High-emission manufacturers such as BlueScope should be given government funding to advance their technology or risk becoming uncompetitive, the Tim Flannery-led Climate Council has said in a new report.
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The report says a new global industrial revolution is underway with clean manufacturing, and Australia's biggest industrial emitters need to cut pollution or risk being left behind in a world "where net zero will be business as usual".
"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 Councillor 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 report, called Australia's Clean Energy Future: Making Things Here in a Net Zero World, says BlueScope's plans towards relining its No.6 blast furnace would mean a commitment to heavy-emissions steelmaking, which could risk the company being left behind internationally.
"If it proceeds, this major investment in old steelmaking technology will likely mean the company continues to make steel using the traditional emissions-intensive process for at least another two decades," the report states.
"This could risk Australia's largest steelmaker losing market share to international competitors as our trading partners increasingly seek out lower carbon supply chains."
A BlueScope spokesman said the reline was "critical to securing the immediate future of iron and steelmaking in Australia". However it did not mean the steelmaker would be limited to using that technology for decades.
"Importantly, the reline project does not lock BlueScope in to blast furnace steelmaking technology for the next 20 years," the spokesman said.
"If a viable alternative at full commercial and industrial scale can be developed and implemented within a shorter time frame, we will move to transition.
"In this context, the reline project is the bridge we need to transition to a Green Steel future once a breakthrough technology is available and proven at commercial and industrial scale. "
The Climate Council, whose chief Professor Flannery now calls the Illawarra home, said the Government's reform of the Safeguard Mechanism was the right opportunity to get the policy settings right.
This would include directing government support to sectors like steel, aluminium, cement and chemicals so they can undertake technology trials rather than subsidising fossil fuels, and directing government support to sectors like steel, aluminium, cement and chemicals so they can undertake technology trials rather than subsidising fossil fuels.
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