{"data":{"id":"sbm2e0b9ac82367a05fcd3d5","short_id":85,"created":"2024-05-14T05:10:21.475Z","space_id":"spc2d334047ad0d7e7aa8046","project_id":"prj2d3336e5a90d264a70605","org_id":"org25a4efd179c5b5ba55d6e","content":{"name-of-organisa_9974be":"Chevron Australia","upload-your-subm_09396f":"fil2e0b9a905067c390da9bc"},"is_topic":false,"title":null,"count_replies":0,"closed":false,"reply_to_id":null,"last_activity":null,"reactions":{},"_files":{"fil2e0b9a905067c390da9bc":{"id":"fil2e0b9a905067c390da9bc","bucket":"files-au-climate","remote_path":"cca/p/prj2d3336e5a90d264a70605/submission/spc2d334047ad0d7e7aa8046/Chevron_Australia_Submission_Climate_Change_Authority_2024_Issues_Paper.dc19f93f.pdf","url":"https://storage.googleapis.com/files-au-climate/cca/p/prj2d3336e5a90d264a70605/submission/spc2d334047ad0d7e7aa8046/Chevron_Australia_Submission_Climate_Change_Authority_2024_Issues_Paper.dc19f93f.pdf","filename":"Chevron Australia Submission - Climate Change Authority 2024 Issues Paper.pdf","transcribed":"                                           David Fallon\n                                 General Manager, Energy Transition\n\n\n\n\nMay 14, 2024\n\n\n      Climate Change Authority 2024 Issues paper: Targets, pathways and progress\n\n\nChevron Australia submission in response to the Climate Change Authority’s 2024\nIssues paper: Targets, pathways and progress\n\nChevron Australia welcomes the opportunity to provide perspectives on the Climate Change\nAuthority’s (the Authority) Targets, Pathways and Progress discussion paper. We appreciate the\nAuthority’s important role as it works to finalise advice and recommendations to the Government on planning for a net zero future, including Australia’s 2035 emissions reduction target, and the\nSectoral Pathways Review.\n\nChevron Australia remains committed to working with the Australian Government to help inform well designed climate policy that effectively reduces greenhouse gas emissions to achieve global targets at the least possible cost. In the spirit of working constructively and collaboratively, we would welcome further engagement with the Authority as it finalises its advice and recommendations.\n\nPlease find below background on Chevron Australia, a short statement on our position regarding net zero, and responses to the questions posed in the Issues paper. Note that this submission represents the views of Chevron Australia and not necessarily those of our joint venture participants.\n\nAbout Chevron Australia\n\nChevron Corporation is one of the world’s leading integrated energy companies and has been present in Australia, via its Australian subsidiaries, for over 70 years. The Chevron Australia group of companies is headed by Chevron Australia Holdings Pty Ltd (Chevron Australia).\n\nChevron Australia is the operator of the Gorgon and Wheatstone LNG and domestic natural gas projects in the north-west of Western Australia. In addition, Chevron Australia holds a one-sixth interest in the North West Shelf LNG Project. Through these preeminent Australian LNG and domestic natural gas projects, Chevron Australia is a major exporter of LNG and major supplier of domestic natural gas to the Western Australian market.\n\fABU240500438\nPage 2\nMay 14, 2024\n\nThe Chevron-operated Gorgon carbon capture and storage (CCS) system is currently the largest integrated CCS project of its kind in the world. Chevron Australia is committed to safely injecting and sequestering carbon dioxide (CO 2) as part of its emissions reduction strategy.\nSince commencement of the CCS system, Chevron Australia has:\n\n       • Injected/stored or offset almost 20 million tonnes of GHG (including more\n         than 9.5 million tonnes of actual abatement and more than 10 million verifiable offsets\n         acquired and surrendered); and\n       • Invested more than $3.2 billion in the Gorgon CCS System with further investment in\n         the coming years to improve system performance and increase injection/storage\n         rates.\n\nChevron Australia Downstream, another Australian subsidiary of the Chevron Corporation, delivers quality fuel and lubricant products and services, including via its national network of\nCaltex service stations. Caltex – a brand owned by Chevron globally – has been present in\nAustralia for more than 70 years.\n\nChevron Australia Downstream also owns and operates three product import terminals. We deliver products and services to a range of industries including mining, resources, agriculture, transport, marine and aviation. We offer services such as bulk fuel supply, oils and lubricants, fuel equipment solutions, customised fleet fuel card solutions and expert advice on fuel management and health and safety.\n\nChevron New Energies (CNE) was launched in 2021 to accelerate Chevron’s energy transition strategy by growing lower carbon businesses. CNE is targeting harder-to-abate sectors where competitive advantages can be built over time and is focused on growing key businesses consistent with its strategy:\n\n       •   Hydrogen;\n       •   Carbon capture, utilisation, and storage (CCUS);\n       •   Offsets and other emerging lower carbon opportunities; and\n       •   Renewable Fuels.\n\nWith the specific purpose of assisting Chevron in achieving its lower carbon ambitions and recognising Australia’s potential to be a significant supplier of lower carbon energy, Chevron\nAustralia New Energies Pty Ltd (CANE) was established in 2022. We are also part of three consortia that have been granted three separate greenhouse gas assessment permits off the coast of northern Australia.\n\nThe entities described above are collectively referred to as Chevron for the purposes of this submission.\n\nChevron Australia is a member of Australian Energy Producers (AEP), the Australian Industry\nGreenhouse Network (AIGN) and the Australian Hydrogen Council (AHC). Chevron Australia\nDownstream is a member of Bioenergy Australia (BA) and Australasian Convenience and\nPetroleum Marketers Association (ACAPMA) and an associate member of the Australian\nInstitute of Petroleum (AIP).\n\fABU240500438\nPage 3\nMay 14, 2024\n\nChevron’s position on net zero\n\nClimate change is global in nature and addressing it will require meaningful global and collaborative approaches from policymakers. Chevron supports the aims of the Paris Agreement and its goal of “holding the increase in the global average temperature to well below 2° C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5° C above pre- industrial levels”. To that end, Chevron is supportive of Australian Government policies that deliver on commitments under the Paris Agreement, and that contribute to and are compatible with achieving net zero emissions globally.