Industrial decarbonisation

Industry, which includes mining, manufacturing and construction, is responsible for almost half of Australia’s emissions when the use of electricity is factored in.

Electricity use or direct fuel combustion is responsible for half of all industry emissions. When electricity use is excluded, this number drops to around 34%.

The process of creating cement, iron or steel from raw materials is extremely varied and energy intensive. This makes industry one of the toughest sectors to decarbonise with a variety of solutions. Renewable electricity and full electrification offers the possibility of achieving zero emissions for industry sectors such as aluminium, iron and steel manufacturing, and other light manufacturing. Other industries such as thermal coal, oil and gas extraction are at odds with a safe climate future, and will need to be phased out as a matter of urgency.

At the same time, new opportunities are arising for the mining industry, and other industries, in Australia. Skyrocketing demand for batteries, electric vehicles, and renewable energy technologies in the global race to net zero will drive increased demand for Australia’s critical minerals – including lithium, cobalt, and rare earths.

Powering Australia’s economy with low-cost and abundant renewable energy will also boost overall economic productivity, and unlock significant opportunities for Australia to become one of the world’s biggest exporters of other decarbonised commodities, including renewable hydrogen and green steel.

Ensure major polluters

do their fair share

The Safeguard Mechanism is intended to manage Australia’s biggest industry polluters, who are responsible for around a quarter of Australia’s total emissions.

In principle, the mechanism does this by setting a baseline limit on how much carbon pollution can be emitted by a facility in a single year. Policing of this mechanism has been poor since its creation by the former Liberal National government in 2014, and no company has ever been penalised for exceeding their baseline despite one in five fossil fuel companies repeatedly doing so.

A well-designed Safeguard Mechanism can make sure big polluting industry starts doing its fair share in reducing Australia’s emissions. Significant design changes, good will and increased ambition from big industrial polluters are all needed to get emissions down in this sector.

What needs to happen by 2030?

The Federal Government must clearly identify skills shortages for the energy transition and provide funding for university, technical and vocational training courses to fill these gaps. This assessment should inform the detail around their pledge of $100 million to create 10,000 New Energy Apprenticeships and the National Skills Agreement that’s in the process of being designed.

What are the benefits?

Rapidly cutting pollution: Modelling conducted prior to the 2022 federal election showed tightening the Safeguard Mechanism could prevent 213 million tonnes of greenhouse gas emissions this decade. That's about the same as the emissions saved this decade if we shut four coal-fired power stations today

New jobs: The same modelling found that redesigning the Safeguard Mechanism to ensure major polluters do their fair share would create an estimated 1600 new jobs by 2030, with 5 out of 6 of these jobs rurally located

Setting a precedent: A well-operating Safeguard Mechanism will set Australia's largest emitters on a path away from fossil fuels and help future-proof jobs within Australian industry

Case Study

The Kitimat aluminium smelter in British Columbia, Canada, shows how big industry can go clean and green to keep providing jobs and critical materials in a zero emissions future.

The smelter is powered by clean, renewable hydropower, allowing it to produce around 420,000 tonnes of aluminium each year and employ over 1,000 people while creating far fewer harmful emissions than a regular smelter.