A new report has, for the first time in Australia, outlined decarbonisation pathways that show it is possible for five of Australia's most significant heavy industry supply chains to transition to net zero, consistent with global efforts to limit warming to 1.5 ºC.
Done in collaboration with companies representing around a fifth of Australia’s industrial emissions and a third of the ASX100 market value, the report finds strong, effective and coordinated action from government, industry and finance is crucial for the net zero transition.
Launching today in Sydney, at an event with The Hon Chris Bowen MP, Minister for Climate Change and Energy, and Lord Adair Turner (who has been an advisor to the project through the UK-based Energy Transitions Commission), the report is the third and final of the Australian Industry Energy Transitions Initiative (Australian Industry ETI).
It identifies five objectives to enable heavy industry to transition to net zero emissions consistent with global efforts to limit warming to 1.5 ºC. They are for Australia to:
- Set a strong, clear, enduring framework with a net zero emissions goal to align industry, finance and government
- Transition to the large-scale, cost-competitive, renewable energy system of the future
- Accelerate development and demonstration of the emerging technologies needed
- Drive deployment of low-carbon solutions, reduce barriers and support investment towards the transition
- Develop integrated net zero emissions industrial regions, supply chains and energy network solutions.
‘Commitment from industry to the long-term transition is a positive step towards developing the capabilities needed, avoiding the risk of stranded assets and higher long-term energy costs, and for ensuring a future in which Australian energy-intensive industries are competitive in a decarbonised world,’ said Australian Industry ETI Chair, Simon McKeon AO, Chancellor of Monash University, former CSIRO Chairman and former Australian of the Year. ‘With strong ambition, coordinated action and government support, industry emissions could be reduced by up to 92 per cent by 2050, based on 2020 levels. This, with high quality and verifiable offsets for the remaining 8 per cent, would transition industry to net zero emissions in support of the ambition to limit warming to 1.5 ºC.
‘This is a moment of opportunity to align and focus efforts to create a globally competitive, equitable, net zero emissions industrial economy in Australia. Action is needed now to lay the foundations, capitalise on the opportunities, and avoid more costly emissions reduction measures in the future,’ he said.
The report outlines how over 1.3 million jobs could be created between 2025 and 2050 in the ambitious 1.5 °C scenario. Investment by government, industry and investors could support up to 64,000 construction jobs per year from 2025 to 2050, plus an additional 129,000 roles in operations and maintenance between 2025 and 2050.
The ‘Pathways to industrial decarbonisation’ report is the result of a three-year collaboration between some of Australia’s largest companies, as part of the Australian Industry ETI convened by not-for-profits Climateworks Centre and Climate-KIC. The report was prepared for the Australian Industry ETI by Climateworks and CSIRO, in consultation with industry and research partners.
‘This three-year program has shown that transitioning heavy industries in a carbon intensive economy, like Australia’s, is a challenge that will require a transformational shift in the energy system,’ said Anna Skarbek, CEO, Climateworks Centre, which is based at Monash University. ‘This includes accelerated action on technology and investment, especially in targeted place-based approaches focused on common net zero goals.’
‘The transition is an investment in modernising Australia’s industrial regions and energy system that, over a 30-year period, equates to roughly A$20.8 billion per year if Australia is to remain on track to limit warming to 1.5 ºC. Around two thirds of this investment is in the energy system and one third in industry technologies, electrification and energy efficiency.
‘To put this into context, it represents a tenth of the export value of the five supply chains in focus for the Australian Industry ETI – approximately A$236 billion each year – and is comparable to investments made through other major efforts,’ said Anna Skarbek.
The report finds that renewable energy is a critical enabler of industrial decarbonisation to be scaled up rapidly, and that industry’s early uptake and effective integration of renewable electricity, electrification, and use of green hydrogen to substitute for other fuel sources can help Australia achieve competitive costs for reliable decarbonised energy.
‘Achieving these pathways needs at least a doubling of total current electricity generation by 2050, but this is possible through multi-gigawatt renewable generation developments some of which are already in advanced stages of planning,’ said Paul Graham, CSIRO’s Chief Energy Economist and report contributor.
‘Having the Minister and Lord Adair Turner speak with Australian Industry ETI participants at the launch of this report today is significant. Collaboration has been a hallmark of the three-year initiative, and it is only by working together – with government, industry, civil society, researchers and financial sector – that we will see the sort of systems transformation needed to deliver on our emissions reductions targets,’ said Chris Lee, CEO of Climate-KIC Australia.
About the Initiative
The Australian Industry Energy Transitions Initiative is a platform for Australia’s emissions-intensive industry and related businesses to coordinate learning and action on net zero emissions supply chains.
The Australian Industry ETI drew together 18 industry partners that represent approximately 22 per cent of Australia’s industrial emissions and approximately 32 per cent of the market value of the ASX100. They include Australian Gas Infrastructure Group, APA Group, Aurecon, AustralianSuper, BHP, BlueScope Steel, bp Australia, Cbus, the Clean Energy Finance Corporation, Fortescue Metals Group, HSBC, Orica, National Australia Bank, Rio Tinto, Schneider Electric, Wesfarmers Chemicals, Energy & Fertilisers, Westpac and Woodside Energy.
The pioneering initiative convened Australian industry and business leaders to collectively explore and address the challenges associated with decarbonisation and is chaired by Simon McKeon AO, Chancellor of Monash University, former CSIRO Chairman and former Australian of the Year.
The Australian Industry ETI supported Australian heavy industry to realise the opportunities of a decarbonised global economy by working collaboratively to develop pathways and actions towards achieving net zero emissions in critical supply chains by 2050.
The Australian Industry ETI focused on five supply chains that collectively contribute more than one quarter of Australia’s annual greenhouse gas emissions and generate significant exports. The five supply chains include steel, aluminium, other metals (such as lithium, copper and nickel), chemicals (such as explosives and fertiliser) and liquified natural gas.
Decarbonisation pathways for Australia’s industrial supply chains were developed with the ambition of achieving emissions reductions in line with limiting global warming to 1.5 °C. Independent not-for-profits Climateworks Centre (operating within Monash University) and Climate-KIC Australia co-convened the Australian Industry ETI in collaboration with the Energy Transitions Commission.
The Australian Industry ETI was developed with the generous support of philanthropic donations, contributions from participant organisations and funding from the Australian Government through the Australian Renewable Energy Agency. It is supported by the Australian Industry Group and the Australian Industry Greenhouse Network, with research partners including BloombergNEF, CSIRO and RMI.
The Australian Industry ETI considered opportunities across the Australian economy, with some work specifically focused on Western Australia as a high-opportunity state.
Pathways to industrial decarbonisation: Positioning Australian industry to prosper in a net zero global economy and supporting reports will be published on 20 February 2023 and available online at https://energytransitionsinitiative.org/
Source: https://energytransitionsinitiative.org/