Alumina Limited (Alumina) accepts the Intergovernmental Panel on Climate Change (IPCC) assessment of climate change science that warming of the climate is occurring, with clear human influence and unavoidable physical impacts. Alumina acknowledges the physical impact of climate change such as decreased rainfall, water scarcity and rising sea levels; with economic and regulatory risks to business due to the transition to a low carbon economy.
Alcoa World Alumina and Chemicals (AWAC) is a global bauxite and alumina business that is a joint venture between Alumina Limited, non-operator (40% owned) and Alcoa Corporation, manager/operator (60% owned). AWAC is committed to reducing the amount of energy it consumes through operational efficiency and technological advances, all of which lowers its energy costs and reduces its greenhouse gas (GHG) emissions.
AWAC measures and discloses scope 1 and 2 emissions. Emissions intensity at AWAC’s refineries and smelter have improved by 13 per cent and 25 per cent respectively from a 2005 base year. The primary drivers behind this reduction have been the sale, closure or curtailment of assets with higher emissions intensity, along with energy efficiency savings, and fuel switching from higher to lower carbon intensive fuels like natural gas (such as at the San Ciprian refinery).
The majority of AWAC emissions are direct (scope 1) from gas consumption at its refineries. AWAC’s emissions reduction pathway has been assessed through to 2030 and involves continued natural gas procurement coupled with investigating the feasibility of renewable energy procurement as costs of renewables falls and its operations become more energy efficient. AWAC have established some processes for identifying potential climate risks and opportunities that impact AWAC operations.
Alumina expects to see growth in demand for aluminium for uses such as more energy-efficient buildings; fuel-efficient vehicles; and sustainable food and beverage packaging.
To further support AWAC, Alumina will:
- Work with AWAC to formulate appropriate GHG emission targets for AWAC.
- Work with AWAC to identify and assess climate change risks, adapt to changing climate risk and seize opportunities across AWAC to produce shareholder value. Due to the energy and carbon intensive nature of our operations, securing low-cost, low- environmental-impact and long-term energy is a focal point of our energy strategy, with the aim to minimise impacts and maximise value.
- Work towards aligning disclosures to the recommendations of the TCFD, to aid in providing information to investors and other stakeholders.
- Explore how an internal carbon price could be used in our investment projects and strategic decision-making processes – to help to prepare our business for regulatory changes.
- Work on developing climate change scenario analysis to assess our future risks in the face of uncertainty. This would include stress testing scenarios such as ‘2 degrees’ and ‘beyond 2 degrees,’ to help us understand the risks to our assets, operations and supply chains.