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Industrial Processes and Product Use emissions projections 2014–15

August 2015

Published by the Department of the Environment.

www.environment.gov.au

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Executive summary

Key points• Industrial processes and product use emissions are non-energy emissions arising from production processes and

use of synthetic greenhouse gases.

• Emissions from industrial processes and product use were 6 per cent of Australia’s national greenhouse gas inventory in 2013–14, at 32 Mt CO2-e.

• Emissions from industrial processes and product use are projected to be:

– 36 Mt CO2-e in 2019–20, an increase of 36 per cent on 1999–2000 levels

– 39 Mt CO2-e in 2029–30, an increase of 47 per cent on 1999–2000 levels

– 41 Mt CO2-e in 2034–35, an increase of 52 per cent on 1999–2000 levels.

• Hydrofluorocarbons (HFCs), predominantly used in refrigeration and air conditioning, are projected to be the largest contributing subsector in 2019–20, accounting for 40 per cent of industrial processes and product use emissions. This is due to the expected increased use of these gases in refrigeration and air conditioning equipment.

• Emissions from metal production are projected to remain stable, except for an initial reduction in aluminium production.

• Emissions in the chemical industry and in mineral products are projected to remain around current levels in 2019–20.

• Emissions from a projected increase in chemical production are partially offset by a decrease in emissions intensity, due to the installation of nitrous oxide abatement technology.

• Mineral products emissions are the net result of projected declining clinker production and increasing lime production.

• Compared to the 2013 Projections, cumulative emissions over the period 2012–13 to 2019–20 are projected to be 0.4 Mt CO2-e higher.

Throughout this report:

1. Totals may not sum due to rounding.

2. Percentages have been calculated prior to rounding.

3. Years in charts and tables are financial years ending in the stated year.

Baseline projectionsIndustrial Processes and Product Use emissions projections 2014–15 2

• Industrial processes and product use emissions are projected to be 36 million tonnes of carbon dioxide equivalent (Mt CO2-e) in 2019–20, an increase of 9 Mt CO2-e compared to 1999–2000 levels.

– The increase is primarily due to the increasing take-up of equipment using HFCs, which release gases gradually over their lifetime. The commencement of several new ammonia and nitric acid plants, to produce ammonium nitrate for use in the mining industry, also contributes to the increase in emissions over this period.

– Product uses as substitutes for ozone depleting substances, which includes emissions from HFCs, are projected to be the largest contributor to emissions in 2019–20, constituting 40 per cent of industrial processes and product use emissions.

– Chemical industry emissions are projected to remain around current levels to 2019–20, as growth in production of explosives used in the mining industry is counteracted by a decline in the emissions intensity of nitric acid production.

– Metal production emissions initially decline due to the closure of Alcoa’s Point Henry aluminium smelter in August 2014, after which emissions remain stable to 2019–20.

– Emissions from mineral products initially decline due to recent clinker facility closures but are projected to return to around current levels by 2019–20, due to growth in lime and other industries.

• Cumulative emissions over the period 2012–13 to 2019–20 are projected to be 272 Mt CO2-e.

• Industrial processes and product use emissions are projected to be 39 Mt CO2-e in 2029–30, an increase of 13 Mt CO2-e compared to 1999–2000 levels. In 2034–35, emissions are projected to be 41 Mt CO2-e, an increase of 14 Mt CO2-e compared to 1999–2000 levels.

• HFC emissions are the largest contributor to emissions in 2029–30, constituting 41 per cent of industrial processes and product use emissions.

Figure 1 Industrial processes and product use emissions 1989–90 to 2034–35

Sources: DoE 2015, DoE analysis.

Results are reported for the major sources of industrial processes and product use: metal production, chemical industry, mineral products, product uses as substitutes for ozone depleting substances, non-energy products from

Industrial Processes and Product Use emissions projections 2014–15 3

fuels and solvent use, other product manufacture and use, and other production.

Table 1 Industrial processes and product use emissions, key years

2000 2020 2030

Mt CO2-e Mt CO2-e

Increase on 2000 Mt CO2-e

Increase on 2000

Metal production 15 10 -32% 10 -33%

Chemical industry 3 5 48% 6 77%

Mineral products 6 6 -2% 7 6%

Product uses as substitutes for ozone depleting substances

2 14 786% 16 893%

Other product manufacture and use

0.2 0.1 -29% 0.1 -24%

Non-energy products from fuels and solvent use

0.3 0.2 -38% 0.2 -26%

Other production 0.1 0.3 94% 0.4 158%

Total 27 36 36% 39 47%


Impact of measures• There are no measures in the 2014–15 industrial processes and product use projections. Projections of abatement

from the Emissions Reduction Fund are not included to avoid disclosing potentially market sensitive information, and because the safeguard element of the Fund has yet to be decided.

• The Government will consider including estimates of abatement in future projections if it is possible to do so without reducing the effectiveness of the Emissions Reduction Fund auctions.


Changes from the 2013 Projections• In the 2014–15 industrial processes and product use projection, cumulative emissions over the period 2012–13 to

2019–20 are 0.4 Mt CO2-e higher than in the 2013 Projections. This is the net result of the following changes since the 2013 Projections:

– Higher revised emissions from product uses as substitutes for ozone depleting substances.

– Alcoa closing its aluminium smelter at Point Henry in August 2014.

– Lower revised production for ammonia and nitric acid, combined with revising down the emissions intensity of nitric acid.

• Recent information on investment in major industrial projects gives an indication of new metal, mineral and chemical processing facilities likely to commence in the near future, as well as existing facilities which are expected to curtail production. Since the 2013 Projections were released, new announcements have been made regarding closures of aluminium and clinker facilities, and the timing of new ammonia and nitric acid facility commencements has been revised.

• Emissions from non-energy products from fuels and solvent use have been included for the first time. These emissions were previously reported in stationary energy.

• Some emissions sources have been reclassified into new subsectors since the 2013 Projections.

– Emissions from the consumption of halocarbons and sulfur hexafluoride have been partitioned into two new subsectors: product uses as substitutes for ozone depleting substances, and other product manufacture and use.

– Emissions from soda ash production are now included in chemical industry emissions.


