Australia’s ambitious 2030 emissions target: faster transition, greater complexity
CANBERRA, SEPTEMBER 9: With Australia’s new government committed to a more ambitious 2030 target, the real work of transitioning to renewable energy sources begins now. Under the new leadership, Australia aims to cut carbon emissions by 43% below 2005 levels by 2030, a figure that was set at 26-28% by the previous administration.
Accelerating the pace of emissions reduction would keep Australia on track to reach net zero emissions by 2050. In a country where fossil fuels provided 67% of electricity in 2021, while renewable sources constituted 32.5%, the faster pace of decarbonization will bring several challenges with it.
Global management consultancy, Partners in Performance, says companies should own and undertake their own decarbonization journey, and not rely on government efforts.
For mining and resource companies, policy and regulatory uncertainty is high and growing. A review of Australia’s safeguard mechanism and carbon credits program is currently underway, and the Climate Change Authority recently published a report on how our carbon markets should interact with global systems.
Change is happening at a faster pace every year. The International Sustainability Standards Board is preparing global frameworks for corporate reporting, and Australian financial and corporate regulators are laying the groundwork for mandatory reporting on all things green and sustainable.
Rob Fowler, Partner in Practice for Energy Transition at Partners in Performance, said: “Australia is waking up to the challenges and opportunities to rapidly reduce carbon emissions across the economy. And once again, Australia’s high-carbon companies are dancing with political buffs and bureaucrats to chart the way forward. Many of us have been here before.
As Australia attempts to call a truce in the decades-long carbon wars, there are a few key things that are different this time. The first difference is that in 2022, investors really care. They put real pressure on boards and management to articulate and activate their decarbonization plans.
The second key difference is technology. Going from using diesel or gas generators at a mine site to a large hybrid wind-solar-storage solution behind the meter is actually a positive net present value (NPV). Third, Australia has the intelligence to drive the transition faster and more cheaply than we thought possible.
Fowler said, “At Partners in Performance, we integrate and leverage these three forces with our clients to drive faster, cheaper and smarter decarbonization.
“We recently did this as part of a groundbreaking project for a major miner in Australia. They intended to deploy over a gigawatt of renewable energy capacity by the end of the decade. Partners in Performance worked closely with them to deliver a 25% schedule acceleration, a 51% reduction in overall capital expenditure, and a 78% reduction in labor costs, resulting in operations and faster, cheaper and smarter results.
A critical aspect of the decarbonization challenge includes so-called commodity chemicals – ammonia, fertilizers and explosives, all of which are crucial inputs to our economies and food systems. Major producers of these commodity chemicals are exploring how the huge investments already made in these value chains can be leveraged in a decarbonized world.
“They ask how their feedstocks and carbon emissions can be changed and transferred, as demand for these important chemicals grows rapidly.
“As these fundamental changes impact chemical sector investment programs, there is a growing demand for ‘carbon neutral’ cargoes,” adds Fowler.
“Everything from LNG to ethylene to metallurgical coal was delivered to customers in East Asia with carbon offsets stapled to physical products. If this trend continues, there will be a massive demand for carbon offsets to meet the needs of traders and customers in these new types of commodity trading.
A similar ongoing discussion focuses on how legacy assets from coal-fired power stations in Australia and nuclear power stations in the UK can be used to boost the deployment of renewables on the grid. Offshore wind energy areas, common infrastructure for mainline connections and plant maintenance centers will allow much of the assets of older energy centers to be used in the future.
Reusing and repurposing existing electricity grid infrastructure will be key to achieving Australia’s ambitious goal of increasing grid renewable energy use to 82% by 2030 (from the current 32.5% ). This includes the conservation and operation of existing electrical infrastructure at coal-fired energy complexes in the Latrobe Valley, Hunter, Illawarra and Collie regions.
“With just 87 months to go until 2030 begins, Australia has a huge amount of work to do and a huge amount of uncertainty to digest,” Fowler added.
“The sooner we begin to combine and deploy the finance, technology and intelligence at our disposal, the sooner we will truly see green mining, green metals and green commodity chemicals as our ‘Net Zero future’. “definitely demands.”
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