Towards Net Zero Emissions
Our goal is clear, now we’re working hard to get there
Our Editorial team sat down with Peter Toth, our Group Executive Strategy & Development, to talk about Rio Tinto’s approach to climate change.
Our 2030 targets
To reduce our absolute emissions by 15% and our emissions intensity by 30% relative to our 2018 baseline
Ed: Peter, thanks for your time. Your portfolio includes climate change – can you tell us about our approach?
Peter: Our strategy on climate change starts with producing materials that are absolutely essential for the transition to a low-carbon economy. If you look at our portfolio – copper, aluminium, titanium and boron – these are all materials used to build solar plants, wind turbines and batteries, all of which are very important to the global climate transition.
And then of course we are also focused on reducing our emissions across our operations.
Ed: That’s been a focus for quite a while now.
Peter: Yes, actually we’ve considered climate change in the way we run our business for a long time. In fact, we’ve incorporated a carbon price into our capital allocation and investment decisions for about 20 years.
In 2015, we signed up to the Paris Agreement. Three years later we divested the last of our coal businesses and so we no longer extract fossil fuels.
But probably the single biggest and most important climate change commitment is to achieve net zero emissions by 2050.
Ed: That’s a big commitment – how are we tracking?
Peter: Overall, we’re making steady progress towards our 2030 targets, and our 2050 net zero ambition. But we have a lot more to do.
Since 2010 we have reduced our carbon footprint by about 40% – and so the extra 15% reduction by 2030 will put us on the pathway to be aligned with the Paris Agreement. These targets were developed bottom-up, in a granular way, and using marginal abatement cost curves to help us identify, prioritise and cost mitigation opportunities at each asset.
Since 2018, we’ve reduced our carbon footprint by 1-1.5 million, which is a 3% reduction. But in terms of 2030, you need to consider our targets in the context of where we’ve come from since 2010. We currently emit 31.5 million tonnes of carbon every year, so the 15% reduction equates to about 5 million tonnes of carbon between now and 2030. You then need to consider that most of our assets already sit in the low end of their respective carbon intensity curves, which means it’s more and more challenging to find ways to further reduce emissions. Technology breakthroughs will be crucial.
So, you’re right – it is quite an ambitious target, but it’s one we’re committed to achieving.
75% of electricity used at our managed operations from renewable sources
Ed. What are we doing to overcome these challenges?
Our goal is very clear, but the project execution pathways by which we will get there are still a work in progress.
We operate in two hard-to-abate industrial sectors, steel and aluminium, so technology such as green hydrogen producing green steel and ELYSIS producing carbon-free aluminum will play a very critical part in terms of being able to get a net zero position. We have committed $1 billion over the next five years to fund abatement targets and established a dedicated Energy and Climate Change Centre of Excellence.
We have further developed our asset-by-asset decarbonisation roadmaps and started work on mitigation projects, with a particular focus on renewables, process heat and ways to replace diesel fuel in our mobile fleets and rail networks. We have 44 projects in our abatement pipeline across all of our product groups and geographies – about 60% are at an experimental or conceptual stage and we’re working hard to progress them.
We are also introducing a more explicit link between executive remuneration and our climate change goals and targets. All of these things will help us reach our goal.
Ed: We also hear a lot of discussion about scope 3 emissions – can you explain what it is, and why it’s important.
Peter: For our business, scope 3 emissions are primarily from the direct or indirect use of fossil fuels by our customers in the processing of our products. For example, when our customers make steel using our iron ore they often combine it with coal – a fossil fuel – which contributes to greenhouse gas emissions. Our ability to directly influence the decarbonisation pathways of our customers’ hard-to-abate processes is limited, but we recognise that we have a partnership role to play.
Ed: A lot of investors want to know why we don’t set scope 3 emissions targets. Can you tell us the thinking behind our position?
Peter: These emissions are beyond our operating perimeter and operational control and so are difficult to influence or even calculate. Instead, we’re focusing on working with customers through technical partnerships to find ways to reduce their scope 1 and 2 emissions, which in turn will significantly reduce our scope 3 exposure.
Ed: In 2020, we announced a few partnerships in this space.
Peter: Yes, that’s right – we further advanced our partnership with China Baowu Steel Group and Tsinghua University and committed $10 million to fund the joint establishment of a Low Carbon Raw Materials Preparation R&D Centre. We also signed a new Memorandum of Understanding with Nippon Steel Corporation to jointly explore technologies to transition to a low-carbon emission steel value chain.
And our ELYSIS joint venture with Alcoa achieved a new milestone with the scaling up of a breakthrough technology that eliminates all direct greenhouse gas emissions from the aluminium smelting process. The first industrial pilot facility is now completed – it’s really exciting to see this important technology progress. We believe the best solutions will come from partnerships like these.
Our Scope 3 Goals
Scope 3 emissions are indirect emissions from value chain activities both upstream and downstream of our business.
Our scope 3 goals are to:
- Work in partnerships with customers on steel decarbonisation pathways and invest in technologies that could deliver reductions in steelmaking carbon intensity of at least 30% from 2030.
- Work in partnerships to develop breakthrough technologies with potential to deliver carbon neutral steelmaking pathways by 2050.
- Work in partnerships to develop breakthrough technology enabling the production of zero-carbon aluminium.
- Meet our ambition to reach net zero emissions from shipping of our products by 2050.