Table of ContentsExecutive summary.................................................................................................................................. 2

Key points................................................................................................................................................................ 2Baseline projections............................................................................................................................................ 3Impact of measures.............................................................................................................................................. 4Changes from the 2013 Projections................................................................................................................5

1.0 Introduction................................................................................................................................... 81.1 Sources of emissions from industrial processes and product use..........................................81.2 Recent trends—national greenhouse gas inventory....................................................................91.3 Projections scenarios........................................................................................................................... 121.4 Outline of methodology....................................................................................................................... 12

2.0 Projections results..................................................................................................................... 142.1 Trends in the industrial processes and product use projections..........................................142.2 Metal production................................................................................................................................... 152.3 Chemical industry.................................................................................................................................. 172.4 Mineral products................................................................................................................................... 192.5 Product uses as substitutes for ozone depleting substances..................................................212.6 Other product manufacture and use...............................................................................................232.7 Non-energy products from fuels and solvent use.......................................................................252.8 Other production................................................................................................................................... 26

3.0 Sensitivity analysis.................................................................................................................... 273.1 Metal production................................................................................................................................... 283.2 Chemical industry.................................................................................................................................. 303.3 Mineral products................................................................................................................................... 313.4 Product uses as substitutes for ozone depleting substances..................................................33

Appendix A Changes from the 2013 Projections..................................................................35

Appendix B Key assumptions...................................................................................................... 37

Appendix C References.................................................................................................................. 40

FiguresFigure 1 Industrial processes and product use emissions 1989–90 to

2034–35................................................................................................................................. 3

Figure 2 Industrial processes and product use emissions by sector 1999–2000 to 2013–14................................................................................................. 11

Figure 3 Historical and projected changes in industrial processes and product use emissions............................................................................................................................ 15

Figure 5 Chemical industry emissions 1989–90 to 2034–35..............................................18

Figure 6 Mineral products emissions 1989–90 to 2034–35................................................20

Figure 7 Product uses as substitutes for ozone depleting substances emissions 1989–90 to 2034–35....................................................................................................... 22


Figure 8 Other product manufacture and use emissions, 1989–90 to 2034–35.............................................................................................................................. 24

Figure 9 Non-energy products from fuels and solvent use emissions 1989–90 to 2034–35....................................................................................................... 25

Figure 10 Other production emissions 1989–90 to 2034–35...............................................26

Figure 12 Metal production emissions sensitivity analysis..................................................28

Figure 13 Chemical industry emissions sensitivity analysis.................................................30

Figure 14 Mineral products emissions sensitivity analysis..................................................31

Figure 15 Product uses as substitutes for ozone depleting substances emissions sensitivity analysis.......................................................................................................... 33

TablesTable 1 Industrial processes and product use emissions, key years................................4

Table 2 Sources of industrial processes and product use emissions................................9

Table 3 Historical industrial processes and product use emissions, key years............................................................................................................................. 10

Table 4 Projections scenarios..................................................................................................... 12

Table 5 Metal production emissions, key years....................................................................17

Table 6 Chemical industry emissions, key years..................................................................19

Table 7 Mineral products emissions, key years....................................................................21

Table 8 Product uses as substitutes for ozone depleting substances emissions, key years..................................................................................................................................... 23

Table 9 Other product manufacture and use emissions, key years................................24

Table 10 Non-energy products from fuels and solvent use emissions, key years........25

Table 11 Other production emissions........................................................................................26

Table 12 Industrial processes and product use emissions sensitivity analysis, key years........................................................................................................... 27

Table 13 Metal production sensitivity analysis, key years..................................................29

Table 14 Chemical industry sensitivity analysis, key years................................................31

Table 15 Mineral products sensitivity analysis, key years..................................................32

Table 16 Product uses as substitutes for ozone depleting substances sensitivity analysis, key years........................................................................................................... 34

Table 17 Changes from the 2013 Projections...........................................................................36

Table 18 New facilities and expansions assumed to commence in the baseline projection......................................................................................................... 38

Table 19 Facilities assumed to close in the baseline projection........................................39


1.0 Introduction

The 2014–15 industrial processes and product use projections are a full update of the 2013 industrial processes and product use projections. They are produced from industry level modelling of emissions growth in the activities that make up the sector, based on the Department of Environment modelling and data from the report jointly produced by the Commonwealth Treasury and the former Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education, titled Climate Change Mitigation Scenarios: Modelling report provided to the Climate Change Authority in support of its Caps and Targets Review (Climate Change Mitigation Scenarios report; Treasury and DIICCSRTE 2013). These results incorporate historical emissions data from the national greenhouse gas inventory from 1989–90 to 2013–14 (DoE 2015).

Results are reported for the major sources of industrial processes and product use: metal production, chemical industry, mineral products, product uses as substitutes for ozone depleting substances, non-energy products from fuels and solvent use, other product manufacture and use, and other production.

1.1 Sources of emissions from industrial processes and product use

The industrial processes and product use sector includes emissions generated from production processes involving the use of carbonates (such as limestone and dolomite), carbon when used as a chemical reductant (such as iron and steel or aluminium production), chemical industry processes (such as ammonia and nitric acid production), the production and use of synthetic gases such as HFCs or sulfur hexafluoride, combustion of lubricant oils not used for fuel and carbon dioxide generated in food production. Emissions from nitrogen trifluoride (NF3) are negligible in Australia and, in accordance with reporting guidelines, are not estimated.

The 2014–15 industrial processes and product use projections are updated for the 2006 IPCC Guidelines for National Greenhouse Gas Inventories.

Greenhouse gas emissions from industrial processes and product use are primarily byproducts of production. The level of emissions is a factor of the process technology used and the level of industrial output. Industrial processes and product use emissions are non-energy related. Energy-related emissions are accounted for in the stationary energy sector. Table 2 outlines the coverage of emissions sources in the sector.


Table 2 Sources of industrial processes and product use emissions

Source Description

Metal production Iron and steel production, aluminium smelting, ferroalloys and other metals production.

Chemical industry Production of ammonia, nitric acid, synthetic rutile and titanium dioxide, organic polymers, soda ash manufacture and nitrous oxide use.

Mineral products Cement clinker production, lime production, the use of limestone and dolomite in industrial smelting processes, soda ash use, magnesia production, and other uses.

Product uses as substitutes for ozone depleting substances

Synthetic gases emitted from the use of HFCs in refrigeration and air conditioning equipment, foam blowing, aerosols, metered dose inhalers, fire extinguishers and solvent use.


Sulfur hexafluoride emissions arising from equipment and applications which use this gas.


Lubricant use emissions from the combustion of lubricant engine oil in vehicles.

Other production Food and drink industry.

1.2 Recent trends—national greenhouse gas inventory

Total industrial processes and product use emissions in 2013–14 are estimated to have been 32 Mt CO2-e, accounting for an estimated 6 per cent of Australia’s total emissions (DoE 2015).

Over the period 1999–2000 to 2013–14, industrial processes and product use emissions increased by 5 Mt CO2-e, or 20 per cent, growing by an average of 1 per cent a year. Most of the increase is a result of growth in the chemical industry, product uses as substitutes for ozone depleting substances and replacements of ozone depleting chemicals with halocarbons covered under the Kyoto Protocol. Growth in these areas has outweighed a significant decline in emissions from metal production resulting from more efficient practices and technologies and a decline in iron and steel production.


Table 3 Historical industrial processes and product use emissions, key years

Projection

2000 2014 Share of industrial processes and product use emissions in 2014

Mt CO2-e Mt CO2-e

Metal production 15 10 32%

Chemical industry 3 5 15%

Mineral products 6 6 19%

Product uses as substitutes for Ozone Depleting Substances

2 10 33%


0.2 0.1 0.4%


0.3 0.2 0.6%

Other production 0.1 0.3 0.8%

Total 27 32 100%

Source: DoE 2015.


Figure 2 Industrial processes and product use emissions by sector 1999–2000 to 2013–14

Source: DoE 2015.

