Australia's largest gas pipeline company will link executive pay to climate-related performance as part of a new pledge on emissions reduction.
APA Group on Wednesday released a plan that cuts pollution in parts of the business at different rates, and assumes more gas basins will be developed as part of the transition to an energy system dominated by wind, solar and battery storage.
The energy infrastructure company, operating in industrial heartland on the east coast as well as across WA's resource-rich regions, also posted a bump in earnings for the year to June 30 as gas usage surged during Australia's energy supply shock.
A key commitment in the Climate Transition Plan is to link executive pay to climate-related performance, and the company must report back annually to shareholders on progress.
The plan targets a 30 per cent cut in emissions from gas infrastructure by 2030 to get to net zero by 2050.
Net zero can occur earlier for power generation and electricity transmission infrastructure, with a target of 2040, following a 35 per cent cut in "emissions intensity" from power generation by 2030.
"Critical to APA is that the businesses commitments are based on currently available proven technologies and are tailored to reflect the different rates of decarbonisation expected for different asset sectors," CEO Rob Wheals told analysts on a post-results call.
The plan was consistent with the Labor government's commitments, the Paris Agreement and the global Taskforce Climate-related Financial Disclosures framework that guided companies, he said.
"Importantly, it also allows the business to bring forward its power generation goal a whole decade earlier to 2040."
APA has signed up to the global Methane Guiding Principles to cut methane emissions across the gas supply chain.
Backed by over 120 countries, the Labor government is yet to adopt the principles.
In addition, APA pledged to target 100 per cent renewable electricity use across the business.
To come up with the plan, APA used scenario analysis and resilience testing asset by asset.
The Moomba Sydney Pipeline and South West Queensland Pipeline were found to be relatively resilient to 2040, providing northern gas supplies are sufficient to meet demand.
"In practice, this may require new basin development," the report said.
Beyond 2040, the assets are more exposed to lower export and domestic demand, potentially eroding value.
The Diamantina gas-fired plant at Mt Isa was most exposed because its role could change from baseload to just meeting peak demand, depending on the rate of change as more renewables roll out.
How to tackle indirect pollution from transport, distribution and end-use by customers, known as "Scope 3" emissions, will be tackled by 2025 in an updated plan.
Scope 3 emissions are a focus of global climate negotiations now that direct - or Scope 1 and 2 - emissions have been built into government commitments and company plans such as APA's.
This future challenge is key for APA because its heavy industry customers remain reliant on gas.
Mr Wheals said gas is "currently irreplaceable" as an energy source for the high-heat manufacturing sector, including steel making and chemicals.
