Highlights from our Climate Action Plan
We have put the low-carbon transition at the heart of our business strategy: combining investments in commodities that enable the energy transition with actions to decarbonise our operations and value chains. As a result of this, our strategy and approach to climate change are supported by strong governance, and we are building our processes and capabilities to enable us to reach net zero emissions by 2050.
Scope 1 and 2 emissions
Net zero by 2050
across our operations
15% reduction by 2025 and 50% by 2030
aligned with stretch goal of Paris Agreement
75% renewable power today
at managed operations, mostly from hydro-power
Deploy solar and wind at scale
targeting 1GW in the Pilbara and green repowering solutions for our Boyne Island and Tomago smelters
Progress abatement projects
for emissions from process heat, mobile diesel, anodes and reductants
Scope 3 emissions
Commitment to engage with iron ore and bauxite customers
to share decarbonisation plans and seek collaboration
Investment in multiple low-carbon steel technology pathways
coordinated by dedicated steel decarbonisation team
Customer partnerships with Baowu, Nippon Steel, POSCO and BlueScope
on steel decarbonisation
Scale up the ELYSISTM technology
for installation from 2024
Net zero emissions from shipping by 2050 and 40% reduction in intensity by 2025
five years ahead of IMO ambition
Portfolio and capital allocation
Up to $3bn growth capital in materials enabling the energy transition
in 2023 and 2024
$7.5bn capital in carbon abatement projects
our best estimate of capital spend on mitigation to 2030, of which $1.5bn in 2022-2024
$200m annual climate-related opex
expected to reduce as energy efficiency work matures
$75/t CO2e internal carbon price
to incentivise efficiency and new mitigation projects
Phase out purchase of diesel haul trucks and locomotives by 2030
Governance, policy engagement and disclosure
AGM advisory vote every three years
annual reporting on our progress
External third-party assurance of our emissions and alignment of target with 1.5°C
Disclose our policy positions
and review all our industry associations’ positions and advocacy annually
Climate performance linked to executive remuneration
Commitment to implement the TCFD recommendations
and CA100+ Net Zero Company Benchmark
While there is broad consensus on the need to tackle climate change, there has not yet been sufficient action globally. Governments, civil society organisations, companies and investors converged at COP26 to reset their ambition to reduce emissions and work in partnerships to transform our economy to net zero.
I was fortunate to attend the summit and came away from it more convinced than ever that Rio Tinto is an integral part of the solution to climate change. It was clear in Glasgow that this is the decade for action. The determination for action from the world’s largest economies was particularly significant.
In 2021, we launched our new business strategy, with the low-carbon transition at its heart. Through this strategy, we are ready to make an increasingly important contribution. The rapid shift to a lower-carbon world offers a unique opportunity for us to grow in the materials that will enable the energy transition and remain an attractive investment for decades to come. It will create additional demand for our products including copper, lithium, high-grade iron ore and aluminium, which are all vital for low-carbon infrastructure. However, we recognise that the carbon footprint of metals and minerals is significant, so we must decarbonise our operations and work with our customers on our strategy to tackle emissions across the full value chain. This is an important part of what we consider impeccable environmental, social and governance (ESG) performance – we can gain competitive advantage by providing low-carbon products that enable our customers to decarbonise.
We have set out a Climate Action Plan and have a clear and challenging decarbonisation strategy to achieve our targets. We now need to see our strategy translating into actions – this won’t be easy; inevitably there are risks and dependencies to delivering our mitigation projects. Our people understand our operations best, and they will bring innovation and solutions to the challenge of reaching net zero over the coming decades. This is why I am focused on building a culture where all our people feel trusted and empowered to drive change. With the world’s focus on tackling climate change, there’s no better time to be at Rio Tinto."
Progress in 2021
Producing materials essential for the low-carbon transition
One of the three key elements of our business strategy is to grow in materials enabling the energy transition.
Reaching net zero emissions globally will ultimately rely on increasing the supply of a range of metals and minerals supporting the development of clean technologies and associated infrastructure.
Key developments across our portfolio in 2021
Although climate change presents clear growth opportunities for our commodities, it also presents both physical and transition risks to our portfolio. The transition to a low-carbon economy will have profound implications not only on the commodities we produce, but how we produce them – particularly when considering fossil-fuel-based steel and aluminium production. This creates considerable opportunities for our business, but also presents clear risks if we fail to align our projects and products with a net zero future.
