Operational (Scope 1 and 2) decarbonisation

Footnotes

¹ These positions are expressed using terms that are defined in the Glossary below, including the terms ‘target’, ‘goal’, ‘net zero’ and ‘carbon neutral’. The baseline year(s) of our targets will be adjusted for any material acquisitions and divestments, and to reflect progressive refinement of emissions reporting methodologies. The targets’ boundaries may in some cases differ from required reporting boundaries. The use of carbon offsets will be governed by BHP’s approach to carbon offsetting described at Carbon offsets and natural climate solutions.

Decarbonising electricity

Decarbonising  electricity by switching to renewables at our operated assets is a  priority decarbonisation lever for this decade, in addition to a focus on preparing the business for widespread diesel displacement in the 2030s. The majority of BHP’s electricity supply is delivered via electricity networks and is accounted for as Scope 2 emissions. We are currently working to reduce Scope 2 emissions via renewable energy PPAs, such as those already executed renewable energy Power Purchasing Agreements (PPAs) in Chile, Queensland, South Australia and grid connected sites in Western Australia. Additionally, work is underway to decarbonise remote power demands in Western Australia either through PPAs with independent power producers or via ‘behind the meter’ renewable energy installations where we self-generate electricity in the Pilbara. 

Decarbonising diesel

Diesel displacement represents the largest technical challenge to BHP’s decarbonisation pathway for operated assets in terms of the magnitude of GHG emission abatement required, predominantly driven by consumption by our haul truck fleet. We are taking steps now to accelerate the essential role that original equipment manufacturers (OEMs) must play in the development of new equipment to address emissions from our trucks and rail fleet. This includes partnerships to trial battery-electric locomotives, to develop electrified haul trucks and collaboration such as through the ‘Charge On Innovation Challenge’ aimed at developing concepts for large-scale haul truck electrification and charging systems. In addition to progressing the availability of fleet solutions for zero emission material movement, we are working on readying the business for electrification of material movement by better understanding the energy balance associated with a fully electrified operation, quantifying future electricity demand and associated infrastructure requirements (e.g. transmission lines), modelling potential changes to our concept of operations, and evaluating our reliance on supporting infrastructure such as trolley lines and fast charging capabilities.

Decarbonising fugitive emissions

Although currently relatively small in relation to other emissions sources at BHP’s operated assets, fugitive methane emissions pose considerable technical and economic challenges for BHP’s abatement ambitions. We are working closely with a range of leading organisations in technology, research and industry across the globe, to develop new approaches and address the issue collectively. This includes investigating opportunities for improving the comprehensiveness and accuracy of methane emissions measurement. Under current reporting requirements, BHP uses a combination of direct measurement and default, production-based factors for different coal mine methane sources. While emerging satellite and aerial-based sensing technology is providing new and potentially valuable perspectives, much more work is required to understand its practical application to geographically large, diffuse sources of very dilute methane such as open-cut coal mines – particularly in crowded neighbourhoods such as the Bowen Basin and Hunter Valley where numerous mines co-exist in close proximity with a range of other significant industrial and agricultural methane sources.

Marginal abatement cost

BHP uses the Marginal Abatement Cost Curve (MACC) as an initial high-level screening tool to visualise and identify decarbonisation projects by their scale and cost of abatement. As an initial prioritisation step, we look for projects that are value accretive (negative abatement cost) or come at a comparatively low abatement cost, and we look for projects that are materially important to our decarbonisation trajectory (i.e. the width of columns in the chart represent the scale of abatement). When we use the MACC as an initial screening tool, we can then use more detailed planning tools to determine whether decarbonisation projects are considered in line with enabling infrastructure (such as upgrades to electricity infrastructure) and are timed to align with ‘inflection points’ such as fleet replacement schedules, contract terms, or other key operational milestones. The figure below is an example of BHP’s estimated MACC at the end of FY2022.

Emissions intensity of production

See Climate change portfolio analysis and capital alignment  for more information. 

Investing in decarbonisation

Our capital allocation process is structured to ensure capital expenditure plans are aligned with our FY2030 and 2050 operational emissions reduction target and goal. We expect to spend around US$4 billion on operational decarbonisation by FY2030, with plans reflecting an annual capital allocation of between approximately US$200 million and approximately US$600 million per year over the next five years. 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.

Ventures  

BHP  Ventures is the in-house venture capital arm of BHP established to build a portfolio of investments to accelerate innovation in the mining industry. The team seeks to identify and foster emerging, game-changing technologies with the potential to help make BHP’s global operations safer, lower emissions and more productive. In FY2022:

• We expanded our partnership with our portfolio company, Circulor, by executing a follow-on investment and continued support of the company’s platform deployment across BHP. Circulor’s traceability-as-a-service enterprise software provides BHP the ability to trace our product throughout the value chain and efficiently measure Scope 3 emissions to support reduction initiatives. 
• Small-scale trials commenced using our iron ore to support development of ‘green steel’ portfolio companies, Electrasteel and Boston Metal.  As each company’s businesses and technologies mature, the BHP Ventures team is exploring further engagement opportunities through pilots and interaction with our steelmaking customers.
• We executed an investment in hydrogen electrolyser technology for low-cost, industry-scale production of green hydrogen with Verdagy. The investment provides us early access to a green hydrogen technology with immediate collaboration opportunities to potentially help decarbonise certain BHP operations.

Operational energy consumption and operational (Scope 1 and Scope 2) GHG emissions reporting

Our operational energy consumption and operational (Scope 1 and Scope 2) GHG emissions can be found in our Annual Reports and Scope 1, 2 and 3 GHG emissions calculation methodology available in the ‘sustainability links and downloads’ section below.