Emissions from product uses as substitutes for ozone depleting substances increased from 2 Mt CO2-e in 1999–2000 to 10 Mt CO2-e in 2013–14. The growth of these emissions has been rapid since 1995 as manufacturers began to use these gases in place of chlorofluorocarbons, which were prohibited under ozone protection laws as a result of the Montreal Protocol.1

Emissions from metal production fell 5 Mt CO2-e over the historical period, resulting in its share of industrial processes and product use emissions declining from 55 per cent to 32 per cent. Over this period there was a significant emissions intensity reduction in the aluminium industry. Two closures—Bluescope Steel closing one of its two blast furnaces and Norsk Hydro closing its aluminium smelter—have significantly reduced production and emissions since 2011–12.

Much of the reduction in metal production emissions came from the aluminium industry. Over the historical period, aluminium production emissions decreased by 21 per cent, while production grew by 1 per cent. This is primarily because improvements in the efficiency of smelting operations led to a decline in perfluorocarbons emitted per tonne of aluminium produced.

1 The chlorofluorocarbon and hydrochlorofluorocarbon chemicals that are being phased out under the Montreal Protocol are also potent synthetic greenhouse gases, often with significantly higher global warming potentials than the hydrochlorofluorocarbons that have replaced them. Emissions of chlorofluorocarbons and hydrochlorofluorocarbons are not reported under the United Nations Framework Convention on Climate Change as they are managed through the Montreal Protocol but their phase out has contributed a net greenhouse gas reduction benefit.


Mineral product emissions decreased by 0.2 Mt CO2-e over the historical period. Around half of mineral product emissions come from clinker production, which grew relatively slowly over the period 1999–2000 to 2006–07 but then fell below 1999–2000 levels by 2013–14. In contrast, emissions from lime production increased over the period.

Chemical industry emissions increased by 1 Mt CO2-e over the historical period. This was largely due to new ammonium nitrate plants being built in response to an increase in demand for explosives from an expanding mining sector. The increase in emissions from the chemical industry would have been greater but for the implementation of nitrous oxide abatement technology in some nitric acid plants since 2010–11. The recent closure of Penrice Soda reduced emissions in 2013–14.

Emissions from other product manufacture and use, non-energy products from fuels and solvent use, and other production comprised a combined 0.6 Mt CO2-e in 2013–14. Total emissions from these subsectors have remained stable around this level throughout the historical period.

1.3 Projections scenariosThe baseline scenario is the Department’s estimate of projected emissions to 2034–35. It includes the impact of the carbon tax in the years 2012–13 to 2013–14 along with the carbon tax repeal from 1 July 2014. The carbon tax impact has been analysed to separate its impact into temporary and permanent effects on emissions. The baseline scenario is based on the assumption that all current abatement measures will continue.

Projections of abatement from the Emissions Reduction Fund are not included to avoid disclosing potentially market sensitive information, and because the safeguard element of the Fund has yet to be decided.

High and low sensitivity scenarios are also provided to indicate possible upper and lower bounds on the projections. The results of the sensitivity analysis are presented in Chapter 3.

Table 4 Projections scenarios

Scenario Description

Baseline Best estimates of emissions based on current information.

High emissions Estimates of emissions based on the combination of alternative assumptions leading to higher production or higher emissions intensity.

Low emissions Estimates of emissions based on the combination of alternative assumptions leading to lower production, lower emissions intensity or substitution away from HFCs.

1.4 Outline of methodologyIndustrial processes and product use emissions are projected using the Department of the Environment’s models for each emissions source. The models and sources are consistent with the methodology used in the national greenhouse gas inventory. A more detailed methodology outline for each subsector is contained in Appendix B.

The historical emissions data for the projections comes from the September quarterly update of Australia’s national greenhouse gas inventory. Emissions intensity assumptions used in determining the projections are sourced from the


National Inventory Report 2012 (DoE 2014).

Emissions are estimated based on projected production. For each industry, production is multiplied by the emissions intensity of production2, both of which are projected by the Department, based on a range of sources and assumptions.

In some cases, activity and emissions data are commercial-in-confidence. Emissions estimates are aggregated where needed to preserve confidentiality.

Production projections by industry commodity were calculated as follows:

Where available, short term projections were sourced from the Bureau of Resource and Energy Economics’ Resources and Energy Quarterly March 2014 and IBISWorld (BREE 2014a, IBISWorld 2014). In these instances, projections were available for the period to 2018–19. Industry information from company reports, analyst reports and major company announcements was also incorporated.

Projections for the remaining period to 2029–30 were based on Climate Change Mitigation Scenarios report results for the ‘no carbon price’ scenario growth rates. However, adjustments were made where significant shifts in a particular industry’s outlook had occurred.

The production projections were adjusted to take account of changes in macroeconomic assumptions since the publication of the Climate Change Mitigation Scenarios, Resources and Energy Quarterly and IBISWorld reports.

Projections from 2029–30 to 2034–35 were extrapolated to continue at the annual average growth rate from 2024–25 to 2029–30.

2 In most industries, the emissions intensity has historically been constant or has only varied slightly over time. This is because the chemical reactions release emissions in fixed proportions to the materials consumed in production.


2.0 Projections results

Emissions are projected to be 36 Mt CO2-e in 2019–20, an increase of 36 per cent above 1999–2000 levels. The increase is primarily due to the increasing takeup of equipment using HFCs, which leak gases gradually over their lifetime. The commencement of several new ammonia and nitric acid plants, to produce ammonium nitrate for use in the mining industry, are also expected to increase projected emissions over this period.

Emissions from iron and steel production, aluminium production and clinker production are projected to decline or remain steady throughout the projections period. Production from these subsectors has recently been affected by rising energy and input costs, the recent high Australian dollar, and low output prices resulting from excess world production capacity. Rising energy costs and low prices are projected to continue throughout the period to 2019–20 (BREE 2014a).

Industrial processes and product use emissions are projected to be 39 Mt CO2-e in 2029–30, an increase of 47 per cent above 1999–2000 levels. In 2034–35, emissions are projected to be 41 Mt CO2-e, an increase of 52 per cent relative to 1999–2000. Similar to the period prior to 2019–20, emissions from HFCs and chemicals production are projected to grow, while emissions from metal production are projected to decline. From 2019–20 to 2034–35 emissions from mineral products are projected to increase due to growth in lime production.

2.1 Trends in the industrial processes and product use projections

The historically rapid growth in emissions from product uses as substitutes for ozone depleting substances is projected to slow after 2019–20 due to the almost complete replacement of chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs) with HFCs. Emissions resulting from equipment leakage are projected to increase throughout the period to 2034–35, driven by projected growth in the number of installations of air conditioning equipment.

The chemical industry is projected to grow strongly in the baseline scenario, as several new ammonium nitrate plants are expected to be established between 2013–14 and 2019–20. Both the new and existing plants are expected to use nitrous oxide abatement catalyst technology, which means they would have lower emissions intensity than observed historically. Beyond 2019–20, emissions from the chemical industry are projected to continue increasing in line with production growth. Ammonia and nitric acid production remains the main projected driver of emissions from the chemical industry, with growth assumed to match growth in the mining industry. Synthetic rutile production and titanium dioxide production are projected to return to full capacity and expand during the projections period.


