Reduction in greenhouse gas (GHG) emissions by 2025
Reduction in GHG emissions by 2030
We recognise that we have a major carbon footprint, significant scope 1 and 2 emissions and material indirect scope 3 emissions. And we know we must address this with urgency to be part of the solution. In October 2021 we announced we will bring forward our target of reducing our scope 1 and 2 emissions by 15% to 2025 – five years earlier. We are also more than trebling our 2030 target, increasing it to a 50% reduction in our scope 1 and 2 emissions.
To achieve these targets and reach our ambition of net zero by 2050, we will:
- Accelerate our own decarbonisation switching to renewable power, electrifying processing and running electric mobile fleets.
- Focus on commodities essential to the drive to net zero.
- Increase our investment in R&D to develop products that will help our customers decarbonise quicker.
We will align our capital expenditure plans with our long-term GHG reduction target and expect to invest approximately $7.5bn towards that goal between 2022 and 2030. In addition, we aim to phase out the purchase of diesel haulage trucks and locomotives by 2030.
Having divested the last of our coal businesses in 2018, we no longer extract fossil fuels. Our portfolio is well positioned for the transition to a low-carbon economy.
In 2021, we also articulated a more explicit link between executive remuneration and our climate change goals and targets.
As well as decarbonising our own assets we need to develop products that can help our customers decarbonise. Our scope 3 emissions are nearly 520 million tonnes of CO2 and around 95% of this is from the processing of iron ore, bauxite and other products by our customers.
We are actively engaging in partnerships to explore ways to improve environmental performance across our value chains, such as with China Baowu Steel Group, Tsinghua University and Nippon Steel Corporation in the steel sector, and the ELYSIS joint venture developing carbon-free smelting technology for aluminium. In 2021 we set a series of measurable and impactful Scope 3 emissions reduction goals to guide our partnership approach. We are also active participants in the International Council on Mining and Metals and the Climate-Smart Mining initiative.
Our value chain
- To help us introduce zero-emission haul trucks at our global operations we’re working with manufacturers Caterpillar and Komatsu to test new technology at our sites.
- We are partnering with Carbfix to implement a technology for capturing carbon and permanently storing it underground at our ISAL aluminium smelter in Iceland. Carbfix will use our land surrounding the ISAL smelter for onshore CO2 injection in the world’s first carbon mineral storage hub, the Coda Terminal. Liquified CO2 will be imported by ship from industrial sites across North Europe for storage. The partnership follows an investment earlier in October in Carbon Capture Inc., a climate tech start-up that focuses on developing modular Direct Air Capture units powered by renewable energy and with the potential to remove significant amounts of CO2 from the atmosphere for permanent underground storage.
- We announced the purchase of four battery-electric trains for use in the Pilbara, Western Australia. Production is due to commence in 2023 ahead of initial trials in the Pilbara in early 2024. The locomotives will be recharged at purpose-built charging stations at the port or mine. They will also be capable of generating additional energy while in transit through a regenerative braking system which takes energy from the train and uses it to recharge the onboard batteries.
- Our engineers are working with experts from the University of Nottingham, England, on a promising new technology to help decarbonise the steel making process using sustainable biomass instead of coal.
- We are exploring the viability of transforming iron ore pellets into low-carbon hot briquetted iron, a low-carbon steel feedstock, using green hydrogen generated from hydro-electricity in Canada.
- We signed a Memorandum of Understanding with BlueScope to research and design low-emissions processes for the steel value chain, including iron ore processing, iron and steelmaking and related technologies. The companies will work together to explore low-carbon steelmaking pathways using Pilbara iron ores, including the use of clean hydrogen to replace coking coal at BlueScope’s Port Kembla Steelworks.
- We joined Japan’s Green Value Chain Platform Network (GVC Network), a collaboration established by the Japanese Ministry of the Environment to lead transparent decarbonisation efforts in the country. GVC Network member companies work to set science-based targets for emissions reduction that are economically feasible and effective for the achievement of their Scope 1, 2 and 3 targets.
- We are partnering with POSCO – the largest steel producer in South Korea and one of the world’s leading steel producers – to jointly explore, develop and demonstrate technologies to transition to a low-carbon emission steel value chain. The partnership will explore a range of technologies for decarbonisation across the entire steel value chain from iron ore mining to steelmaking, including integrating our iron ore processing technology and POSCO’s steelmaking technology.
- We signed a Memorandum of Understanding with Schneider Electric to develop a circular and sustainable market ecosystem for both our companies and our customers.
- We are partnering with the Australian Renewable Energy Agency to study whether hydrogen can replace natural gas in alumina refineries.
- We have formed two partnerships to research using hydrogen to reduce emissions in alumina refining: a study with the Australian Renewable Energy Agency to assess hydrogen use in industry and support a coordinated approach to developing a local supply chain, and a study with Sumitomo Corporation into building a hydrogen pilot plant at our Yarwun alumina refinery in Gladstone, Queensland, Australia.
Disclosures consistent with the TCFD recommendations
In 2018, we referenced the recommendations from the Task Force on Climate-related Financial Disclosures (TCFD) in our first climate change report and have aligned our climate change disclosures to be more transparent. Climate-related disclosures on governance, strategy, risk management and metrics and targets are also integrated into our Annual Report in the following sections: strategic context, key performance indicators, risk management, principal risks and uncertainties, governance, Sustainability Committee report and remuneration.
Our Climate Change Report provides a more thorough and consolidated review of our climate change strategy, our approach to evaluating and managing climate-related risks and progress towards our targets. Our 2020 Sustainability Fact Book, published with our Annual Report, includes a full list of the TCFD recommendations alongside references to our disclosure against them. We see ongoing development of good practice on climate-related disclosures in our sector and beyond, in part as a result of an iterative process of feedback from stakeholders.
