The regional powerhouses of Australia’s industrial economy could slash their greenhouse gas emissions by more than 80% and become centres for multibillion-dollar investments in renewable energy, according to a report backed by some of the country’s biggest companies.
Bringing down emissions from producing iron, steel, aluminium, chemicals and liquefied natural gas is seen as one of the most challenging parts of Australia’s efforts to reach net zero.
But the report from the Australian Industry Energy Transitions Initiative (ETI), a partnership between heavy industry and experts working on decarbonisation, says the transition is possible using a range of known technologies, and would bring a jobs bonanza.
By introducing a range of technologies along the supply chain, most of them proven and some already commercially available, the report says greenhouse gas emissions could be cut annually by 69.5m tonnes of CO2-equivalent – about 14% of Australia’s current total emissions.
Innes Willox, the chief executive of the Australian Industry Group, an ETI partner, said the steps industries needed to take to get to net zero were “increasingly clear”.
“While their costs and difficulties should not be underestimated, the current energy affordability crisis highlights the unsustainable cost of the status quo,” he said.
Much of the effort to decarbonise would come from the supply of new renewable energy at a massive scale.
Between 68.3 and 125.9 terawatt hours of additional renewable energy would be needed. In 2021, Australia generated 265 TWh of electricity, with a quarter of that coming from renewable sources.
According to the report, building the renewable energy infrastructure, including energy storage, and creating a green hydrogen industry to serve the regions could generate between 178,000 and 372,000 jobs, with investment of between $50bn and $100bn.
Industry leaders among the 18 partners in ETI said a high level of collaboration and coordination would be needed to achieve the emissions cuts in the Pilbara, Hunter, Illawarra and Gladstone regions.
Anna Skarbek, the chief executive of Climateworks, one of the conveners of ETI, said: “This will require an unprecedented transformation of the energy system.”
Emissions in the regions accounted for 16% of Australia’s total carbon footprint, with the largest being the Pilbara in Western Australia – a centre of iron ore and LNG production.
In the Pilbara, the report says much of the emissions come from the LNG industry.
Managing methane leaks, recovering lost heat and electrifying the process of cooling gas down to liquid form could save about 13Mt of CO2e a year, but up to 7.6Mt would need to be captured and stored using carbon capture and storage technology – an approach which has struggled to be viable despite billions in investments.
The second highest emitting region, Gladstone in Queensland, could also save emissions on its LNG export industry. Large emissions cuts could also be made by electrifying processes in the aluminium industry, where other technologies were also in development to save energy.
This month, Rio Tinto put out a formal call for wind and solar energy projects before 2030 to power its aluminium operations in Queensland.
In the New South Wales Hunter region, heavy industry includes ammonia production and aluminium smelting. Using renewable energy and hydrogen produced from renewables could save up to 9Mt a year there.
Christopher Davis is chief financial officer at Orica, a major supplier of explosives, chemicals and services to the mining sector in the Hunter Valley, Gladstone and Pilbara. He said the company understood “the potential economic and environmental opportunities presented by regional decarbonisation”.
The company had announced several decarbonisation projects, and he said “we must continue to work collectively to ensure our industry, and Australia, remains competitive in a low-carbon economy”.
Other members of the ETI include Rio Tinto, Fortescue Metals, BP Australia, BlueScope Steel and the government’s Clean Energy Finance Corporation. The government’s Australian Renewable Energy Agency part-funded the report.
The ETI, run by Climateworks and the consultancy Climate-KIC, worked on the report for two years with its industry partners, CSIRO, BloombergNEF and the Rocky Mountain Institute.
Simon McKeon, the chair of ETI and chancellor of Monash University, said Australia could stay competitive in a global economy that was decarbonising.
“But this will require coordinated efforts across industry, governments and communities and also the finance and energy sectors,” he said.
“It will also need the alignment of policy, regulations and programs to create clear goals and investment confidence.”
The Guardian has approached the energy minister, Chris Bowen, for comment.