By Jo Nova
That didn’t last long
It was only two years ago that BHP announced “Operational Decarbonisation”. They would build 550MW of wind solar and battery storage in the Pilbara region of WA. It was part of a $4 billion global budget for electrifying trucks and reducing carbon emissions. It was all so ambitious — they set a goal of a 30 per cent reduction by 2030, from 2020 levels, and net zero by 2050. The “Responsible Energy” message is still starring all over their home page.
Their diesel haul trucks use 1.5 billion litres of fuel each year, and they were keen to replace them with electric vehicles, which, they said would “save money”. But it’s all fallen in a hole already. The $4 billion USD global plan has shrunk to half a billion — a savage 88% cut. The new Pilbara solar and wind turbines were quietly shelved late last year (perhaps after Donald Trump won) but the news is only being shared now.
Meanwhile the electric trucks haven’t been invented fast enough so they’ve been delayed indefinitely.
BHP scraps renewable energy projects, casting doubt on emissions targets
BHP Home page
Daniel Mercer, ABC
Mining giant BHP has dumped plans to build a major renewable energy project at its flagship iron ore operations, sparking claims the company is slowly walking away from efforts to decarbonise.
In 2023, BHP announced it would spend about $US2 billion ($3 billion) building more than 500 megawatts of large-scale wind, solar and battery projects to clean up and electrify its iron ore business in Western Australia’s Pilbara region.
BHP estimated the project would cut greenhouse gas emissions from its “inland” iron ore division by 15 per cent by the end of the decade and reduce overall emissions by about 2 per cent.
But internal BHP documents seen by the ABC show the miner binned the plans last year because of budget cuts.
“Due to capital constraints, the project has ceased,” BHP noted in one document seen by the ABC.
Tim Buckley of Climate Energy Finance finds the “capital constraints” hard to believe (which only makes it more interesting). He says the company is “awash with money”, “booking 50 per cent annual returns on capital…”. If they have the cash but still don’t want to buy the Green Dream, it suggests maybe BHP management can read the writing on the wall — perhaps they realize the great renewables bubble is ending, the subsidies are winding up, and they don’t want to be left holding the can? And obviously, none of it was going to save money, or they’d be doing it anyway.
Wow — that’s some flip — an 88% reduction in funding for green energy?
It’s as if they’ve lost their green mojo:
The cancellation of the so-called ‘Inland Solar PV’ project comes amid what one analyst described as a “cooling” by BHP on broader decarbonisation efforts.
In its recent annual report, the mining colossus revealed it had pared back to $US500 million ($759 million) — from $US4 billion previously — the amount to be spent on “operational decarbonisation” by the end of the decade.
But the sudden abandonment of the electric truck plan begs the question — were they really expecting trucks to improve that much or were they expecting more subsidies to make it make sense?
Central to the reduction was BHP’s decision to defer investing in electric truck and train haulage technology that could slash the company’s diesel use. The miner explained the deferral had been prompted by delays in the development of suitable electric technology that could replace conventional diesel varieties.
Solar grows to 30 or 40% then microgrid costs rise exponentially
These remote mining operations in WA are almost all microgrids — each one is a standalone energy system and a feasibility study on renewables. These projects cannot access the main electricity grid more than 1,000 km south, and they run their own small gas turbine — in BHP’s case a 190MW generator. Like Alice Springs, like Onslow and King and Flinders Island.
The most interesting comments came from one funds manager who reveals that many companies are having the same trouble as BHP — they add in solar power until they reach 30 to 40 percent and then the costs rise exponentially as the intermittency.
Sam Berridge, a funds manager specialising in resources at Perennial, said BHP’s moves were consistent with many companies grappling with decarbonisation challenges. Mr Berridge noted miners in many ways had led the charge towards renewable energy because it often made sense for them to do so.
This was because mines tended to be “micro grids” in their own right and, historically, they had sourced much of their power from dirty and expensive diesel. “Now diesel has been sort of pushed off as being like the highest cost option, I suppose,” Mr Berridge said. “More solar has crept into the optimal energy mix up to circa 30 to 40 per cent depending on where that project is located. “And I think it’s starting to plateau at around about that level.”
However, Mr Berridge said the costs of running a mine on renewable energy started to rise “exponentially” beyond a certain point as the need to compensate for the intermittency of wind and solar power mounted.
The Pilbara in the NW of WA is one of the sunniest places in the world — 10 hours a day and 218 clear days a year. If we can’t make a solar powered microgrid work there, where can it work?
h/t David B, BallyB, Brenda Spence