工业脱碳路径- Pathways to industrialdecarbonisation -Australian Industry Energy Transitions Initiative

PATHWAYSTOINDUSTRIALDECARBONISATION

PHASE3REPORT-FEBRUARY2023

AustralianIndustryETIisconvenedbyClimateworksCentreandClimate-KICAustralia

WWW.ENERGYTRANSITIONSINITIATIVE.ORG

Pathwaystoindustrialdecarbonisation

PositioningAustralianindustrytoprosperinanetzeroglobaleconomy

1

Acknowledgements

TheAustralianIndustryEnergyTransitionsInitiative(AustralianIndustryETI)isfundedbyacombinationofphilanthropyandindustryparticipants,andhasalsoreceivedfundingfromtheAustralianRenewableEnergyAgency(ARENA)aspartofARENA’sAdvancingRenewablesProgram.TheviewsexpressedhereinarenotnecessarilytheviewsoftheAustraliangovernment,andtheAustraliangovernmentdoesnotacceptresponsibilityforanyinformationoradvicecontainedherein.

TheAustralianIndustryETIisconvenedbyClimateworksCentre,operatingwithintheMonashSustainableDevelopmentInstitute,andClimate-KICAustralia,incollaborationwiththeEnergyTransitionsCommissionanddeliverypartnersCSIRO,RMI(formerlyRockyMountainInstitute)andBloombergNEF.

TheAustralianIndustryETI’sindustryparticipantsandsupportershavecontributedtotheresearch,findings,conclusionsandmessagesinthisreport.Industryparticipantshavecollaboratedinthedevelopmentof,andhavehadoversightof,themodelinputsandarchitectureofthereport.Industryparticipantsendorse,inageneralway,thecentralthemesandfindingsofthereportrelatingtotheneedforambitious,coordinatedactiontomeetthesignificantchallengesinvolvedintransitioningAustralia’senergysystemandbroadereconomyinordertolimitwarmingto1.5°Cabovepreindustriallevels,andinrelationtothepotentialopportunitiesforAustralia’seconomyifstrong,effectiveandcoordinatedactionisachieved.Whilethisreportprovidesanevidence-based,independentanalysisinformedbyconsultationwithindustry,itdoesnotnecessarilyreflectthepositionofeachindividualparticipant.

Thisreportcontainsstatementsthatare,ormaybedeemedtobe,forwardlookingstatements,includinggoals,pathwaysandambitionsforthesupplychainsinfocus.Suchforwardlookingstatementsarenotguaranteesoffutureperformanceandinvolveknownandunknownrisks,uncertaintiesandotherfactors,manyofwhicharebeyondthecontrolofthe

AustralianIndustryETI.

Participants:AustralianGasInfrastructureGroup,APAGroup,Aurecon,AustralianSuper,BHP,BlueScopeSteel,

bpAustralia,Cbus,theCleanEnergyFinanceCorporation,FortescueMetalsGroup,HSBC,Orica,NationalAustralia

Bank,RioTinto,SchneiderElectric,WesfarmersChemicals,Energy&Fertilisers,WestpacandWoodsideEnergy.Supporters:AustralianIndustryGroupandtheAustralianIndustryGreenhouseNetwork.

ThisreportistheresultofthreeyearsengagementwithAustralia’semissions-intensiveindustryandrelatedbusinessestocoordinatelearningandaction,anddeveloppathwaysandprojectstowardsachievingnetzeroemissionssupplychainsinAustraliabymid-century.

ThisreportwaswrittenbyClimateworksCentrespecialistsandPaulGrahamfromCSIRO,withsignificantcontributionsfromreviewerswithinClimateworksCentre,Climate-KICAustraliaandtheEnergyTransitionsCommission(ETC).JobsfiguresinthisreportwereprovidedbyAccentureAustraliaanddevelopedfromdataprovidedbyClimateworksCentreandCSIROonarangeofcarbonabatementopportunitiesinAustralianIndustryETIsupplychains.Afullanalysisofjobsfigurescanbefoundinthecompanionjobsreport.

WeacknowledgeandpayourrespecttotheTraditionalOwnersandElders–pastandpresent–ofthelandsandwatersonwhichprogramparticipantsoperatenationally.

