Australia’s resources companies are becoming increasingly conscious of their own greenhouse gas emissions, but remain unconcerned about downstream emissions from the sale of coal and gas and ignore zero carbon targets, a new report from ClimateWorks Australia has found.
Australia is one of the world’s largest exporters of fossil fuels, ranking amongst the top global suppliers of coal and gas. Estimates suggest that the emissions caused by the coal and gas exported by Australia are more than double Australia’s national emissions.
ClimateWorks Australia examined the climate change policies and targets of 22 of Australia’s largest resources companies, finding that while many had set targets to reach zero net emissions for their own operations, virtually none were looking to eliminate emissions from the resources they sell.
The think tank released the findings in the latest report of its Net Zero Momentum Tracker and followed similar assessments of the banking, superannuation, transport and property sectors.
Just half of the resources companies assessed had set targets to reduce their own direct emissions to levels deemed consistent with the Paris Agreement, and less than a quarter had set targets to reduce their operational emissions to net-zero by 2050.
While the assessment found that most resources companies had started to examine their emissions footprint, ClimateWorks Australia found that oil and coal producer Glencore was the only Australian resources company found to have set an aspiration to reach net-zero emissions across all its scope 1, 2 and 3 emissions.
Scope 1 emissions represent those caused directly by the operations of the company itself, while Scope 2 emissions represent those caused indirectly by service providers such as power stations supplying power to the company.
However, for many resources companies, it is scope 3 emissions, representing emissions from the downstream use of their products, that represent the most substantial category of emissions.
ClimateWorks said that Australian resources companies were becoming more aware of their responsibility to account for scope 3 emissions, but found that some were still ignoring them altogether.
“Overall our resources sector report found no company has a comprehensive net-zero by 2050 target backed with strategies to address their scope 3 emissions,’” head of system change and capability at ClimateWorks Australia, Amandine Denis-Ryan, said.
“We found momentum to address emissions within Australia’s resources sector had significantly accelerated in the past year. Nine of the 11 companies assessed as aligned with net-zero by 2050 for their operational emissions made these commitments within the past 12 months. Only BHP and South32 set their net-zero targets earlier than that.”
“In some ways this is not a surprise. The companies we assessed are in the “hard-to-abate” sectors where finding ways to viably transition to a net-zero global economy is hugely challenging. That said, we can see a growing number of Australia’s resource companies are acting to decarbonise their operations, and gearing up to provide resources necessary for the global economic net-zero transition.”
ClimateWorks found that Centennial, Newcrest Mining and Whitehaven had set no targets or commitments to reduce their downstream emissions.
Resources companies have faced increased pressure to set policies to account for the greenhouse gas emissions they are responsible for, particularly from investors who increasingly view companies that are aloof to the need to act on climate change as a potential financial risk.
Groups like the Investor Group on Climate Change have argued that companies that fail to recognise that there needs to be a global shift to a lower emissions economy face a significant ‘transition risk’ caused by a failure to adapt to a post-fossil fuel global economy.
ClimateWorks Australia suggested that it would be in the resources sector’s interests to begin looking to decarbonise both their operations and the products they sell, particularly following commitments from some of Australia’s largest trading partners to net zero emissions targets.
“Four out of Australia’s five biggest trading partners now maintain net-zero targets, including China, Japan and South Korea. We expect this to drive down demand for emissions-intensive products and create a large global market for new products, such as renewable hydrogen,” Denis-Ryan said.
“Resource companies can capitalise on the transition and secure their future within a global net-zero economy. But very little action is currently being undertaken to reduce the production of high-emissions goods.”
“For example, none of the oil and gas companies have targets to reduce their production of fossil fuels. They tend to rely on carbon capture and storage and nature-based solutions to reduce and offset their emissions, which will not be sufficient to achieve the Paris climate goals,” Denis-Ryan added.