\n\nOur strategy is to leverage our strengths to safely deliver lower carbon energy to a growing and industrialising global population. Globally, we are investing to grow our traditional business, lower the carbon intensity of our operations and grow new lower carbon businesses in renewable fuels, carbon capture and offsets, hydrogen, and other emerging technologies.\n\nAustralia’s policies must recognise there are multiple pathways to achieve net zero emissions globally. Chevron believes that the design and implementation of net zero policies should account for technological, economic, and societal realities while maximising flexibility, optionality and affordability. Policies which exclude or limit certain technologies or energy sources should be avoided, as this shrinks the range of potential pathways to achieve net zero emissions globally.\n\nFurther, it is Chevron’s view that planning and streamlined permitting of all lower carbon energy sources, including natural gas, and their associated infrastructure, will be essential to meeting the Government’s decarbonisation targets, and those of our partners in the Asia-Pacific region.\nIt is critical for the Government to support the continued role of natural gas by sequencing the review and support for ongoing natural gas investment to avoid structural shortages while electrification increases.\n\nChevron also supports a well-designed price on carbon, applied as widely and broadly as possible, as the best approach to reduce greenhouse gas (GHG) emissions and we encourage national policies that support international linkages (for example, through Article 6 of the Paris\nAgreement), with the goal of ultimately building up to a liquid and integrated global carbon market.\n\nFor more details regarding Chevron’s perspective on climate change, please refer to our 2023\nChevron Climate Change Resilience Report.1\n\n\n\n\n1\n    2023 Chevron Climate Change Resilience Report (chevron.com)\n\fABU240500438\nPage 4\nMay 14, 2024\n\nResponses to the Authority’s questions\n\n1. How should the Authority take account of climate science and Australia’s international\n   obligations in considering possible emissions reductions targets for 2035?\n\nChevron is encouraged that the Authority is incorporating scientific evidence, technological feasibility, economic implications, and social acceptance considerations into its advice on emissions reduction targets and that it is proposing to provide a clear roadmap for implementation. We recommend the Authority’s advice and recommendations on Australia’s\n2035 emissions reduction targets be consistent with climate science and support the delivery of\nAustralia’s commitments under the Paris Agreement that contribute to and are compatible with achieving net zero emissions globally.\n\nWithout a realistic and transparent path forward, Australia risks undermining the credibility of policy efforts, creating scepticism and eroding trust in the efficacy of climate change policy initiatives. This could affect future efforts to mobilise support for, and to implement, climate action. The use of economic modelling to support the Authority’s 2035 target recommendation to the Australian Government (p. 36) will be beneficial in understanding potential pathways and in understanding trade-offs. This modelling must be based on robust assumptions for each sector and Chevron is happy to provide support to the Authority regarding any assumptions relevant to the sectors in which Chevron works.\n\nWe believe that the design and implementation of national emissions reduction targets and policies should account for technological, economic, and societal realities while maximising flexibility, optionality, and affordability. Greenhouse gases are global in nature, meaning an emission or emission reduction in any part of the world should be viewed as having equivalent value, and thus emissions reductions should be incentivised to occur in the most efficient manner possible. As highlighted further in our response to question 6 below, part of that incentivisation needs to include appropriate financial mechanisms and government support for lower carbon industries and technologies.\n\n2. How should the Authority weight the goals of ambition and achievability in\n   considering possible emissions reductions targets for 2035?\n\nThe Authority clearly states in its paper it will recommend a target that is ambitious, achievable, and advantageous for Australia, and aim to push the boundaries of what is currently deemed possible while providing a clear roadmap for implementation.\n\nChevron is encouraged that the Authority is looking to balance ambition and achievability when recommending a possible emissions target for 2035. An overly ambitious target without realistic pathways and policy settings, which doesn’t account for economic, technological and societal realities risks undermining efforts to make the transition to net zero.\n\nAs noted above, Chevron believes national net zero policies should account for and routinely assess economic, technological, and societal realities and feasibility, to ensure policies balance economic, environmental and energy-security needs to enable increased ambition. We recommend that the Authority considers the most efficient, cost-effective pathway to net zero, that takes advantage of the least-cost emissions reductions opportunities wherever they may occur. We are also conscious of the need to balance affordability, reliability, and lower carbon\n\fABU240500438\nPage 5\nMay 14, 2024 activities to enable an energy transition that does not disproportionately impact lower income earners and small businesses, in Australia and in the markets that Australia supplies.\n\nNet zero policies must also be achievable using technologies expected to be available at scale within the applicable timeframe of Australia’s emissions targets. All technologies and energy sources should be available – policies which exclude or limit certain technologies or energy sources should be avoided, as this could reduce the capacity for Australia to meet its targets.\nChevron recommends a framework that does not pick winners or losers, but enables innovation and the market, with government support such as shared infrastructure, to work out the best path.\n\nAdditionally, Australia’s programs and approval processes must support the necessary levels of construction, manufacturing, and associated infrastructure to support the transition.