ESG Impact: What you need to know - July 2025
In this month’s ESG Impact, we explore opportunities to reduce waste in the construction industry, progress for Orica’s Hunter Valley Hydrogen Hub, potential for an Australian low-carbon liquid fuel industry, new electrification policies in NSW and Victoria, and more.
INDUSTRY
New report identifies value in building waste
According to a new report, Australia’s Waste[d] Opportunity, Australia looks set to waste up to AUD 64 billion in construction materials over the next five years if there is no transformation of building and design processes.
The report, from circular economy consultancy Coreo, in partnership with the Green Building Council of Australia (GBCA) and funded by the Clean Energy Finance Corporation (CEFC) and the Bradfield Development Authority, reveals that the average building project discards 141kg of material per square metre. Concrete, masonry and tiles account for the largest volume of discarded material.
The report calls for change in how we define ‘waste’, with GBCA Chief Impact Officer Jorge Chapa noting that materials wasted on construction sites represent more than just environmental loss, “they’re lost economic value, lost emissions reductions, and lost opportunities to do better”.
Along with setting Australia’s first national benchmarks for construction and fitout waste, the report aims to support the transition to smarter materials use, with recommendations such as mandatory waste reporting requirements for all Green Star building projects from 2027, and similar requirements for Green Star fitouts. It also includes guidance for improving design, procurement and recovery across the building lifecycle.
Why does it matter?
The Federal Government’s bid to build 1.2 million new homes by 2029 presents opportunities to rethink how we design, construct and recover resources across the property sector. Australia’s construction industry currently generates 29 million tonnes of wasted material annually. This is almost 40 per cent of the nation’s total volume of waste and more than any other sector.
The ‘Australia’s Waste[d] Opportunity’ report shows new building construction, including commercial and mixed use, generates an average of 2,079 tonnes of wasted materials per site, which is equivalent to the weight of 3.6 Airbus A380 planes.
Australia has set an ambition to double the circularity of the economy by 2035, which is currently estimated by the CSIRO to be 4.6%. This may be achieved by reducing the material footprint, lifting materials productivity and increasing the percentage of resources safely recovered.
By working together across the entire value chain, stakeholders can build circularity into the design, planning, construction, operation and decommission phases. It’s an opportunity too important to waste.
Progress for Orica hydrogen project
Chemicals giant Orica has been conditionally awarded AUD 432 million from ARENA Hydrogen Headstart program to support the operation of its Hunter Valley Hydrogen Hub (HVHH).
Delivered as production credits once the project is commercially operational, the funding is subject to a final investment decision and other pre-conditions being met.
HVHH’s first phase aims to produce approximately 12 tonnes of renewable hydrogen per day via a 50 MW electrolyser at Orica’s Kooragang Island ammonia production facilities near Newcastle.
The electrolysis process will use renewable electricity to split recycled water into hydrogen and oxygen. Orica has stated that this will reduce its daily natural gas demand for chemical feedstock by about 7.5 per cent.
At full production, the estimated annual emissions reduction would be equivalent to removing 26,500 cars from the road, and the project is expected to create close to 160 construction jobs and up to 10 ongoing roles.
Why does it matter?
While hydrogen is widely recognised as a key enabler of industrial decarbonisation, commercial development has been slow due to challenges including high costs, and infrastructure and skills gaps. Support from ARENA provides the financial certainty required to address some of these barriers.
Ammonia and ammonium nitrate are essential to sectors such as resources, agriculture, health and food, but their carbon-intensive manufacturing process has been hard to abate. The renewable hydrogen produced at the HVHH aims to gradually replace natural gas feedstock in the manufacturing process.
Orica’s Kooragang Island plant is also strategically important – the only ammonia facility on Australia’s east coast with direct port access. Its location may enhance the potential for green hydrogen export and broader industrial use.
Opportunities for low-carbon liquid fuel
A new report from Clean Energy Finance Corporation (CEFC) and Deloitte has identified that Australia may have potential to build a booming low-carbon liquid fuel (LCLF) industry which could have an AUD 36 billion market opportunity by 2050.
LCLFs are renewable substitutes for conventional fossil-based liquid fuels, with common forms including sustainable aviation fuel, renewable diesel and synthetic e-fuels.
The report, Refined Ambitions: Exploring Australia’s Low Carbon Fuel Potential, shows that in addition to economic opportunity, the potential LCLF industry could lead to 230 million tonnes of cumulative CO2-e abatement over the next 25 years, which is equivalent to almost half of Australia’s annual emissions.
With 80 per cent of Australia’s liquid fuels currently imported, supplies are vulnerable to global disruption. The report identifies the potential industry’s additional benefits, including fuel security, industry diversification and Australia’s export potential.
