The report cards are in. Corporate Australia has been marked on how it’s progressing towards net zero emissions, and many of the results are surprising – both surprisingly good and bad. Our resources sector is progressing well, but the transport and energy sectors aren’t on target.
Wei Sue, System Lead of Sustainable Corporates at ClimateWorks Australia, which has been compiling the comprehensive “Net Zero Momentum Tracker” reports for more than a year, says although progress isn’t fast enough in some sectors, overall we should be encouraged by how Australian big business is progressing – particularly the behind-the-scenes discussions occurring within companies as they prepare to make decarbonisation commitments. Of the 215 large Australian companies analysed, 55 have committed to net zero emissions by 2050, and have a pathway to get there.
“We’ve certainly been pleasantly surprised by the increase in commitments and momentum,” she says. “Even in cases where they haven’t achieved, we’ve become aware of some of the internal discussions they are having. I wouldn’t underestimate the amount of discussion that is going on.”
In order for Australia to meet international expectations of net zero emissions by 2050, big business needs to have not only a commitment to the end goal, but achievable interim targets and strategies. Since 2009, the non-profit ClimateWorks, which was founded in 2009 by Monash University and the Myer Foundation, has been one of the key organisations helping advise corporations and governments on how to set and implement those interim targets and decarbonisation strategies. Wei says that its recent “Net Zero Momentum Tracker” reports are currently the most comprehensive tool in Australia for assessing how big business is progressing towards these goals.
Of the 215 large Australian companies analysed, 55 have committed to net zero emissions by 2050, and have a pathway to get there.
“We need to collectively up our pace in order to transition at speed and scale over the next decade,” she says. “As a rule of thumb, emissions have to halve by 2030.”
As the reports were being compiled, the team was having to keep up with the latest commitments and actions; as some companies knew a published report was coming, they fast-tracked their decision-making.
“For example, when we started looking at the superannuation fund sector [mid last year], none of the largest super funds had made any commitments towards net zero,” Wei says. “As of today, five have.”
Another example was Lendlease. Once the report on the real estate sector came out, the company made a commitment to net zero by 2045. “It wasn’t just their own emissions, though, but the whole supply chain upstream and downstream, from their suppliers to their customers,” says Wei.
The superannuation sector is one part of the economy that some people may not think of as vital in our progress towards zero emissions. But Australia’s 180 super funds manage assets worth around $2.7 trillion, and by choosing to invest in companies with zero-emission targets, they can have a huge influence on big business. “Twenty per cent of superfunds assessed have targets, or have expressed an aspiration, to achieve net zero emissions by 2050 for their investment portfolios,” the report states.
In the resources sector, the tracker found all 22 of the biggest mining companies are taking steps to decarbonise their operations, with half of them committed to reducing their operational emissions in line with the net zero by 2050 goal. However, not surprisingly, action to reduce their most significant emissions – those that stem from customer use of their products, and the goods and services the resources companies procure – falls well short of that 2050 goal.
Five resources companies (Anglo American, BHP, Fortescue, Santos and South32) have specific targets and strategies to achieve net zero by 2050, with Anglo American, Santos and Fortescue aiming to go one better by reaching this by 2040. As part of its strategy to achieve its targets, Santos is developing one of the largest carbon capture facilities in the world at Moomba. It could permanently store up to 1.7 million tonnes of carbon dioxide a year – the equivalent of taking 700,000 cars off the road. In June, Santos was granted $15 million from the Australian Government’s Carbon Capture Use and Storage Development Fund for this project. If successful, the project could be expanded and take up to 20 million tonnes of carbon dioxide a year.
Some of the biggest companies are working in alliances to develop technologies that will help them work towards net zero, rather than relying on carbon offsetting or sequestration.
Wei Sue says the resources sector has been quite a pleasant surprise. “They seem to have made significant progress as they have experienced quite a bit of stakeholder pressure – investors, lenders and in some cases the public. The challenge now is how to achieve net zero emissions.”
She says some of the biggest companies are working in alliances to develop technologies that will help them work towards net zero, rather than relying on carbon offsetting or sequestration. “While they work out how to transition towards net zero, carbon offsets have a role in the interim. But as we get closer to 2050, offsets should be used as a last resort.”
On first look, the retail sector appears to be doing well, with four out of five companies “undertaking activities to reduce emissions or have a stated commitment to do so”. However, Wei says she believes the sector is underachieving and “has a lot more scope to make more ambitious commitments”, with “low-hanging fruit” such as decarbonising the buildings that they occupy (whether owned or leased). “Then there is a lot of optimisation that could happen in logistics and distribution.”
The most recent ClimateWorks report to be compiled addressed electricity production, and the energy sector hasn’t got a pass mark at this stage.
“The energy companies in Australia aren’t quite there yet in terms of their commitments,” Wei says. “A lot of the technology we need for a zero carbon electricity grid is already available and mature.”
Moving Australia towards net zero emissions depends on this sector making more rapid changes, Wei says.