Figure 3 Historical and projected changes in industrial processes and product use emissions


Initially, metal production emissions are set to decline following the closure of Alcoa’s aluminium smelter at Point Henry in August 2014. Its closure was announced amid a high Australian dollar and low global metal prices. Production of iron and steel over the period to 2019–20 is projected to remain around current levels, in line with declining export demand and steel prices, in spite of a lower exchange rate. Beyond 2019–20, international demand for iron and steel and aluminium is projected to increase. Construction of new, more efficient plants overseas is expected to eliminate the opportunity for older plants in Australia to increase exports. Metal production emissions are projected to be stable from 2019–20 to 2029–30, due to projected stable production levels for iron and steel and aluminium.

Emissions from the production of mineral products are projected to initially decline, as cement producers are expected to import clinker, instead of manufacturing it themselves. Boral’s Waurn Ponds clinker plant recently closed and the closure of Adelaide Brighton’s Munster plant and Boral’s Maldon plant have been announced (Boral 2012, Boral 2014, Cockburn Cement 2014). Projected excess world clinker production capacity, particularly in lowcost producing countries, could lead to further reductions in domestic clinker production over the projections period. Emissions from lime production are projected to increase, as lime production rises in response to growing demand from road construction and the agriculture sector. The projected increase in supply includes the expansion of Cockburn Cement’s Munster lime facility.

2.2 Metal productionEmissions from metal production come from the production of iron and steel, aluminium, ferroalloys and other metals (copper, nickel and silicon). Carbon dioxide, methane and nitrous oxide are released when carbon-based coking fuels


are used to remove oxygen from metal ores. Perfluorocarbons are released during aluminium production from reaction in the cryolite solution in which the aluminium production takes place. Fugitive methane emissions also occur as a result of steel production.

Metal production emissions were estimated to be 10 Mt CO2-e in 2013–14, a decrease of 31 per cent below 1999–2000 levels.

Emissions from metal production are projected to decline throughout the projections period. In 2019–20 emissions are projected to be 10 Mt CO2-e, 0.2 Mt CO2-e lower than in 2013–14. This is a result of Alcoa closing its Point Henry aluminium smelter in August 2014, after which iron and steel and aluminium production are projected to remain relatively stable. Emissions in 2029–30 are projected to be 10 Mt CO2-e, 0.4 Mt CO2-e lower than in 2013–14, as production of aluminium is projected to decline while iron and steel production continues at around current levels.

Figure 4 Metal production emissions 1989–90 to 2034–35


The emissions intensity of metal production is assumed to remain constant throughout the projections period on a facility basis. This results in iron and steel emissions remaining proportional to production; and similarly for most ferroalloys and other metals throughout the projections period. For aluminium production, the initial facility closure leads to a fall in the overall emissions intensity of domestic aluminium production.

Domestic iron and steel production is projected to remain relatively stable over the projections period. Iron and steel production projections take account of changes in macroeconomic assumptions since the publication of the Climate Change Mitigation Scenarios report and Resources and Energy Quarterly. The projection has a stronger outlook for exports than the Resources and Energy Quarterly, which forecasted a decline in Australian exports as nominal export prices gradually declined.


Table 5 Metal production emissions, key years

2000 2014 2020 2030

Mt CO2-e Mt CO2-e Mt CO2-e


Increase on 2000

Iron and steel 10 6 6 -38% 6 -38%

Aluminium 4 3 3 -27% 3 -31%

Ferroalloys and other metals

0.5 0.7 0.8 40% 0.8 45%

Total 15 10 10 -32% 10 -33%


The long term outlook for iron and steel production growth rates is based on the Climate Change Mitigation Scenarios report. Beyond 2019–20, excess world steel smelting capacity is expected to limit any expansion of domestic production and hence emissions. Increased international demand for iron and steel is expected to be met by capacity increases in emerging economies, particularly China and India (BREE 2014a). Australian production, while declining, is projected to remain above the current domestic consumption level.

Aluminium production is projected to decline throughout the projections period, a similar assessment to BREE’s forecasts to 2018–19. The closure of Alcoa’s Point Henry smelter is expected to reduce annual emissions by around 0.4 Mt CO2-e by 2015–16, although the immediate impact is smaller as other smelters are expected to make up some of the difference.

BREE’s outlook is for both domestic consumption and Australian exports of aluminium to decline, in spite of a small increase in nominal export prices. Rising input costs, including energy and alumina, are expected to contribute to the gradual production decline.

Emissions from ferroalloys and other metals production are projected to increase steadily to 2019–20. Silicon production is projected to expand with Simcoa’s construction of an additional furnace, while ferromanganese and nickel production are also projected to grow (Simcoa 2014). Copper production is expected to decline due to the announced closure of Glencore Xstrata’s Townsville copper refinery in 2016 (BREE 2014a).

From 2019–20 onwards, ferroalloys and other metals production growth is based on the Climate Change Mitigation Scenarios report. Production and emissions are projected to increase by around 0.1 per cent annually, expected to come from productivity and efficiency gains rather than facility expansions.

2.3 Chemical industryChemical industry emissions come from the production of ammonia, nitric acid, synthetic rutile, titanium dioxide, methanol and polymers and other chemicals. Emissions from acetylene and nitrous oxide use are also included in this subsector.

Carbon dioxide emissions are released during the production of ammonia, synthetic rutile, titanium dioxide and from acetylene used in welding. Methane emissions are released during the production of methanol and polymers and


other chemicals. Nitrous oxide emissions are released during nitric acid production and from use in anaesthesia and aerosols.

Chemical industry emissions were estimated to be 5 Mt CO2-e in 2013–14, an increase of 39 per cent above 1999–2000 levels.

Emissions from the chemical industry are projected to increase throughout the projections period. In 2019–20 emissions are projected to be 5 Mt CO2-e, 0.3 Mt CO2-e higher than in 2013–14. This is a result of several new ammonia facilities and nitric acid facilities commencing operations during this period. These are the chemical inputs into ammonium nitrate, used in explosives in the mining industry which is expected to grow rapidly over this period. Emissions in 2029–30 are projected to be 6 Mt CO2-e, 1 Mt CO2-e higher than in 2013–14, due to continued expansion of ammonia and nitric acid production along with relatively smaller increases in synthetic rutile and titanium dioxide production. The growth in chemicals production is contrasted by the closure of Penrice Soda in 2013–14.

Figure 5 Chemical industry emissions 1989–90 to 2034–35

Source: DoE 2015, DoE analysis.

Ammonia and nitric acid production are the main drivers of emissions in the chemical industry. Both of these chemicals are produced primarily to make ammonium nitrate, although ammonia is also used in ammonium phosphate production, urea production and nickel refining.


