Several top mining jurisdictions are drawing up decarbonization plans in response to the Paris Accord that holds countries accountable for climate change.
Canada has committed to achieve net zero emissions by 2050. Its Net-Zero Emissions Accountability Act is expected to enshrine the country’s target in law and establish a process to set five-year emission reduction targets from 2030 as well as to develop a credible plan to meet each milestone.
Australia has not committed to net zero yet, but is signalling a change soon as it aims to reach zero emissions “as quickly as possible and preferably by 2050”. In line with the Paris Accord, the country’s current target is to reduce greenhouse gas (GHG) emissions to 26-28 percent below 2005 levels by 2030.
South Africa aims to reach net zero by 2050, according to the Low Emission Development Strategy
(LEDS), developed in response to the Paris Accord. LEDS is based on three policy documents: the National Development Plan, with the objective to eliminate poverty and reduce inequality by 2030; the National Climate Change Response Policy, the government’s policy framework for climate change; and the Climate Change Bill, which will form the legislative foundation for the country’s climate change response.
China aims to hit peak emissions before 2030 and reach carbon neutrality by 2060, according to President Xi Jinping.
Pressure is mounting on mining companies to support national decarbonization targets in their host countries. The potential for carbon taxes in a number of jurisdictions also provides incentives for mining companies to engage more effectively in energy transition. In light of these sustainability challenges, many companies are conducting systemic reviews of their asset portfolios and several have already published decarbonization plans. These plans reveal that most mining companies see energy transition challenges and opportunities materialize in two primary areas:
- Reducing environmental impact, with a focus on cutting GHG emissions. Many mining companies are starting to move beyond identifying risks associated with carbon emissions and beginning to implement their decarbonization plans. In terms of execution, most miners are primarily focusing on direct and indirect (purchased electricity, heat and steam) emissions and concentrating on:
In addition to tackling their direct and indirect emissions, many companies are now focusing on emissions indirectly generated by their value chains. This shift in focus will require a new approach that involves exploring how collaborative relationships with customers, suppliers and other value chain partners could reduce the footprint and/or improve the recyclability of the commodity supplied.
- operational efficiency improvements to reduce energy and water consumption; and
- electrifying operations, material movement and processing, and using renewable energy sources, where possible, to minimize the use of fossil fuels.
- Providing green and critical commodities for energy transition. Efforts worldwide to replace fossil fuels in electricity generation, transportation and heat with cleaner, preferably renewable, fuel sources, are fundamentally changing the demand profiles of a number of commodities. While steel raw materials (iron ore and metallurgic coal) will continue to dominate the project portfolios of many diversified miners over the next decade, the proportion of energy transition commodities is rising. As a result, demand for the following commodities is expected to increase:
- Copper – driven by growing electricity consumption;
- Lithium, nickel, cobalt, graphite, manganese, vanadium and zinc – driven by increasing demand for batteries in electric vehicles and energy storage applications; and
- Platinum, palladium and other catalyst materials – driven by the projected growth in hydrogen fuel cells and carbon capture and storage capacity globally.
Transition commodities offer some great new business opportunities for miners. For example, the World Bank estimates that to keep temperatures rising less than 2C, graphite, lithium and cobalt production would need to ramp up by more than 450 percent by 2050 to meet demand for energy storage technologies. However, demand for such commodities remains highly uncertain and supply shortages could quickly develop. Addressing the potential demand/supply imbalances, as well as ensuring the ethical sourcing of some of the green and critical commodities and rare earths, will be a key challenge for the sector.