Former BHP chief economist Dr Huw McKay has called for stronger government climate policies, including a carbon price, to drive meaningful decarbonisation in the mining sector. His comments follow leaked documents showing BHP slowed its emissions reduction efforts.
BHP's Decarbonisation Delays Exposed
Internal documents leaked to Guardian Australia and the ABC earlier this year revealed that BHP delayed major renewables projects in the Pilbara, scrapped a project that would have significantly cut global emissions, and considered postponing the electrification of its diesel truck and train fleets into the next two decades. Experts said the slowdown jeopardised Australia's climate targets and exposed flaws in the safeguard mechanism.
Dr McKay, now a visiting fellow at Australian National University's Crawford School of Public Policy, said voluntary corporate commitments were unstable. He agreed with economist Ross Garnaut that strong government policy was essential. "The preferred policy is, of course, a carbon price that is calibrated to move the needle on hard-to-abate emissions," McKay said. "Inserting a carbon-price obligation into the investment process at major resources companies would lead to swifter action."
BHP's Emissions Targets and Progress
BHP aims to cut emissions 30% below 2020 levels by 2030, a target it has already met through power purchase agreements, especially in Chile, and the 2024 suspension of its Western Australian nickel operations. However, its net-zero goal requires significant cuts from mining operations, including transitioning its diesel fleet and transforming its gas- and diesel-powered inland grid.
Despite publicly calling climate change an "existential" risk, BHP shelved a 50MW solar farm and 20MW battery at its Jimblebar mine after board approval, delayed a 500MW solar, wind, and battery system, and continued purchasing 62 polluting diesel haulage trucks while pledging electrification as early as 2027-2028.
Government Response and Safeguard Mechanism
Climate Change Minister Chris Bowen defended the safeguard mechanism, which mandates annual emissions intensity cuts for about 200 large industrial sites, including BHP facilities. Government data showed total onsite emissions covered fell 2.3% this year. "We won't be imposing a carbon tax," Bowen said. The mechanism requires facilities to reduce emissions intensity by up to 4.9% per year, either directly or by buying offsets.
McKay will speak at an ANU seminar on "Heavy industry decarbonisation: insights from the BHP leaks," discussing how corporate goals, investment processes, and policy environments influence decision-making.
BHP's Public Relations Push
Following the leaks, BHP promoted a trial of two battery-electric trucks in the Pilbara, an event attended by the press and Western Australian Premier Roger Cook. Critics said it was a re-announcement. A BHP spokesperson stated trials were needed as 240-ton battery-electric haul trucks were not yet scalable. "BHP continues to focus on delivering our operational emissions reduction target and long-term net zero goal," the spokesperson said.