Table 6 Chemical industry emissions, key years

2000 2014 2020 2030

Mt CO2-e Mt CO2-e Mt CO2-eIncrease on 2000 Mt CO2-e

Increase on 2000

Total 3 5 5 48% 6 77%


Three projects have recently been completed and one project is under construction and will also commence operating prior to 2019–20 (BREE 2014b, Incitec Pivot 2013). Two of these new facilities, Incitec Pivot’s Moranbah facility and Port Hedland facility, contain new ammonia and nitric acid facilities to supplement ammonium nitrate production. The other two projects, CSPB Wesfarmer’s Kwinana facility expansion and Yara Pilbara Nitrates’ proposed facility in the Burrup Peninsula, already have access to existing ammonia production and so only require additional nitric acid production to support their ammonium nitrate expansions. These projects are expected to add around 1100 kt of ammonium nitrate production annually before 2019–20, an increase of over 60 per cent. All other domestic ammonia and nitric acid facilities are projected to maintain their current production levels.

The emissions intensity of nitric acid production is projected to decline due to the use of catalysts which reduce nitrous oxide emissions. These catalysts are already installed at the existing nitric acid facilities and are planned to be included in some of the new facilities. This technology could reduce nitrous oxide emissions by up to 92 per cent (Wesfarmers 2014, Orica 2013).

Beyond 2019–20, both ammonia and nitric acid production are projected to increase at the same rate as mining activity, as projected in the Climate Change Mitigation Scenarios report. There is some uncertainty in future ammonia production as natural gas, a feedstock in producing ammonia, is forecast to significantly increase in price.

Emissions from production of synthetic rutile and titanium dioxide are also projected to increase throughout the projections period. Historically, both of these commodities are manufactured primarily for export. After synthetic rutile production peaked in 2008–09 during the global financial crisis, the industry has since been producing around 34 per cent below that level (BREE 2014a). The short term outlook is for production to remain roughly constant. Emissions from titanium dioxide are projected to grow around 1 per cent annually, slower than historical growth, as production capacity doubled during the last decade and further increases are unlikely to be necessary.

2.4 Mineral productsMineral products emissions include process emissions from cement clinker production, lime produced from calcium carbonate sources, and limestone and dolomite used as carbonate for a variety of processes. Mineral products have widespread use in the construction and metallurgical industries.

Emissions from mineral products occur when carbon dioxide is released as a by-product of heating carbonates in order to remove them from the product.

Mineral products emissions were estimated to be 6 Mt CO2-e in 2013–14, a decrease of 3 per cent below 1999–2000 levels.

Emissions from mineral products are projected to decline initially, due to facility closures, before increasing over time. In 2019–20 emissions are projected to be 6 Mt CO2-e, 0.1 Mt CO2-e higher than in 2013–14. This is a result of


emissions increases from lime production and metals smelting (other than iron and aluminium) offsetting closures of clinker facilities. Emissions in 2029–30 are projected to be 7 Mt CO2-e, 0.5 Mt CO2-e higher than in 2013–14, as growth in lime production and other carbonate uses continues.

Figure 6 Mineral products emissions 1989–90 to 2034–35


Clinker emissions are projected to decline, due to the recent clinker production plant closures of Boral’s Waurn Ponds and Maldon facilities and Adelaide Brighton’s Munster facility during 2014–15. The recent high Australian dollar has lowered the cost of imported clinker relative to domestic production. These companies have announced that these facilities will continue producing cement using imported clinker (Boral 2012, Boral 2014, Cockburn Cement 2014). After accounting for these closures, clinker production for individual facilities throughout the projections period is maintained at the 2006–07 to 2012–13 average. Excess world capacity, particularly in lowcost producing countries, places pressure on Australian firms’ ability to expand domestic clinker production in the long term. As domestic demand for cement increases for domestic building and construction, the additional clinker required for production is expected to be met by imports.


Table 7 Mineral products emissions, key years

2000 2014 2020 2030


Increase on 2000

Cement production

4 3 3 -16% 3 -15%

Lime production 1 1 1 53% 2 73%

Limestone and dolomite use

2 1 2 -3% 2 13%

Total 6 6 6 -2% 7 6%


Emissions from lime production are projected to grow by around 2 per cent annually throughout the period 2013–14 to 2019–20. This projected growth includes Cockburn Cement’s Munster lime facility expansion of 100 kt during this period (Adelaide Brighton 2014, Adelaide Brighton 2015, IBISWorld 2014). Beyond 2019–20, production and emissions are projected to continue increasing, albeit at a slower rate than earlier in the projections period. Demand for lime from mining, metals processing and agriculture are expected to continue but this growth is offset by the possibility of import competition reducing domestic production.

Emissions from limestone and dolomite use are projected to increase throughout the projections period, in spite of Penrice Soda closing its soda ash and sodium bicarbonate production facility in June 2014. Emissions from using carbonates in producing glass and nonferrous metals are projected to increase, while emissions from using imported soda ash remain around 2013–14 levels. The emissions increase is partly offset by lower demand for carbonates in iron and steel production, which is projected to remain around current levels.

2.5 Product uses as substitutes for ozone depleting substances

Most product uses as substitutes for ozone depleting substances3 is in private or commercial air conditioning and refrigeration, while smaller amounts are used in foam blowing, aerosols, metered dose inhalers, fire extinguishers and solvents. Emissions from HFCs occur when the gases gradually escape from equipment over a number of years. These gases are imported, and not produced in Australia. Under the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989, companies pay a levy on imports.

The Ozone Protection and Synthetic Greenhouse Gas Management Act 1989 was amended in 2011 to allow for an equivalent carbon price on synthetic greenhouse gases, to cover sulfur hexafluoride, and to extend import

3 The only synthetic greenhouse gases accounted for as product uses as substitutes for ozone depleting substances are HFCs. Other synthetic greenhouse gases accounted for under the United Nations Framework Convention on Climate Change are not emitted at significant levels within Australia. Projections of emissions associated with synthetic greenhouse gas consumption are therefore projections of HFC emissions.


controls to all equipment containing a synthetic greenhouse gas for the first time. This was expected to increase the price of such equipment, and create further incentives for equipment to be appropriately installed and maintained, to increase recovery and recycling of synthetic greenhouse gases, and for the development and import of alternative technologies. In addition to synthetic gases, alternative refrigerant gases, such as ammonia, carbon dioxide and hydrocarbons are increasingly used in refrigeration systems installed in supermarkets and meat processing facilities.

In 2013–14, emissions from the product uses as substitutes for ozone depleting substances were estimated to be 10 Mt CO2-e. Emissions growth is expected to be lower than in the past, as nearly 70 per cent of equipment now contains HFCs instead of ozone depleting substances. By 2019–20, nearly all equipment is expected to contain HFCs, which would further reduce the rate of emissions growth. Emissions are projected to reach 14 Mt CO2-e by 2019–20, and 16 Mt CO2-e by 2029–30.

