Rio Tinto plans to invest $1 billion over the next five years to meet its new climate change targets.
Despite the investment chief executive Jean-Sébastien Jacques has stated, “There is no clear pathway right now for the world to get net zero emissions by 2050.”
Rio Tinto, which released its climate change target with its 2019 annual results this week, reduced its greenhouse gas emissions by 46 per cent over the last 10 years.
The company aims to hit net zero emissions from its operations by 2050.
Rio Tinto’s targets include a further 30 per cent reduction in emissions intensity and 15 per cent reduction in absolute emissions from the 2018 levels by 2023.
Jacques listed electrification of transport, energy and resource efficiency, decarbonisation of energy generation and transformation of agriculture and land use as key steps to transitioning into a low carbon world.
Rio Tinto has partnered with Apple and Alcoa to further develop Elysis carbon-free aluminium smelting technology and shied away from coal, oil and gas operations.
“The challenge for the world, and for the resources industry, is to continue the focus on poverty reduction and wealth creation, while delivering climate action,” he said.
The chief executive, during his speech at Rio Tinto’s 2019 results announcement, also addressed the investors and posed the question of what they were willing to sacrifice to achieve net zero emissions.
“For consumers, are you willing to sacrifice economic growth and associated jobs to deliver climate goals?” Jacques asked.
“For governments, are you willing to sacrifice economic growth and associated jobs to deliver climate goals?
“And for shareholders, are you willing to see a reduction in shareholder returns to finance climate action. Are you willing to cap your growth in the short term?”
Deloitte identified “the path to decarbonisation” as a key trend in its Tracking the Trends 2020 report, which was released earlier this month.
With investors challenging the industry to rethink its portfolios and future investments, the path to decarbonisation will not be easy, but the commitment from mining companies is necessary, according to Deloitte.
As well as the environmental benefits, Deloitte Australia partner, financial advisory John O’Brien also recognised the operational and cost benefits of decarbonising mines.
“Decarbonisation makes sense operationally because the electrified mine is easier to automate and the automated mine is easier to electrify,” O’Brien said.
Although setting up renewable energy infrastructure is costly, Deloitte stresses that the consumption costs of renewable power are negligible.
“If we fast-forward to a world where energy has no marginal cost, the sector stands to unlock a huge wave of opportunity,” O’Brien said.
Deloitte United Kingdom mining and metals leader Tim Biggs agreed with O’Brien, reinforcing that mining companies must see decarbonisation as a business benefit opportunity, not as a cost.
“A massive shift towards electrification could change the way employees work, requiring companies to obtain buy-in at not only at the management level, but at the operations level,” Biggs said.
BHP also announced a climate investment program last year, committing US$400 million ($607 million) over five years. The company plans to use the funds to develop technologies to reduce emissions from its operations, as well as those generated from the use of its resources.