While reducing our operational emissions is vital, emissions from our value chain (Scope 3 emissions) are significantly higher than those from our own operations. We work with our customers, suppliers and other value chain participants to seek to influence emissions reductions across the life cycle of our products.
By definition, Scope 3 emissions occur from sources that are not owned or controlled by BHP, but by our customers, suppliers and others in our value chain. For some emissions sources, we have the ability to influence our suppliers or other service providers to reduce emissions from their activities. For example, BHP is one of the largest global shippers of bulk commodities. We are working on initiatives to reduce our freight emissions and seek to drive change more broadly within the shipping industry. Find out more about our approach to sustainable shipping.
For other emissions sources, such as the downstream processing of our products, the fact that these emissions occur ‘outside the gate’ makes them more challenging to address. However, we already work directly with our customers to help them improve the productivity and environmental performance of their processes based on the quality characteristics of our products. There is opportunity to build on these relationships to identify strategic opportunities to partner in implementing projects with the potential to achieve more material emissions reductions. Find out more about how we work with our customers to minimise the environmental impacts of their production.
Our approach to addressing Scope 3 emissions is evolving. Find out more in our whitepaper on addressing greenhouse gas emissions beyond our operations (PDF 122 kb).
As we work to develop an integrated product stewardship strategy in FY2020 we intend to look to identify additional opportunities to work with others in our value chain to influence emissions reductions. We also intend to set public goals related to Scope 3 emissions.
These goals will be set consistent with all of the following principles:
- Risk-based: focused on material risks and opportunities;
- Measurable, accountable and time-bound: clearly defined with clear responsibilities for delivery and against which it is possible to measure progress over a defined timeframe;
- Paris-aligned: support decarbonisation pathways for our products in line with the goals of the Paris Agreement;
- Collaborative: engage the right partners to support action at the point of operational control;
- Outcomes-focused: deliver tangible outcomes and value rather than focus only on activity;
- Attainable: recognise our stewardship role relating to sold products as compared to the operational control of our managed facilities;
- Based on consultation: engage with external expert and/or academic parties to inform the development of appropriate goals;
- Assured: reporting will be subject to external verification and assurance.
The most significant contributions to Scope 3 emissions in our value chain come from the downstream processing and use of our products, in particular emissions emanating from the steelmaking process (the processing and use of our iron ore and metallurgical coal). In FY2019 emissions associated with the processing of our non-fossil fuel commodities (iron ore to steel; copper concentrate and cathode to copper wire) were 305 million tonnes of CO2-e. Emissions associated with the use of our fossil fuel commodities (metallurgical and energy coal, oil and gas) were 233 million tonnes of CO2-e.
Scope 3 GHG emissions 1 2
|| Scope 3 emissions (million tonnes CO2-e)
|Scope 3 category
|Purchased goods and services (including capital goods)
Fuel and energy related activities
Upstream transportation and distribution3
Downstream transportation and distribution4
Processing of sold products5
|– Iron ore to steel
|– Copper to copper wire
| Use of sold products
| – Metallurgical coal
| – Energy coal
| – Natural gas
| – Crude oil and condensates6
| – Natural gas liquids
|Investments (i.e. our non-operated assets)7
Scope 3 emissions reporting necessarily requires a degree of overlap in reporting boundaries due to our involvement at multiple points in the life cycle of the commodities we produce and consume. A significant example of this is that Scope 3 emissions reported under the ‘Processing of sold products’ category in the table above include the processing of our iron ore to steel. This third party activity also consumes metallurgical coal as an input, a portion of which is produced by us. For reporting purposes, we account for Scope 3 emissions from combustion of metallurgical coal with all other fossil fuels under the ‘Use of sold products’ category, such that a portion of metallurgical coal emissions is accounted for under two categories.
This is an expected outcome of emissions reporting between the different scopes defined under standard GHG accounting practices and is not considered to detract from the overall value of our Scope 3 emissions disclosure. This double counting means that the emissions reported under each category should not be added up, as to do so would give an inflated total figure.