Figure 7 Product uses as substitutes for ozone depleting substances emissions 1989–90 to 2034–35



Table 8 Product uses as substitutes for ozone depleting substances emissions, key years

2000 2014 2020 2030



Increase on 2000

Total 2 10 14 786% 16 893%


Projected population growth and increases in commercial activity are expected to support growth in emissions from HFCs over the period 2013–14 to 2019–20. Domestic air conditioners are expected to be the largest source of emissions, followed by commercial refrigeration, then vehicle air conditioning. Beyond 2019–20, emissions from refrigeration are projected to remain relatively stable, and emissions from air conditioning are projected to increase.

Throughout the projections period, emissions from metered dose inhalers are projected to increase broadly in line with population growth. Emissions from foam blowing, fire extinguishers and aerosols are projected to remain relatively stable.

Gases with lower global warming potentials may become more economically and technically viable than HFCs. However, the projections exclude the impact of substituting from HFCs to other gases in order to estimate the potential effect of unabated HFCs consumption on emissions. Existing substitute synthetic gases are not currently implemented on a commercial scale.

2.6 Other product manufacture and useOther product manufacture and use emissions include sulfur hexafluoride emissions from equipment and applications which use this gas.

Emissions from other product and manufacture and use are very small and constituted 0.4 per cent of industrial processes and product use emissions in 2013–14. Emissions were 0.1 Mt CO2-e in 2013–14, a decrease of 32 per cent below 1999–2000 levels. Emissions are projected to remain around 0.1 Mt CO2-e in 2019–20 and 2029–30.


Figure 8 Other product manufacture and use emissions, 1989–90 to 2034–35


The largest source of sulfur hexafluoride emissions is circuit breakers installed in electricity grids, where emissions occur when the gases gradually escape from equipment over a number of years. Over the projections period, circuit breakers are expected to be decommissioned and replaced with newer equipment, with this small increase in circuit breaker stocks offset by assumed lower leakage rates than observed historically. Other uses of sulfur hexafluoride are assumed to increase in line with population growth; these uses include use in eye surgery, tracer gas studies, magnesium casting, plumbing services, tyre manufacture and industrial machinery equipment.

Table 9 Other product manufacture and use emissions, key years

2000 2014 2020 2030


Increase on 2000

Total 0.2 0.1 0.1 -29% 0.1 -24%



2.7 Non-energy products from fuels and solvent useAll emissions from non-energy products from fuels and solvent use are classified as arising from lubricant use. Carbon dioxide emissions from lubricants arise from the combustion of engine oil in vehicles.

Emissions from lubricant use are very small and constituted 0.6 per cent of industrial processes and product use emissions in 2013–14. Emissions were 0.2 Mt CO2-e in 2013–14, a decrease of 35 per cent below 1999–2000 levels. Emissions are projected to remain around 0.2 Mt CO2-e in 2019–20 and 2029–30.

Figure 9 Non-energy products from fuels and solvent use emissions 1989–90 to 2034–35


Lubricants are used across many industries. Most lubricants emissions come from refinery, chemical, machinery manufacturing and construction industries. Emissions growth in lubricant use is based on the Climate Change Mitigation Scenarios report growth rates aggregated for all industries which use lubricants.

Table 10 Non-energy products from fuels and solvent use emissions, key years

2000 2014 2020 2030



Increase on 2000

Total 0.3 0.2 0.2 -38% 0.2 -26%



2.8 Other productionAll emissions from other production are classified as arising from the food and beverage industry. Carbon dioxide is used in the production of many types of food and beverages. In general, the carbon dioxide is a by-product of ammonia production, ethylene oxide production, and sodium bicarbonate use.

In 2013–14, emissions from other production constituted 0.8 per cent of industrial processes and product use emissions. Emissions were 0.3 Mt CO2-e in 2013–14, an increase of 76 per cent above 1999–2000 levels. Emissions are projected to be around 0.3 Mt CO2-e in 2019–20 and increase to 0.4 Mt CO2-e in 2029–30.

Figure 10 Other production emissions 1989–90 to 2034–35


Emissions growth in other production is based on the Climate Change Mitigation Scenarios report growth rates for food manufacturing.

Table 11 Other production emissions

2000 2014 2020 2030


Increase on 2000

Total 0.1 0.3 0.3 94% 0.4 158%



3.0 Sensitivity analysis

A sensitivity analysis has been conducted to indicate possible upper and lower bounds on the projections. The high emissions scenario is based on higher production growth than in the baseline scenario. Similarly, the low emissions scenario is based on lower production growth than in the baseline scenario (see Appendix B for baseline scenario assumption details). Emissions intensities are assumed to be the same as for the baseline scenario, unless otherwise noted.

The high emissions sensitivity shows emissions could be higher than in the baseline scenario by 6 Mt CO2-e in 2019–20 and 9 Mt CO2-e in 2034–35. These results show the influence on emissions if nitric acid facilities were to stop using nitric acid abatement technology. The high emissions sensitivity also includes impacts from improved economic conditions which allow small production gains in metals and mineral production facilities, as well as additional expansion of ammonia and nitric acid production.

The low emissions sensitivity shows emissions could be lower than in the baseline scenario by 5 Mt CO2-e in 2019–20 and 17 Mt CO2-e in 2034–35. These results illustrate the effects of replacing HFCs in refrigeration and air conditioning equipment with low GWP alternatives. The low emissions sensitivity also includes the impacts of further production curtailments and improved performance of nitric acid abatement technology.

Table 12 Industrial processes and product use emissions sensitivity analysis, key years

Projection

2020 Change from baseline


Mt CO2-e Mt CO2-e Mt CO2-e Mt CO2-e

Baseline 36 - 41 -

High emissions 42 6 50 9

Low emissions 31 -5 24 -17



Figure 11 High and low emissions sensitivity analysis


3.1 Metal productionEmissions sensitivities in the metal production subsector are based on uncertainty regarding production, and the closure of particular facilities.

Figure 12 Metal production emissions sensitivity analysis



The high emissions sensitivity assumes a stronger production outlook than in the baseline scenario for each metal industry. Iron and steel production is projected to increase slightly to reach and maintain current capacity levels throughout the projections period. Aluminium production is projected to remain at capacity levels throughout the projections period, following Alcoa’s Point Henry closure. Ferroalloys and other metal production assume an annual growth rate which is 50 per cent higher than in the baseline scenario.

The low emissions sensitivity assumes a 50 per cent slower annual production growth rate than in the baseline scenario for iron and steel, ferroalloys and other metals production. Aluminium production is based on the National Energy Forecasting Report 2013–14 low demand sensitivity scenario which reduces total aluminium production to 50 per cent of capacity over the period 2014–15 to 2016–17, followed by full facility closures once arrangements with the respective state governments or electricity providers expire (AEMO 2014).

Table 13 Metal production sensitivity analysis, key years

Projection




Baseline 10 - 10 -

High emissions 11 0.5 11 0.9




3.2 Chemical industryEmissions sensitivities in the chemical industry subsector are predominantly based on uncertainty regarding production and emissions intensity, particularly for ammonia and nitric acid production.