Reducing the carbon footprint of our operations
We are accelerating the decarbonisation of our assets to strengthen our alignment with the goals of the Paris Agreement and aim to reduce our emissions by 50% by 2030.
In 2021, our Scope 1 and 2 emissions fell to 31.1Mt CO2e, equivalent to a 4% reduction against our 2018 equity emissions baseline.
Our Scope 1 and 2 emissions in 2021
Our absolute emissions in 2021 were 31.1Mt CO2e (2020: 31.5Mt CO2e), 4% below our 2018 equity emissions baseline. The reductions achieved since 2018 are primarily the result of switching to renewable electricity contracts at Kennecott copper in the US and the Escondida mine in Chile (managed by BHP; Rio Tinto owns 30%), and also relate to unplanned operational disruptions in 2021 at Richards Bay Minerals (RBM) in South Africa and the Kitimat aluminium smelter in Canada.
The four most significant sources of our operational emissions are:
- electricity: 45% (both purchased and generated)
- carbon anodes and reductants in aluminium smelting and titanium dioxide furnaces: 21%
- fossil fuels for heat at our processing plants and alumina refineries: 18%
- diesel consumption in our mining equipment and rail fleet: 13%
The carbon intensity of our assets varies widely across our portfolio, and largely reflects the balance between mining and processing activities. Most of our assets already sit at the low end of their respective commodity carbon intensity curves. Operations with a predominant mining and logistics focus are less carbon intensive, while refining and smelting operations are high-temperature, energy-intensive processes.
2021 Scope 1 and 2 emissions by operations and source (equity basis)
Partnering to reduce the carbon footprint of our value chains
Our products are essential enablers of the energy transition and a net zero world.
We operate in energy- and carbon-intensive value chains – particularly steel and aluminium production – and are working with our customers on the technologies needed to address the resulting emissions. Steel is a vital material for industry, construction, transportation and low-carbon infrastructure and, with limits to the availability of recyclable steel, our iron ore products have an important future role to play – but we must support our customers as they work to decarbonise steel production.
Our Scope 3 emissions in 2021
Our Scope 3 emissions were 554Mt CO2e in 2021 (down from 570Mt CO2e in 2020) and around 95% of this is from the processing of iron ore, bauxite and other products by our customers. 94% of these processing emissions take place at our customer facilities in China, South Korea, Japan and other countries that have pledged to be carbon neutral by around mid-century. As our customers start to align with their governments’ pledges, we note that about 28% of our iron sales are directly to steel producers that have already set public targets for their Scope 1 and 2 emissions (our Scope 3), and have ambitions to reach net zero by around mid-century.
Enhancing our resilience to physical climate risk
Our assets, infrastructure, communities and broader value chains are exposed to the impacts of extreme weather events associated with climate change, as evidenced by our experience of events such as drought, flooding, heat waves and fires that are occurring globally.
While the immediate exposure to extreme weather events (acute climate risk) is addressed by product-group-level risk assessments and study guidance, the longer-dated risk exposure to chronic changes in climate is less well understood given the inherent uncertainty in future climate projections. Managing physical climate change risk through risk-based adaptation practices is essential to enhance the resilience of assets and communities.
Managing acute physical risk in the Pilbara
Our 2019 report describes the series of controls in place to manage the threat of extreme weather at our iron ore operations in the Pilbara in Western Australia. In 2020, we continued our work to enhance asset resilience at these operations and started site construction works for a project to strengthen the Cape Lambert A jetty and wharf, and this work continued during 2021. These works also include replacing berthing and mooring dolphins, longitudinal strengthening of the jetty and protective coating remediation. The replacement of berthing and mooring dolphins is well advanced and is expected to be complete in early 2022 followed by the longitudinal strengthening works and finally the protective coating remediation of the jetty by mid-2022 to bring these current projects to an end. These controls will result in a significant improvement in structural integrity and asset life associated with our operations in the marine port environment.
The Dampier Resilience Project has moved into implementation and is progressing through engineering and procurement activities with a site mobilisation in mid-2022. The project is forecast to be completed in late 2023. The scope of the project is to upgrade the 220kV transmission line between the Yurrayli Maya power station and Port Dampier, and develop a new bulk supply substation at Kangaroo Hill and 33kV distribution connections to Dampier. This critical project replaces assets at end-of-life with new, fit-for-purpose and resilient infrastructure to ensure power network stability, reliability and security.