Seizing Gladstone’s low-carbon opportunity

A coordinated and fast-paced transition of Australia’s industrial regions will maintain prosperity in those communities and enable Australia to meet its obligations under the Paris Agreement.

Through the Australian Industry Energy Transitions Initiative (Australian Industry ETI), Climateworks Centre identified the emissions reduction potential for five of Australia’s largest industrial regions and how the ‘hard to abate’ industries within these regions could decarbonise.

Building on this work, in 2024 Climateworks focused on one of these regions – Gladstone, in Central Queensland – to show how the region can abate virtually all emissions from heavy manufacturing.

Gladstone was an ideal choice for our case study, as it has emissions-intensive manufacturing industries: 79 per cent of current energy use in heavy manufacturing comes from consumption of gas or coal, mostly for the heat that is needed for industrial processes.

However, it also has many natural and economic assets that can provide globally competitive advantages in a net zero world. These include: 

To ensure the right actions are taken today, it is critical to understand what success looks like.

This report presents our findings and recommended actions for Gladstone to remain competitive as the world decarbonises – findings on its future as a clean manufacturing hub.

The prosperity of the Gladstone region requires immediate action to maintain its heavy manufacturing industries and support Australia in meeting its obligations under the Paris Agreement.

Gladstone’s heavy manufacturing industries are critical to the local economy and supply products that the world will continue to need.

Maintaining Gladstone’s existing industries requires Australia to look strategically at the global market and opportunities to capitalise on the demand for low-carbon products.

Demand for low-carbon products is projected to increase, including in existing trading partners like Japan and South Korea, making Gladstone well-placed to seize the opportunity. 

Aluminium and ammonia could be produced in Gladstone with very low emissions and they are projected to increase in demand in key trading partners.

This is material to Australia’s potential to become a low-carbon manufacturing powerhouse and helping to decarbonise some of the world’s most emissions-intensive supply chains.

The transition will require low-cost, near-zero emissions electricity supply available to industry at a sufficiently rapid pace, as well as capital investment in industrial facilities so they can manufacture low-carbon products without too great a ‘green premium’.

Slow decarbonisation, high energy costs or uncertainty over timing could stand in the way of this opportunity.

The opportunity to produce low-carbon products is paired with a risk of losing market share if no action is taken, as well as the risk of missing corporate and government emissions reduction targets.

Climateworks’ work in heavy industry decarbonisation has shown that Gladstone, and regions like it, could benefit from adopting a ‘net zero industrial precinct’ (NZIP) approach.

Collective industrial decarbonisation within an NZIP allows for coordinated investment and policy that promote regional prosperity and a more equitable transition to low-carbon operations.

For an NZIP, industrial actors and government agencies come together to implement technological, economic and policy solutions that reduce investment costs and risks, aiming to secure firm renewable energy and produce competitive low-carbon products that will be in demand as the world transitions to net zero.

Working to reduce emissions of a whole NZIP, rather than one company at a time, could set regions up for success. 

For this project, we identified key gaps that restrict rapid decarbonisation, and that could benefit from an NZIP approach.

In the case of Gladstone, a key limiting factor is access to renewable energy generation at the scale needed to provide electricity, heat and alternative feedstock.

A combination of the closure of coal-fired power stations and a potentially dramatic increase in electricity consumption to meet early demand for low-carbon products would require significantly expanded renewable energy generation capacity.

Facilities may access electricity via connection to the electricity grid or on-site renewable energy or energy storage. In this way, they can reduce both scope 1 and 2 energy emissions and make significant inroads into the emissions intensity of low-carbon products produced within the precinct.

Our analysis of future energy consumption and emissions – denoted as the ‘Climateworks Gladstone’ scenario – found that existing major manufacturing industries (aluminium, alumina, explosives, cement) and new low-carbon energy exports (using regional hydrogen assumptions) could require 74 TWh/year of renewable electricity by 2040.

This results in a 93 per cent scope 1 energy emissions reduction across these industries by 2040. For perspective, the size of the National Electricity Market (NEM) today is 174 TWh/year.

This report presents findings from our analysis of these issues in Gladstone and our recommendations for actions that can be implemented now.

Gladstone is material to both Australia’s economy and emissions, and the proposed actions position the region, and Australia, to optimise the opportunity of the global low-carbon economy.

These recommendations would enable the net zero transition in Gladstone as well as other Australian regions.

We recommend that:

• Energy planning authorities create ‘regional Integrated System Plans’ for Gladstone and other major industrial regions, building on the Australian Energy Market Operator (AEMO) ‘Green energy exports’ scenario, resulting in new electricity infrastructure being built at the scale required.
• Governments develop policies to support low-carbon industrial heat at scale, including national and state-level industrial heat strategies, financing models and a coordinated funding response to support early-stage technologies and deployment of low-carbon heat technologies at scale.
• Energy demand management policy and energy efficiency mechanisms for heavy industry be expanded, optimising infrastructure development and costs for all energy users.
• Governments enact measures to support early hydrogen demand in existing industries, catalysing a low-carbon hydrogen market in industrial regions.
• Governments and industry endorse high-quality standards for low-carbon products, ensuring consistency between Australia’s emissions intensity standards and international standards.

Download the report (PDF 3.3mb)

ISBN: 978-1-7637231-3-9