\n\nThe benefits, costs, impacts and trade-offs of net zero policies and plans should be transparently communicated to the public and be based on sound science, and include accurate real-world data and information to the extent possible, accompanied by rigorous analysis and costings.\n\n3. How can Australia further support other countries to decarbonise and develop\n   sustainably?\n\nChevron believes that there are multiple ways for Australia to support other countries to decarbonise and develop sustainably.\n\nThe Authority’s Issues paper states that “if other countries set strong targets, green economy exports can be expected to prosper, while emissions-intensive export industries may falter.” The\nGovernment’s recently announced Future Gas Strategy notes that “many of our trade partners will have a harder task [to reach net zero] compared to Australia because of their limited availability of cheap, reliable energy” and that “continued supply of LNG can reduce the carbon intensity of our region’s energy mix, including by replacing more emissions intensive fuels like coal.2 When existing infrastructure can be utilised, the switch to gas can allow for immediate emissions reductions. The International Energy Agency (IEA) and others have recognised the value and emissions reductions benefits of switching from coal to natural gas. Growing global energy needs mean demand for Australian LNG will remain strong for existing customers, and demand will also come from other countries that look to use more LNG in their energy mix.\nWithout the option of sourcing Australian LNG, some customer countries may continue using higher-carbon energy sources.\n\nChevron is aligned with the Authority’s view expressed in the Issues paper that the use of any international credits to support Australia’s net zero journey will need to be supported by deep, well-designed international carbon markets and that international units must be of high integrity and align with Australia’s national objectives. As noted above, emissions reduction is a global challenge and requires cross-border solutions. We believe that utilising an international framework established under Article 6.2 or 6.4 of the Paris Agreement will provide the greatest certainty to avoid double counting and jurisdictions should work together to streamline approvals processes, ensuring accuracy, transparency, and robustness of Internationally Transferred\nMitigated Outcomes (ITMOs).\n\n2\n    Australian Government – Future Gas Strategy, p. 47\n\fABU240500438\nPage 6\nMay 14, 2024\n\nWe encourage Australia to support the development of a hydrogen export market which we believe will be important in supporting the efforts of other countries to decarbonise their economies. Hydrogen can be used in power generation for co-firing with natural gas and with\nAustralia’s strong natural gas resource base, geographic capability and capacity for CO2 storage and development of renewables, there is potential to produce low carbon intensity hydrogen and build an export market to support the use of lower carbon fuels in other countries. Policies to scale the full value chain of hydrogen infrastructure will be needed, including transport to end use markets and storage at the point of use.\n\nFurther, Australia’s CCS solutions can help other countries meet their decarbonisation objectives. Australia can help countries in the region abate emissions by sequestering their CO2 emissions using Australian carbon capture and storage projects given our suitable geology for offshore and onshore greenhouse gas geosequestration. Developing a large-scale carbon capture and storage industry will enable Australia to continue to benefit from its vast resource base, generating economic benefits whilst reducing the emissions intensity of these activities.\nTo this end, Chevron encourages Australia to support the development of globally consistent and compatible regulatory systems as a foundation to a global carbon capture and storage market. Effective policy frameworks are being created in Australia to provide proper specification of CO2 streams for storage and long term management and monitoring of CO2 storage, and the industry would benefit from further work to accommodate storage of imported\nCO2, offer incentives to export and transport CO2 for storage, streamline regulations, and allocate ownership, credit accounting, and liabilities along a transboundary carbon capture and storage value chain, as appropriate for the scope of authority of the jurisdiction.\n\nOur production and use of renewable fuels is another avenue Australia can use to help support other countries in their development journey. Our fuel security is not just about local manufacturing but about diversity of reliable regional sources of sustainable feedstock. The scarcity of feedstocks may limit deployment opportunities for renewable fuels, and Australia will need to incentivise not only local manufacturing but also importers who will develop increased optionality and a greater range of markets to import from.\n\n4. What technologies are important for each sector’s pathway to net zero and why?\n\nChevron recognises the importance of the Authority’s work to inform the six-sector decarbonisation plans, including advice on the technologies and strategies to help reduce emissions. We believe net zero policies should treat technologies and approaches equally regardless of whether they reduce greenhouse from existing sources or remove greenhouse emissions from the atmosphere. Negative emissions approaches and technologies should be fairly and appropriately accounted for and allowed to participate fully in market-based mechanisms.\n\nAs stated in response to question 2, Chevron believes Australian Government policy should recognise that there are multiple pathways to achieve net zero, and all technologies and energy sources should be available to meet the challenge. Well-designed climate policy is equitable, encourages a level playing field that does not pick winners or losers, and protects competitiveness. Policies which exclude or limit certain technologies or energy sources should be avoided, as this shrinks the range of potential pathways to achieve net zero emissions across the economy. Reduced optionality could also lead to unintended consequences such as supply limitation, reliability challenges, or higher costs.\n\fABU240500438\nPage 7\nMay 14, 2024\n\nFurther, Australia is a vast country with a range of climates and topographies. Technologies available in one region may not be the most suitable in another part of Australia. Entities require flexibility to deploy technologies that suit individual circumstances (e.g. Tasmania has considerable hydroelectricity, while most of Australia’s north-west region does not have a power grid, other than the NWIS).