Climate change
Introduction
Rio Tinto recognises that climate change (including climatic effects, policy response, adaptive measures and other residual effects) will continue to cause changes in our products' value chains and hence will affect our business. As such there are many risks to manage and opportunities to grasp. Rio Tinto has a broad mix of mineral based products. This means it is well positioned to assist in society's response to climate change. Furthermore, it has identified and is working on emergent climate change opportunities.
Rio Tinto emits approximately 13 million tonnes of CO2-e onsite per year from our operations. Another 12 million tonnes of CO2-e is associated with the generation of electricity we purchase for our operations. Combustion of Rio Tinto coal by our customers generates an estimated 354 million tonnes of CO2-e each year. CO2-e emissions associated with the conversion of our iron ore into steel are approximately 217 million tonnes per year.
On the other hand, there is a positive correlation between energy efficiency and reductions in greenhouse gases, as there is between increased recycling of our metal and mineral products and reduced emissions. As a result, some of our products and proprietary energy efficient processes should have competitive advantages under greenhouse gas regulations.
We are committed to:
- increasing the efficient use of energy to reduce greenhouse gas emissions per unit of product and have adopted a four per cent GHG improvement target by 2008, and a five per cent energy use reduction target;
- working with customers to improve the use of our products through their life cycle;
- technologies to reduce greenhouse gas emissions from our processes and use of our products;
- continuing to participate constructively in the ongoing international and national climate change policy debates; and
- ensuring the specific actions we take have social, environmental and economic value.
In 2000 Rio Tinto commenced a climate change programme to support our position on position on climate change. It continues and is being expanded.
Elements of the programme
Gathering an accurate understanding of our current greenhouse gas practices and energy efficiency throughout the Group.
Achievement of greenhouse emissions reduction targets.
Undertaking and supporting a number of research projects to reduce greenhouse gas emissions from our production and from the use of our products. Promoting projects to demonstrate the efficacy of carbon capture and storage.
Joining in voluntary agreements with countries where we operate to reduce our greenhouse emissions.
Developing informed responses to national and international climate change policies. We have developed a set of key criteria Rio Tinto believes should underpin public policy on climate change.
Working with our customers, suppliers and other external partners to reduce greenhouse gas emissions, improve information flows, and collaborate on greenhouse policy issues.
Understanding how emissions trading schemes are developing and working across the globe.
Risk Management
Climate change has been included in the company's key risk management processes.
Annual valuation:
The cost of GHG emissions has been included in the annual valuation exercise conducted by each Rio Tinto business. Guidance has been issued by the Economics Department.
Business evaluation:
The cost of GHG emissions and an evaluation of the risks and opportunities associated with climate change policy measures are included in every new business development opportunity that is submitted to the Investment committee of the board. Climate change is now a factor in our project evaluation process.
Technical evaluation:
Guidance for assessment of the physical impacts of climate change over the life of a project is being developed by the Technical Evaluation Group and will be included in all new project technical evaluations.
Risk assessment:
A Group wide climate change risk assessment was completed in 2002. The risk assessment addressed both qualitative and quantitative estimates of climate change risk and opportunities under a variety of possible future policies affecting our operations and the markets for our products. An update of the assessment will be undertaken as part of the 2006 - 2008 Climate Change Action Plan.
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