PATHWAYSTOINDUSTRIALDECARBONISATION

Pathwaystoindustrialdecarbonisation

PositioningAustralianindustrytoprosperinanetzeroglobaleconomy

Phase3report,February2023

Authors

DrTyraHorngren

DrTessaLeach

RoMaxwell

PaulGraham

PeterCarton,MeredithEngland,JayGordon,AlasdairGraham,MikeHemsley,ItaKettleborough,PhilipLake,RafalMalinowski,HannahMaral,JasonNielsen,LauraSimes

ClimateworksCentreandClimate-KICAustralia2023,‘Pathwaystoindustrialdecarbonisation:PositioningAustralianindustrytoprosperinanetzeroglobaleconomy’,AustralianIndustry

EnergyTransitionsInitiative,Phase3,ClimateworksCentre.

ISBN:978-0-9924232-6-1

RobKellyKylieTurnerAnnaMalos

Contributors

3

4

AUSTRALIANINDUSTRYENERGYTRANSITIONSINITIATIVE—

Contents

Acknowledgements2

TableofFigures6

ForewordbySimonMcKeon8

Executivesummary9

1.Introduction14

2.Pathwayforheavyindustrydecarbonisation22

2.1Decarbonisationalignedto1.5°Crequiresasignificantstretch

inefforts22

2.2ThedecarbonisationofAustralia’sindustrialsupplychainswill

requireatransformationalshiftinAustralia’senergysystem25

2.3Australiaisoneofthebetterplacedeconomiessettobenefit

fromaglobalenergytransition46

2.4Achievingtheenergytransitionwillinvolvechallengesbut

thesecanbeovercome.47

3.Focusonironandsteel49

3.1Ironandsteelproductionassumptions51

3.2Technologydeploymenttimeline51

3.3Ironandsteelsupplychaindecarbonisation54

MomentumisbuildingacrosstheAustralianandglobal

3.4

ironandsteelindustry64

3.5Enablingthetransition65

4.Focusonaluminium70

4.1Aluminiumsupplychainproductionassumptions72

4.2Technologydeploymenttimeline72

4.3Aluminiumsupplychaindecarbonisation76

MomentumisbuildingacrosstheAustralianandglobal

4.4

aluminiumindustry83

4.5Enablingthetransition84

5

PATHWAYSTOINDUSTRIALDECARBONISATION

5.Focusonothermetals90

5.1Othermetalsproductionassumptions92

5.2Technologydeploymenttimeline93

5.3Othermetalssupplychaindecarbonisation94

5.4MomentumisbuildingacrossAustralianandglobalother

metalsindustries101

5.5Enablingthetransition102

6.Focusonchemicals107

6.1Chemicalsproductionassumptions109

6.2Technologydeploymenttimeline109

6.3Chemicalssupplychaindecarbonisation115

6.4MomentumisbuildingacrosstheAustralianandglobal

chemicalsindustry122

6.5Enablingthetransition123

7.FocusonLNG128

7.1LNGproductionassumptions130

7.2Technologydeploymenttimeline132

7.3LNGsupplychaindecarbonisation135

MomentumisbuildingacrosstheAustralianandglobal

7.4

LNGindustry142

7.5Enablingthetransition142

8.EnablingthetransitiontonetzeroemissionsinAustralianindustry148

8.1Enablersofacoordinatedtransition149

8.2Recommendedactionstounlock1.5°C-alignedpathways157

9.Conclusionandsummaryofrecommendedactions174

References

179

Glossary

192

6

AUSTRALIANINDUSTRYENERGYTRANSITIONSINITIATIVE—

TableofFigures

FigureA:Priorityobjectivesforaction

11

FigureB:Findingsforkeyenablers

12

FigureC:Supplychainsnapshot

13

Figure1.01:ThesignificanceoftheAustralianIndustryETIsupplychains

15

Figure1.02:

EstimatedemissionsfromdownstreamuseofselectedAustraliancommodityexportscomparedwithAustralia’sdomesticemissions

16

Figure1.03:Globalcarbonbudgetatdifferentlikelihoodsoflimitingwarmingto1.5°C

17

Figure1.04:Climateambitioninthethreecorescenarios

20

Figure2.01:AnnualemissionsintheAustralianIndustryETIscenarios

23

Figure2.02:CumulativeemissionsintheAustralianIndustryETIscenarios

24

Figure2.03:AnnualemissionsfromindustryintheAustralianIndustryETIscenarios

24

Figure2.04:Cumulativeinvestmentinrenewableenergyandindustryabatementtechnologiesby2050

25

Figure2.05:Changesinindustryenergyuseovertimeinthe‘Coordinatedactionscenario’

26

Figure2.06:Electricitygenerationmixinthe‘Coordinatedactionscenario’

