Fossil fuel giant Santos has rejected allegations it plucked arbitrary figures out of thin air to support claims it could reach net-zero emissions by 2040, a court has been told.

The oil and gas exploration company has been accused of misleading and deceptive conduct by advocacy group Australasian Centre for Corporate Responsibility in Federal Court proceedings launched in August 2021.

As a 13-day trial began on Monday, Santos’ barrister Neil Young KC denied claims of “greenwashing,” saying his client had merely set out targets and had not promised any achievements.

“They are all targets, they’re not promises or predictions to achieve those outcomes,” he told Justice Brigitte Markovic.

Announcements that the firm could reduce emissions by 26 to 30 per cent by 2030 and reach net-zero by 2040 did not have to be accompanied by ready-made projects or detailed modelling, Mr Young said.

“Some of the elements depended totally on the development of a market that did not currently exist and that could not be modelled in the way contended for by ACCR,” he argued.

Santos had never argued that natural gas was carbon-neutral but rather that it was an important transition fuel as the country moved towards net-zero, Mr Young said.

He argued that the firm had also flagged the use of carbon capture technology to remove carbon dioxide emitted during the production of “clean” hydrogen fuel but only if that was accompanied by carbon credits.

Earlier on Monday, barrister Noel Hutley SC made arguments for the advocacy group, claiming that Santos lacked reasonable grounds for making its statements.

Santos’s climate change “plan” was not a plan at all, he told the court.

“It was little more than a series of speculations … cobbled together in a matter of weeks.”

The centre holds shares in firms like Santos to try to force them to meet the goals of the Paris Climate Agreement, an international treaty on climate change that was signed by various nations in 2016.

The mining giant’s chief executive Kevin Gallagher told a December 2020 investor briefing his company had a “doable plan” to reach its climate targets, Mr Hutley said.

“I think we’re now at a point where we can talk confidently about realistic roadmaps, real activities and a plan to achieve net-zero by 2040,” the company boss said at the time.

This was all pitched with certainty and not as mere aspirations, Mr Hutley said.

The firm claimed it could completely reduce its emissions through the use of carbon capture technology and blue hydrogen production, with a minimal reliance on offsets, he said.

Blue hydrogen is created from natural gas but uses carbon capture to remove the related emissions from the atmosphere.

Santos forecasts failed to include carbon dioxide produced in the manufacturing of this hydrogen and the fact that it was impossible to completely capture all emissions produced, Mr Hutley said.

The firm’s claims it could rely on carbon offsets to meet its goals would “make a total farce” of the touted roadmap, he added.

Calculations of estimated emissions and barrels of oil and gas produced out to 2040 were “wholly arbitrary”, Mr Hutley said.

“Those figures get locked in because of Mr Gallagher’s directions,” he said.

“The basis for them is wholly unexplained.”

Santos allegedly made the misleading statements at the December 2020 investor day and in its 2020 annual report and climate change report, both published in February 2021.

The advocacy group is seeking injunctions forcing the firm to issue a corrective notice about the environmental impacts of its operations.

It is not seeking damages or compensation, saying it had filed the lawsuit to vindicate the public interest in ensuring corporate climate change commitments are reasonably based.

The trial continues Tuesday.

---

Written by: Miklos Bolza © AAP 2024