Rio Tinto: ‘Technology-driven’ climate policies not enough to keep global warming to safe levels

One of Australia’s biggest resource companies says ‘high and rising’ carbon prices will be needed to keep global warming to safe levels after its own internal analysis found that a ‘target-focused’ approach technology” would not deliver the emissions reductions needed to meet the Paris Agreement goals.

In findings that contrast with the Morrison government’s preferred technology approach to climate policy not taxes, Rio Tinto said a “technology-driven” scenario modeled by the company would not enable the reductions in carbon emissions. emissions needed to keep global warming below 2 degrees.

“In a technology-driven scenario, innovation drives economic productivity and decarbonization efforts; however, carbon prices remain modest (ranging from USD 10 to USD 75/tCO2e by 2030) and measures to limit emissions are insufficient, so that the warming exceeds 2°C by 2100”, indicates the half-yearly report of Rio Tinto.

Although Rio Tinto has not specifically modeled the Morrison government’s climate change agenda, the company’s economic analysis suggests that forms of carbon pricing will be needed to achieve deeper emissions reductions. .

Rio Tinto pointed to a “society-led” scenario – which assumed much higher carbon prices, reaching US$130 (Australian $180) per tonne by 2050 – which would provide a sufficient market signal to reduce emissions at levels consistent with the Paris Agreement goal of keeping global warming below 2 degrees.

The coalition government has consistently rejected calls to introduce a price on Australian carbon emissions, having repealed the carbon price introduced by the previous Labor government.

The Morrison government’s policy stance “technology not taxes” saw the government avoid policies that would impose restrictions on the amount of greenhouse gas emissions produced by Australian industries and instead focused on the financing technologies that support the continued use of fossil fuels.

As Australia’s electricity system undergoes an accelerated transition to lower-cost wind and solar energy sources, the Morrison government has poured funds into the expansion of Australia’s gas industries and funded carbon capture and storage technologies not proven.

Rio Tinto's descriptions of its internal climate scenario modeling.  Source: Rio Tinto.
Rio Tinto’s descriptions of its internal climate scenario modeling. Source: Rio Tinto.

However, the refusal to impose a cost on greenhouse gas emissions has raised the prospect of Australian industries becoming the target of measures such as border carbon taxes, such as that implemented by the European Union.

It is companies like Rio Tinto and other large producers of emissions-intensive materials like aluminum that could be targeted by such a carbon border tax.

After completing an exit from its coal business in 2018, Rio Tinto’s core business now focuses on aluminium, iron ore, copper and other minerals. With 21.9 million tonnes of CO2 emissions, the company’s aluminum segment is responsible for the bulk of Rio Tinto’s carbon footprint.

Rio Tinto’s update says the company is committed to decarbonizing its operations, with the company recently signing a memorandum of understanding with the Tasmanian government, pledging to use more hydrogen in its operations. aluminum in Bell Bay and to purchase renewable energy.

In the update, Rio Tinto confirmed targets to reduce its Scope 1 and 2 emissions by 50% by 2030 – a target significantly higher than the 26-28% reduction adopted by the Morrison government – as well than its longer-term commitment. achieve net zero emissions by 2050.

To achieve these goals, Rio Tinto has committed to invest approximately $10 billion in the development of 7 GW of new wind and solar capacity to provide zero-emission electricity to its operations.

“These projects offer a range of economic outcomes, but overall they are accretive at a very modest carbon price. More importantly, they preserve the integrity of our long-lived assets and reduce the risk profile of our cash flows. We are accelerating our activity in the Pilbara and expanding our remit for potential wind and solar sites,” Rio Tinto said in its semi-annual update.

While the update suggests Rio Tinto is ready to go further on reducing emissions than the federal government, the resource giant has brushed off criticism from shareholder advocacy group the Australasian Center for Corporate Responsibility ( ACCR), which argued that Rio Tinto failed to fulfill its commitment to end its membership in lobby groups that sought to delay climate action.

“Rio Tinto continues to give a free pass to coal advocacy through the Minerals Council of Australia (MCA) and Queensland Resources Council (QRC) in Australia, and the National Mining Association in the United States,” said the climate director and the ACCR. environment,” said Dan Gocher.

“Years of engagement with Rio Tinto on this issue has yielded no tangible progress. MCA and QRC continue to advocate for the expansion of thermal coal, in the form of new and expanded mines in Nova Scotia. South Wales and Queensland, and regularly argue that Australia can meet Asia’s growing coal demand.

Teresa H. Sadler