05/10/2021 - 15:20

Fortescue to tackle scope 3 emissions

05/10/2021 - 15:20

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Fortescue Metals Group is targeting net zero scope 3 emissions by 2040, which covers its entire value chain, including its customers’ crude steel manufacturing.

Elizabeth Gaines says the company is transitioning from an iron ore producer to a green renewables and resources company.

Fortescue Metals Group is targeting net zero scope 3 emissions by 2040, which covers its entire value chain, including its customers’ crude steel manufacturing.

Scope 3 emissions include those from all upstream and downstream activities which aren’t owned or controlled by the reporting organisation.  

According to Fortescue, crude steel manufacturing accounted for 98 per cent of the company’s scope 3 emissions.

The company told the ASX it would achieve the ambitious target by developing new iron and steelmaking technologies and work with customers on the supply of green hydrogen and ammonia from Fortescue Future Industries.

It said it would also prioritise the decarbonization of its fleet of eight ore carriers and engage with partners to reduce emissions from shipping.

Fortescue is accelerating several initiatives including supporting the adoption of green ammonia in new vessel construction, and research and development work to produce green iron and cement from its ores at low temperatures without coal.

The company has also set two medium-term goals to achieve by 2030, using 2021 levels as a baseline.

It is aiming to reduce emissions of the shipping of the company’s ores by 50 per cent and reduce emissions from steelmaking by Fortescue’s customers by 7.5 per cent.

Fortescue has previously set the goal of net zero operating emissions by 2040 and a medium-term target of reducing scope 1 and scope 2 emissions by 26 per cent by 2030.

Fortescue Metals Group chief executive Elizabeth Gaines said the company was transitioning from an iron ore producer to a green renewables and resources company.

“This scope 3 target is consistent with this transition and complements out targets for scope 1 and 2 emissions reduction,” Ms Gaines said.

“Collaboration is integral to driving the rapid transition to green energy, and we remain committed to actively engaging with out customers, suppliers and other key industry participants to facilitate the reduction of emissions.

“This include the development of technologies and the supply of green hydrogen and ammonia through FFI, which will provide significant opportunities for the steel, cement and land and sea transport industries to decarbonise.”

Fortescue Future Industries chief executive Julie Shuttleworth said work to decarbonise Fortescue’s iron ore operations will position the company as the first major supplier of green iron ore in the world, paving the way for a new green steel industry.

Fellow miner BHP has also outlined scope 3 targets but has not settled on a date to achieve net zero scope 3 emissions.

Earlier this year, the company announced it would support industry to develop technologies and pathways capable of 30 per cent emissions intensity reduction in steelmaking and support 40 per cent emissions intensity reduction of BHP-chartered shipping of its products by 2030.

In 2020, Rio Tinto's climate change report said it was aiming to work with customers to reduce steelmaking carbon intensity of at least 30 per cent from 2030, work on partnerships to deliver technologies with the potential to deliver carbon neutral steelmaking pathways by 2050, help develop technology to produce zero-carbon aluminium and reach net zero emissions from the shipping of its products by 2050. 

Australasian Centre for Corporate Responsibility director of climate and environment Dan Gocher said Fortescue’s bold target overshadowed the lack of ambition by BHP and Rio Tinto.

BHP and Rio Tinto should be embarrassed by being outdone by a company they once referred to as a ‘junior miner’,” Mr Gocher said.

“It’s time for BHP and Rio Tinto to set binding targets for their Scope 3 emissions, rather than simply funding research and working with their customers.

“This announcement is particularly humiliating for BHP, given the impending vote on its climate plan and the valid concerns that proxy advisers have expressed regarding BHP’s lack of action on steelmaking.

BHP’s interest in sustaining the value of its metallurgical coal business is clearly hampering its ambition to reduce emissions from steelmaking.”

Shares in Fortescue closed 1.3 per cent down, to $14.22 each.

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