\n\nThe long life of existing assets in capital-intensive hard-to-abate sectors such as mining, manufacturing, transportation, marine and agriculture must be considered when developing policy, ensuring retrofit solutions are supported to offer cost-neutral alternatives while longer term solutions are developed.\n\nCarbon capture, utilisation, and storage (CCUS)\n\nChevron considers CCUS to be a critical enabler to meet the objectives of the Paris Agreement.\nThis view is supported by the Intergovernmental Panel on Climate Change (IPCC) that notes numerous potential pathways to achieving the goals of the Paris Agreement requiring CCUS in its reports.3 In its 2021 CCUS report, the International Energy Agency stated, “CCUS technologies will play an important role in meeting net-zero targets, including as one of the few solutions to tackle emissions from heavy industry and to remove carbon from the atmosphere.”\n\nAustralia has the capability and capacity to store carbon, with known high quality, stable geological storage basins, existing infrastructure, well-established technical expertise, and regulatory regimes (environment protection, carbon accounting and reporting, financial services). We have the opportunity to become a carbon abatement leader while also maintaining its position as a leading energy exporter.\n\nCCUS provides the potential to deliver competitive, large-scale abatement for new and existing industries such as cement, hydrogen and ammonia. It also has the potential to support the development and therefore increase the cost effectiveness of net negative CO2 technologies such as Direct Air Capture (DAC) that require captured CO 2 to be utilised or geologically stored.\nThe Authority notes that most Intergovernmental Panel on Climate Change scenarios 4 that limit warming to 1.5°C require rates of removals that lead to net negative emissions beyond 2050 (p.\n27). Australia is already building capacity for the use of captured carbon. This, in conjunction with the storage of CO2, can help support other sectors in the economy, as well as our partners abroad, in lowering their emissions intensity. For example, the addition of CO 2 to value-adding products, such as cement and the conversion of carbon to graphite, are good examples of\nAustralian innovation that is helping to lower carbon intensity in building products. 5\n\nCCUS is a key part of Chevron’s commitment to accelerate progress toward a lower carbon future. We are already deploying carbon capture and storage technologies across the world, and as noted above, our Gorgon CCS system remains the world’s largest carbon capture and storage system designed for greenhouse gas abatement.\n\n\n\n3\n  Summary for Policymakers of IPCC Special Report on Global Warming of 1.5°C approved by governments — IPCC and AR6 Climate Change 2022: Mitigation of Climate Change — IPCC and AR6\nSynthesis Report: Climate Change 2023 (ipcc.ch)\n4\n  Climate Change 2022 Mitigation of Climate Change – Contribution of Working Group III to the Sixth\nAssessment Report of the Intergovernmental Panel on Climate Change\n5\n  MCi – Low Carbon Materials (minercalcarbonation.com)\n\fABU240500438\nPage 8\nMay 14, 2024\n\nAustralia can support the potential for cost-effective, safe, and verifiable CCUS projects by:\n\n   •   enabling low emissions technology funding, which is an important element of any\n       national climate change policy approach. Existing funding and potential future funding\n       could provide important measures to support low emissions technology development\n       and accelerate a range of innovative emissions reduction opportunities.\n   •   creating a clear, streamlined and stable regulatory environment including permitting and\n       approvals which encourages investment (incentivising greater levels of investment by\n       the private sector) and the rapid, at-scale development of technologies that are in line\n       with climate change imperatives.\n   •   enacting targeted policies that promote support for research, development and\n       deployment of technologies to enable scalable solutions, drive down cost and improve\n       performance in relation to carbon capture.\n   •   avoiding policies that limit or exclude specified sectors from participation to avoid\n       potential ineffective frameworks.\n   •   Public-private co-investment in shared infrastructure such as networks of CO 2 pipelines\n       will help drive down capex cost and potentially connect hard-to-abate sectors to\n       identified CCS hubs.\n   •   enabling policy for transborder carbon movement for sequestration that will assist the\n       region to decarbonise.\n\nRenewable Fuels\n\nChevron also supports policies to increase renewable fuel production, including renewable diesel, biodiesel, and sustainable aviation fuel (SAF). Incentive-oriented biofuel policies should focus on maximum abatement per dollar spent. Incentives intended to advance specific sectoral performance targets should be designed to properly enable lower carbon solutions and be commensurate with technology maturity.\n\nWe note that volumetric mandates for fuels as a form of incentive can create distortions in the market, limit competition, and discourage innovation. New low carbon liquid fuels regulations should encourage all affordable and effective alternatives to compete in the marketplace.\n\nLower carbon fuels can be enabled through a combination of a lifecycle-based market policy, such as a low carbon fuel standard, and infrastructure grants, tax credits, excise exemption for lower carbon-intensity fuels, and demand-side incentivisation. This would encourage competition with conventional fuels and stimulate market demand, giving confidence to investors and incentivising local production by addressing the economic differential between renewable and traditional fuels.\n\nPolicy that drives demand and incentivises supply of renewable fuels will stimulate the business case for lower carbon alternatives, particularly SAF and renewable diesel. Our experience in other markets shows that capital flows to policy-enabled markets. Ready-now imports are necessary to support the acceleration of demand in Australia, to incentivise and complement the development of a competitive domestic manufacturing market and ensure that the renewables market in Australia is sustainable and globally competitive.