Andrew Forrest says setting net zero goal is ‘critical’ for Australia
Andrew Forrest has called on the federal government to set a date for carbon neutrality, saying a firm target was ‘critical’ to encouraging business investment.
Fortescue Metals Group chairman Andrew Forrest has called on the federal government to set a target date for carbon neutrality, declaring a firm target was “critical” to encouraging business investment.
His comments came after Fortescue declared record profits and dividends for the full financial year, with the iron ore miner’s bumper $2.11 a share final dividend delivering about $2.4bn to the Fortescue founder.
Fortescue booked a $US10.3bn ($14.10bn) net profit for the 2021 financial year as the miner rode the run-up to record prices for iron ore over the past year.
More than $6bn in dividends have been paid to the Fortescue founder over the past three years.
The Fortescue result rounds off the big miner reporting season, with three major iron ore producers – Fortescue, BHP and Rio Tinto – posting net profits of $US34.6bn for the reporting period to end-June. Rio Tinto’s $US13.1bn result represents only a half-year figure.
Combined, their underlying earnings before interest, tax, amortisation and depreciation totalled $US74.8bn in the latest reporting season.
Dr Forrest has already committed the mining major to ambitious carbon reduction targets, promising Fortescue’s giant Pilbara iron ore operations will be carbon neutral by 2030, and saying on Monday that the company will set goals for the reduction of emissions from its customers by the end of September.
Through its Fortescue Future Industries subsidiary, the iron ore major is also seeking to become the biggest renewable energy company in the world, promising to invest 10 per cent of its annual profits in new projects focused on the production of green hydrogen and other forms of renewable energy.
Speaking after Fortescue delivered record profits from its Pilbara iron ore operations on Monday, Dr Forrest said state and federal governments needed to shift policy settings to encourage investment by business to reduce carbon emissions.
“Global warming is a certainty unless companies like us act, and other companies act like us. And at this stage I’m only hearing crickets,” he told analysts.
Prime Minister Scott Morrison has so far refused to commit Australia to a net-zero carbon position by 2050, saying only that Australia would “preferably” reach that goal.
In the wake of the release of the latest IPCC global warming report in early August, which warned the planet is likely to heat up by more than 1.5C within the decade, Mr Morrison said he would not be “signing a blank cheque on behalf of Australians to targets without plans”.
“Blank cheque commitments you always end up paying for, and you always end up paying in higher taxes,” he said.
The federal government is under growing pressure to set a target date for achievement of net zero emissions ahead of the international COP26 summit in Glasgow later this year, but Mr Morrison has been threatened with a backlash from elements within his Nationals coalition partner if a concrete target is set.
Dr Forrest would not be drawn on whether he believed Australia had been well served by the federal government’s current policy settings, but said setting such a target was “critical” to encourage business investment. “We see a national target for a carbon-neutral Australia as being critical to creating a carbon-neutral Australia. The businesses of our economy drive, of course, the total economy. All businesses operate well to targets,” he said.
“But without concrete targets or specific ambitions, businesses don’t tend to move forward at anything like the pace, speed and efficiency they could. And as we are the economy, then we are saying firmly to governments of all persuasions, a carbon-neutral target for our country is critical.”
Dr Forrest also called on state governments to ease the path to the development of renewable energy projects, saying approvals pathways and regulatory burdens needed to be reviewed to encourage the development of new industries.
Fortescue has said it wants to be shipping 15 million tonnes of green hydrogen by 2030, with a goal of making it the world’s most traded seaborne commodity. The company is conducting feasibility studies into the development of hydrogen production in Tasmania, and is looking to develop a pilot plant for the production of carbon-free steel in WA.
The company is also running programs to develop haul trucks that use hydrogen as fuel, and has successfully trialled the use of ammonia as a fuel for its heavy rail locomotives.
Dr Forrest outlined his ambitious plan to turn the iron ore major into a global clean energy giant at the company’s annual shareholder meeting in 2020, surprising the market by announcing plans for Fortescue to eventually produce 235 gigawatts of renewable energy a year, or five times the current capacity of Australia’s National Energy Market.
Since then the mining magnate has been travelling the globe, signing early stage evaluation deals in far flung locations including Papua New Guinea, the Democratic Republic of Congo, India, Indonesia, Brazil and beyond. But Dr Forrest said quickly turning Australia into a major exporter of hydrogen and other clean fuels would need regulators to reconsider the approach to the approval of new projects and the adoption of new technologies.
“If we sit and we rely on old systems and old approvals and old pathways to create an entirely new and potentially huge new industry – which will carry the livelihood of every Australian into the future – then simply relying on old structures, and old approval processes won’t work,” he told reporters.
“You will handicap your industry, your handicap your economic growth, and you will force investment to leave Australia.”
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