Independent senator David Pocock has accused mining giant BHP of “laughing” at Australia’s key climate policy while receiving hundreds of millions of dollars in diesel tax breaks, according to leaked documents.
Leaked documents reveal BHP’s backsliding
An exclusive investigation by Guardian Australia and the ABC based on leaked documents shows BHP has scrapped a project to significantly reduce global emissions, delayed vast renewables projects in the Pilbara, and war-gamed options to push the electrification of its polluting diesel truck and train fleets into the next two decades. This comes despite internal memos as recently as 2023 stating: “Urgent decarbonisation in line with BHP’s public commitments effectively underpins [the Western Australian iron ore division’s] licence to operate, sustain and grow.”
Disparity between safeguard payments and fuel tax credits
Analysis provided to Guardian Australia suggests BHP paid less than $9 million under the safeguard mechanism for its excess emissions last financial year. Simultaneously, it received an estimated $622 million in fuel tax credits from the federal government for its use of diesel, including about $379 million for its WA iron ore mines. Senator Pocock highlighted this disparity during Senate estimates on Tuesday, stating: “BHP had [to pay] $8 million for emissions [under the safeguard mechanism] last year while getting $379 million in fuel tax credits … you have to admit that’s pretty ridiculous. They are spending 2% [of what they receive in diesel tax credits]. That sounds like a joke to most Australians.”
Government defends safeguard mechanism
Industry and Science Minister Tim Ayres defended the safeguard scheme, noting it had reduced emissions by 5.5 million tonnes in the two years since the government reformed it. An environment department official told Pocock it did “not make a lot of sense” to compare the company’s payments under the safeguard mechanism to the credits it received under the diesel fuel tax rebate. Pocock responded: “We have a government that’s telling us we are very ambitious and are doing everything we can with all these things in place, then we have leaked documents from BHP who internally they are laughing at the safeguard mechanism and they don’t have to worry about it for 14 years … I am concerned that no one has thought to go, ‘Hang on, these two things don’t really work together.’”
Ministerial responses
Earlier on Tuesday, Environment Minister Chris Bowen said he had made his expectations “crystal clear” to emitters publicly and privately. The safeguard did “provide some flexibility”, he said, because the roughly 200 major industrial polluters it applied to faced “different challenges and opportunities” to cut emissions. “But I want to see all large emitters reducing emissions onsite,” he added. “That applies to BHP and everyone else.” Resources Minister Madeleine King said she was not concerned about the revelations and BHP was “doing their job”. “BHP is committed to cutting emissions,” she told ABC radio. “They will make their commercial decisions, as do others. BHP and other miners are subject to the safeguard mechanism.”
Independent MP calls for policy tightening
Independent MP Kate Chaney said the safeguard needed to be tightened so companies had stronger incentives to cut emissions onsite, rather than pay for an unlimited number of contentious carbon offsets. “It’s important that companies have flexibility in the way they reduce emissions, but it’s the government’s job to drive ambitious decarbonisation for a safe climate and stable economy,” she said. Chaney also called for reform of the diesel fuel tax credit scheme, which gives some industry a full rebate on the 52.6c per litre fuel excise. She argued the rebate should be limited for the “largest and most profitable companies like BHP” but left in place for farmers and small businesses. “Large resource companies like BHP produce a huge chunk of Australia’s emissions,” she said. “Without strong decarbonisation from these companies, Australia will not be able to meet its emissions targets and international commitments. But companies will always play within the rules that have been set. This speaks more to weakness in government policy than a failure of business.”
Labor grassroots push for fuel tax reform
Labor’s grassroots environment action network, Lean, renewed calls for the fuel tax credit scheme to be capped in the wake of the revelations. National co-convener Louise Crawford said: “[We] have been saying for months that the diesel fuel tax credit needs reform – it should be pushing the biggest miners toward electrification, not the opposite. Capping the rebate at $50 million would free up funds to invest in electrification for those companies and others. And it would send a clear signal to get on with it.” More than 270 local ALP branches have passed motions supporting Lean’s internal push, which is expected to be debated at Labor’s national conference in July. Bowen played down the prospect of immediate changes to the fuel credit scheme when asked on Monday. “We just had a budget a couple of weeks ago – we decided not to make that change,” he said, maintaining that the government’s focus was on the safeguard mechanism.
BHP’s response and progress
In a statement, BHP said it was making significant strides in emission reduction, cutting emissions by 36% from 2020 levels. It has a medium-term target of 30% by 2030 and a goal of net zero by 2050. BHP points to analysis that it is one of the best performers on emission reductions of large publicly listed companies and has transitioned 70% of its energy use to renewables. The company blames its slowed progress on operational decarbonisation on the lack of availability of battery-electric trucks. It says it is trialling the technology but it is not yet ready to deploy at scale. Fortescue, one of its main competitors, says the technology is ready and has ordered hundreds of battery-electric trucks, expecting to be able to run without any fossil fuels for 24-hour periods by 2027.
