Reducing GHG emissions at our operated assets is a key component of our climate change strategy. Our long-term goal is to achieve net zero operational GHG emissions (Scope 1 and Scope 2 from our operated assets) by 2050. We have also set a medium-term target to reduce operational GHG emissions by at least 30 per cent from FY2020 levels(1) by FY2030. We are also working to achieve our short-term target for FY2022 to maintain our total operational GHG emissions at or below FY2017 levels(2) while continuing to grow our business. This reflects our commitment to play our part to accelerate the global pathway to decarbonisation.
(1) FY2020 baseline will be adjusted for any material acquisitions and divestments based on GHG emissions at the time of the transaction. Carbon offsets will be used as required.
(2) FY2017 baseline will be adjusted for any material acquisitions and divestments based on GHG emissions at the time of the transaction. Carbon offsets will be used as required.
Pathways to net zero
Our Pathways to Net Zero (P2NZ) GHG emissions project was established in FY2019 to explore opportunities to achieve net zero operational GHG emissions by 2050. The project identified and quantified potential operational decarbonisation pathways and has informed decision-making and prioritisation of BHP’s decarbonisation investments.
We plan to deliver our medium-term target through the decarbonisation of our electricity supply and diesel displacement. The first phase (FY2021-FY2025) is focused on moving to renewable electricity and conducting feasibility studies for displacement of diesel use for material movement, light vehicles and stationary equipment.
In the second phase (FY2026-FY2030), the focus will shift to implementing diesel displacement initiatives at our operated assets, along with the continuation of the shift to renewable electricity.
Progress on decarbonisation
- We signed a renewable power purchasing agreement (PPA) to supply up to 50 per cent of our electricity needs at the Nickel West Kwinana Refinery from the Merredin Solar Farm.
- We secured firm renewable electricity via a PPA to meet half of the electricity needs across Queensland Coal mines from low-emissions sources.
- We continued to implement PPAs for renewable electricity commencing from FY2022 at our Chilean copper operated assets Escondida and Spence, which are on track to reach net zero Scope 2 GHG emissions by the mid-2020s.
These agreements are intended to help meet our FY2022 and FY2030 operational GHG emissions targets. We regularly monitor our forecasted GHG emissions to check we are on track.
In FY2021, we partnered with Rio Tinto and Vale to launch the ‘Charge on Innovation Challenge’, a mining truck electrification initiative, facilitated by Austmine. The initiative aims to develop innovative charging infrastructure in parallel with the development of battery-electric trucks.
In August 2021, BHP became a founding member of Komatsu’s GHG Alliance, which aims to develop commercially viable emissions haul trucks. BHP will provide engineering and technical resources to Komatsu, enabling BHP’s real-time access to technology in development and giving Komatsu the opportunity to draw on BHP’s mining expertise to accelerate its path to market. Also in August 2021, BHP and TransAlta announced plans to build two solar farms and a battery storage system to help power the Mt Keith and Leinster operations at Nickel West.
In FY2022, we intend to look for further opportunities to collaborate with original equipment manufacturers (OEMs), source renewable electricity for our Australian operated assets and progress studies for diesel displacement at our operated assets.
For more information on our steps to decarbonise, see Powering ahead with cleaner operations.
Operational greenhouse gas emissions and energy consumption
Our operational GHG emissions are measured against our target performance based on an operational control, market-based methodology. We also disclose operational GHG emissions by equity share and financial control in our ESG Navigator and Databook.
In FY2021, total operational energy consumption increased 3 per cent from FY2020 due to increased drilling activity in our Trinidad and Tobago operations, the use of diesel generators to provide power to our Angostura facility during the Ruby project tie-in and increased diesel usage at our Queensland Coal operated assets. Building on our Light Electric Vehicle (LEV) trials at Olympic Dam and Queensland Coal, we have commenced LEV trials at Nickel West using onboard battery power. This trial is anticipated to reduce noise, heat and diesel particulate matter, as well as consumption of fossil fuel. We have increased the renewable component of our energy consumption in FY2021 due to the start of the renewable PPA at Queensland Coal.
