BHP wrestles with steel emissions challenge
BHP has ultimately backed away from setting a hard target for steelmakers that account for about three-quarters of its Scope 3 emissions.
BHP has set a net zero emissions target by 2050 for both its direct suppliers and shippers of its products but will not extend the goal to its steelmaking customers.
The mining giant committed to cut so-called “scope 3” emissions — those from downstream manufacturers, such as steel mills, that use the iron ore and commodities that BHP mines — under former boss Andrew Mackenzie in 2019 who said a global dependence on fossil fuels posed an “existential” risk to the planet.
His successor, Mike Henry, has followed through on the ambition and plans for emissions in 2030 to be 30 per cent lower than 2020 levels on a path for net zero emissions by 2050.
While BHP has separated the giant task into different categories, it has ultimately backed away from setting a hard target for steelmakers that account for about three-quarters of its Scope 3 emissions.
“Recognising the particular challenge of a net zero pathway for customers’ processing of our products — which is dependent on the development and downstream deployment of solutions and supportive policy — we cannot set a target, but will continue to partner with customers and others to accelerate the transition to carbon neutral steelmaking,” BHP said in its climate transition action plan released on Tuesday.
Its Scope 3 pledge for suppliers and shippers also arrived with caveats and would hinge on the widespread availability of carbon neutral goods and services and zero emission fuels and technology on ships.
While many countries and corporations alike have signed up to reach net zero goals by 2050 or sooner, BHP said there were still major hurdles when it came to the steelmaking industry including technology gaps.
“There are a number of global uncertainties that must be reckoned with in terms of achieving net zero in steel. These are principally in the area of technology development, including cost,” BHP said.
Regional factors just as influential include the availability of low carbon raw material feedstock, ageing steel-mills, insufficient policy support, exposure to international steel trade and future growth in demand for affordable steel.
It also highlighted a report by Climate Action 100+ which showed that even under ambitious scenarios it would be difficult for steelmakers to hit net zero targets by 2050.
“Although ambitions are growing, a pathway to net zero for steel is still highly uncertain,” BHP noted.
BHP’s Scope 3 emissions were 402 million tonnes of carbon dioxide equivalent in the year to June 30 with customers’ steelmaking operations accounting for 300m tonnes or 75 per cent of the total.
The miner’s own Scope 1 and 2 emissions increased by 2 per cent to 16.2 million tonnes of carbon dioxide equivalent covering direct pollution from vehicles, power stations and processing plants, as well as emissions attributable to power bought from external providers.
Still, it said it was on track to maintain greenhouse gas emissions at or below 2017 levels by the 2022 financial year and also hit the 2030 target.
Australian corporates are increasingly under pressure on climate change as institutional investors such as Climate Action 100+, backed by Australian superannuation funds, use their power to hold companies to account.
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