Our full Scope 3 emissions inventory is available to download as part of our GHG data Excel file (XLSX 80 kb). Details of the calculation methodologies, assumptions and key references used in the preparation of our Scope 3 emissions data can be found in the associated Scope 3 calculation methodology document.
Accelerating the development of carbon capture and storage
We also work in partnership with others to accelerate the development of low emissions technologies with the potential to deliver step-change emissions reductions from the processing and use of our products over a longer time horizon. Carbon capture and storage (CCS) is a key low emissions technology with the potential to play a pivotal role in reducing emissions from industrial processes, such as steel production, as well as emissions from the power sector and from oil and gas production.
While we recognise that progress is required in developing policy frameworks to support the wider deployment of this technology, our CCS investments and partnerships focus on mechanisms to reduce costs and accelerate development timeframes. Our investments include activities aimed at knowledge sharing from commercial-scale projects, development of sectoral deployment roadmaps, and funding for research and development at leading universities and research institutes.
For example, we established the International CCS Knowledge Centre to share lessons from SaskPower's Boundary Dam CCS project in Saskatchewan, Canada. We are working with Peking University and other partners to identify the key policy, technical and economic barriers to CCS deployment in the industrial sector, with a particular focus on the iron and steel industry in China. We have also established a research collaboration between the University of Melbourne, University of Cambridge and Stanford University to support fundamental research into the long-term storage mechanisms of CO2 in sub-surface locations. Find out more about our approach to CCS.
More recently, in March 2019 we committed to invest US$6 million in Carbon Engineering Ltd to progress the development of a ground-breaking technology to reduce carbon emissions by accelerating the development of Direct Air Capture, which removes CO2 from the atmosphere. In June 2019, we also committed to invest US$5 million in CO2CRC, a research project to develop subsurface storage technologies aimed at reducing the cost and environmental footprint of long-term CO2 storage monitoring.
Climate Investment Program
In July 2019, our CEO Andrew Mackenzie announced that BHP’s Board had approved a new Climate Investment Program that will invest in technologies to reduce emissions, and research and development of potential future solutions.
The Program will build on BHP’s existing program of investing in low emissions technologies and carbon capture and storage.
It includes a total investment amount of US$400 million over five years from FY2020. Investments will target operational emissions reduction and potential reductions of Scope 3 emissions, including from the processing and use of our products.
The Program will target mature and disruptive technologies, designed to achieve near-term emissions outcomes and longer term, higher-risk goals. We expect technology investment to be critical in meeting our short- and medium-term targets for operational emissions reduction, our longer–term goal of operational net-zero emissions and our goals in relation to Scope 3 emissions. The Program will also drive investment in nature-based solutions.
1 Scope 3 refers to all other indirect GHG emissions (not included in Scope 2) from activities across our value chain, including upstream emissions related to the extraction and production of purchased materials and fuels; downstream emissions related to the processing and use of our products; upstream and downstream transportation and distribution; and emissions from our non-operated joint ventures. Scope 3 emissions have been calculated using methodologies consistent with the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard.
2 FY2018 data includes Continuing operations and Discontinued operations (Onshore US assets). FY2019 data includes Discontinued operations (Onshore US) to 31 October 2019 and Continuing operations.
3 Includes product transport where freight costs are covered by BHP, for example under Cost and Freight (CFR) or similar terms, as well as purchased transport services for process inputs to our operations.
4 Product transport where freight costs are not covered by BHP, for example under Free on Board (FOB) or similar terms.
5 All iron ore production is assumed to be processed into steel and all copper production is assumed to be processed into copper wire for end use. Processing of nickel, zinc, gold, silver, ethane and uranium oxide is not currently included, as production volumes are much lower than iron ore and copper, and a large range of possible end uses apply.Processing/refining of petroleum products is also excluded as these emissions are considered immaterial compared to the end-use product combustion reported in the ‘Use of sold products’ category.
6 All crude oil and condensates are conservatively assumed to be refined and combusted as diesel.
7 Covers the Scope 1 and 2 emissions (on an equity basis) from our assets that are owned as a joint venture but not operated by BHP.