\n\fABU240500438\nPage 9\nMay 14, 2024\n\nHydrogen\n\nChevron believes that hydrogen has a role to play in supplementing domestic gas in Australia’s hard-to-abate industries. Hydrogen is most appropriate for use in hard-to-abate industries such as steel, ammonia and cement, and the first uses of hydrogen in power generation will likely be in co-firing with natural gas. There is also the possibility to produce hydrogen from renewable electricity at times of excess renewables generation, store it, and then use that hydrogen to produce energy when renewable generation wanes. Chevron’s investment in the Advance\nClean Energy Storage (ACES) project in the US is an example of this concept.\n\nLower carbon intensity hydrogen is a nascent industry and government support will be critical to create a lower carbon intensity hydrogen market. Policy should recognise that all methods of producing lower carbon intensity hydrogen will be necessary to cost-effectively create and scale this industry to support Australia’s emissions reduction targets. Policies that prohibit project approval or exclude/limit hydrogen from the market based on the use of certain technologies or feedstocks should be avoided as these arbitrarily limit opportunities for reducing GHG emissions. Similarly, efforts to define hydrogen production into types (e.g. green, blue, renewable, etc.) distract from the goal of supporting lower carbon intensity fuel industries.\nInstead, we believe policies should utilize an approach that enables all forms of lower GHG intensity hydrogen by designing incentive and regulatory programs in a manner that provides credit or value based on the product’s specific lifecycle GHG intensity.\n\nWe believe that to enable the scaled deployment of lower carbon intensity hydrogen, well- designed policies and incentives to accelerate the buildout of hydrogen infrastructure (pipelines, port facilities etc.) as well as infrastructure for natural gas, CO 2 transport to sequestration or utilisation sites, water and electricity that supports the production of lower GHG intensity hydrogen are critical to make Australia globally competitive. Policies to scale the full value chain of hydrogen infrastructure will also be needed, including transport (delivery) to end use markets and storage at the point of use or in regional centres, as well as stimulating the domestic use of lower carbon intensity hydrogen in diverse applications.\n\nAdoption of hydrogen paired with carbon capture and storage, that can be produced with lower carbon intensity, can also facilitate early investment and infrastructure necessary to help\nAustralia meet its hydrogen ambitions.\n\nChevron also recommends that policies seeking to reduce transportation GHG emissions should encompass all significant GHG emissions from the vehicle and fuel cycle, as this is the only way to effectively compare different solutions on a full lifecycle GHG intensity basis. For hard-to-abate industries, policies should regulate GHG emissions at the product-level (e.g., cement, steel, etc.) instead of at the facility-level to enable reductions across the value chain. In the electricity sector for example; we believe that hydrogen is a prime candidate to deliver lower\nGHG intensity dispatchable power to meet demand and ensure grid reliability during times where renewable power generation drops off (e.g. seasonal variability in renewable power generation). Critically, policy must allow all generation and energy storage technologies to compete on a lifecycle GHG intensity and cost basis as opposed to mandating certain forms of generation (e.g. renewable portfolio standards) to ensure affordability. Regardless of sector, we do not support volumetric mandates for hydrogen to incentivise demand.\n\nOverall, a focus on maximising emissions reductions most efficiently and cost-effectively across the economy is needed, as opposed to isolating individual technologies, sectors, industries or\n\fABU240500438\nPage 10\nMay 14, 2024 facilities and forcing them to net zero. Policies that incentivise GHG reductions to occur anywhere throughout the value chain allow entities to prioritise opportunities that can achieve a greater overall GHG reduction with the same (or potentially fewer) resources.\n\n5. How can governments use mandates, rules, and standards to accelerate Australia’s\n   decarbonisation? Is more planning by governments needed? If so, how should this be\n   coordinated and how can this be done while making the transition inclusive, adaptive,\n   and innovative?\n\nMandates, rules, and standards need to be broad and sufficiently flexible for emitters to comply.\nIt is our general view that governments should avoid market interventions or policies that discourage investment in Australia’s energy system as this will lead to further supply challenges and domestic price volatility.\n\nStable, clear, and efficient government policy and regulations regarding environmental approvals and permits is needed to facilitate future investment. Chevron recommends improving the efficiency, certainty and predictability of major project assessments and approvals for all energy investments. We prefer that governments consolidate authority to permit or issue approvals into the smallest number of governmental entities possible, with appropriate resourcing and seek to align local, regional, and national permitting requirements to expedite decision-making. Investment attractiveness could be improved by having efficient and streamlined approvals processes to increase confidence and certainty regarding regulatory requirements. Being an attractive investment destination will enable ongoing economic benefits and jobs for Australia.\n\nBroad market-based mechanisms applied across the widest possible coverage of emissions and involving all sectors maximises efficient and cost-effective reductions while allocating costs equitably, gradually, and predictably. Chevron believes that the use of market-based mechanisms and a price on carbon that incentivises the lowest-cost abatement at the widest scale possible is the most effective and efficient policy approach to decarbonisation. It incentivises the most efficient and cost-effective emissions reductions while enabling support to affected communities, consumers, and businesses.\n\nChevron also supports flexible mechanisms, such as those that allow linking of offsets or credits from negative emissions technologies to products, services, or activities as they facilitate participation from a wide variety of sectors, incentivise economy-wide participation and further stimulate innovation and cost reduction.