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The push for decarbonisation

Climate change continues to be one of the critical issues facing industry and Government. The push for change is now accelerating with new and revised policies to reduce carbon emissions set to be introduced. 

This new push began in February with the release of the King Review. The Report outlined how Australia could lower its carbon emissions while supporting the economy, businesses and households by reviewing Australia’s Emissions Reduction Fund (ERF). The recommendations covered three areas:

1.    Enhancing the Emissions Reduction Fund to encourage greater participation;
2.    Incentivising voluntary emissions reductions on a broader scale; and
3.    Unlocking low emissions technologies required by businesses.

In May, the Government accepted 21 of the 26 recommendations in principle. 

One of the key recommendations is to introduce the concept of “utmost good faith” into the Emissions Reduction Fund scheme. This would mean that participants who did not act in the utmost good faith would risk legal consequences that could potentially include relinquishing Australian Carbon Credit Units (ACCUs), cancelling carbon contracts and other penalties. The details of what it means to act in the utmost good faith are still to be revealed, with the Government consulting with industry at present. 

Some of the other recommendations that have been accepted by the government include:

●    Enabling some projects to be awarded ACCUs on a compressed timeline. This will address the issue that considerable cost may be incurred years before a project can generate income from selling the ACCUs they generate; 

  • Establishing a process for third parties to propose and prepare ERF methods. This has already commenced with initial scoping of a Carbon Capture and Storage/Carbon Capture, Use and Storage method; 
  • Reducing the cost for small projects by creating a fixed price purchasing desk under the ERF; and 
  • Establishing a ‘below-baseline crediting arrangement’ to incentivise large emitters. This would provide credits to large facilities who undertake transformational abatement projects to reduce their emissions below the safeguard baselines that are allowed for in the legislation. 

These recommendations are all subject to consultation with industry, but represent a clear support for emission reduction projects and technologies to reduce the level of carbon emissions by industry.

The King Review is complemented by the Federal Government’s Technology Investment Roadmap Discussion Paper that was released in May. Low-emission technology is critical to decarbonisation and this paper is an important step towards planning for those investments in Australia. Some of the key areas of focus in the Discussion Paper include renewables and the need to decarbonise the electricity grid, the potential for natural gas generation to lower emissions and the role of clean hydrogen as a potential export market for Australia. 
With consultation now closed, we expect to see details of the long-term emissions reduction strategy and our first low Emissions Technology Statement in September.

The Minerals Council of Australia (MCA) also released its Climate Action Plan in June, which outlines their plan to achieve net zero emissions in the industry globally and in Australia. The plan focuses on three key areas:

  1. Supporting the development of  technology pathways to achieve significant reductions in Australia’s greenhouse emissions; 
  2. Increased transparency on climate change related reporting and informed advocacy; and 
  3. Knowledge sharing of the sector’s responses to climate change. 

While the Government, supported by industry bodies, are forging ahead with plans for decarbonisation, organisations are also recognising its importance and taking the lead. 

For example, zero emissions could be a reality for copper mining in the next 30 years. The University of Sydney has identified five ways that copper mining can achieve this goal by leveraging new technology to change the way exploration, materials movement, ventilation, processing and water use occurs. This is particularly important given the likely increase in demand for copper in thanks to it’s critical role in green technology like electric vehicles, wind farms and hydroelectricity. 

Rio Tinto has also announced that a solar farm will power its Koodaideri iron ore mine in the Pilbara. As a result, the company will take the equivalent of 28,000 cards off the road. While Fortescue Metals Group has multiple plans to decarbonise. These include utilising hydrogen and battery electric energy solutions in its mobile fleet, installing solar generation at its Chichester Hub mining operations and investing in solar power to deliver part of its stationery energy requirements through the Pilbara Energy Connect program. 

Together, Government and industry are prioritising decarbonisation, signifying their commitment to the Paris Agreement to respond to climate change. Over the coming months we will no doubt hear more about how the Government will tackle this important issue and we expect to see more innovation as the industry works towards significantly reducing carbon emissions.

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