In FY2021, operational GHG emissions were 11 per cent higher than the adjusted FY2017 baseline of 14.6 million tonnes (Mt) of CO2-e on a Continuing operations basis, reflecting increased production at our Minerals Australia operated assets since FY2017. However, as a result of actions taken in FY2020 and FY2021, particularly securing the supply of renewable energy at some operations, our forecasted operational GHG emissions are currently tracking in line with our FY2022 and FY2030 targets (see Progress on decarbonisation above).
(1) Unless otherwise noted, FY2019 data includes Continuing operations and Discontinued operations (Onshore US assets) to 31 October 2018. Data in italics indicates that data has been adjusted since it was previously reported. FY2020 originally reported data that has been restated is 9.5 MtCO2-e for Scope 1 GHG emissions and 15.8 MtCO2-e for total operational GHG emissions, due to minor amendments to fugitive emissions from the coal operated assets as part of the annual reconciliation process for Australian regulatory reporting purposes. FY2019 data that has been restated is 6.1 MtCO2-e for Scope 2 GHG emissions, 15.8 MtCO2-e for total operational GHG emissions, and 15.3 MtCO2-e for total operational GHG emissions (adjusted for Discontinued operations) due to minor amendments to market-based emission factors for Minerals Americas operated assets. Additionally, non-material adjustments in prior year asset-level data and changes to presentation of the data has, in certain instances, resulted in minor impacts to the rounding of data since it was previously reported.
(2) Calculated based on an operational control approach in line with World Resources Institute/World Business Council for Sustainable Development guidance. Consumption of fuel and consumption of electricity refers to annual quantity of energy consumed from the combustion of fuel; and the operation of any facility; and energy consumed resulting from the purchase of electricity, heat, steam or cooling by the company for its own use. Over 99.9 per cent of BHP's energy consumption and operational GHG emissions occurs outside the UK and offshore area (as defined in the relevant UK reporting regulations). UK energy consumption of 99,762 kWh and emissions of 21 tCO2-e is associated with electricity consumption from our office in London. One TWh equals 1,000,000,000 kWh. Data has been rounded to the nearest 1 PJ or 0.1 TWh to be consistent with asset/regional energy information reported. In some instances, the sum of totals for sources and commodities may differ due to rounding.
(3) In FY2021 we have revised and tightened the definition of renewable energy consumption for our operations to better align with our market-based emissions reporting. This resulted in the restatement of operational consumption from renewable energy sources figures. Previously reported numbers for FY2020 and FY2019 for this data were 0.01 TWh for both years.
(4) BHP currently uses Global Warming Potentials (GWP) from the Intergovernmental Panel on Climate Change (IPCC) Assessment Report 5 (AR5) based on a 100-year timeframe for Minerals Australia and Petroleum. Minerals Americas currently use IPCC Assessment Report 4 (AR4) GWP and will be transitioning to AR5 GWP in FY2022.
(5) Scope 1 and Scope 2 GHG emissions have been calculated based on an operational control approach (unless otherwise stated) in line with the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard. For more information, see BHP Scope 1, 2 and 3 GHG Emissions Calculation Methodology. Data has been rounded to the nearest 10 ktCO2-e or 0.1 MtCO2-e to be consistent with asset/regional GHG emissions information reported. In some instances, the sum of totals for source, commodity and asset may differ due to rounding.
(6) Scope 1 refers to direct GHG emissions from operated assets.
(7) Scope 2 refers to indirect GHG emissions from the generation of purchased or acquired electricity, steam, heat or cooling that is consumed by operated assets. Our Scope 2 emissions have been calculated using the market-based method using supplier specific emission factors, in line with the Greenhouse Gas Protocol Scope 2 Guidance unless otherwise specified. A residual mix emission factor is currently unavailable to account for grid electricity emissions remaining after removal of quantities directly contracted between parties; this may result in double counting of low GHG emissions or renewable electricity contributions across grid-supplied consumers.
