Gladstone, located in Central Queensland, is a key industrial hub producing essential heavy manufacturing goods such as aluminium, cement and chemicals.

While vital to Australia’s economic development, Gladstone’s industries are currently emissions-intensive.

Most of these emissions are from the production of industrial heat, as almost 80 per cent of energy used to generate heat comes from burning coal and gas. 

Industrial decarbonisation is critical to ensuring Gladstone’s long-term economic resilience as the world transitions to a net zero economy under the goals of the Paris Agreement.

With a strong concentration of emissions-intensive industries, Gladstone faces both significant risks and major opportunities in the shift to low-carbon manufacturing.

Accelerating coordinated decarbonisation efforts in the region will be essential for Australia to meet its climate commitments while also securing regional prosperity. 

This report focuses on two key opportunities for industrial decarbonisation in Gladstone: replacing fossil fuels used for industrial heat with low-carbon alternatives and complementing this shift with industrial energy demand management.

This offers a significant opportunity to reduce emissions while enhancing grid stability and securing Gladstone’s prosperity in a decarbonising global economy. 

Our modelling shows that Gladstone’s industrial emissions could be cut by almost two-thirds by 2040 with a switch to low-carbon heat.

More ambitious renewable energy plans could see an even greater reduction of close to 80 per cent. 

Building on Climateworks Centre’s previous work, this report presents a decarbonisation pathway for Gladstone’s industrial heat.

Key technologies include electrified heat, electrothermal energy storage, low-carbon fuels such as green hydrogen, biomass and biomethane, and carbon capture and utilisation (CCU).

These technologies address both low- and high-temperature industrial processes.

Our modelling shows that by 2040, decarbonising Gladstone’s industrial heat could result in a sevenfold increase in industrial electricity consumption to 36 terawatt hours (TWh) per year, compared to 2022.

Green hydrogen will also be essential for long-term decarbonisation of high-temperature heat, with an annual demand of 296 kilotonnes (kt) per year by 2040 for Gladstone’s existing industries.

Biomass and biomethane can also play a short-term transitional role as easily substituted ‘drop-in’ alternatives to fossil fuels, particularly if Gladstone’s access to large-scale renewable electricity or green hydrogen production is delayed. 

The report highlights the significant role industrial demand response – a consumer-led adjustment of electricity use – could play in the transition.

Flexible demand could help increase grid reliability and avoid costly infrastructure overbuild by enabling a more effective use of renewable energy for electrification. 

Electrifying Gladstone’s industries in flexible ways could more than double Australia’s ability to stabilise the energy grid – providing up to 4.4 gigawatt (GW) of demand response capacity by 2040.

Energy demand management for industrial heat could not only reduce demand at current peak periods by around 2 GW but also save Gladstone’s industries $3 million a day in operating costs. 

Critically, using electrothermal storage technologies in Gladstone’s alumina sector could enable industrial flexibility at scale without compromising productivity, and represents the most cost-effective route for electrifying low-temperature heat. 

Our analysis shows electrothermal storage could fundamentally alter Queensland’s energy landscape and reduce electricity costs, not just for industry but for consumers across the grid.

Adding storage to Gladstone’s industries could cut wholesale electricity prices by as much as 60 per cent, lowering costs for industry and consumers alike. 

While the necessary technologies already exist, they face deployment barriers, including high upfront and operational costs for decarbonisation assets, limited supply of low-carbon fuels and renewable electricity, and energy planning that currently underestimates the scale and pace of industry’s decarbonisation ambition. 

To examine how other markets around the world have overcome these challenges, this report presents a series of case studies of best practices, including: 

• financing and de-risking strategies that are used to support industrial decarbonisation and the manufacturing of low-carbon goods 
• demand response programs that are used to encourage increased flexibility and the provision of demand response capacity. 

While this report is focused on Gladstone, the industrial technologies, challenges and opportunities are not unique to Gladstone.

The report sets out targeted recommendations to enable the net zero transition in Gladstone, as well as other Australian industrial regions like it.

These actions could accelerate heavy industry’s decarbonisation and the transformation of Australia’s energy system, while also unlocking significant benefits for consumers across the grid. 

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