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Bluescope Steel must step up low-carbon ambition

21 November 2019

21 November 2019

Bluescope Steel shareholders today called on the company to set new Paris-aligned emission reduction targets to drive low-carbon transition.

As one of the top 20 greenhouse gas emitters in Australia, Bluescope Steel is highly exposed to the policy, market and technology shifts required to meet Paris Agreement’s goals of holding global warming to 1.5°C or at worst well-below 2°C.

The company has come some way from avoiding the issue of climate risk in 2017, to now including carbon reduction scenarios and shadow carbon pricing in its strategic decision-making. But, without clear strategies and targets to reduce emissions in line with the climate goals of the Paris Agreement, Bluescope still has a long way to go.

Bluescope’s 2019 Sustainability Report commits the company to reviewing its greenhouse gas emissions intensity reduction targets in 2020. As a target company of the Climate Action 100+ investor initiative, it should be clear that investors expect the company to “Take action to reduce greenhouse gas emissions across their value chain, consistent with the Paris Agreement’s goal.”

So will Bluescope’s 2020 review result in new emission reduction targets that:

  • Cover short, medium and long term timeframes; 
  • Cover the company’s entire value chain; and
  • Be verifiably aligned with the climate goals of the Paris Agreement?

Unfortunately Chairman John Bevan couldn’t provide a commitment that these standards would be met with new targets next year. The company’s current target to reduce greenhouse gas emissions intensity by 1% each year out to 2027 falls well short of the decarbonisation pathway required to meet the Paris climate goals.

Every Australian State and Territory now has plans to reach net-zero greenhouse gas emissions by 2050, and New Zealand has enshrined this target in national law. This is in line with IPCC guidance that in order to meet the Paris climate commitments, we also need to halve global emissions by 2030.

Bluescope was also questioned on its pathway to achieve net-zero emissions by 2050, considering steelmaking is an inherently emissions-heavy industry. “How much capital are we allocating to low- and zero-carbon technologies to ensure we’re appropriately managing the transition risk posed by increasing climate policy?” asked one shareholder.

Mr Bevan acknowledged the risks posed by emission reduction policies, and recognised that zero-carbon steel cannot be achieved with current technology.

There are some positive signs of a potential low carbon future for the steel industry. But while Bluescope says it is “allocating some capital” and “working with others” to try to find low-carbon technological solutions, these efforts are not being guided by Paris-aligned targets to reduce emissions.

Without these targets, there is no compulsion for Bluescope to allocate enough capital and work hard enough to develop a zero-carbon business model, leaving the company at risk of being left behind.