shares in many other oil and gas exploration and production companies, they are holding onto investments in some of the biggest companies to take advantage of future earnings from renewable energy. Woodside chief executive Peter Coleman recently declared 2019 "the year of the deal" as the company prepared to sell a stake in Scarborough and add infrastructure at Pluto. But its quest to find major global partners and customers for Scarborough has not been helped by the EPA guidelines furore exposed the risks surrounding Scarborough and Browse emissions.

Browse, a much more carbon intensive project than Scarborough, is expected to emit up to 7 million tonnes a year of CO2 at its peak, averaging 4 million tonnes a year over 50 years. The AFR has reported that based on current carbon credit prices, it would cost Woodside on average $56 million extra a year if credits were available, but probably significantly more. Wood Mackenzie research analyst David Low told the AFR the CO2 profile could be a concern for some partners who had global company CO2 targets to meet. Following the EPA’s backdown, the Australasian Centre for Corporate Responsibility released a statement saying the episode confirmed the overwhelming power of the fossil fuels lobby. “Premier McGowan has confirmed who really runs climate policy,” climate and environment director Dan Gocher said.

“The great hypocrite in all of this is Woodside’s Peter Coleman, who was happy to swan around in November last year calling for a price to be put on carbon, only to aggressively lobby against guidelines that would effectively set such a price. “The events of the last week have sent a very clear signal: these companies are not afraid to get their hands dirty, and they will fight tooth and nail against sensible climate policy, as they have done for the last 20 years.” A Woodside spokeswoman said the company's position on the proposed EPA Greenhouse Gas Guideline had been consistent. "The guideline was inconsistent with the timelines envisaged under Australia’s Paris Agreement goals, creating significant uncertainty for investors," she said. "If applied, the guideline would put Western Australian industries at a serious disadvantage to those elsewhere in Australia.