“The energy sector has a big role to play in decarbonising Australia faster. It also has a role to play in facilitating decarbonisation in other sectors.”
The report acknowledges that AGL, Energy Australia and Origin have made commitments to reach net zero by 2050, “but they haven’t made interim commitments as to how that’s going to link up with net zero commitments in 2050, or the interim commitments aren’t ambitious enough”, Wei says. To meet the Paris goals of limiting global temperature rise to 2°C, they need to show a 64–74% emission reduction by 2030, she says.
The report identified that only one energy company, ENGIE, had emissions commitments partially in line with efforts required to support Australia’s Paris-aligned decarbonisation trajectory.
Alan Finkel, former Chief Scientist of Australia and current Special Adviser to the Australian Government on Low Emissions Technologies, says he believes Australian electricity producers are actually doing remarkably well on the world stage. “In the UK they’re moving away from predominantly coal-fired electricity production, but they’re moving to gas as an intermediary stage,” he says.
This means the UK operations appear to be making quick gains in reducing emissions, Finkel says, but their hard work is yet to come. “In Australia we are moving directly to solar and wind. So on one level we’re way behind, but on another level we’re leading the world. We have the highest per capita solar capacity in the world, and the highest outside of Europe for solar and wind combined.”
The transport sector is not doing well, with none of the 32 transportation companies assessed disclosing climate commitments that fully align with the goals of the Paris Agreement. However, again Wei says that there is much discussion behind closed doors about the shift to electric vehicles and overcoming the challenges of net zero emissions in airlines and shipping.
“Getting to net zero in the complex supply chains within these hard-to-abate sectors involves transformational solutions that are more than a single organisation can achieve alone, as it requires simultaneous shifts of finance, investment and service providers.”
ClimateWorks promotes four pillars that it says will move Australia towards decarbonisation: energy efficiency savings; producing more renewable energy; electrification of fuel (e.g. shifting away from gas and moving towards low or zero emissions energy); and in the most difficult cases (such as unwanted methane production in agriculture) reducing emissions and offsetting where needed. “One of the things we were seeking to do with these reports is to highlight what good commitments look like,” Wei says.
To facilitate some of these discussions, ClimateWorks has helped bring together 16 major Australian companies that together represent about a quarter of the ASX100 market value. With a $2 million grant from the Australian Renewable Energy Agency (ARENA), the Australian Industry Energy Transitions Initiative (ETI) aims over two years to accelerate action towards achieving net-zero emissions in critical sectors declared “hard-to-abate”. Companies in the initiative include BHP, Woodside, BlueScope Steel and National Australia Bank.
Director of the initiative, Rob Kelly, says phase one was completed in June, with an extensively researched technical report highlighting the areas that industry can move forward in. The next two phases will be teasing out the details.
“What we are doing is undertaking that research to model the pathways, but bringing industry into that process,” Kelly says. “The last thing you want to do is bring research in that’s separated from the real world.”
Through workshops and one-on-one sessions, the companies involved have provided realistic feedback on world-class research from the CSIRO and international organisations including RMI and the Energy Transitions Commission. Key actions for progress have been identified in each of the industry areas, such as nitrous oxide abatement in the chemical industry, and the use of hydrogen in steel production as an alternative process to coking coal.
Kelly says there have been some “robust discussions”, but overall the industry representatives are enthused by the strategies they are developing. “The technology is always advancing and new technologies are arising,” he says. “Electrification of fuel has advanced much more quickly than we would have expected, and hydrogen in particular presents some interesting opportunities.”
As a key example, Kelly pointed towards the development of the Asian Renewable Energy Hub in the Pilbara, which could become the world’s biggest power station. With the first phase of development approved last year, construction is expected to begin in 2026 on what could be a 26,000MW renewable energy hub, with wind and solar power not just providing energy to Pilbara mining companies, but also a hydrogen-producing plant that could export power to the world.
“Getting to net zero in the complex supply chains within these hard-to-abate sectors involves transformational solutions that are more than a single organisation can achieve alone, as it requires simultaneous shifts of finance, investment and service providers,” says the CEO of ClimateWorks, Anna Skarbek. “The Australian Industry Energy Transitions Initiative recognises that getting to net zero requires collective action.”
Schneider Electric Pacific Zone President Gareth O’Reilly says the ETI’s work is vital, and that every company has a responsibility to take part. “Increasing energy efficiency actually benefits the bottom line; there is no excuse to not contribute to combating climate change,” he says.
“Schneider Electric joined the ETI as an expert advisor, providing guidance, insights and technology to transition to zero carbon, and has already worked with participants such as BlueScope Steel – delivering energy savings and a purchasing agreement for renewable power, reducing greenhouse gas emissions by 300,000 tonnes of CO2 a year.
“We support the ETI’s proposed pathways to net zero including, switching energy sources, process improvements, digitisation, adopting electric vehicles, embracing electrification and zero emissions renewables. Industry’s early uptake of these steps can help Australia achieve competitive costs for reliable, decarbonised energy and ensure our industry can compete in a decarbonised global economy.”