12 Responses to World’s Largest Mining Firm: ‘In A Carbon Constrained World, Coal Is Going To Decline. And Frankly It Should.’
One of the world’s biggest mining firms says that extreme weather caused by climate change is already impacting some of its assets, thus forcing the company to re-evaluate its investments in the coal sector.
Speaking to investors and analysts on Monday, the Chief Executive of BHP Billiton’s coal division explained how the company is reinforcing infrastructure around its coal export terminal in Queensland, Australia because of increases in extreme weather that threaten the facility.
BHP Billiton is one of the largest producers of aluminum, copper, thermal coal, metallurgical coal, nickel, silver and uranium. The Australian company also owns and operates the Hay Point Services Coal Terminal, a coal facility that makes up a large portion of the biggest coal port in the world.
And now that facility is under threat from intensifying extreme weather, says BHP executive Marcus Randolph. His comments were reported in the Australian Financial Review after the company’s presentation on its sustainability strategy:
“As we see more cyclone-related events . . . the vulnerability of one of these facilities to a cyclone is quite high,” he said. “So we built a model saying this is how we see this impacting what the economics would be and used that with our board of directors to rebuild the facility to be more durable to climate change.”
Mr Randolph said the decision was taken after cyclone Yasi hit further north in Queensland in February 2011. “If cyclone Yasi had hit Hay Point, we would have lost that facility,” he said. “So it is a recognition that as these cyclones become more severe, we need to have facilities that are more able to withstand them.”
Simply reinforcing a coal export facility with extra jetties to withstand an increase in extreme weather caused by carbon pollution from the coal that the company wants to continue exporting isn’t exactly a ringing endorsement for sustainability. But this plain-spoken admission that climate change is having a measurable impact now — without trying muddle the science — is very unique for a coal company.
“You couldn’t ask for a more surprising source for our basic message: coal causes climate change, climate changes creates more extreme weather, more extreme weather will force us to make huge new investments in trying to protect ourselves,” said Carl Pope, former executive director of the Sierra Club, in an email.
In his presentation, Randolph made another stunning comment about the need to address carbon pollution by clearly stating that there is an “absolute ceiling” on emissions that can be pumped into the atmosphere:
BHP’s internal target over the next four years is to maintain its greenhouse gas emissions below 2006 levels, adjusted for material acquisitions and divestments. Mr Randolph said the target would stay even if a future government repealed the carbon tax.
“If you look at the targets . . . there is not a qualifier saying it is okay to emit more greenhouse gases if the carbon tax is eliminated,” he said. “An absolute ceiling is an absolute ceiling. Even if there isn’t a carbon tax, it still needs to be an issue we devote a lot of attention to.”
Just one month before, Randolph — the chief executive of the company’s coal division — told the Australian Financial Review that he believes the market for coal is going to decline because of environmental constraints, and that “frankly it should”:
“In a carbon constrained world where energy coal is the biggest contributor to a carbon problem, how do you think this is going to evolve over a 30- to 40-year time horizon? You’d have to look at that and say on balance, I suspect, the usage of thermal coal is going to decline. And frankly it should.”
Mr Randolph said it was positive that investment was being made in examining clean coal technology but he had his doubts that would be enough to make coal a good choice for power generation in the longer term. He said the rapid rise in shale gas production in the United States, which this year lowered demand for thermal coal in that country, had caught the world by surprise.
“We’ve been cautious in our energy coal investments,” Mr Randolph said. “There are a couple of reasons for that: the cloudy future, the general return on investment that is available in the industry and there are some structural reasons why it is the way it is. And it is also the availability of better returns on other projects that exist in the broader [BHP] portfolio.”
In 2009, as a member of the American Council on Clean Coal Electricity (ACCCE), BHP was swept up in a scandal around the U.S. climate bill then being considering in Congress. A lobbying firm that worked for ACCCE was caught sending fake letters to members of Congress asking them to vote against the bill. At that time, BHP was a prominent member of the coal lobby; however the company is no longer listed as a member on the coalition’s website.
So while one of the world’s largest mining companies makes these stunning admissions about the reality of coal’s contribution climate change, the U.S. coal lobby continues to smear the climate science, target state renewable energy targets, and organize fake campaigns to make it look like the industry has wide public support.