Figure 13 Chemical industry emissions sensitivity analysis


The high emissions sensitivity assumes the commencement of an additional new ammonium nitrate plant and a methanol plant. Orica Resources’ planned 250 kt ammonium nitrate expansion at Kooragang Island is assumed to proceed, as is MEO’s planned methanol plant to be constructed in the Timor Sea (Orica 2013, MEO 2014). Growth in both synthetic rutile and titanium dioxide production is assumed to be faster than in the baseline scenario.

The high emissions sensitivity also assumes that no nitric acid facilities use the nitrous oxide abatement catalyst from 2014–15 onwards, following the carbon tax repeal. Emissions intensity is assumed to return to levels prior to installing this catalyst technology.

The low emissions sensitivity analysis allows for a decline in ammonia production due to the rising price of gas as a feedstock to ammonia production. Growth rates for synthetic rutile and titanium dioxide are assumed to be 50 per cent lower than in the baseline scenario throughout the projections period. No further production growth in nitric acid production is assumed beyond 2019–20.

The low emissions sensitivity also assumes that all new and existing nitric acid facilities use the nitrous oxide abatement catalyst throughout the projections period.


Table 14 Chemical industry sensitivity analysis, key years

Projection




Baseline 5 - 6 -




3.3 Mineral productsEmissions sensitivities in the mineral products subsector are based on varying the production growth rates and assumptions regarding the closure of particular facilities. Limestone and dolomite emissions arising from metallurgy industries have the same sensitivity analysis assumptions as outlined in the metal production sensitivities.

Figure 14 Mineral products emissions sensitivity analysis


The high emissions sensitivity assumes clinker production is maintained at capacity levels, following the two facility closures, in the short term. In the long term, production is projected to gradually increase in volume equivalent to recommencing production at Boral’s Waurn Ponds facility. Lime production and limestone and dolomite use assume growth rates are 50 per cent higher than observed in the baseline scenario for industries not associated with metal production.


The low emissions sensitivity analysis allows for further decreases in clinker production, due to rising electricity and gas costs making clinker production uneconomic. Lime production is assumed not to exceed the 2019–20 level in the baseline scenario, to reflect increased import competition similar to that experienced by the clinker industry in the baseline scenario. Limestone and dolomite use assume growth rates are 50 per cent lower than observed in the baseline scenario for industries not associated with metal production.

Table 15 Mineral products sensitivity analysis, key years

Projection




Baseline 6 - 7 -

High emissions 7 0.6 8 1

Low emissions 6 -0.3 5 -2



3.4 Product uses as substitutes for ozone depleting substances

Emissions sensitivities in the product uses as substitutes for ozone depleting substances subsector are based on varying the consumption level of HFCs while maintaining the same leakage rate assumptions as in the baseline scenario.

Figure 15 Product uses as substitutes for ozone depleting substances emissions sensitivity analysis


The high emissions sensitivity assumes a 25 per cent higher consumption growth rate than assumed in the baseline scenario.

The low emissions sensitivity scenario assumes the gradual phase out of HFCs, to be replaced by gases with a lower global warming potential (GWP). The replacement of HFCs in their current applications with lower GWP gases could be motivated by future changes in technology or regulation. This sensitivity only considers changes in emissions from HFCs; the change in emissions from substitute gases is not estimated.


Table 16 Product uses as substitutes for ozone depleting substances sensitivity analysis, key years

Projection




Baseline 14 - 17 -





Appendix A Changes from the 2013 Projections

The 2014–15 industrial processes and product use projections are an update of the 2013 industrial processes and product use projections. Emissions in 2019–20 are projected to be 0.7 Mt CO2-e lower than in the 2013 Projections, however cumulative emissions from 2012–13 to 2019–20 are projected to be 0.4 Mt CO2-e higher than in the 2013 Projections. These results are the net effect of:

• the closure of Alcoa’s Point Henry aluminium smelter

• lower projected production for ammonia and nitric acid

• lower emissions intensity of nitric acid production

• lower projected clinker production due to three facility closures

• higher growth in emissions from product uses as substitutes for ozone depleting substances

• the first time inclusion of non-energy products from fuels and solvent use emissions.

Historical emissions in the most recent national greenhouse gas inventory have been revised due to the availability of additional data, in particular data reported under the National Greenhouse and Energy Reporting Scheme for iron and steel emissions. Historical emissions are now higher over the period 2002–03 to 2010–11 but in 2012–13 and 2013–14 they are lower than was reported in the 2013 Projections. The national greenhouse gas inventory has been revised slightly upward due to revisions to iron and steel emissions.

Both the 2013 and 2014–15 Projections incorporate assumptions about the timing and sizes of facility start-ups or closures. The 2014–15 Projections make use of new information about the short-term prospects for these facilities. In contrast, many of the projections relating to the longer-term use the same Climate Change Mitigation Scenarios report as the 2013 Projections, albeit scaled to accommodate updated macroeconomic assumptions.

Emissions from the chemical industry in the baseline scenario are lower than in the 2013 Projections because expectations of long term production growth have been revised down. The emissions intensity of nitric acid production has been revised down between 2011–12 and 2019–20, as the 2012 national greenhouse gas inventory indicates that nitrous oxide abatement technology has been installed earlier than was assumed in the 2013 Projections. In terms of consistency between the previous and current projections, some of the projects included in the 2013 Projections have since commenced construction or production.

Emissions from manufacture of mineral products are lower than in the 2013 Projections due to lower projected clinker production. Projected clinker production was based on company statements about facilities’ statuses in the short term, and the prospects for imported clinker to replace domestic production.

Projected emissions from product uses as substitutes for ozone depleting substances are higher than in the 2013 Projections. In the 2013 Projections, emissions from product uses as substitutes for ozone depleting substances were based only on industry activity, while the 2014–15 Projections have also taken account of further information available on equipment stocks and HFC imports.

Other production emissions have been revised down from the 2013 Projections. A small fall in emissions in the most recent inventory year has lead to emissions being projected from a lower base.

Emissions from non-energy products from fuels and solvent use have been included in industrial processes and product use emissions for the first time. These emissions were formerly included in the stationary energy sector.


Emissions from soda ash manufacturing are now included in chemical industry emissions; these emissions were previously included in mineral products. Emissions from soda ash use in production processes are still included in mineral products.

Table 17 Changes from the 2013 Projections

2020 Cumulative 2013 to

2020

2030 Cumulative 2013 to

2030


Metal production 0.6 4 -0.9 6

Chemical industry -4 -24 -7 -80

Mineral products -0.4 -1 -0.7 -7

Product uses as substitutes for Ozone Depleting Substances

3 19 2 49


Not applicable Not applicable Not applicable Not applicable


Not applicable Not applicable Not applicable Not applicable

Other production 0.0 -0.1 0.0 -0.2

Total -0.6 0.4 -6 -26

Sources: DoE 2013, DoE 2015, DoE analysis.


Appendix B Key assumptions

The 2014–15 Projections consist of a single baseline scenario which includes the impact of existing emissions reduction measures. The baseline projection includes the impact of the carbon tax from 1 July 2012 to 30 June 2014 and the carbon tax repeal effective from 1 July 2014. The baseline projection does not include the impact of the Emissions Reduction Fund.

