Australia’s BHP, which has a substantial foothold in North America’s offshore, on Wednesday launched a five-year, $400 million climate investment program to develop technologies to reduce emissions from its operations and those generated from the use of its resources.
“Over the next five years this program will scale up low carbon technologies critical to the decarbonization of our operations,” CEO Andrew Mackenzie said. “It will drive investment in nature-based solutions and encourage further collective action on scope three emissions.”
The World Resources Institute’s greenhouse gas (GHG) protocol corporate standard classifies emissions into three “scopes.” Scope 1 includes direct emissions from owned/controlled sources, while scope 2 emissions are indirect emissions from the generation of purchased energy. Scope 3 emissions are all indirect emissions that occur in the value chain of the reporting company, both upstream and downstream emissions.
“Commercial success of these investments will breed ambition and create more innovative partnerships to respond collectively to climate challenge,” Mackenzie said. “We must take a product stewardship role for emissions across our value chain and commit to work with shippers, processors and users of our products to reduce scope three emissions.”
BHP plans to establish a medium-term, science-based target for scope one and two emissions in line with the 2015 United Nations (UN) climate change accord, aka the Paris Agreement. The target would be in addition to BHP’s short-term goal to cap 2022 emissions at 2017 levels, and long-term goal of net-zero emissions by mid-century.
Plans also are underway to develop a climate portfolio analysis report in 2020, following on from the UN analysis. The new report plans to evaluate the potential impacts of a broader range of scenarios and a transition to reduce emissions growth at a “well below” 2-degree C world.
In addition, BHP plans to strengthen the link between emissions performance and executive remuneration. From 2021 forward, the link is to be clarified to further reinforce the strategic importance and responsibility of reducing emissions as a business.
“We require a considered and orderly transition to a lower carbon world, in which resource companies like BHP have both critical expertise and a key role to play,” Mackenzie said.
The push toward climate change policies is becoming pervasive across the United States, particularly at the state level. Many oil and gas operators also are eyeing measures to align with the UN accord.
For example, shareholders of London-based BP in May overwhelmingly approved a management-backed resolution to align business strategy with the Paris Agreement. In June, Tulsa-based pipeline giant Williams joined the natural gas industry’s Our Nation’s Energy Future Coalition (ONE Future), of which BHP is a member. ONE Future collaborates with academia and policymakers to voluntarily reduce emissions with an overarching goal to “minimize methane emissions at every point in the U.S. natural gas supply chain…” The goal is to sustain more than 99% efficiency across operations.