Company: RTNTF
Filing Date: 2025-02-20
Form Type: 20-F
Source: 0001628280-25-006642
Chunk: 121

Company: RIO TINTO LTD
Filing Date: 2025-02-20
Form: 20-F
Chunk 121
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| Annual Report on Form 20-F 2024 | 63 | riotinto.com |

Strategic report | Our approach to ESG | Climate Action Plan

Capital allocation and investment framework

| Total decarbonisation spend1$589m(2023: $425m)                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |     | Capital expenditure, investments andcarbon credits$283m(2023: $191m) |     | Operational expenditure$306m(2023: $234m) |
| Decarbonisation spend refers to the total cost of delivering our global decarbonisation projects, nature-based solutions and carbon credits, and select scope 3 activities. Expendituremust be incurred for decarbonisation purposes and can be either capital or operating in nature, based on financial accounting principles.1.Total decarbonisation spend includes costs related to the purchase of offsets, renewable energy certificates, decarbonisation team costs and external decarbonisation investments. |     |                                                                      |     |                                           |

Decarbonisation investment is derived from the Group’s capital allocation framework and aligned to our 2025 and 2030 Scope 1 and 2 emissions targets. We make decisions under a dedicated evaluation framework which considers the following: – impact of the investment on shareholder value and asset cost base – level of emissions abatement – maturity of the technology and delivery risk – competitiveness of the investment as per the marginal abatement cost curve (MACC) and external benchmark – policy context – alternative options on the pathway to net zero. We also assess projects against our approach to a just transition, with consideration to the impact on employees, local communities and industry. In line with our other investment decisions, governance of decarbonisation investments depends on the nature and size of the project. Using this framework, we maintain our capital expenditure guidance of $5-6 billion between 2022 and 2030 and $0.5-1 billion in the period 2024-2026. This includes voluntary carbon credits and investment in nature-based solutions projects but excludes the cost of carbon credits bought for compliance purposes. We are also transitioning many of our significant fossil fuel contracts into various commercial contracts for renewable PPAs and biofuels. Rio Tinto applies an internal cost of carbon when making our investment decisions. This includes current legislated carbon penalties, which apply to approximately half of our emissions, principally in Australia and Canada, plus future policies that could be introduced in the regions where we operate. See page 44 for more detail on our carbon prices used