Heavy emitters are facing extreme pressure to make their operations greener, not only from their shareholders but their customers further down the supply chain as well.
Australian business leader Simon McKeon says that while public shareholder pressure has focused executives’ attention on sustainability issues, “there’s an even louder voice which many of us in the broader community don’t hear” coming from B2B customers.
For example, Rio Tinto and Nespresso struck a deal to produce the aluminium used in its coffee pods more sustainably by using a renewable energy source. The buying power of manufacturers and consumer goods companies means future business depends on the ability to produce those raw materials with the smallest possible carbon footprint.
“That pressure is very real and heavy industry is on notice that if they simply sit on their hands their product will go out of favour over time,” McKeon told Which-50.
“I believe this is a trend which is going to become massive in years to come.”
Last week eight of Australia’s industrial giants agreed to work together to reduce their carbon emissions to net zero by 2050. However, the path to get there is isn’t entirely clear.
BHP, Woodside, BlueScope Steel, BP Australia, Orica, APA Group, Australian Gas Infrastructure Group and Wesfarmers – which together represent 14 per cent of Australian industrial emissions – have signed on to the Australian Industry Energy Transitions Initiative (ETI).
The initiative will focus on finding ways to reduce pollution from emissions-intensive industries such as LNG, steelmaking, aluminium processing and chemical refining.
The Australian Industry ETI is chaired by Simon McKeon AO, Chancellor of Monash University, former CSIRO Chairman and former Australian of the Year. He said collaboration, experimentation and shared knowledge would all sit at the heart of the initiative’s work.
“2050 is a long way off and many corporates will have six or seven CEOs between now and then. There’s plenty of opportunities for those individual CEOs to kick cans down the road,” McKeon said.
“There’s nothing special about 2050 except that it’s a very long time away. I think what it really signifies is certain industries have more work to do than others.”
McKeon noted that for some industries reducing emission is fairly straightforward and can be achieved by swapping from power generated by fossil fuels to renewable-based power.
For Australia’s heavy emitters it’s not just a question of choosing a different power source or using power more efficiently, they also need to scrutinise their individual industrial processes.
For example, the process of producing aluminium consumes a huge amount of raw power and a particular part of the smelting process also releases emissions. So a solution would need to find an alternative power source and a process which doesn’t release carbon dioxide gas. (The Candian government, Rio Tinto and Alocoa have come up with a method that releases oxygen instead of carbon dioxide.)
The potential solutions to lower emissions sit on a scale ranging from proven technologies to thought bubbles that still need to be researched.
“There are very, very few heavy emitters that I am aware of that can honestly say they have a plan through to carbon neutrality,” McKeon said.
McKeon said the initiative will provide support for the like-minded corporates from different industries to share ideas and research.
The group will also be put in contact with some of the best technological think tanks in the world including the homegrown CSIRO and the Rocky Mountain Institute out of North America. In the past individual companies would need to approach the CSIRO and fund research to solve a specific problem. Now the CSIRO will have the ability to impact many big corporates, not just via a one-on-one relationship.