The first comprehensive framework to assess the climate plans and decarbonisation efforts of the big miners has flagged concerns that energy efficiency is being neglected in favour of easier, less sustainable forms of emissions reductions.
A report published this week by RFC Ambrian found that while the big miners’ climate strategies were generally credible, they were overly reliant on outsourced carbon offsets, asset depletion and renewable power purchases from existing generation rather than new installations.
Stefan Skorut, Executive Director at RFC Ambrian and lead researcher for the project, said the pioneering analysis would provide investors with more certainty around climate risk in the resources sector, and help mining companies refine their strategies into the future.
“The catalyst for us in embarking on this project was a conversation with an executive at a major insurer, who questioned how long his company could continue servicing mining companies, given the inherent and growing risk around emissions.
“This comprehensive framework, tailored specifically to the unique characteristics of the resources sector, is designed to answer those questions and provide clarity on climate for anyone who invests or does business in mining.”
According to the report, miners should be paying more attention to energy efficiency and internal technological solutions in their climate plans, especially considering the context of declining ore grades.
“The most effective way to lower emissions in the sector is to produce more ore from less activity,” Mr Skorut said.
“Unfortunately, ore grades are moving in the opposite direction, and the sector will need to invest heavily in solutions that increase operational efficiency.”
“Investors and other stakeholders would prefer companies put more effort into identifying abatement opportunities in-house and improving the sustainability of the mining industry in the long run, rather than plugging results, smoothing peaks, or simply buying their way to targets.”
The report identified this trend to outsource emissions reductions at the expense of internal solutions as a key risk factor with the potential to derail the credibility of the industry to execute on its decarbonisation targets and ambitions in the long term.
In comparing the climate strategies of the big four miners, the framework found that despite having a larger carbon footprint than its peers, Rio Tinto’s large funding commitments and focus on operational efficiencies had in fact placed it well to deliver on its ambitious climate goals.