We meet with the Climate Action 100+ (CA100+) group regularly at the Board, Executive Committee and climate team levels, and we value their co-ordination of investor engagement. We will work towards disclosures consistent with the evolving CA100+ benchmark and our Board intends to put our TCFD-aligned reporting to an advisory vote at our 2022 annual general meetings.
Our position on climate change
In 2015, we supported the adoption of the Paris Agreement and the long-term goal to limit global average temperature rise to well below 2°C and to pursue efforts to limit warming to 1.5°C. The Paris Agreement highlights the need to take “into account the imperatives of a just transition of the workforce and the creation of decent work”. We are committed to supporting a just transition to a low-carbon economy that is socially inclusive and provides decent work and livelihoods. We will integrate our commitment to implementing core business and human rights standards, including the UN Guiding Principles on Business and Human Rights (UNGPs), into our decarbonisation plans and actions.
Government policy that creates the right framework for change is critical, coupled with real business action and societal shifts. A challenge as serious as climate change requires transparency, collaboration and a shared contribution to the solution. Our positions on key climate and energy policy issues are:
We accept mainstream climate science assessed by the Intergovernmental Panel on Climate Change and the fact that climate change is occurring and is largely caused by human activities. We acknowledge the IPCC’s report on 1.5°C and their recommendation to aim for net zero emissions by 2050.
We support the outcomes of the Paris Agreement and the long-term goal to limit global average temperature rise to well below 2°C and pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels. We support governments as they raise the ambition of their Nationally Determined Contributions (NDCs).
The role of business
Significant progress towards a solution to climate change will only occur where there is broad engagement involving the breadth of experience and opinion from business, governments, investors, civil society organisations and consumers. Business has a role to play in addressing and managing the risks and uncertainties of climate change.
Emissions & energy reduction targets & standards
It is important to set targets, take action to achieve them, and report on progress against targets. We do not advocate for policies that undermine the Paris Agreement or discount NDCs. Our ambition is to reach net zero emissions across our operations by 2050.
Adapting to climate change
We recognise the importance of adaptation and increasing resilience to a changing climate.
Market mechanisms & emissions trading
Where climate policies are implemented, we support the use of market mechanisms, including a market-based price on carbon such as in emissions trading systems. We believe this is the best way of stimulating innovation and achieving emissions reductions at least cost.
Effective climate policies should incentivise the private sector to invest in low-carbon technology, while avoiding the negative unintended consequences of transferring industrial production to countries with weaker emissions regulation. Where climate regulation, such as carbon pricing, is introduced to incentivise the decarbonisation of ‘hard to abate’ sectors, this should be coupled with measures to maintain the competitiveness of emissions intensive trade-exposed industries to minimise competitive distortions within and across jurisdictions.
Energy policy & energy efficiency
Rio Tinto will promote alignment with its climate and energy policy in its discussions with industry association members. We recognise the valuable contribution that renewable energy sources make in reducing emissions. Many of our operations are energy intensive and we have been taking action to improve both productivity and energy efficiency, as we reduce emissions.
Climate and energy policy advocacy
Significant global and regional progress on climate change will only happen when everyone – business, governments, investors, civil society organisations and consumers – plays their part. Our own approach to climate change requires active engagement on relevant policies with a range of stakeholders in the countries where we operate.
Our responses to government consultations are guided by our overall policy positions that include support for market mechanisms, as we believe this is the best way of stimulating innovation and achieving emissions reductions at least cost. Our submissions are typically developed by subject matter experts, reviewed by government relations and legal teams, and then approved by the relevant country director or senior executive.
In 2020, we responded directly to four national and sub-national government consultations on climate and energy policy:
Working with our industry associations
Industry associations play an important role in policy development, sharing best practice and developing standards. They also allow us to better understand a range of external views and contribute our perspectives and experiences in support of a coordinated approach which benefits business, the economy and society.
We recognise that there is increasing stakeholder interest in industry associations and the role they play in policy advocacy. Each industry association is different. Some focus on a thematic mandate and promote best practice in a given domain, others gather a broader set of companies and represent a sector’s interest to government, policy makers and other stakeholders. Our participation across different industry associations also varies – we are more active in associations on issues where we can benefit, influence and add value.
Positions taken by industry associations on a given topic will consider a range of members’ views, and the nuance and emphasis of an industry association’s position may differ from that of Rio Tinto. Diverse and differing views should be heard in order to support rich and full debate, reach compromises where appropriate, and make progress on solutions to complex issues. We encourage industry associations to engage broadly with other stakeholders (such as investors and non-government organisations).
Our annual review of our industry association memberships supplements the Climate Change Report and provides a complete list of the major industry associations that take positions on climate change and sets out the elements used to evaluate their policy positions and advocacy:
- Accept mainstream climate science
- Advance the Paris Agreement goals to hold the increase in the global average temperature to well below 2°C above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels
- Support governments as they raise the ambition of their Nationally Determined Contributions
- Support market mechanisms, including carbon pricing, that stimulate innovation and cost-effective emissions reductions and minimise competitive distortions within and across sectors and jurisdictions
- Recognise the valuable contribution that renewable energy sources make in reducing emissions, not undermine the role renewables have in the energy mix
- Ensure that any positions and advocacy on the use of coal do not support subsidies and note that it will require advanced technology, and in the medium to long term must be consistent with Paris targets
The review provides further information on any major industry associations whose positions and advocacy on climate and energy policy significantly differ from Rio Tinto’s key positions on these issues.