Transurban FY26 Corporate Report Section C: Strategy
Key assumptions
Summary output
Modelling of emissions offset liability (carbon pricing) • NGFS scenario-based shadow carbon prices are applied to emissions projected from the Group's historical emissions profile and do not assume future decarbonisation actions or emissions reductions by the Group. • Emissions are calculated on an operational control basis using country- specific emissions factors derived from publicly available data, with adjustments made where necessary, and are weighted to reflect the Group's regional asset mix. Scope 1: • Carbon costs are assumed to be borne directly by the Group and are not passed through to customers. Scope 2: • Electricity cost impacts are estimated using average supplier carbon cost pass-through assumptions and do not explicitly capture electricity market fluctuations, regional pricing differences, contractual arrangements, or regional variations in electricity prices and emissions intensity. • Location-based accounting is used for Scope 2 emissions and therefore does not reflect the effect of the Group's renewable electricity procurement arrangements, via PPAs, which are recognised under market-based accounting. • Output ranges reflect grid emissions intensities associated with currently announced government targets and scenario-aligned future electricity generation pathways. Assumptions may be updated over time to reflect changes in government policy, market conditions and transition pathways. Scope 3 • Cost impacts are estimated using average supplier carbon cost pass- through assumptions applied to Scope 3 Category 1 emissions. Actual pass-through rates may vary by sector, market structure and supplier characteristics.
Weighted average annual cost ($ millions) Delayed Transition Scenario Net Zero 2050 Scenario
Medium-term (1-4 years) Scope 1
- -
<1-1
12-27
Scope 2 (Electricity) (Location-based) Scope 3, Category 1 (Purchased goods and services)
-
6-16
- -
-
Scope 3, Category 3 (Fuel)
Total
18-44
Long-term (4+ years capped at FY35) Scope 1 Scope 2 (Electricity) (Location-based) Scope 3, Category 1 (Purchased goods and services)
<1-1
2-3
2-7
26-32
1-13
20-36
-
<1-1
Scope 3, Category 3 (Fuel)
Total
3-21 48-72 Scope 3, Category 2 (Capital goods) expressed as % of total major construction project costs 1
Medium-term (1-4 years)
-
1-2% 2-4%
Long-term (4+ years capped at FY35)
<1%
Key judgements and uncertainties Scenario analysis of carbon pricing
Estimating the financial effects of climate-related transition risks involves significant judgement and inherent uncertainty, reflecting the absence of a single established methodology to translate transition pathways into financial outcomes. The analysis applies multiple scenarios and modelling approaches, with results sensitive to key assumptions and methodological choices, such as assumptions relating to grid decarbonisation. Management judgement has been applied in selecting scenarios, emissions scope and modelling approach, including the use of scenario-aligned carbon prices as a proxy for transition risk. These are applied as shadow prices representing the implied cost of decarbonisation pathways, rather than current or expected regulatory carbon pricing mechanisms. The analysis is subject to a range of assumptions and limitations. Emissions projections are primarily based on historical intensity trends and do not reflect potential changes in utilisation, efficiency, technology adoption or future asset development. Cost estimates are based on assumed carbon cost pass-through and representative emissions baselines, and do not fully capture market dynamics, price volatility, regional variation or supplier-specific emissions profiles. Scope 2 estimates are based on location-based emissions factors and do not reflect renewable electricity arrangements and associated market based Scope 2 emissions. Accordingly, results are indicative of potential economic exposure to climate-related transition risks, rather than forecasts of realised carbon costs or liabilities. ¢
Findings from academic and market research, suggests that climate-related transition risks have historically had modest and context-dependent impacts on borrowing costs and are secondary to traditional credit risk drivers. The potential effects of transition risks on the Group’s cost of debt were assessed using scenario analysis, informed by relevant economic research, market studies, and external consultant analysis. The assessment considered the potential effect of different transition pathways on borrowing spreads across short-, medium- and long-term time horizons. Uncertainty in the underlying assumptions increases over longer forecasting horizons, particularly beyond 4 years.
Cost of debt The Group has identified climate-related transition risk as a factor that may, under certain scenarios, influence lender and investor risk perceptions. Transition factors may affect the Group's access to and cost of capital through changes in investor and lender perceptions of climate-related risks. In particular, rapid or disorderly policy changes, shifts in market expectations, or changes in transition pathways could affect borrowing spreads applied to new or refinanced debt, or result in more restrictive financing conditions.
1 Results are expressed as a percentage, as the absolute impact depends on the scale, timing and cost of future construction projects, which are subject to significant uncertainty and cannot be forecast reliably
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