How can Australia's human rights infrastructure better enable the net zero transition?

Fiona David and Dr David Tickler

A Parliamentary Inquiry is currently considering if Australia’s laws are sufficient to protect human rights in Australia. In our view, the short answer is “no”.

While there are many use-cases that could be drawn upon to illustrate this point, in our submission to the Inquiry, we refer to some of the human rights issues embedded in Australia’s transition to a ‘net zero’ economy to illustrate the urgent need for comprehensive, national human rights reform. 

Human rights and supply chains of renewable energy

Australia’s transition to a ‘net zero’ economy is forecast to require huge changes to the way we produce and use energy. Replacing power generation, manufacturing and transport infrastructure with green technologies requires the creation of new supply chains, and rapid expansion of existing ones. While several reports have attempted to project future scenarios for a net zero Australia, including impacts of increasing demand here and overseas on the markets for critical minerals and green materials, the focus has largely been on engineering challenges and economic opportunities rather than social dimensions, including human rights and equity.

The Net Zero Australia report, examining different scenarios for Australia’s transition to net zero, provides useful insights on the materials that will be required to enable the transition. Based on forecast requirements for additional renewable energy infrastructure to 2060, Australia’s energy transition will require an additional 355 gigawatts (GW) of solar PV, 135 GW of wind generation and 111 GW of battery storage. Current levels are 35 GW, 9 GW and ~1 GW, respectively, meaning that this will require rapid increases in our demand for critical minerals and components, the majority of which are currently imported into Australia.

Similarly, replacing the vehicle fleet with battery electric vehicles (BEVs) will increase annual demand for cobalt, lithium and rare earth metals for BEVs by a factor of 30. Taking cobalt as an example, combining forecasts for fixed battery storage and BEVs with mineral intensities from the CSIRO, yields estimates of 10,000 tonnes of cobalt for fixed energy storage, and ~350,000 tonnes for battery electric vehicles, a 30-fold increase above current demand. If current global supply chain relationships are assumed, 70% of this will come from the Democratic Republic of the Congo via battery manufacturers in China.

The forecast increase in installed solar capacity under the Net Zero Australia ‘E+’ (aggressive expansion of renewables) scenario implies a 15-fold increase in the volume of imported solar modules, with China currently the main global producer. While Australia has some potential to onshore production of both the critical minerals and the products they go into – our total reserves of cobalt, for example, are estimated at 1.5 million tonnes – we currently have limited domestic production of either (our current cobalt production is 5- 6,000 tonnes per annum) leaving us dependent on, and vulnerable to, international supply chains.

Existing research points to the many human rights challenges that are deeply embedded in supply chains originating from countries including China and the Democratic Republic of the Congo, on which we currently depend for supply of source minerals and component parts. For example, the Global Slavery Index 2023 notes as follows:

“From 2019 to 2021, the Business and Human Rights Centre tracked almost 200 allegations of human rights abuses related to the mining of cobalt, copper, lithium, manganese, nickel, and zinc — all essential minerals for renewable energy products. Abuses included unpaid wages, underpaid wages, exploitative hiring and firing practices, child labour, and discrimination based on gender, sexuality, race, caste, or religion. Widespread experiences of forced labour also occur in cobalt mining in the Democratic Republic of the Congo (DRC).”

The report also notes:

“Solar panels are within the top five at-risk products for 11 G20 countries: Argentina, Australia, Brazil, France, Germany, India, Japan, Mexico, South Africa, South Korea, and Türkiye."

Solar panels requires polysilicon, a silica-product derived from quartz sand, which is mined and transformed into polysilicon in the Xinjiang Autonomous Region of China. This is an area where State-sponsored human rights abuses have been documented, including by the United Nations. While these claims are rejected by the Government of China, the fact remains that it is impossible for companies to undertake independent assessments of the human rights situation in the region, due to Chinese laws on foreign sanctions.

At present, the Modern Slavery Act requires Australian businesses to report on the efforts they are taking to respond to modern slavery risk in their supply chains. Encouragingly, a recent Inquiry recommended strengthening Australia’s laws on modern slavery, requiring companies to undertake and be held accountable for their due diligence on these issues.

While these recommendations are a step in the right direction, there is a need to go much further and consider what a comprehensive business and human rights law would look like in Australia. This would bring Australia into line with developments throughout Europe.  For consistency with our trading partners, and interoperability with other emerging standards, including in the EU, law reform efforts should be aligned with the UN Guiding Principles on Business and Human Rights, and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct.

Equipping Australia for a just transition

Responding to the human dimensions of the net zero challenges requires a far more comprehensive approach to ensuring protection of human rights than we have in place today.

Giving effect to Australia’s international human rights obligations in law in a Human Rights Act is a critical first, foundational step, on a much longer journey towards achieving a fair and just net zero transition. A strong foundation of human rights will then enable much greater certainty, as decisions are made by governments on all aspects of policy, including the energy transition.

Investors and business need to be enabled to play their part, to embed human rights into the energy transition. Australia needs modern, fit for purpose law regulating the obligations on investors and business with regard to human rights, both in Australia and overseas. This will bring Australia into line with many of our OECD counterparts, including efforts of the European Union, and existing national laws in France, Germany, Norway and the Netherlands, who have either already enacted such laws or are in the process of so doing.

Finally, Australia must provide strong leadership and support internationally, and at home, for efforts to ensure businesses are reporting on human rights risk, as part of 'sustainability' disclosures. The ISSB standards, which will be integrated into Australian guidance for business, are a first step. But to date, these are primarily focused on the readily quantifiable, climate aspects of sustainability. Efforts internationally to build out the content of standards for reporting on the human rights (or 'social') risk to businesses are just emerging.  It is vital that Australia actively participates in ensuring any reporting requirements reflect globally recognised human rights frameworks.

Together, these three steps will help set Australia on a course for a safer, fairer transition to net zero.

Read our full submission here.

References

Bruce et al. (2021) Critical Energy Minerals Roadmap. CSIRO, Australia. https://www.csiro.au/en/work-with-us/services/consultancy-strategic-advice-services/csiro-futures/energy-and-resources/critical-energy-minerals-roadmap

Davis et al. (2023) ‘Modelling Summary Report’, Net Zero Australia, ISBN 978 0 7340 5704 4. https://www.netzeroaustralia.net.au/wp-content/uploads/2023/04/Net-Zero-Australia-final-results-full-results-pack-19-April-23.pdf

Graham (2022) Electric vehicle projections 2022. CSIRO, Australia https://aemo.com.au/-/media/files/stakeholder_consultation/consultations/nem-consultations/2022/2023-inputs-assumptions-and-scenarios-consultation/supporting-materials-for-2023/csiro-2022-electric-vehicles-projections-report.pdf

Kim et al. (2022) ‘The Role of Critical Minerals in Clean Energy Transitions’, World Energy Outlook Special Report, International Energy Agency https://iea.blob.core.windows.net/assets/ffd2a83b-8c30-4e9d-980a-52b6d9a86fdc/TheRoleofCriticalMineralsinCleanEnergyTransitions.pdf

Murphy, L. and Elimä, N. (2021). “In Broad Daylight: Uyghur Forced Labour and Global Solar Supply Chains.” Sheffield, UK: Sheffield Hallam University Helena Kennedy Centre for International Justice. https://www.shu.ac.uk/helena-kennedy-centre-international-justice/research-and-projects/all-projects/in-broad-daylight