27

Figure2.07:Electricityrequiredforthe‘Coordinatedactionwithexportssensitivity’

29

Figure2.08:

Renewableenergycapacityinthe‘Coordinatedactionscenario’and‘Coordinatedactionwithexportssensitivity’

29

Figure2.09:

RenewablegenerationcapacityinstalmentsinAustraliaandthescaleofinstalmentsneededtoachievethe‘Coordinatedactionscenario’and‘Coordinatedactionwithexportssensitivity’

30

Figure2.10:CumulativeelectricitysystemexpenditureintheAustralianIndustryETIscenarios(2020-2050)

31

Figure2.11:

Hydrogenproductionroutesconsideredinthe‘Coordinatedactionscenario’intheAustralianIndustryETIanalysis

32

Figure2.12:.LevelisedcostofhydrogeninNEMstates

33

Figure2.13:HydrogenproductionintheAustralianIndustryETIscenarios

34

Figure2.14:State-levelgreenhydrogenproductioncostsin2050

35

Figure2.15:Storagecapacityrequirementsin2050relativetorenewablecapacity

36

Figure2.16:Weightedaveragecostofelectricityandtransmissionovertime

37

Figure2.17:Electricitypricesforgeneralmarketcustomersin2050

37

Figure2.18:Electricitypricesforgreenhydrogenproducersin2050

38

Figure2.19:Electricitypricesfordifferentcustomersegmentsin2050

39

Figure2.20:Potentialdriversofgreenhydrogenproductionlocationandtransport

40

Figure2.21:.Modelfindingsforhydrogenproductionlocationsinthe‘Coordinatedactionscenario’in2050

41

Figure2.22:

Modelfindingsforhydrogenproductionlocationsinthe‘Coordinatedactionwithexportssensitivity’in2050

42

Figure2.23:Australianindustrialenergyneedsin2030undertwoscenarios

43

Figure2.24:EnergyneededforhydrogenproductionintheSWISin2040undertwoscenarios

43

Figure2.25:Quantitiesandtypesofhydrogenproducedin2030underdifferentgasprices

45

Figure2.26:Globalelectricitycostsin2030and2050

46

Figure2.27:Challengesfortheenergytransition

47

Figure3.01:AssumedrelativeproductionchangesinAustraliaunderthe‘Coordinatedactionscenario’

51

Figure3.02:

Technologydeploymenttimelineforthedecarbonisationofironandsteelinthe‘Coordinatedactionscenario’

52

Figure3.03:Steelproductionroutes

53

Figure3.04:ChallengesforironandsteeldecarbonisationinAustralia

54

Figure3.05:Hematite-goethiteandmagnetiteprocessing

56

7

PATHWAYSTOINDUSTRIALDECARBONISATION

Figure3.06:

Changesinfueluseforironoreminingandironandsteelmakinginthe‘Coordinatedactionscenario’

58

Figure3.07:

Electricitygenerationrequiredforthedecarbonisationoftheironandsteelsupplychaininthe‘Coordinatedactionscenario’

59

Figure3.08:Electricityandcumulativeinvestment(2020-2050)neededtounlockAustralia’sgreenironexportopportunity

61

Figure3.09:Cumulativeinvestmentinsteelmakingtechnologiesinthe‘Coordinatedactionscenario’

62

Figure3.10:Objectivesandrecommendedactionsforironandsteel

65

Figure4.01:AssumedrelativeproductionchangesinAustraliaunderthe‘Coordinatedactionscenario’

72

Figure4.02:

Technologydeploymenttimelineforthedecarbonisationofthealuminiumsupplychaininthe‘Coordinatedactionscenario’

73

Figure4.03:Cumulativeinvestmentinlow-emissionstechnologiesinthe‘Coordinatedactionscenario’

74

Figure4.04:Selectionoftechnologyoptionstodecarbonisethealuminiumsupplychain

75

Figure4.05:Challengesforaluminiumdecarbonisation

76

Figure4.06:Electricitygeneratedfromfossilfuelandrenewablesourcesforaluminiumsmelting

79

Figure4.07:

Changesinfueluseforbauxiteminingwiththecorrespondingriseinelectricitygenerationrequirementsinthe‘Coordinatedactionscenario’

80

Figure4.08:Objectivesandrecommendedactionsforaluminium

84

Figure5.01:AssumedrelativeproductionchangesinAustraliaunderthe‘Coordinatedactionscenario’

93

Figure5.02:

Technologydeploymenttimelineforthedecarbonisationofothermetalsinthe‘Coordinatedactionscenario’

