World's two mega-miners at odds over "climate extinction"

Published by MAC on 2019-07-26
Source: The Australian, Australian Associated Press

BHP warns of ‘existential’ climate risk

Nick Evans, Resource Writer

The Australian

24 July 2019

The global dependence on fossil fuels poses a potentially “existential”
risk to the planet, according to BHP chief executive Andrew Mackenzie, and
climate change is escalating towards crisis point.

In a landmark speech on climate change in London last night, Mr Mackenzie
said the mining major would extend its carbon reduction efforts and push
its customers to reduce their own emissions, and would tie its executive
pay packets more closely to their success in reducing the release of
greenhouse gases.

Mr Mackenzie did not promise BHP would exit the coal industry, as its
chief rival Rio Tinto has done, but hinted at a possible move on its coal
portfolio next year when BHP releases its next “climate portfolio
analysis”, examining the impact of global warming on the outlook for its
products.

Instead, Mr Mackenzie called for a nuanced approach to dealing with the
problem of accelerating global warming, saying there was no “simple
bullet”. BHP last year generated 40 per cent of its underlying earnings
from oil and coal.

“Renewables, nuclear, hydrogen, long-term storage of electricity, coal and
gas with carbon capture and storage (CCS), negative emissions technologies
like reforestation and biomass with CCS, and other approaches will all
contribute to lower carbon outcomes,” he said.

“Electric vehicles, for example, are considered to be lower carbon than
internal combustion engines. But if the power is generated from fossil
fuels the emissions are just moved up the chain.

“There are similar trade-offs associated with renewables. While renewables
are powerful levers for decarbonisation they compete for land which could
be used for agriculture and urbanisation, or for conservation and leisure.”

But the BHP boss ramped up the company’s rhetoric on the need for action
on climate change, saying that while coal and fossil fuels had delivered
enormous economic benefits across the globe, and still promised to do so
in developing economies, their use came with consequences.

“We must also face the challenges that come with these benefits, because
the world’s dependence on fossil fuels carries risks with it that could be
existential,” he said. “Previous events when CO2 was added to the
atmosphere more slowly, and sometimes in similar amounts, show us what may
happen if we do not act. These events coincided with mass extinctions and
major rises in sea level. And they also suggest that future heating will
more likely be towards the upper end of forecasts.”

Mr Mackenzie reiterated BHP’s long-term position that the evidence for
human-caused global warming is “indisputable”.

“The planet will survive. Many species may not,” he said.

“We see this period as an escalation towards a crisis. However, the global
response does not yet match the severity of the threat.”

The BHP boss announced the company will give ground to activists who have
been pushing mining majors to monitor and try to reduce so-called “scope
3” emissions — those from downstream manufacturers, such as steel mills,
that use the iron ore and other commodities that BHP mines.

The move will mark a major departure from BHP’s peers, with Rio Tinto
having fiercely resisted pressure to set targets for carbon emissions from
buyers of its products.

Rio chairman Simon Thompson told shareholders at its annual meeting
earlier this year that the scope 3 push was “unworkable”, saying Rio could
have little control of how its customers ran their businesses.

But Mr Mackenzie said BHP had a responsibility to do more than merely
reduce its own carbon footprint.

“These emissions are generated as customers transport, transform and use
our products to serve the needs of billions of people, and they are almost
40 times higher than the emissions from our own operations,” he said.

“We will push for efficient use of all our products as part of our overall
decarbonisation strategy and plans. For that we must take a product
stewardship role for all emissions across our value chain. And commit to
work with the shippers, processors and users of our products to reduce
scope 3 emissions,” he said.

“Those who enjoy the benefits of our products should be able to do so with
less and less impact. To measure our stewardship of BHP’s products in 2020
we will also set public goals to address scope 3 emissions.”

Mr Mackenzie did not detail how initiatives to reduce scope 3, and BHP’s
own emissions would factor into executive pay.

Reducing BHP’s own carbon emissions is already a part of the executive pay
structure, factored in to key “non-financial” performance indicators
considered by its remuneration panels, along with safety figures and
“social investment” initiatives. But the goals by which executives are
measured are not outlined, and BHP does not define the weighting of the
various components.

BHP is not due to release a new remuneration policy until 2021, and Mr
Mackenzie left the details of the carbon component of that package for a
later date, promising only that it would have a higher weighting than
current pay scale and the company would be more transparent about how it
measures the outcomes.

BHP shares closed up 24c at $41.58 yesterday.

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BHP boss announces $US400m plan to combat 'indisputable' climate crisis

The mining giant’s chief executive Andrew Mackenzie endorses drastic action to tackle global warming.

Australian Associated Press

23 July 2019

The chief executive of the world’s largest mining company has endorsed drastic action to combat global warming, which he calls “indisputable”, and an emerging crisis.

“The planet will survive. Many species may not,” the BHP chief executive officer, Andrew Mackenzie, told a business breakfast in London on Tuesday. “This is a confronting conclusion but as a veteran geologist once said, ‘you can’t argue with a rock’.”

Mackenzie endorsed carbon pricing but said it was not enough to combat the looming threat of mass extinctions and major sea rises.
BHP reveals five mine dams at 'extreme' risk of causing damage and loss of life
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He announced BHP was spending $US400m ($A570m) to create a climate investment program to reduce emissions from its own operations as well as those generated from its resources.

BHP has been working to reduce its emissions since the 1990s but still directly produced 16.5m tonnes of carbon dioxide-equivalent emissions in the 2017/18 fiscal year, mostly from energy and diesel use at its operations.

That’s the equivalent to the greenhouse gas emissions from 3.5m cars or 4.2 coal-fired power stations for a year, according to a calculator on the US Environmental Protection Agency’s website.

But when one adds to the equation customers’ use of BHP’s products – most notably the processing of iron ore and the burning of coal and crude oil – BHP’s indirect emissions dwarfed that, totalling 596.4m tonnes of carbon dioxide for the fiscal year.

That’s equivalent of the emissions produced in a year by 126m cars or 153 coal-fired power plants, according to the EPA calculator.

“Use of emissions-intensive products from the resource industry have contributed significantly to global warming,” Mackenzie said, while noting that BHP’s emissions in 2017 were less than those in 2006.

BHP has a short-term goal to cap 2022 emissions at 2017 levels, and a long-term goal of achieving net-zero emissions by mid-century.

It is also strengthening the link between emissions performance and executive renumeration from 2021, and has invested $6m in Carbon Engineering Limited, a Canadian company focused on developing ways to capture carbon dioxide from the atmosphere.

Mackenzie said that “like most scientists” he believes that global warming will tend to the upper end of forecasts, while

conceding there was a chance it would not. But he said prudent risk management meant BHP was planning to protect against the downside.

Global warming required a “coordinated global response” and no single solution could combat it, Mackenzie said . “While we endorse a carbon price this is not enough in isolation.”

Electric vehicles, renewables, reforestation and replacing single-use plastics all have trade-offs, such as simply moving fossil fuel emissions up the chain if energy production is not also decarbonised.

“An ‘all of the above’ solution barely gets us there,” Mackenzie said. “All emitters, resource companies, customers, consumers must play their part together with governments to meet the climate challenge.”