Global Mining Giant Announces $400 Million Program To Cut Emissions
This week, Australian mining giant BHP announced a US$400 million Climate Investment Program intended to cut emissions from its own operations as well as those emissions generated by its customers.
BHP CEO Andrew Mackenzie gave a speech on Tuesday at a Financial Times’ Climate for Change speech held in London, in which he announced his company’s planned $400 million Climate Investment Program. The plan is to develop technologies which will reduce emissions from the company’s own operations as well as emissions through the use of its mined resources — a commitment to reduce Scope 1, 2, and 3 emissions. As a result, BHP will become the world’s first mining company to set goals for its customers as well as for its own operations.
“Over the next five years this program will scale up low carbon technologies critical to the decarbonisation of our operations,” said Mackenzie. “It will drive investment in nature-based solutions and encourage further collective action on scope three emissions.”
“Commercial success of these investments will breed ambition and create more innovative partnerships to respond collectively to the climate challenge.”
“We must take a product stewardship role for emissions across our value chain and commit to work with shippers, processors and users of our products to reduce scope three emissions,” Mr Mackenzie added.
BHP will also establish a new medium-term, science-based target for its Scope 1 and 2 emissions in line with the Paris Agreement, building on the company’s existing short-term goal to cap 2022 emissions at 2017 levels, and a long-term goal of net-zero emissions by 2050. BHP will also develop a new climate portfolio analysis report in 2020 — following on from the company’s 2015 two-degree scenario analysis — which will evaluate the potential impacts of a broader range of scenarios and a transition to a “well below” two-degree world.
On top of that, BHP will now move to link executive remuneration to emissions performance.
“For many years performance against emissions targets has been considered in BHP’s executive remuneration plans,” Mackenzie explained. “From next financial year we will clarify and strengthen this link and further reinforce the strategic importance of action to reduce emissions.”
BHP will look to a range of technologies to help them achieve their newly-enshrined and long-term goals, including “Renewables, nuclear, hydrogen, long-term storage of electricity, coal and gas with carbon capture and storage (CCS), negative emissions technologies like re-forestation and biomass with CCS, and other approaches will all contribute to lower carbon outcomes.” Mackenzie explained that “there is no one simple ‘silver bullet'” for achieving the necessary ambition, explaining that “the global response does not yet match the severity of the threat. In part because of the outright complexity of the problem.
“So we must tailor our response to address this complexity and start with an acknowledgement that solutions will take on a range of forms.”
BHP’s commitment has been praised for their continued ability to be a “positive player” on the global stage.
“As CEO of BHP, Andrew Mackenzie has acknowledged that the world’s dependence on fossil fuels carries existential risks and that the evidence of global warming is indisputable,” said Tim Buckley, Director of Energy Finance Studies at the Institute for Energy Economics & Financial Analysis (IEEFA) in an email to journalists. “A clear message, as is the acknowledgement that BHP must take public responsibility for whole-of-value chain emissions – scope 1, 2, and 3. IEEFA sees BHP as finally stepping up to take a leadership role in this critical, global debate to transition to well below 2 degrees. Now we need to see BHP’s actions match its important new rhetoric.”
“BHP is again proving to be a positive player showing agility when the going gets tough,” Buckley said in a separate article published by the IEEFA: “they did it twenty years ago exiting steel in Australia, they did it more recently exiting shale in the US (albeit not before destroying $20bn of shareholder wealth), and now the company appears to be limiting its losses in the thermal coal sector.”
“While BHP lags that of Rio Tinto’s progressive thermal coal exit over 2014-2018, its latest move highlights the tough decision-making required of big players and the declining legitimacy of thermal coal,” Buckley added.
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