\n\nAs noted in our response to question 3, we also support the use of market-based accounting\n(e.g., “book and claim” accounting) to account for the GHG performance of one product, service, or activity as long as the accounting is transparently reported to avoid double counting of emissions and/or emissions reductions.\n\nChevron does not believe government support designed intentionally to rescue underperforming or failing energy sectors reflects the best policy. The energy industry should understand market cycles and should be prepared for downturns.\n\fABU240500438\nPage 11\nMay 14, 2024\n\n6. How can governments stimulate private finance needed for the net zero transition –\n   are there innovative instruments that could be deployed or new business models that\n   governments could support? Is there a bigger role for governments to play in\n   coordinating the investment needed to transition the economy?\n\nIn formulating its response to the Australian Government on the potential technology transition and emissions pathways that best support Australia’s transition to net zero by 2050, the\nAuthority is required to identify how public and private finance can support and align with these emission pathways (p. 36). Chevron believes that the Australian Government has a variety of tools that can support business to invest in lower carbon technologies and markets. Clear direction on the chosen tools to support and co-ordinate lower carbon efforts as well as a streamlined approach at State and Federal levels will be key to encouraging investment. Some of the potential tools for the Australian Government to contemplate are suggested below.\n\nIncentives: We acknowledge and support the enactment of incentives for nascent technologies and regions lacking a viable carbon market. Incentives should be designed with the intent to create scalability for lower carbon businesses and reduce its need over time. Incentives should be designed with the goal of promoting the most efficient and cost-effective lower carbon journey given the options available to customers.\n\nGrants and Public Partnerships: We believe competitive grant programs, public-private partnerships or co-investments in lower carbon technologies can be valuable tools if designed to be competitive, results oriented, and transparent, and to incorporate appropriate investment terms. Innovation policy grants should focus on advancing emerging and pre-commercial technologies. Grants for existing commercial opportunities that distort markets and create unfair competition should be avoided. To be effective and appropriate, we believe grant programs should be designed with the following baseline principles:\n\n   •   provide adequate operator flexibility,\n   •   include clearly defined offramps for grant applicants prior to execution of definitive\n       agreements,\n   •   provide adequate protections for companies’ proprietary information and intellectual\n       capital, and\n   •   contain financial terms that recognise extent of the private sector risk associated with the\n       project and do not insist on government insertion to the broader operations of grant\n       recipients.\n\nCredit Stacking: The development of pre-commercial early-stage abatement projects can be accelerated if allowed to take advantage of the full range or relevant incentives. Policies that restrict the applicable use of otherwise relevant incentives slow advancement towards scalable technologies.\n\nTax: We support tax incentives that enhance investment in energy. Policies that impose taxes on one sector to fund a competing sector are counterproductive to achieving energy security in our view. All sources of energy, traditional and new, are needed to meet growing demand.\n\nSunset Dates and Reassessment: Incentive oriented programs should be designed with the goal of ultimately enabling technologies and products to compete without government support.\nWe support the reassessment of programs, including incorporation of established sunset dates, that enable policymakers to evaluate whether customer preferences and cost competitiveness\n\fABU240500438\nPage 12\nMay 14, 2024 warrant continued government support. Decisions regarding renewal of an incentive should be done on a technology and product neutral basis and in a transparent manner that takes into account program effectiveness. Incentive programs should not be altered, suspended, terminated, etc. prior to the established sunset date to promote investment certainty. We support the enactment of incentives until such time as true cost competitiveness emerges or consumer preferences support market prices that drive demand for lower carbon energy.\n\nAs noted in the outline of Chevron’s position on net zero above, we support a well-designed price on carbon, applied as widely and broadly as possible. Revenue from a well-designed carbon price could be used to support further lower carbon market activities or policies, or more effectively support Australians in the transition to a lower carbon world.\n\n7. How can governments better support markets, including carbon markets, to deliver\n   emissions reduction outcomes?\n\nChevron believes the best decisions are made with the best available data and pursuing a lower carbon future is no different. Using carbon intensity of products as a measure creates a meaningful comparison of a product’s emissions and allows the value of lowering the carbon emissions of products to be recognised in a market. Policies that seek to reduce GHG emissions on a lifecycle emissions intensity basis should strive for lifecycle analysis (LCA) that adheres to the following principles, as appropriate:\n\n   •   Accuracy and Representativeness: LCAs should prioritise the use of the best\n       available data possible. Specifically, we believe LCAs should prioritise the use of primary\n       data over default emissions estimates as estimates can lead to vastly different LCA\n       results. Primary data used in LCAs should be accurate, collected within a reasonably\n       recent time period and subject to third-party verification to drive reasonable reliability in\n       the LCA results. Nonetheless, we recognise that collecting primary data can sometimes\n       be infeasible or impracticable in certain situations.\n\n   •   Completeness: LCAs should seek to be inclusive of all significant GHG emissions\n       associated with the value chain including those from production, manufacturing,\n       transportation, storage, end-use, disposal, decommissioning, direct land-use change,\n       etc. that materially affect the overall GHG intensity of the product, service or activity.