What's keeping the champions of industrial net zero awake at night?

Industry is becoming increasingly concerned about the glacial pace of “greening” Australia’s electricity grid and the risk it poses to their decarbonisation plans.

“We are trying to look at how we can bring Scope 2 [emissions] to net zero in the foreseeable future without having the certainty that these [renewable] power purchase agreement (PPA) projects are going to be able to connect to the grid, or how quickly the grid will decarbonise,” says Cyril Giraud, Head of Sustainability at Holcim Australia.

Scope 2 emissions relate to the purchase of electricity, steam, heat, or cooling. They are a material contributor to carbon emissions for most enterprises. For Holcim, the world’s biggest cement manufacturer, Scope 2 accounts for 4% of global CO2 emissions.

“These factors are completely out of our control and it’s one thing we should be concerned about,” says Giraud.

His warning comes as large scale solar PV projects under construction in Australia’s National Electricity Market slump to the lowest level since 2017, when the industry was still in its infancy.

Industry insiders fear the future will be very expensive for energy consumers if planning approvals don’t improve dramatically.

Effective initiatives: green ratings

Holcim is one of several industrial companies headlining the Industrial Net Zero conference in September, sharing lessons from their journey leading the decarbonisation of the building industry worldwide.

“like nutritional data on the back of a cereal box, but for carbon and environmental data”

In 2019, Holcim brought to market the first environmental product declaration (EPD) that associated an emissions factor to its product, like nutritional data on the back of a cereal box, but for carbon and environmental data.

This formed the basis of its ECOPact low carbon concrete mix range, which contains a minimum 30 per cent less embodied carbon.

“When you look at the end product, a building, we all need to recognise that performance in sustainability starts with the transformation of a whole sector of material suppliers and manufacturers. At Holcim, we grasped that pretty quickly and we’re embracing that full integration of being a solution provider rather than being a material supplier,” says Giraud.

New Zealand dairy cooperative Fonterra has adopted a similar posture. Under the stewardship of Linda Mulvihill, Fonterra’s General Manager of Energy & Climate, it has been progressively switching its milk processing boilers from coal to wood biomass and wood pellets since at least 2018.

Late last year, it announced a series of measures to reduce on-farm emissions - which account for 86 per cent of Fonterra’s total emissions - by 30 per cent by 2030 (from a 2018 baseline).

As a large part of its customers’ Scope 3 emissions, Fonterra’s announcement was a demonstration of being a sustainable partner of choice “both now, and into the future”.

Transparency, simplicity, collaboration

“Transparency is the starting point of any effective decarbonisation initiative,” says Giraud. “Unless you are able to measure and compare, it will be very difficult to drive performance.”

“In the world of supply chain, this combination of accuracy, credibility, transparency, and then simplification through branding and claims, is absolutely essential to shift the dial. Holcim has done that really well with the ECOPact range,” he says.

“collaboration with value chain partners is key to achieving net zero targets”

Amanda Robertson, Head of Sustainability, Nestlé Oceania says collaboration with value chain partners is key to achieving net zero targets.

Only five per cent of Nestle’s greenhouse gas emissions come from sources within its direct operations.

“For Nestlé to achieve our ambitious sustainability goals we need to understand the impact of every part of our value chain. This includes parts we control, such as factories, warehouses, and packaging choices, and parts we only influence like the farmers who supply our ingredients,” Robertson told reporters last year.

Nestlé has committed to reducing its greenhouse gas emissions by 20 percent by 2025, and halving them by 2030 to reach net zero by 2050, even as its business continues to grow.

“We know that we can’t do this alone,” said Robertson.

She points to Nestlé’s Institute of Packaging Science, with 50 packaging experts dedicated to developing sustainable packaging materials and systems, as an investment with potentially wide ranging benefits for the fast moving consumer goods industry.

Australia’s overall carbon literacy matures

The decarbonisation movement in Australia is distinctly different from other first-mover economies, like Europe, in that it is industry initiated, not policy led.

In the absence of strong carbon pricing mechanisms or stringent decarbonisation frameworks, industry players had to educate themselves on the basics. 

The movement hasn't been reduced to a tick-box exercise to meet regulatory standards.

As a result, Giraud feels Australians have a better grasp of climate science fundamentals, emissions data, sustainability rating schemes, and the outcomes they drive than some of their global peers.

They know how to use emissions data to measure performance with a degree of sophistication that doesn’t exist in Europe, he says.

“This is the biggest transformation that I’ve noticed in the last four years. Within mature organisations, discussions on life cycle assessment, which used to be a very technical field, are now part of everyday customer boardroom conversation,” says Giraud.

Cost of transition and border taxes

The other issue keeping champions of industrial net zero awake at night is the cost of transition and the absence of funding partners to share the burden.

“Europe has this extraordinary mechanism (EU Innovation Fund for breakthrough Carbon Capture Utilization and Storage (CCUS)) with the emission trading scheme where they’ve the ability to mobilise extensive funding for projects that will change the way manufacturers operate,” says Giraud.

He feels that level of funding for innovative low-carbon technologies does not exist in Australia, despite the government’s $1.9 billion boost to the Australian Renewable Energy Agency’s baseline funding in the May budget.

Without sufficient support to transform technology within the country, it will be cheaper to import low carbon products than manufacture them domestically, sparking a heated debate about carbon adjustment border mechanisms to level the field.

To hear more Cyril Giraud, Linda Mulvihill, Amanda Robertson and others leaders in the large-scale heavy industry at the Industrial Net Zero conference view the agenda or download the brochure.

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