Fortescue Metals Commits to Net Zero Emissions by 2040
Fortescue Metals Group (ASX: FMG) has, on the 16th of June, announced a goal to reduce their emissions to net-zero by 2040. The effort will be achieved through a new focus on hydrogen and battery electric energy solutions. FMG is working towards the Paris Agreement, which is an agreement between the United Nations aiming towards the long-term goal of stopping global temperatures rising above 2 degrees centigrade; a benchmark danger levels in global warming. This has seen US800 million invested in infrastructure projects pertaining to the use of renewable energy since October 2019. A US700 million investment in the Pilbara Energy Connect program is included in this, which in collaboration with developing projects will help replace 25 to 30 per cent of current fossil fuel energy with solar power.
Technology is the key for FMG to reach its goal, with gas and renewable technology both being utilised to power the company at the moment. However, the group is planning to start moving towards hydrogen and battery electric solutions in the future. The Chichester Solar Gas Hybrid Project currently being developed is a prime example of how the company will source energy; with a 60-megawatt photovoltaic generation facility that will need a 60-kilometre transmission line to be built by FMG. Concerning the Pilbara Energy Connect, FMG will build, own and operate a US250 million transmission project which includes 275km of high voltage line that will connect to FMG’s mining sites. The US450 million Pilbara Generation project will comprise of 150-megawatt gas-powered and 150 megawatts provided by photovoltaic power generation.
Furthering their environmental objectives, FMG has partnered with Commonwealth Scientific Industrial Research Organisation (CSIRO) to develop a metal membrane which will have the commercial purpose of transporting ammonia and help with a process to generate pure hydrogen. This is an exciting development in the possibilities concerning energy. Unfortunately, FMG has been caught in a crossfire concerning the environment recently, with an AUD200 million dollar bill coming from residential homes that have been affected by iron ore dust in Port Hedland; where now the producers are to buy out the residents at above market value. However, it seems that BHP will be taking on most of the cost as it is argued that they were the largest exporter in the area. Depending on how negotiations go between the government and iron ore producers, FMG may be facing a fine.
There will be governmental support for FMG environmental goals through the new AUD72 billion-dollar investment in infrastructure, which will create jobs and support iron ore producers in Western Australia. This announcement is more focused on the current state of the economy and not the environmental agenda, which will start shaping the iron ore producer’s future operations. Yet, many industries are using the current macroeconomic environment to pivot into greener energy which could be a signal to investors that the company is future focused.
By Caroline Wong
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