In order for Australia to reduce greenhouse gas emissions and meet its goal of keeping global warming to 1.5 degrees Celsius, some of the country’s largest heavy industrial companies, including BHP, BlueScope, Rio Tinto, and Woodside, say urgent action is required from governments, investors, and business.
After their endorsement of a research in February that demonstrated they could reduce direct emissions in their supply chains by more than 90% by 2050 without heavily depending on carbon offsets, 17 members of the Australian Industry Energy Transitions Initiative have issued a joint statement.
The development of a “large-scale, cost-competitive, renewable energy system of the future” and the creation of “integrated net zero emissions industrial regions” are two of the goals listed by the ETI as being necessary for heavy industry to achieve net zero emissions at a rate consistent with keeping global warming to 1.5 degrees Celsius above pre-industrial levels.
The signatory corporations did not define what the country’s emissions reduction goals should be in relation to limiting heating to 1.5°C. According to scientists, this requires emissions to be reduced by at least 57% and possibly even 75% by 2030 compared to 2005 levels, much above the Albanese government’s aim of 43%, and to reach net zero considerably earlier than 2050.
The February report produced by the Climateworks Centre and the CSIRO showed how decarbonization of heavy industry could be achieved, but that it would require a “significant stretch in ambition,” according to the statement, which was also supported by BP, Westpac, Australian Super, Orica, Wesfarmers, Fortescue Metals, the Australian Industry Group, and the Australian Industry Greenhouse Network.
The businesses urged others to join them, declaring that they were “ready to seize this opportunity.” They promised to “promote and support” the federal and state governments as they create a set of economic-wide regulations.
The ambitions of some of the businesses who have backed the ETI declaration, however, appear to conflict with its objectives. In Australia and other countries, Woodside plans to open a number of sizable gas and oil reserves. The world’s existing fossil fuel infrastructure is sufficient to push global warming beyond 1.5 degrees Celsius and toward the more hazardous climate change that would result, according to a report released last month by the Intergovernmental Panel on Climate Change.
Innes Willox, the chief executive of the Australian Industry Group, described 1.5C as a “enormous challenge,” but noted that the IPCC had demonstrated that “each fraction of a degree matters” and that failure would have “extremely severe costs.” He stated that company emissions controls would “definitely have to strengthen and apply more broadly over time.”
With the help of the Greens and independents, the government last week approved modifications to the safeguard mechanism, one of its defining climate policies. Several of the main industrial sites across the nation will now be compelled to cut their emissions intensity by 4.9% annually, either directly or by purchasing offsets.
The Coalition unveiled the safeguard mechanism in 2016. A cap on greenhouse gas emissions from around 200 significant industrial units was promised.
Facilities that emit more than 100,000 tonnes of carbon dioxide equivalent annually are subject to it. A baseline emissions cap is established for each facility.
Companies that exceeded their baseline would have to purchase carbon offsets or pay a penalty, according to the Coalition. In reality, facilities were permitted to alter their baselines, few received sanctions, and industrial emissions increased.
The government’s initiative to update the program was won by Labor.
It has established new benchmarks based on emissions intensity, or the amount of emissions a plant emits per unit of output. Baselines will be decreased by as much as 4.9% year.
Businesses have the option of reducing their emissions on-site or purchasing offsets, such as Australian carbon credit units.
The system permits the opening of new polluting facilities, such as gas and coal mines, and sets benchmarks at “international best practice.” To achieve net zero CO2 emissions from new gas fields, all CO2 emissions must be offset.
An innovative “safeguard credit” will be given to businesses that reduce their pollution emissions below what their baseline permits. Other polluting facilities that emit more than their baseline and require offsets can purchase these within-scheme credits.
To ensure that overall emissions under the plan cannot rise and must decrease over time, Labor and the Greens reached an agreement that included the introduction of an absolute “cap.” The climate change minister will determine the rate of the reduction, which is not specified.
On July 1, 2023, the modifications will take effect.
On Monday, a number of manufacturing firms issued statements applauding the government for changing the safeguard in response to their worries. The amendments included increasing public support for manufacturing firms from $600 million to $1 billion and lowering the pace at which some non-fossil fuel businesses would have to reduce emissions intensity to just 1% a year.
BlueScope’s chief executive, Mark Vassella, said in a statement to the stock exchange that the company’s engagement with the government on the safeguard had been “constructive” and that it could now concentrate on finishing a feasibility study for a $1 billion blast furnace and other decarbonization projects at its Port Kembla steelworks.
Adbri’s CEO Mark Irwin expressed his appreciation for the government’s pledge to provide “more assistance to companies providing essential inputs to renewable energy industries, like cement and lime.”
Sanjeev Gandhi, the chief executive of Orica, stated that his company firmly supported the government’s reforms and that as a result, emissions reduction technologies would be implemented at its production facilities in Newcastle and Gladstone.
The statements emphasized the difference in viewpoints on climate policy between major business and industry and the federal Coalition. Ted O’Brien, a spokeswoman for the Coalition on climate change, claimed last week that the safety mechanism would “decapitate” the economy. Peter Dutton, the leader of the opposition, stated to the ABC on Sunday that the policy would result in the cement sector leaving the nation and was creating problems for steel businesses.
The government’s policies, according to climate change minister Chris Bowen, have given people the “confidence needed to make significant investments in decarbonization, future-proofing thousands of employment onshore.”
Big business and “big government” have agreed on “a massive new tax,” according to O’Brien, and Australian consumers would be required to pay it.
The safety net doesn’t include paying a tax. Companies must take action to cut emissions, but no taxes are collected by the government.