Orica CEO Sanjeev Gandhi says net zero drive risks destroying manufacturing in Australia
Orica CEO Sanjeev Gandhi has taken huge strides to reduce the chemical company’s carbon emissions. But he warns that net zero by 2050 risks destroying manufacturing in Australia.
Orica chief executive Sanjeev Gandhi claims it will be a disaster for Australia if net-zero climate targets destroy its manufacturing industry.
The explosives and chemicals boss backs decarbonisation – but not by the 2050 deadline set by the Albanese government. The debate over whether to pursue net zero emissions by 2050 is being re-examined, with the Liberal Party last week joining its Coalition partner the Nationals by formally ditching the controversial climate target.
After a meeting of the joint party room on Sunday afternoon, leader Sussan Ley said the Coalition would instead legislate to “make affordable energy our number one priority” and emissions reduction targets would be decided “year on year” and “as fast and as far as technology allows”.
Orica, the world’s largest manufacturer of explosives and blasting systems for the mining and infrastructure sectors, is one of the biggest contributors to greenhouse gas emissions in Australia’s chemical industry but has taken significant steps to reduce its carbon footprint. A $25m upgrade to its ammonium nitrate processing plants on Kooragang Island has reduced the nation’s entire chemical industry emissions by 11 per cent.
But even though Mr Gandhi has made big inroads in decarbonising, he called for political leaders to avoid setting reduction targets by fixed dates because the technology underpinning such a rapid transition while supporting manufacturing does not exist.
“We’ve reduced our gross emissions by 50 per cent since 2019, now this is material because we are the largest emitter of CO2 equivalents in the chemical industry in this country,” he said. “We are making a real impact here, and that is why I’m all in for a decarbonisation strategy, but to always keep in mind this is an energy transition.
“Transitions are disruptive, and the end result should not be that we decarbonise Australia by shutting down manufacturing.
“This is the worst case scenario. This we have to avoid at every cost, so there must be a transition, there must be government support, clear policies, and there must be a timeline, which can’t be overnight.”
The explosives and chemicals maker started its decarbonisation journey in earnest around 2017-18 before the introduction of the Albanese government’s safeguard mechanism for big CO2 emitters.
“It takes a long time to do this. It’s not easy to do what we are doing. We should be very wary of milestones because that’s where the pressure comes on industry,” he said.
Orica is sticking with a green hydrogen project near Newcastle backed by government funding but warns of big challenges for manufacturing based on current east coast gas prices and the 2050 net zero target.
Mr Gandhi said the technologies needed “don’t exist today”, including around carbon capture and use. “This transition is where we are learning on the go. One of the biggest challenges of CO2 is that there’s no commercial use of CO2 beyond urea, so we need to find ways to use CO2 so that it is not emitted,” he said.
“Industry is working on it. There’s a lot of R&D, there’s a lot of innovation happening. But we need time, so the transition will take longer, most probably. But I think we are on the right path, and we shouldn’t abandon the path.”
GrainCorp chief executive Robert Spurway said net zero was a hot topic when he was talking to Australian farmers and international customers for wheat and other crops.
“I think the reality is many of the countries that we trade with and the customers we deliver to are focused on that in the long term,” he said. “We need to do it (achieve net zero) in a way that makes sure that we continue to support production and efficiency of the Australian agriculture sector.
“I’m very optimistic that it can be an opportunity for the agriculture sector, including really demonstrating the best practice that Australia applies in precision farming, some of the practices that will improve carbon sequestration at the same time improving yield, really demonstrating Australia’s ability not just to feed Australians, but to feed the world in a sustainable way.”
Lower carbon farming also came up in discussions about price, but Australian farmers are yet to see any meaningful premiums for their efforts. “It does come up in many, if not most, of the interactions we have with key customers. They’re really interested in what we’re doing. They appreciate the leadership we’re taking and also very interested in the investments we’re making in innovation,” Mr Spurway said.
“Globally, our customers are interested in traceability, and not just from a food safety point of view, but also from a sustainability point of view.”
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Originally published as Orica CEO Sanjeev Gandhi says net zero drive risks destroying manufacturing in Australia