Why does it matter?
Australia consumes more than 56 billion litres of liquid fossil fuels each year, which generates approximately 32 per cent of national emissions.
The report finds LCLFs are crucial to Australia’s net-zero future, particularly for sectors such as aviation, mining, heavy freight and defence, where electrification may be challenging due to lack of grid access in remote areas, limited battery range, the slow turnover of large capital assets and the payload efficiency of aircraft.
The report notes that the abundant LCLF feedstock resources from Australia’s agricultural sector present opportunities to create new revenue streams for local farmers. The country also has a globally competitive advantage as a net exporter of suitable raw feedstocks, such as canola, sawmill residues, bagasse, sorghum, tallow, used cooking oil and other oil seeds.
Australia’s LCLF industry is also set for acceleration with a recent ESG Impact news item highlighting the Federal Government’s allocation of AUD 250 million from the AUD 1.7 billion Future Made in Australia Innovation Fund to boost domestic growth of LCLFs.
POLICY
States target electrification
Fresh priorities for electrification are on government agendas in NSW and Victoria. City of Sydney has proposed planning rules that require new residential developments to have electric cooktops, ovens and space heating from 1 January 2026.
Broader proposals open for consultation aim to extend gas bans to outdoor appliances, as well as to new commercial builds over 1,000 square metres and hotels with more than 100 rooms. The NSW councils of Hornsby Shire, Lane Cove, City of Newcastle, Waverley, City of Parramatta and City of Canada Bay have also banned gas appliances in new builds.
Meanwhile, the Victorian State Government has announced plans to phase out gas hot water systems, requiring electric systems in new builds from March 2027 and replacing existing gas systems when they reach the end of their life.
The reforms will apply to most commercial buildings from 2027, while rental properties will also be subject to higher energy efficiency standards.
Why does it matter?
The significance of these policies is twofold. While electrification is central to decarbonising the built environment, banning gas from new builds also helps to redirect the States’ gas resources to meet industrial demand.
The Climate Change Authority’s Built Environment Sector Pathway Review recognises significant decarbonisation opportunities in electrification and energy efficiency, including by replacing gas appliances with high-efficiency and grid-integrated electric alternatives.
In announcing its new policy, City of Sydney noted that all-electric buildings are “healthier, more climate-resilient and cheaper to run. They reduce long-term energy costs, improve indoor air quality and make it easier to use renewable energy as the grid continues to decarbonise”.
More guidance for climate-related transition plan disclosure
The International Financial Reporting Standards (IFRS) Foundation has released guidance on climate-related transition plan disclosures, supporting the adoption and implementation of the IFRS Sustainability Disclosure Standards.
The document builds on disclosure-specific material developed by the Transition Plan Taskforce (TPT), with the IFRS Foundation taking responsibility for these resources in 2024. The guidance is designed to help entities disclose high-quality information about their climate-related transition when applying IFRS S2: Climate-related Disclosures. It covers disclosures about any ‘transition plan’ that an entity may have, including both mitigation and adaptation efforts.
Why does it matter?
While entities are not required to have a transition plan under IFRS S2, they are required to provide material information about the sustainability-related risks and opportunities that could affect their prospects, including details about their climate-related transition.
The new guidance document aims to address the fragmentation of current disclosures about transition plans and provide jurisdictions with a starting point for applying IFRS S2 when making related disclosures. It is most useful for entities that are currently applying IFRS S2, that have a strategic climate goal and that have, or are developing, a transition plan.
Relevant Australian entities will also receive more disclosure guidance from Treasury as part of the Federal Government’s Sustainable Finance Roadmap, released in June 2024. Best practice guidance for the disclosure of corporate transition plans will be developed and published by Treasury by the end of this year.
Australians embrace battery program
Australian households and businesses have been quick to take up discount offers under the Federal Government’s Cheaper Home Batteries Program.
Within weeks of its launch on 1 July 2025, about 1,000 registrations for new household batteries were made per day and, if the rate of registrations continues for the year, it could deliver close to 250,000 battery systems and 4,500 megawatt hours (MWh) of storage by next June.
Under the battery program, which is being delivered by the Clean Energy Regulator through the existing Small-scale Renewable Energy Scheme, eligible participants receive a discount of close to 30 per cent on the cost of installing small-scale batteries connected to new or existing rooftop solar.
Why does it matter?
While Australia is a world leader in rooftop solar with more than 4 million rooftop solar PV systems installed across the country, high upfront costs have limited battery installation for energy storage, with batteries installed in only one in 40 households.
The Cheap Home Batteries Program may play a role in making batteries more accessible for more Australians. If the enthusiastic uptake continues, the program may help stabilise the grid by firming up renewables during peak demand periods.
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