Why power hungry companies need to use their clout for climate
By: Ketan Joshi
Tags: Rio Tinto, Steel, Climate Change, Energy, Emissions

As individual consumers, we each feel we have relatively little impact on the shape of the entire energy grid. It is relatively true — we’re each one of millions, and we can contribute, but we can’t pull the levers -at least not in the way big players can.

Aluminium smelters consume incredible quantities of electricity. They are truly power hungry and owned by large companies, and therefore wield disproportionate power in energy grids around the world.

Here’s a neat example: Rio Tinto’s Tiwai Point aluminium smelter in New Zealand (it consumes 13% of the country’s electricity) is being threatened with shut down because the company is demanding a massive reduction in operating costs through subsidised electricity prices. This type of power play is pretty common, but what makes it interesting is that the plant is fuelled by a nearby hydro power station, making it nearly zero emissions.

Rio Tinto’s climate problem

Like so many other companies, Rio Tinto has promised to hit ‘net zero’ emissions by 2050 (and “reduce its direct emissions by 15 per cent within the next decade”), but the shutdown — threatened or real — of one of its cleanest smelters suggests that ambition isthin.

The company’s emissions have fallen 46% from 2008 — a number which drops to 18% when you exclude divestment decisions. And they are still astronomically high. As the SMH writes:

“While hydropower supplies electricity for many of Rio Tinto’s smelters globally, its plants in Queensland and New South Wales are largely powered by coal-fired generators, the most polluting form of energy creation”

It is Australia — QLD and NSW in particular — that are the heart of the company’s climate burden. In 2019, the emissions of the company were still far higher than the total emissions of all domestic flights in Australia (pre-COVID, of course).

We can actually drill down into Australia-only data, using the ‘National Greenhouse Inventory’. This breaks up Australia’s emissions not by sector, but by the company responsible for them.

From FY09 to FY19, Rio Tinto comes in at number two, on the ranking of highest emissions by company, beaten only by AGL Energy:

And although Rio Tinto’s global emissions might have fallen due to some savvy divestment, its Australian emissions remain incredibly high, with relatively little change over a decade.

What to do with all this power?

Only this week, a new initiative led by ClimateWorks Australia has been established to help large energy consumers transition to zero carbon alternatives, with partners like Bluescope Steel, Woodside and BP Australia. One notable exception from the ‘Australian Energy Transitions Initiative’: Rio Tinto.

In New South Wales, the Tomago smelter, majority-owned by Rio Tinto is flexing the same muscles. Demands for cheap power contracts are ringing out again, and the threat of lost jobs too:

“Despite Australia’s natural competitive advantage with access to widespread electricity through fossil fuels and renewable resources, Tomago’s energy costs are some of the highest in the world compared to global peers in a very competitive market” — (part owner) CSR chairman John Gillam

It’s a strange remark, considering power sourced from renewables — still only a small fraction of NSW’s generation — is significantly cheaper than from fossil fuels. Tomago also celebrated a new deal for increased extraction of fossil fuels, because it would “keep the lights on”.

If the primary concern were power prices, the demands would be for an immediate and significant expansion of clean energy in NSW, paired with the rapid shut-down of coal-fired power stations. If the primary concern were emissions and climate, the demand would be the same.

On top of everything, Tomago has been directly exposed to the power grid’s increasingly significant cracks and failures, driven partly by ageing fossil fuelled power stations. An upgrade to new energy technology would ease this, as leaders take the reins of a transition instead of simply waiting for the grid to crumble.

It’s significantly easier at remote mining operations, such as Rio Tinto’s in Western Australia, which are being repowered by renewables. But in the big grids of NSW and Queensland, the company could be wielding its power to bring emissions and power prices down for everyone. It holds significantly more power than you or I do as electricity consumers in the world’s grids. It could be combining its own interests, the interests of other consumers and the interests of everyone on the planet — but instead, it opts for short-termism.