\n\n   •   Comparability: Reproducibility of results is critical for LCAs. LCA results should seek to\n       be comparable when conducted with consistent scope, boundary conditions, methods\n       and basis of actual measurements or emission factors. Critically to accomplish this,\n       LCAs and all underlying data and models should strive to be aligned with industry\n       standards for GHG reporting and any models used in developing an LCA should be\n       peer-reviewed.\n\n   •   Transparency: LCA results and significant assumptions upon which the results are\n       based should be made available to end-users and consumers and consistently\n       communicated on a performance basis, typically as mass CO 2e per product, service or\n       activity. LCA results should avoid requiring disclosure of any Confidential Business\n       Information (CBI), technology, trade secrets and the like.\n\fABU240500438\nPage 13\nMay 14, 2024\n\nChevron supports the use of carbon pricing mechanisms as well as flexible mechanisms, such as offsets (including international offsets), which further stimulates innovation and reduces costs.\n\nIt is our general view that market interventions or policies that discourage investment in\nAustralia’s energy system should be avoided as these will lead to further supply challenges and domestic price volatility. As stated in response to question 4, Chevron also does not support volumetric mandates for fuels as a form of incentive. Where these are considered or enacted in\nAustralia, we are keen to help shape regulations to efficiently deliver on policy objectives.\n\n8. What further actions can be taken by governments (e.g. through public funding), the\n   private sector and households to accelerate emissions reductions, including in\n   relation to the deployment of technologies and access to new opportunities in the\n   transition to net zero? What barriers stand in the way and how could they be\n   overcome?\n\nChevron agrees with the Authority’s consideration that global competition for clean energy investment is high and more is needed to grow Australia’s clean energy sector. Much of the capital required for Australia’s energy transition is expected to come from investors in partnership with governments, and this investment will be driven by both domestic and export opportunities.\n\nChevron believes that increasing Australia’s investment attractiveness through a range of government-supported initiatives and incentives will be an important component. Investment attractiveness could be improved by enabling shared infrastructure, enacting more efficient and streamlined approvals processes, and having bi-partisan political support for the regulatory framework to increase confidence that regulatory requirements will be stable into the future.\nBeing an attractive, globally competitive investment destination will enable ongoing economic benefits and jobs for Australia.\n\nAs stated in question 6, tax incentives, grant programs, and public/private partnerships can be effective policy tools to enable lower carbon operations and products, if designed properly. We support the enactment of incentives until such time as true cost competitiveness emerges or consumer preferences support market prices that drive demand for lower carbon energy. Policy should enable competitive development and commercialisation of transformative lower carbon solutions and products by allowing all solutions to compete without penalising one sector to build another.\n\nIt is our view that enabling competitive development and commercialisation of all lower carbon solutions and products to reduce lifecycle GHG emissions, through technology agnostic tax incentives, research and development grant programs and public/private partnerships, can help build robust carbon operations and products markets.\n\n9. How should governments decide upon the appropriate allocation of resources\n   towards reducing emissions, removing carbon from the atmosphere, and adapting to\n   climate change impacts?\n\nAs noted in our response to question 5, Chevron believes net zero policies should treat technologies and approaches equally regardless of whether they reduce GHG emissions from\n\fABU240500438\nPage 14\nMay 14, 2024 existing sources or remove them from the atmosphere. Government resourcing should encourage a level playing field and protects competitiveness.\n\nFurther, consideration should be given to targeted government resourcing and support for research, development, and deployment of technologies to enable scalable solutions, drive down costs and improve performance.\n\n10. How can governments, businesses and people, including First Nations people, help\n    ensure the benefits and burdens of the net zero transition are equitably shared?\n\nA holistic and evidence-based policy framework that takes into account economic, technological, social, and environmental realities will help ensure the benefits and burdens of the net zero transition are spread. Policy must recognise that access to reliable and affordable energy is critical both now, and into the future. It is also important to recognise that the energy transition will take time and disruptions are likely to occur if policymakers push faster than consumers, technology and economies of scale are prepared for.\n\nPolicies should be designed to create a market that is sustainable, economic and creates jobs. Australia must ensure it has a stable, clear, and efficient policy and regulatory framework to assist in deploying lower carbon energy technologies at scale in the decades ahead while ensuring energy stability and encouraging large scale private capital investment in the energy transformation.\n\nSignificant social and institutional support will be required to support the emerging lower carbon energy industries. Chevron places great importance on being a good community partner and remains focused on working in partnership with local communities to achieve better outcomes.\nWe strive to provide opportunities for information sharing with the community and to seek their feedback. Building relationships in the communities where we operate is at the core of\nChevron’s values. Chevron is committed to working with governments and local communities to help the community understand and benefit from the development of lower carbon energies projects. The benefits, costs, and trade-offs for Australia’s net zero policies should be transparently communicated to the public, be based on verifiable data and accompanied by rigorous analysis.