Australia has significant potential to become a global powerhouse in sustainable manufacturing over coming decades, a new report has found.

But suitable policies will be needed in order to capitalise on opportunities.

In a report released last week, the Climate Council said Australia has an opportunity to be a leader in decarbonising emissions intensive manufacturing sectors such as steel, aluminium and cement and to emerge as a leading provider of low or no carbon manufactured products.

According to the report, benefits of embracing opportunities could be significant.

If Australia made green steel onshore by refining our own iron ore rather than exporting more than 90 percent of the raw material overseas, the report says we could avoid 1.5 billion tonnes of greenhouse gas emissions annually (three times the amount Australia emits each year) and generate around ten times the profits that our iron ore industry does today.

With abundant renewable energy resources, meanwhile, we have an opportunity to evolve into a world leading exporter of clean energy commodities and critical minerals.

On the flip side, the report argues that Australia needs to act in order to avoid being excluded from low carbon or zero carbon supply chains as developed countries and major companies seek to deliver upon climate commitments.

“A new global Industrial Revolution is underway as the world aims to get to net zero emissions and limit dangerous global warming, and this is shifting investment away from polluting industries towards clean ones,” Nicki Hutley, Climate Councilor and independent economist said.

“To stay competitive in this net zero world, Australia’s heavy industries – including steelmaking, aluminium and metal production, cement, and chemical production – will need to undergo a big transformation. But the good news is that we have the resources and know-how to do this.”

(The Whyalla Steelworks plant is being transformed and aims to be producing zero carbon steel by 2030 by a direct reduced iron method and an electric arc furnace to convert iron into steel)

The report outlined a range of potential strategies.

These include:

  • Making green steel onshore by refining our own iron ore onshore (rather than simply exporting the raw product) and using sustainable methods to convert iron into steel. These methods could include hydrogen direct reduction using renewable hydrogen combined with an electric arc furnace or hydrogen direct reduction combined with a melter and followed by an oxygen furnace (see report); electrolytic steelmaking; and increased recycling of steel.
  • Decarbonising aluminium production by using clean energy sources in smelting and alumina refining; reducing direct emissions from the smelting process; recycling materials and increasing resource efficiency.
  • Decarbonising chemical and fertilizer production by producing green ammonia. This involves using renewable energy rather than gas as a feedstock and fuel when producing ammonia – one of the key ingredients in modern fertilisers.
  • Decarbonising non-fossil fuel mining through use of cleaner powered sources (onsite renewable/storge generation or renewable energy purchased from the grid) and switching to zero emission vehicles/equipment such as trucks, trains, drill rigs and excavators.
  • Decarbonising cement and concrete production through replacing a portion of the clinker used in cement with other cementitious materials such as clay, furnace slag and fly-ash; using geopolymer concrete; using renewable energy as a fuel source to fire cement kilns; and switching to low/zero emissions transport.

In several areas, action is happening.

In South Australia, steel rail and sleeper systems manufacturer Whyalla Steelworks (part of the Liberty Group of the Global GFG Alliance) plans to produce carbon neutral steel by 2030.

Toward this end, it is undertaking a major upgrade through which it plans to replace its blast furnace at its Whyalla facility (see image above) with a direct reduced iron (DRI) plant and an electric arc furnace.

Under this DRI method, hydrogen is used to strip oxygen out of the iron ore to create iron with only water as a biproduct. The iron will then be used as feedstock for an electric arc furnace.

Whilst the new plants will be initially powered by gas, the GFG Alliance intends to convert them to renewable hydrogen which is produced by a large solar plant that GFG is building at Whyalla and for the electric arc furnace to be powered by renewables.

In the United States, meanwhile, Boston Metal is trialling an alternative carbon-free steel production process which alters the process to turn iron ore into high purity molten iron that can be added directly into downstream steelmaking with no reheating required as it is already liquid.

It uses renewable energy to convert the iron ore into steel in a zero-carbon process.

Turning to concrete, the Wellcamp Airport just outside of Toowoomba in Queensland’s southeast is renowned as one of the world’s most environmentally friendly on account of its use of more than 4,000 cubic meters (100,000 tonnes) of low carbon ‘Earth Friendly Concrete’ (a type of geopolymer concrete) that was supplied by construction materials firm Wagners.

The concrete does not use cement (and avoids the emissions intensive process by which this is produced) and instead uses waste materials to create a replacement binder.  All up, Wagners says this saves around 250kg of carbon dioxide per cubic meter poured.

In total, use of the concrete at the Wellcamp Airport saved around 6,600 tonnes of emissions.

Use of geopolymer concrete at the Wellcamp Airport near Toowoomba saved around 6,600 tonnes of carbon dioxide emissions).

To help aid the transition, the Climate Council says the Commonwealth Government’s Safeguard Mechanism must send a strong message that large emitters need to transform their operations.

Developed by the previous Coalition Government, the Safeguard Mechanism regulates carbon pollution from Australia’s 2015 largest industrial emitters which together produce around 28 percent of the nation’s total greenhouse gas emissions.

Under this system, industrial facilities who are subject to the mechanism need to restrict their emissions to within an established baseline.

The current Labor Government is in negotiations with the crossbench regarding proposed changes to the scheme.

These would involve new emissions baselines for all companies who are covered by the scheme.

To ensure that companies reduced their emissions over time, the baselines are proposed to be reduced by around five percent each year until Australia reaches net zero.

Companies who breach their baseline in any year are proposed to be allowed to buy offsets to make up the excess emissions.

In its report, the Climate Council argues that several measures are needed to get this right.

First, the scheme must prioritise genuine reductions in emissions and must not enable corporations to purchase unlimited offsets whilst adopting a business-as-usual approach to pollution.

Second, the government should stop new coal and gas projects from going ahead.

Finally, support should be targeted at industries which can either continue to thrive as the world decarbonises or which will in fact support the world’s clean energy transformation. This would not include any subsidies for coal and gas.

(Partnering with First Mode, Anglo American‘s nuGen™ Zero Emission Haulage Solution was first launched in South Africa in May 2022 and $200 million has been invested to accelerate the vehicle‘s development and commercialisation.)

Professor Tim Flannery, Chief Climate Councillor, says that the opportunity is significant.

“Australia has some of the best solar energy resources on earth, and right beneath our feet we have some of the world’s largest reserves of critical minerals like iron ore and bauxite,” Flannery says.

“We can harness these world-class resources to become a world-leading industrial powerhouse and a nation leading on climate solutions.”

“We can also use cheap renewable energy to power manufacturing as well as expand Australia’s capacity to refine and process raw materials onshore. This would spur job creation, develop clean new value-added industries, and significantly reduce emissions.”