(8) Excludes Onshore US assets, which were divested in FY2019. Non-material acquisitions and divestments have not been included in Discontinued operations and are included in the Total.
(9) For this purpose, copper equivalent production has been calculated based on FY2021 average realised product prices for FY2021 production, FY2020 average realised product prices for FY2020 production and FY2019 average realised product prices for FY2019 production. Production figures used are consistent with energy and GHG emissions reporting boundaries (i.e. BHP operational control) and are taken on 100 per cent basis.
(10) Scope 1 GHG emissions from BHP's facilities covered by the Safeguard Mechanism administered by the Clean Energy Regulator in Australia and the distillate and gasoline GHG emissions from turbine boilers at the cathode plant at Escondida covered by the Green Tax legislation in Chile.
(11) More information on the calculation methodologies, assumptions and key references used in the preparation of our Scope 1 and Scope 2 GHG emissions data can be found in the BHP Scope 1, 2 and 3 GHG Emissions Calculation Methodology, available at bhp.com/climate. More information on our strategy to further reduce GHG emissions, including our investments in low-emissions technology and natural climate solutions, is available in the BHP Climate Change Report 2020 and the BHP Climate Transition Action Plan 2021.
(12) In FY2021, we have calculated an additional operational GHG emissions total for the reporting year including contributions from the retirement of a quantity of carbon offsets. This figure has been calculated by subtracting the number of carbon offsets retired (each equivalent to a single tonne of CO2-e reduced or ‘removed’ from the atmosphere) from the total emissions reported under our operational control boundary for the year. This is not intended to establish a recurrent approach. For more information, see BHP’s use of carbon offsets in FY2021.
Investing in decarbonisation
In FY2020, we announced a commitment of at least US$400 million to invest in GHG emissions reductions across our operated assets and value chain over the five-year life of our Climate Investment Program. In FY2021, we spent US$29M under this program, targeting operational, maritime, steelmaking and BHP Ventures investments, and committed to spend significantly more, including up to US$65 million over coming years towards partnerships with our customers in the steel sector.
We estimate potential spend of between US$100 and US$200 million per year over the next five years in support of operational decarbonisation at our operated assets. This estimate has been included in existing capital guidance. Going forward, as our climate response is further integrated into business-as-usual planning, our spending on climate initiatives is expected to become increasingly indistinguishable from normal business spending.
We assess and rank each decarbonisation project across our operated assets through our Capital Allocation Framework, where our decarbonisation commitments rank alongside maintenance capital in the hierarchy of our capital allocation. Through our studies and investment governance process, we seek to optimise the risk and reward proposition for these projects to allocate capital and optimise decarbonisation at a portfolio level. We have developed an internal marginal abatement cost curve designed to support the allocation of capital towards the most economically efficient and effective decarbonisation projects.
We include regional carbon price forecasts in our assessment of all projects in the Capital Allocation Framework. In recognition that explicit carbon pricing regimes in many instances do not fully reflect the implicit regulatory risk and value of carbon across our value chain, we are developing additional qualitative and quantitative metrics to better capture the future cost and value of GHG emissions abatement to inform corporate strategy and core business decisions.
Operational decarbonisation - pathways to net zero
Our climate change approach is focused on reducing operational greenhouse gas emissions, investing in low emissions technologies, supporting emissions reductions in our value chain, managing climate-related threats and opportunities and partnering with others to enhance the global policy and market response.
Escondida: Breaking the water-energy nexus
At Escondida, operated by BHP in the Atacama Desert in Chile, we are soon to break the usual downsides of the water-energy nexus. Through a series of initiatives, we have substantially eliminated the use of groundwater, ceasing all pumping from the high Andean aquifers for operational water supply purposes.