94

Figure5.03:ChallengesforothermetalsdecarbonisationinAustralia

94

Figure5.04:

Changesinfueluseforothermetalsminingandhaulagewiththecorrespondingriseinelectricitygenerationrequirementsinthe‘Coordinatedactionscenario’

97

Figure5.05:Cumulativeinvestmentinlow-emissionstechnologiesinthe‘Coordinatedactionscenario’

99

Figure5.06:Objectivesandrecommendedactionsforothermetals

102

Figure6.01:AssumedrelativeproductionchangesinAustraliaunderthe‘Coordinatedactionscenario’

109

Figure6.02:Conventionalnitrogenouschemicalsproduction

110

Figure6.03:Potentialammoniaemissionsabatementtechnologies

111

Figure6.04:Greenammoniaproductionwithhydrogenfeedstock

112

Figure6.05:

Technologydeploymenttimelineforthedecarbonisationofthechemicalssupplychaininthe‘Coordinatedactionscenario’

113

Figure6.06:

Cumulativeexpenditureondecarbonisationtechnologiesandhydrogenforthechemicalssupplychainsinthe‘Coordinatedactionscenario’

114

Figure6.07:ChallengesforchemicalsdecarbonisationinAustralia

115

Figure6.08:Changeinenergymixforammoniaproductioninthe‘Coordinatedactionscenario’

119

Figure6.09:Hydrogenproductionandconsumptionin2050inthe‘Coordinatedactionscenario’(PJ/year)

120

Figure6.10:Objectivesandrecommendedactionsforchemicals

123

Figure7.01:LNGproductionassumptionsinAustralia

130

Figure7.02:LNGemissionsupto2050aspartofAustralia’s1.5°Calignedcarbonbudget(50percentprobability)

132

Figure7.03:TechnologydeploymenttimeforthedecarbonisationofLNGinthe‘Coordinatedactionscenario’

133

Figure7.04:CumulativeinvestmentinLNGtechnologies

134

Figure7.05:ChallengesforLNGdecarbonisationinAustralia

135

Figure7.06:

EmissionsbyAustralianIndustryETIscenarioin2030and2050,includingtheimpactofreservoirCCS

136

Figure7.07:Energymixincoordinatedactionandthepercentageofenergyusedbye-drives

139

Figure7.08:ObjectivesandrecommendedactionsforLNG

143

Figure8.01:Typesofenablersofindustrialdecarbonisation

150

Figure8.02:Cumulativeinvestmentbetween2020and2050ineachscenario

152

Figure8.03:Objectivestounlock1.5°Calignedpathways

158

Figure8.04:SomeemergingtechnologiesintheAustralianIndustryETIsupplychains

166

Figure8.05:SomematuretechnologiesinAustralianIndustryETIsupplychains

167

8

RANSITIONSINITIATIVE—

AUSTRALIANINDUSTRYENERGYT

Foreword

Australianbusinessunderstandsthelonggame.NowhereisthismoreapparentthaninthestepsbusinessistakingtoaddressAustralia’s,andtheworld’s,decarbonisationchallenge.

WhenwestartedtheAustralianIndustryEnergyTransitionsInitiative(AustralianIndustryETI)in2019,weinvitedAustralianbusinessestocomewithusonajourney.Weprovidedaspaceforrobustandchallengingdiscussionandwo1ollobuqou1eloovoe才ounbo1e才6nbnowwoooulb6o才才oeo才no1doo6ueown6才ie1opui1obieoteuon6eo6lo‘才n6才i才necessitatesstrongcollaborationandcoordination.

Somuchhaschangedsincewebegantheprogram.Wehavelivedthroughaglobalpandemic,firesandfloods.Wehaveseenfirsthand,theterriblepricesomeofusarepayingforclimatechangeandthewaysinwhichourworldisinextricablyconnected.

Ou1oo1qo16才oq61才ioiq6n才en6voooll6do16才ob才obovoloqq6才nw6Ve6nb6o才ione才ow61be6oniovineno才So1oomieeioneincriticalsupplychainsby2050,thatshouldaimtolimitwarmingtowithin1.5degreesCelsius.It’snotaneasypath,butwebelieveit’spossible,andweknowit’snecessary.Changeisrarelyeasy,andthepathwaytonetzeroemissionsisnoexception.Thisisacomplextransition,butthereisalsoanopportunitytoensureAustraliaispositionedforglobalcompetitiveness.

