An expert consultation process has laid out a path to decarbonisation in Australia. 

A new report by the Australian Industry Energy Transitions Initiative (ETI) says that some of Australia's largest heavy industrial companies could cut direct greenhouse gas emissions in their supply chains by more than 90 per cent by 2050, without relying heavily on carbon offsets. 

The report, prepared by Climateworks Centre and the CSIRO, found that the industrial transition would cost the equivalent of $21 billion a year over three decades if Australia were to play its part in trying to limit global heating to 1.5℃. The report, called “Pathways to industrial decarbonisation” (accessible in PDF form), looked at five major supply chains for industries, including iron, steel, aluminium, chemicals, and liquified natural gas (LNG). 

It found that these industries could cut annual CO2 from 221 million tonnes in 2020 to 17 million tonnes by mid-century while steel and iron production rose by nearly 20 per cent and aluminium production by more than 30 per cent. 

The initiative worked with companies responsible for about a fifth of the country’s industrial CO2 and a third of the market value of the ASX100. The report included supporting statements from the Australian Industry Group, BHP, Orica, Rio Tinto and some major banks and super funds. 

Woodside Energy, which is planning a large fossil fuel expansion, was also involved. It said it was pleased to receive the report and the recommendations “deserve careful consideration”.

The report has landed during a political debate over the safeguard mechanism; the Coalition policy that the Albanese government says it wants to revamp to reduce the CO2 emitted by Australia's biggest polluting industrial facilities. 

The Greens have offered to support Labor’s plan if it agrees not to approve any more coal and gas mines, a step the government says it will not take. 

Labor’s safeguard policy has been described as “a mirror image of fossil industry greenwashing” in the USA. 

The report found a combination of “strong ambition, coordinated action and government support” could lead to industrial emissions being cut by up to 92 per cent by 2050 compared with 2020 levels.

Although the transition is an investment, costing about $21 billion a year for 30 years, the report says it is equivalent to just a tenth of the $236 billion a year export value of the five supply chains examined and is comparable to other major investments. 

About two-thirds of the estimated required investment, equivalent to $20.8 billion a year over a 30-year period, is needed in the energy system as it shifts to renewable sources, with the rest in technology for industrial electrification and energy efficiency.

The report highlights the need for a transition to modernise Australia’s industrial regions and energy system, with the use of offsets in the proposed safeguard mechanism changes becoming a contentious issue after criticism of carbon credits created through forest regeneration projects. The government has proposed allowing unlimited offsets under the scheme.