Chris Bowen says he has made it ‘crystal clear’ to BHP and other big polluters they must cut emissions onsite | BHP
Australia’s climate change minister Chris Bowen said it was “clear” he expected industrial polluters including BHP to cut their on-site emissions after leaked documents revealed the world’s biggest miner was backtracking on climate action.
An exclusive investigation based on documents leaked by the Guardian and ABC show BHP has canceled a project to significantly cut global emissions, delayed major renewable energy projects in the Pilbara and used war-gaming options to push the electrification of polluting diesel truck and train fleets into the next two decades.
This despite internal memos as recently as 2023 stating: “Urgent decarbonisation in line with BHP’s public commitments effectively supports[WesternAustralianironoredivision’slicencetooperatesustainandgrow”[BatıAvustralyademircevheribölümününişletmesürdürmevebüyümelisansınıetkilibirşekildedesteklemektedir”[theWesternAustralianironoredivision’slicencetooperatesustainandgrow”
Experts and analysts say the slowdown in BHP’s decarbonization drive demonstrates the failure of key climate policy, the safeguard mechanism and the impact of the federal government’s diesel tax break on major miners, including BHP.
Bowen said on Tuesday that BHP was still subject to the safeguard mechanism and had “clearly” expressed its expectations to those involved in the spread, both publicly and privately.
He said the safeguard measure “provides some flexibility” because the nearly 200 major industrial polluters to which it applies face “different challenges and opportunities” to reduce emissions.
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What is the protection mechanism?
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Australia’s safeguard mechanism requires the country’s largest polluting industrial facilities to reduce their greenhouse gas emissions intensity each year.
This applies to approximately 200 facilities that emit the equivalent of more than 100,000 tonnes of carbon dioxide or other greenhouse gases each year. These include mines, gas plants, processing plants, smelters and manufacturers.
Facility owners can make deductions on-site or by purchasing carbon offsets.
This policy was introduced by the right-wing Coalition government in 2016 with the promise that it would stop the increase in industrial emissions. However, it was not implemented as promised and the total pollution at the sites continued to increase.
The Albanian Labor Party government renewed the plan in 2023, setting new emission limits for each facility, known as baseline values.
According to the changes, facilities must reduce their emission intensity (the amount of pollution per unit production) by up to 4.9% per year. Companies can choose to make direct deductions or purchase carbon offsets to meet their reduction obligations.
They have access to two different types of carbon credits to offset pollution. They can buy Australian carbon credit units created through government-approved projects that are said to draw CO2 from the atmosphere or prevent its release.
Or they can use “conservation credits,” which are created when a facility emits less than the conservation baseline. The vehicle owner receives a conservation credit for every tonne of CO2 the vehicle drops below the baseline level. These in-program credits can be sold to other polluting facilities that emit more emissions than the baseline and need offsets.
Polluting new facilities, including gas fields and coal mines, are allowed to open and enter the program based on “international best practice”. For new gas fields, this means offsetting all CO2 pollution and becoming net zero.
A deal between Labor and the Greens introduced an absolute “cap” for total emissions under the scheme to fall over time. The pace of mitigation was not stipulated in the agreement and was determined by the minister of climate change.
“But I would like to see all major emitters reduce on-site emissions,” he said. “That goes for BHP and everyone else.”
Earlier, Resources Minister Madeleine King said she was not concerned about the comments and that BHP was “doing its job”.
“BHP is committed to reducing emissions,” he told ABC radio. “They will make their business decisions like everyone else. BHP and other miners are subject to the safeguard mechanism.”
Independent MP Kate Chaney said safeguards should be tightened so that companies have stronger incentives to reduce emissions on-site, rather than paying for an unlimited number of controversial carbon offsets.
“It is important that companies have flexibility to reduce emissions, but it is the government’s duty to promote ambitious decarbonisation for a safe climate and a stable economy,” he said.
Chaney said the government should also reform the diesel fuel tax credit plan, which gives some industries a full rebate on the 52.6 ca liters on fuel. Chaney said the rebate should be limited to “the largest and most profitable companies like BHP” but left for farmers and small businesses.
He said the current version, in which BHP receives more than $600 million a year in fuel tax credits, means “we’re hitting the brakes and the accelerator at the same time” because the incentive to keep burning diesel is greater than the incentive to reduce emissions by switching to renewable energy and electric trucks and trains.
“Big resource companies like BHP produce a large portion of Australia’s emissions,” he said. “Without strong decarbonisation of these companies, Australia will not be able to meet its emissions targets and international commitments.
“But companies will always operate within the established rules. This indicates weakness in government policy rather than business failure.”
BHP said in a statement that it had made significant progress on emissions reductions, reducing emissions by 36% compared to 2020 levels. It has a medium-term target of 30% by 2030 and a net zero target by 2050. In its analysis, BHP states that large publicly traded companies are among the best performers in emissions reductions and have switched 70% of their energy use to renewable energy.
The company attributes its slow progress in operational decarbonization to the unavailability of battery-electric trucks. He says he’s been testing the technology, but it’s not yet ready for wide-scale deployment.
Fortescue, one of its main rivals, says the technology is ready and has ordered hundreds of battery-electric trucks. It is expected to be able to operate without any fossil fuels for 24-hour periods by 2027, although it has been blamed for a recent spike in emissions.
