|
BHP Billiton is balancing the demand for minerals and associated climate change with smart strategies, energy efficiency plans and the incorporation of carbon pricing in investment decisions.
As a member of the global society, the challenge for BHP Billiton is to meet the world’s minerals and energy needs while mitigating the potential impact of greenhouse gas (GHG) emissions on the climate.Over the next two decades, it is anticipated that global demand for minerals and energy will grow, with the strongest growth in developing countries. Access to affordable energy, minerals and metals will remain central to society as it is a critical component of poverty alleviation and social and economic development. Reducing climate change risks The company is both a user and producer of fossil fuel energy products that create GHG emissions. In order to continue to improve its performance and ensure its aluminium smelters and petroleum businesses are among the most energy and GHG efficient in the world, BHP Billiton is working on activities related to climate change risks and opportunities in a number of ways. These include reducing the GHG intensity of its operations in line with a target, requiring sites to develop GHG management and energy conservation plans, pricing carbon in investment decision-making, funding research and development activities and collaborating with customers. Reducing GHG intensity In 1995, BHP Billiton set a five-year target of 10% improvement in the GHG emissions intensity of its operations. It exceeded this target by 2%. The company then set a target of not less than 5% over the years 2002 to 2007. This target is also being exceeded. A new GHG emissions reduction target is to be established in 2007. An intensity target is a commitment to reduce emissions on a per-unit-of-output basis. BHP Billiton’s GHG reduction target is based on an index equivalent to the ratio of the current year’s total GHG emissions inventories divided by the emissions inventories for the base year (2002) adjusted for current production levels. The target only includes sites that the company operates. The index is affected by GHG emissions reduction measures and process improvements, including improvements in energy efficiency, as well as structural changes involving acquisition, start-up, closure and divestment. Organic growth or decline in any of the company’s businesses is not considered a condition for base year emissions adjustment. A minimum of 90% of the level of total emissions from controlled operations is included in the target. If a major acquisition takes place, the GHG intensity of the acquired operation is added to the index, including the base year.BHP Billiton’s methodology for measuring its GHG emissions evolved through the company’s activities in energy management and efficiency improvement and participation in various government initiatives on GHG reduction. The methodology generally follows an energy balance approach. GHG emissions associated with energy consumption are determined according to a set of GHG emission factors. Other GHG emissions, such as those from the use of carbon-based fluxes and fugitive emissions from coal mines, are added to form the total inventory. The methodology is based upon setting well-defined boundaries at site levels and recording “raw” energy consumption figures and other emissions data. This data is then converted to GHG equivalent using a set of emission factors. All six GHGs identified in the Kyoto Protocol are included: carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons and perfluorocarbons.The company undertakes annual independent external assurance and verification of its GHG emissions. A component of the independent verification is on-site audits of a representative number of sites across the organisation. In addition to the data, the systems and procedures used to collect and process the data are also verified. GHG and energy conservation management plans All BHP Billiton operated sites with emissions over 100,000 tonnes of carbon dioxide equivalent per annum are required to have greenhouse gas and energy conservation management programs/plans. At 30 June 2006, such plans were in place at 98% of required sites. Pricing carbon in investment decision making BHP Billiton has a requirement that carbon pricing sensitivity analysis be undertaken in investment decisions on new projects and investments that would emit more than 100,000 tonnes of CO2 equivalent per annum. This analysis includes a range of prices for developed and developing countries over an extended period of time. The company’s price series for carbon is revised annually and has appropriately high and low ranges to reflect the uncertainty associated with forecasting the price of carbon credits. In cases where there is high uncertainty about prices, it is helpful to use sensitivity analysis to judge what the business implications of alternative investments might be. A range of prices is used to test the sensitivity of investments/acquisitions to potential carbon taxes.The company expects that, as markets develop and deepen, more reliable price data will become available and more sophisticated methodologies can be developed. Funding research and development activities BHP Billiton is funding research, development and demonstration into low emissions technologies in order to seek ways to develop changes in emissions levels for fossil fuel power generation. External initiatives being supported include the Australian coal industry’s COAL21 program, the Cooperative Research Centre for Greenhouse Gas Technologies, the Cooperative Research Centre for Coal in Sustainable Development and the US Department of Energy’s FutureGen project. A number of methods and technologies are being trialled or investigated to lower emissions, reduce waste, and increase the amount of energy gained from each tonne of coal. These methods include methane capture during coal mining, improved coal preparation, increasing use of combustion by-products and wastes, synergies with renewables, increasing thermal efficiency and emerging power generation technologies. Of the low emissions power generation technologies currently under research, the company sees coal gasification and integrated gasification combined cycle (IGCC) systems as holding significant promise. Coal gasification is when coal is reacted with steam and controlled amounts of air or oxygen under high temperatures and under pressure. Chemical bonds in the coal are broken to produce a gaseous mixture, typically hydrogen and carbon monoxide. These gases are combusted in a gas turbine and waste heat from the product gas is used to produce steam to drive a steam turbine. This system is proving to be highly efficient and produces less greenhouse gases and other emissions. Commercial-scale plants are operating in the US and Europe but current costs are between 10% and 30% above conventional plants. Gasification combined with geological sequestration has the potential to reduce significantly GHG emissions but this combined system is unlikely to be common in the next decade. Geological sequestration is the capture and storage of greenhouse gases in secure geological or mineral environments. ‘Capture’ includes the separation and capture. The term ‘geological storage’ is used for the deep subsurface trapping of CO2 after transportation and injection whether in rocks or minerals or in solution or as gaseous CO2. Collaboration with customers For some products, the principal emissions source and opportunities to reduce emissions come not from the direct or indirect emissions associated with extraction or manufacture but from the use of the products.Where relevant, BHP Billiton is assessing GHG emissions over the life cycle of products, including improving the energy efficiency in downstream consumption of its energy products. Life cycle analysis is the evaluation of GHG emissions throughout the full product or service system life cycle of a product or a service. With energy coal for example, the company is working with its customers to improve energy efficiency in the downstream consumption of its products as well as promoting activities to help deliver low-emission or zero-emission coal technologies. BHP Billiton recognises emissions trading as a valid marketbased mechanism, which has the potential to facilitate management of GHG emissions provided that the system is broad-based, efficient and introduced in a way that allows industry time to adjust. The company has been developing expertise in emissions trading in Europe in order to offer support to its customers in meeting their obligations under the European Union Emission Trading Scheme (EUETS) and in order to learn about how such systems work. BHP Billiton is also assessing opportunities to use the Clean Development Mechanism (CDM) of the Kyoto Protocol. The CDM is a market-based mechanism that is designed to lower the cost of reducing GHG emissions and promoting sustainable development in developing countries. A CDM project allows a developed country to receive emissions credit for financing projects that reduce emissions in a developing country. BHP Billiton began measuring its GHG emissions in 1993 and has publicly reported its GHG emissions data since then. In 1995, the company was one of the first participants in the Australian Greenhouse Challenge program, which was designed to encourage reductions in GHG emissions. The company continues to be a member of the program and reports emissions annually to the Australian Greenhouse Office.Updates on the company’s emissions levels, trends, sources and related activities are also publicly reported in the company’s annual Sustainability Report. Contact: Sustainable Development and Community Relations Department
Telephone: +61 1300 554 757
Website: www.bhpbilliton.com BHP Sustainability Website: http://sustainability.bhpbilliton.com/2006/
|
