Skip to main contentSkip to navigationSkip to navigation
A coal truck passes coal at a BHP mine
BHP chief executive Mike Henry says the world will ‘still need oil and gas to power mobility and everyday modern life on the pathway to decarbonisation’ and the company will benefit in the transition. Photograph: Ian Waldie/Getty Images
BHP chief executive Mike Henry says the world will ‘still need oil and gas to power mobility and everyday modern life on the pathway to decarbonisation’ and the company will benefit in the transition. Photograph: Ian Waldie/Getty Images

BHP announces plan to slash emissions by 30% over next decade but stops short of quitting coal and oil

This article is more than 3 years old

CEO also ties executive pay to miner’s environmental performance in announcement drawing mixed reviews from conservation groups

BHP would benefit from soaring demand for metals if the world decarbonises and heats by less than 1.5C, the mining giant’s chief executive, Mike Henry, has said.

The company on Thursday announced plans for dramatic cuts in emissions from its operations and those of customers, as well as details of how executive pay would be linked to the miner’s environmental performance.

However, the company has stopped short of quitting coal and oil entirely. It plans to continue to mine coking coal, which is used to make steel, as well as oil and gas, although it expects demand for hydrocarbon fuels to decline as transportation moves to electric power.

BHP’s commitments come a year after Henry’s predecessor, Andrew Mackenzie, declared that global heating was indisputable and fighting it would require “the biggest global mobilisation since world war two”.

Henry on Thursday said limiting heating to 1.5C, in line with the Paris agreement, provided the best outcome for BHP of four scenarios tested by the company.

“Of the scenarios we have assessed, those that envision stronger global climate action also deliver greater value for BHP,” he said. “That’s because we are major providers of the commodities that will enable a green transition.”

Under a less-than-1.5C scenario, BHP predicts demand for steel will almost double.

“If we want to keep pace with the development of renewable technologies such as electric vehicles and solar energy, then copper production will have to double over the next 30 years,” Henry said. “And nickel production will have to increase nearly four-fold to power the next generation of battery technology.”

But the world would “still need oil and gas to power mobility and everyday modern life on the pathway to decarbonisation”, the chief executive said.

Mike Henry: ‘We are major providers of the commodities that will enable a green transition.’ Photograph: Melanie Burton/Reuters

As part of a plan to tackle global heating, BHP would slash emissions from its own operations by 30% over the next decade, Henry said. That would be a way station to the company’s previously announced commitment to achieve net-zero emissions from operations by 2050.

He said that would be done on a like-for-like basis, so that BHP got no “free pass” by divesting highly emitting operations, such as the Mount Arthur coal mine in NSW, which is for sale following pressure from investors.

BHP also planned to reduce scope-three emissions – those made by customers – by reducing emissions from steelmaking by 30% by 2030.

Over the same time period, it planned to slash emissions from its shipping by 40% by moving from ships running on highly polluting bunker fuel to ones powered by lower-emission natural gas. It would also link 10% of executive pay to environmental performance.

Henry said the world was “not currently on track” to meet the internationally agreed Paris target of limiting global heating to less than 2C.

“Neither the current aggregate commitments of nations, nor progress against those commitments, is sufficient,” he said. “The world will need to increase action if it is to achieve the ambitions of Paris.”

BHP’s announcement received mixed reviews from environment groups.

The Investor Group on Climate Change chief executive, Emma Herd, said it was “pleasing to see further progress in BHP’s climate response”.

“Importantly, BHP’s analysis shows that large diversified miners can generate significant shareholder value under rapid decarbonisation pathways that are consistent with the Paris agreement goals,” she said.

“We also note the significant work BHP has put into understanding its scope-three emissions, the new medium-term targets across all emissions scopes and the link to executive remuneration. Investors want climate risk analysis to inform core business decisions and look forward to continuing to engage with BHP to ensure continued momentum on this front.”

However, the Australasian Centre for Corporate Responsibility said BHP needed to “go back to the drawing board on its new climate change targets”.

“Despite promising the world, BHP fails to deliver any meaningful outcomes in terms of actual emissions reduction,” the centre’s director of climate and environment, Dan Gocher, said.

“It needs to try harder. BHP should be aiming for a 40-60% reduction in all of its emissions by 2030.

“BHP may have finally given up on thermal coal but it and its industry associations are still betting heavily on gas, which is proven to have the same – if not worse – emissions than coal once fugitive methane emissions are factored in.

“BHP continues to rely on unproven and horribly expensive carbon capture and storage to decarbonise its scope-three emissions, rather than simply leaving fossil fuels in the ground.”

Market Forces, which is run by environmental group Friends of the Earth, said BHP’s announcement “set the bar for its diversified mining competitors”.

“However, setting the bar at 30% below 2020 levels by 2030 is clearly choosing to fall short of the Paris agreement’s ultimate goal of holding global warming to less than 1.5C,” the Market Forces executive director, Julien Vincent, said.

“On scope-three emissions, BHP has been generous with the hope but stingy with its delivery. The prospect of reducing emissions from steel production by 30% over the next decade is a tantalising start, but doesn’t count for much if all BHP is going to do is work with customers to find pathways for reducing emissions.”

Explore more on these topics

Most viewed

Most viewed