The repeal of the carbon tax is projected to have a direct impact on emissions from product uses as substitutes for ozone depleting substances. The carbon tax repeal means these gases no longer have an equivalent carbon price applied to them through the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989. In the projections, the inventory years 2012–13 and 2013–14 are assumed to capture the share of carbon tax abatement calculated from the Climate Change Mitigation Scenarios report results. Emissions in 2014–15 are projected to increase in response to the carbon tax repeal, in addition to the underlying emissions trends.

The 2014–15 Projections incorporate the Department’s gross domestic product (GDP) and exchange rate assumptions. These assumptions adopted the Midyear Economic and Fiscal Outlook 2014–15 (MYEFO) projections of GDP and exchange rate out to 2024–25, which the Department extrapolated to 2034–35. The Climate Change Mitigation Scenarios report results used in these projections have been adjusted to incorporate the Department’s GDP and exchange rate assumptions.

Emissions are estimated based on commodity production projections for each industry. The production projections incorporate results from the Climate Change Mitigation Scenarios report, Bureau of Resource and Energy Economics’ Resources and Energy Quarterly March 2014 and IBISWorld (Treasury and DIICCSRTE 2013, BREE 2014a, IBISWorld 2014). Industry information from company reports, analyst reports and major company announcements was also incorporated. In developing production projections, adjustments were made to incorporate the macroeconomic assumptions for the 2014–15 Projections.

The GDP results from the Climate Change Mitigation Scenarios report were scaled to the GDP series for the 2014–15 Projections. This resulted in changes to individual industry production growth rates, which were applied to the production projections.

The 2014–15 exchange rate assumption was lower than published in the Climate Change Mitigation Scenarios report. The production projections incorporated this fact into the period 2014–15 to 2019–20, by incorporating impacts of exchange rate changes on the terms of trade and domestic production levels.

According to Treasury and DIICCSRTE 2013, Box 3.1, a fall in the terms of trade and exchange rate leads to an increase in production levels in manufacturing as a whole. In Treasury and DIICCSRTE 2013, growth rates for refinery, steel, alumina and aluminium production were increased by 1 percentage point in each year over the period 2013 to 2020 to take account of the projected production increase as a result of depreciation in terms of trade and the exchange rate over the projections period.

The projections in the metal production subsector are mainly based on BREE’s Resources and Energy Quarterly March 2014 in the short term, which incorporate information on processing facilities opening or closing. The long-term projection is based on the adjusted Climate Change Mitigation Scenarios report production growth rates.

In the short term, projections of mineral product manufacture are based on IBISWorld forecasts, and public company statements regarding the opening and closure of facilities. Longer-term projections are based on the adjusted Climate Change Mitigation Scenarios report growth rates, except for lime production which is based on the Department’s


assessment.

Projections of chemical industry production are based on capacity expansions included in BREE’s resources and energy major projects list (see Appendix B) and public company statements (BREE 2014b).

The projection of emissions from the product uses as substitutes for ozone depleting substances has been revised in full since the 2013 Projections, and is based on the methodology for estimating these emissions outlined in the National Inventory Report 2012 (DoE 2014).The total amount of gas installed in equipment was estimated, and converted into annual emissions from gas leaks, accounting for the stock and characteristics of different equipment types. A similar process with a separate model was used to calculate emissions from other product manufacture and use.

Company statements and research by BREE and IBISWorld informed the facility specific information that underpins these projections. Tables 18 and 19 list the facilities assumed to commence, expand or close in the baseline projection between 2013–14 and 2034–35.

Table 18 New facilities and expansions assumed to commence in the baseline projection

Company and location Facility type

Simcoa, Kemerton Silicon

Incitec Pivot, Moranbah Ammonia, nitric acid

Incitec Pivot, Port Hedland Ammonia, nitric acid

CSBP Wesfarmers, Kwinana Nitric acid

Yara Pilbara Nitrates, Burrup Peninsula Nitric acid

Cockburn Cement, Munster Lime


Table 19 Facilities assumed to close in the baseline projection

Company and location Facility type

Alcoa, Point Henry Aluminium

Glencore Xstrata, Townsville Copper

Adelaide Brighton, Munster Clinker

Boral, Maldon Clinker

Boral, Waurn Ponds Clinker

For all facilities except nitric acid facilities, the emissions intensity of production was assumed to remain constant throughout the projections. The emissions intensities were based on the National Inventory Report 2012 (DoE 2014). For nitric acid production, the adoption of nitrous oxide abatement technology is assumed to reduce the emissions intensity of production by up to 92 per cent relative to 2009–10 (Wesfarmers 2014, Orica 2013).

Projected emissions from product uses as substitutes for ozone depleting substances assume equipment leakage rates remain constant, at the same rates as published in the National Inventory Report 2012 (DoE 2014). Equipment stocks using HFCs are assumed to increase in proportion to HFCs imports.


Appendix C References

Adelaide Brighton 2014, Adelaide Brighton Appendix 4D half year report June 2014, Sydney, NSW.

Adelaide Brighton 2015, Adelaide Brighton Annual Report 2014, Sydney, NSW.

AEMO 2014, National Electricity Forecasting Report, Australian Energy Market Operator, June 2014, Melbourne, Vic.

Boral 2012, Boral plans suspension of clinker production at its Waurn Ponds cement plant in Victoria, media release 6 December 2012, Sydney, NSW.

Boral 2014, Boral to cease clinker manufacturing at Maldon cement works, media release 19 June 2014, Sydney, NSW.

BREE 2014a, Resources and Energy Quarterly March Quarter 2014, Bureau of Resources and Energy Economics, Canberra, ACT.

BREE 2014b, Resources and Energy Major Projects April 2014, Bureau of Resources and Energy Economics, Canberra, ACT.

Cockburn Cement 2014, Cockburn Gazette Responses, media release 6 March 2014, Munster, WA.

DoE 2013, Australia’s Abatement Task and 2013 Emissions Projections, Department of the Environment, Canberra, ACT.

DoE 2014, Australian National Greenhouse Accounts: National Inventory Report 2012, Department of the Environment, Canberra, ACT.

DoE 2015, Australian National Greenhouse Accounts: Quarterly Update of Australia’s National Greenhouse Gas Inventory September Quarter 2014, Department of the Environment, Canberra, ACT.

Department of the Treasury and Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education (DIICCSRTE) 2013, Climate Change Mitigation Scenarios: Modelling report provided to the Climate Change Authority in support of its Caps and Targets Review, Commonwealth of Australia, Canberra, ACT.

IBISWorld 2014, Cement and Lime Manufacturing in Australia October 2014, Melbourne, Vic.

Incitec Pivot 2013, Incitec Pivot Annual Report 2013, Melbourne, Vic.

MEO Australia 2014, Tassie Shoal Projects – Value Realisation Initiative, media release 7 August 2014, Melbourne, Vic.

Orica 2013, Orica Annual Report 2013, Melbourne, Vic.

Simcoa 2014, Annual Compliance Assessment Report, November 2014, Wellesley, WA.

Wesfarmers 2014, Wesfarmers Annual Report 2014, Perth, WA.


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