\n\n11. How can governments better ensure First Nations people are empowered to play a\n    leading role in the development and implementation of climate change policies and\n    actions, including as they relate to the ongoing curation of the Indigenous estate?\n\nChevron acknowledges Aboriginal and Torres Strait Islander peoples as the First Peoples of\nAustralia and respects their ongoing connection to, and care for, the places in which we operate. We are committed to meaningful consultation and the development of long-term relationships with First Nations People. Chevron also commends the Australian Government on its funding support for the resourcing of First Nations communities to effectively participate and benefit from the energy transition.\n\nWith respect to forthcoming projects and developments, Chevron Australia has significant resources and robust stakeholder consultation processes in place. Chevron Australia has been consulting, and strengthening our relationships, with Traditional Owner groups whose functions, interests or activities may be affected by our activities.\n\fABU240500438\nPage 15\nMay 14, 2024\n\nAs noted in our response to question 10, we support early and ongoing engagement to identify potential impacts and develop mitigations where appropriate. Providing useful and accurate information and responding timely to community concerns, in a way that meets both legislative requirements and community expectations, is important to gain community support for lower carbon energy projects and other energy transition-related initiatives.\n\n12. How can Australian governments support the wellbeing of workers, communities and\n    regions as the nation decarbonises, including in relation to cost of living, workforce\n    and industry transition and access to low emissions technologies and services?\n\nRegional Australia faces unique challenges attracting and retaining the skilled workforce needed to support an emerging lower carbon energy industry. These challenges include isolated geographical locations and a corresponding lack of social infrastructure, housing, training capacity and other worker mobility impacts. These challenges may impede project cost and efficiency, including supporting local content, and achieving and maintaining a social license to operate, which risks increasing over time as projects develop scale.\n\nLocal content is a key priority within Chevron and our vision is to partner with local communities and contribute to a sustainable and diverse local economy that supports long-term project needs through employment and training opportunities, local infrastructure, supply chain opportunities as well as increasing technical knowledge and expertise in the new energies sector. However, even with Chevron’s best efforts to support local communities through local content, the unique challenges of the energy transition will require a high level of collaboration and cooperation across federal, state, local governments and communities. Diversified skill sets and a continuous learning and upskilling will be important for employees to stay relevant.\n\nAdditionally, as stated in response to question 2, the benefits, costs, impacts and trade-offs of net zero policies and plans should be transparently communicated to the public, allowing a fuller community discussion around what ambitious decarbonisation looks like in practice.\n\n13. How can governments help Australians prepare for and respond to the impacts of\n    climate change?\n\nChevron acknowledges there is much public debate and interest around the energy transition, and broad effect of climate change on Australians.\n\nChevron believes governments need to be transparent about its net zero policies to build public trust and communicate benefits, costs, and trade-offs to the public. Recent concerns raised regarding the impact of transmission and wind energy infrastructure highlight the sensitivity of the energy transition for everyday Australians and the need for meaningful community engagement. Many solutions will be required to build the energy system of the future, and governments need to be as inclusive as possible, open to participation and competition from across sectors. The benefits, costs, impacts and trade-offs of policies regulating GHGs should be transparently communicated to Australians and be based on sound science, include accurate real-world data and information to the extent possible and be accompanied by rigorous analysis.\n\nAgain, early and ongoing engagement is necessary to identify potential impacts and develop mitigations where appropriate. Providing useful and accurate information and responding timely to community concerns, in a way that meets both legislative requirements and community expectations, is important to gain community support as the transition progresses.\n\fABU240500438\nPage 16\nMay 14, 2024\n\n14. What else should the authority be considering in its advice to government?\n\nCross-cutting issues in sectoral pathways\n\nWhile sectoral pathways are an important consideration to identify the specific technologies and approaches needed for each sector, sectoral targets, where one sector is ring-fenced from emissions reduction opportunities in other sectors and elsewhere in the economy (and globally), risks ultimately making the task of reaching net zero more difficult. For these reasons, it is critical that the different, but interlinked, sectoral reviews being undertaken to support Australia’s\nNet Zero 2050 plan address the cross-cutting issues raised by the energy transition.\n\nResearch and development\n\nTargeted government policies that promote support for research, development, and deployment of technologies can enable scalable solutions, drive down costs and improve performance.\n\nWe support the enactment of incentives for nascent technologies and regions lacking a viable carbon market. Incentives should be designed with the intent to create scalability for lower carbon businesses and reduce its need over time. Incentives should be designed with the goal of promoting the most efficient and cost-effective lower carbon journey given the options available to customers.\n\nInvestments in pre-commercial early-stage abatement technologies can lead to commercially viable businesses and ultimately reduce the need for incentives over time.\n\n\n\n\nSincerely,\n\n\n\n\nDavid Fallon\n\f","size":303969,"redacted":[],"meta":{"name":"Chevron_Australia_Submission_Climate_Change_Authority_2024_Issues_Paper.dc19f93f.pdf","local_path":"files/FjpE3LXPqG4CjJxCp6_-CWct.pdf"},"config":{}}}}}