Ae61oeul才otou1wo1》6nb才nowo1》oto才no1e‘wo6llnow》nowmo1o6dou才wn6才ie才oonnio6llVqoeeidloto1才nodecarbonisationofheavyindustryandimportantly,moreaboutwhatwedon’tknowandwheremoreresearchisneeded.

Australianbusinesshasstartedtotransformitself:testingtechnology,contemplatingnewmarkets,andchallengingitselftomeetthedecarbonisationchallengeheadon.BusinessisworkingtoshapeastrategyforafutureinwhichAustralianenergy-intensiveindustriesarecompetitiveinadecarbonisedworld.

Thisisamomentofopportunity.Withanationaltargettoachievenetzeroemissionsby2050andeffortstoestablishaframeworkforeffectiveemissionsreductionsunderway,itisnowtimeforustoseizeandcreatethefuturewewant.Theheavyindustrysectorhasworkedtogethertounderstandthepathwaytonetzero,topreparefortheheavylifting.Nowit’stimeforTeamAustraliatostepup.

Foreverychangeweaskofourleaders,wemuststatewhatwearewillingtodoinsupport.

Theonlywaywemakethemostofthismomentisbyworkingtowardsthesamevision,together.Allofus,working才ow61be6oommono6ueo‘eo才才ineueob才odoineoomto1才6dlowi才ndoine6li才才lodi才unoomto1才6dlo6ewow1oe才lowi才nboththechallengesweknowabout,andthosewecan’tyetsee.Thepathwaysoutlinedherearechallenging,the1ie》eot6o才ionin才o才noun》nown61ounoomto1才6dlodu才才nieq6才nw6Vie6leoloeeon6lloneine6nbloeeunoomto1才6dlothanwhatwewillfaceifwefailtoactdecisively.Atstakeisaplanetthatwemustpassoningoodconditionto

futuregenerationsandaprosperouseconomythatcansustainthem.Achallengingpathway,butifanyonecandoit,

Australianscan.

SIMONMcKEONAO

Chair,AustralianIndustryEnergyTransitionsInitiative

9

PAT

H

WAYS

TO

INDUSTRIALDECARBONISATION

Executive

summary

In2023,thereisinternationalaccordthaturgentactionisrequiredtoreduceemissionsinlinewithParisAgreementgoalsandlimitwarmingtobelow2°C,andpreferablyto1.5°C.Theglobalaveragetemperaturehasrisenbyaround1.1°Csincepre-industrialtimes,witheachdecaderecordingsuccessivelywarmertemperaturesthanthelast(IntergovernmentalPanelonClimateChange[IPCC]2021).Astheriseinglobaltemperatureisdirectlyrelatedtocumulativegreenhousegasemissions,timeisfastrunningouttopreventwarmingbeyond1.5°Candtheworsteffectsofclimatechange.ForAustralia,rapidanddeepemissionsreductionsareneededifthisnationistocontributetoglobalemissionsreductionsinlinewithParisAgreementgoals.

TheAustralianIndustryEnergyTransitionsInitiative(AustralianIndustryETI)hasspentthepastthreeyearsundertakinganextensiveprogramtocollectivelyexploreandaddressthechallengesassociatedwithdecarbonisingtheemissions-intensiveindustrysector.TheAustralianIndustryETIfocusesonfivesupplychains(ironandsteel,aluminium,othermetals,chemicals,andliquefiednaturalgas(LNG))thataresignificantintermsoftheiremissions,energyuse,andcontributionstotheAustralianandglobaleconomies.Collectively,heavyindustryisresponsiblefor17.3percentofAustralia’sGDP.ThesefivesupplychainsgenerateexportsworthapproximatelyA$236billioneachyearanddirectlyemployanestimated414,000people(AustralianBureauofStatistics2020;2022a;2022b).Australia’sindustrysectorsaccountforaround44percentofAustralia’stotalemissions,withthefivesupplychainsthatarethefocusfortheAustralianIndustryETIcontributinganestimated25percent.

Combiningmulti-yearengagementswithsomeofAustralia’slargestcompaniesandevidence-based,independentanalysis,theAustralianIndustryETIhasidentifiedpotentialpathwaystonetzeroemissionsacrossheavyindustrysupplychains,aswellastangibleprojectsforactiontowardsthenetzeroemissionsgoal.Aseconomiesworldwideincreasinglyaligntonetzero,thisreportpresentsthepathwaysforAustralia’sheavyindustrydecarbonisationandpriorityactionsneededacrosskeysupplychainstosupportthetransition.

Thisreportanalysesthreetechno-economicscenariosdevelopedt