BHP chief executive Mike Henry says the returns are attractive on oil and gas assets © REUTERS

BHP, the world’s biggest natural resources company, is targeting a minimum 30 per cent reduction in its greenhouse gas emissions by the end of the decade but plans to continue investing in oil and gas.

The Anglo-Australian company outlined plans on Thursday to spend up to $4bn over the next 10 years to reduce its environmental footprint and said it would link a portion of bonus payments for top executives to its new climate goals.

However, chief executive Mike Henry, who took the helm in January, said BHP would continue to develop oil and gas assets, arguing returns were attractive and that it would do so at a lower carbon intensity than many of other producers.

“We see, as others see, the ongoing need for oil and gas for the foreseeable future, and that's because it's essential to human mobility and to many of the industrial processes that underpin life as we know it today,” Mr Henry told analysts and investors. “Given the capabilities we have, we think this is a business that we’ll continue to invest in.”

BHP’s oil and gas business sets the company apart from its pure mining peers but for some investors sits uneasily with its climate commitments, which are viewed as among the most demanding in the mining industry. Rival Rio Tinto, for example is seeking to reduce its operational emissions to 15 per cent below its 2018 levels over the next 10 years.

“BHP . . . is still betting heavily on gas — which is proven to have the same, if not worse emissions than coal once fugitive methane emissions are factored in,” said Dan Gocher of the Australasian Centre for Corporate Responsibility.

BHP’s new chief development officer Johan van Jaarsveld said the company would spend $2bn-$4bn over the next decade on projects to achieve at least a 30 per cent reduction in operational emissions. 

It plans to do this by increasing the use of renewable energy at its mines and reducing its consumption of diesel by electrifying its fleet of haulage trucks and other equipment.

On the company’s list of spending priorities, Mr van Jaarsveld said these projects would rank on a par with maintenance and the costs of ensuring its mines are safe for workers.

As well as seeking to reduce its operational emissions, BHP announced goals to reduce greenhouse gases emitted by its customers and suppliers, also known as “Scope 3” emissions, which exceeded Australia’s total GHG emissions last year. 

BHP said it would help develop technologies and approaches to make steelmaking 30 per cent less carbon intensive and shipping 40 per cent less intensive

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BHP’s main commodity is iron ore, which is used to produce steel through a carbon-intensive process that also consumes coking coal, another raw material the company produces. Most of BHP’s iron ore is shipped to China.

“BHP has set the bar for its diversified mining competitors, which have failed to set greenhouse gas reduction targets anywhere near what has just been announced,” said Julien Vincent, executive director at Market Forces, a campaigning group. 

“However, setting the bar at 30 per cent below 2020 levels by 2030 is clearly choosing to fall short of the Paris Agreement’s ultimate goal of holding global warming to less than 1.5C,” he said, adding: “On Scope 3 emissions, BHP has been generous with the hope but stingy with its delivery.”

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