Australia’s surging industrial emissions are ‘elephant in the room’, Reputex says

Greenhouse gas emissions from Australia’s emissions intensive industries are expected to keep growing for the next decade, with the federal government’s climate policies likely to be too soft to see emissions peak anytime before 2030.

In new research published by analysts Reputex, greenhouse gas emissions from some of Australia’s largest industrial emitters are projected to grow by as much as 77 per cent from 2005 levels by 2030, massively exceeding the Morrison government’s economy-wide target to decrease emissions by 26 per cent.

While strong growth in the uptake of new wind and solar projects has seen emissions in Australia’s electricity sector achieve sustained reductions in emissions, this work is being undone by lacklustre policies in other parts of the Australian economy that has seen emissions in sectors like transport, manufacturing and the production of LNG continue to rise.

According to Reputex, the growth in Australia’s industrial emissions could present a substantial barrier to Australia reaching its emissions reduction targets under the Paris Agreement.

“Industry emissions are the elephant in the room for Australian policymakers. While we are seeing rapid decarbonisation in the electricity sector, those gains are being eroded by policy inaction in other economic sectors” RepuTex executive director Hugh Grossman said.

“That imbalance is likely to continue until industry emissions are more formally aligned with Australia’s national target under the Paris Agreement.”

In 2030, Australia’s overall emissions are expected to fall by around 16 per cent compared to 2005 levels, well short of the government’s 2030 target under the Paris Agreement and leaving a surplus of 392 million tonnes of emissions.

The Morrison government is expected to rely upon leftover credits from its 2020 target under the Kyoto Protocol, a move that has proven highly controversial in international climate talks which have yet to endorse their use.

Grossman said that a number of recent announcements from other countries that they will formally adopt net zero emissions targets, including most of the largest buyers of Australian gas and coal, would put pressure on Australia to strengthen its climate policies.

“As China, the US, and the rest of the international community begins to adopt a tougher stance on climate laggards, the screws will tighten on Australia,” Grossman said.

“The imposition of carbon border fees or quotas on carbon-intensive goods is possible, but we think unlikely given the complexity and hostility of the process. Comparably, the banning of carryover credits is an inevitable diplomatic lever to pressure Australia into achieving its agreed emissions reductions between 2020 and 2030.

“With Australia likely to be held to its hard emissions target, industry will be required to play a far bigger role to get us across the line to our 2030 target – and beyond.”

Reputex predicts that the electricity sector could see emissions fall by as much as one-third by 2030, as renewable energy projects replace coal-fired power station as they retire. However, these gains are effectively wiped out by a projected 29 per cent rise in emissions from the direct combustion of fuels, a 32 per cent rise in transport emissions and a massive 51 per cent rise in fugitive emissions, driven primarily by growth in gas production.

Reputex said that industries covered by the Morrison government’s Safeguard Mechanism, pitched as an effective cap on emissions from Australia’s industrial emitters, are expected to rise by as much as 77 per cent.

Grossman added that while the Morrison government had made some positive announcements as part of its recently launched Technology Investment Roadmap, that more substantial policies would be needed to get Australia’s industrial emissions under control, and the earlier the government acted, the easier the transition to lower emissions would be.

“We do not view the Technology Investment Roadmap as a near-term driver of emissions reductions, with technologies like low carbon iron and steel not proposed to be commercially viable until 2030 or 2040,” Grossman said.

“Further policy adjustments will therefore be required, with an industry emissions target best able to address the source of Australia’s emissions increases, and set Australia’s largest emitting facilities on a pathway to net-zero emissions before 2050.

“Setting an emissions target from today to net zero emissions in 2050 would see industrial emissions come off their peak and take a shallow decarbonisation pathway, of around 5 million tonnes per annum, making it a fairly easy task for most sectors,” Grossman added.