The move to a lower greenhouse gas (GHG) intensive global economy would significantly change Australia’s trade profile given that exports account for around 25pc of its economy and are dominated by fossil fuels and steel making commodities, according to a report by the Australian government’s climate policy advisor.
But the country’s abundance of minerals for low emission technologies and the ability to export renewable power will see new exports emerge.
The report by the Australian government’s climate policy advisor the Climate Change Authority (CCA) said international trade has historically rested on factors such as the relative costs of production, quality, and security of supply. As the world shifts towards net-zero emissions, carbon content will become increasingly important for competitive advantage.
Australia has some of the world’s best resources for producing electricity from solar and wind resources, extensive landscapes conducive to sequestration of carbon, and large reserves of the raw materials required for low emissions technologies, such as lithium, uranium, nickel and copper, the CCA said in the report titled Trade and Investment Trends in a Decarbonising World.
“We also have the potential to decarbonise exports with high embedded emissions, such as steel and aluminium,” said the CCA report. The report referred to initiatives by Australian iron ore producers Fortescue Metals Group looking to produce steel with hydrogen by removing coking coal from the process. UK-Australian iron ore producer Rio Tinto and steel producer BlueScope last week said that they will jointly explore low-carbon steel production using Pilbara iron ore, including the use of hydrogen to replace coking coal at BlueScope’s Port Kembla Steelworks in Australia.
Iron ore is Australia’s largest export by value and volume. Australia is also the world’s largest exporter of metallurgical coal, the largest LNG exporter and the second largest thermal coal exporter.
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