BHP flashes green credentials, but is it doing enough?

BHP’s annual ‘climate change report’ is now a ‘climate action report’. What a difference a year makes when it comes to nomenclature.

The action its referring to is at least a little more than just hiving its $20 billion petroleum business off into Woodside, which will handily knock 2.2Mt of its own emissions and 38.1Mt of scope 3 emissions off its books and onto Woodside’s.

BHP says in its new report it wants to target net zero not just for its own operations and shipping but also for “direct suppliers” by 2050, ‘subject to the widespread availability of carbon-neutral(15) goods and services to meet our requirements’.

This is where it will get a bit tricky for the world’s biggest miner. Its own operational emissions are the low hanging fruit if it’s looking to make a global contribution to reducing carbon emissions.

Scope 3 emissions, those generated in BHP’s supply chain and its customers (mainly Chinese steel mills), sit at 402.5 Mt as of the 2021 inventory, dwarfing the 16Mt generated from scope 1 & 2 emissions.

 

Deep Green

75% of those scope 3 emissions are down to the use of its iron ore and met coal in the steelmaking process.

BHP has committed to lobbying and working with its partners on reducing emissions and working toward net zero – and promised to review its membership of lobby groups its aligned with – but read deeper into some of its modelling and there are substantial challenges ahead.

“Even assuming a step-change and global convergence in regulatory and technological factors over the next decade, our modelling indicates that it is still difficult to achieve net zero sector emissions for key steel producing regions,” the company wrote.

Its new “Deep Green” hypothetical has been developed to explore the ‘bottom up limits of steel decarbonisation on a regional basis’.

Effectively, it simulates a world where steel emissions make a rapid shift towards decarbonisation, featuring universal access to zero emissions electricity and a (presently fanciful) US$200/t global carbon price.

“In this Deep Green hypothetical, global steel emissions fall by around two-thirds from current levels, bringing absolute volumes well below the 1990 base level,” BHP said.

“That is significant, but is not net zero. Even in Europe, which has positive exposure to the factors outlined above, net zero is not achieved.”

While scrap usage is expected to rise, BHP unsurprisingly finds a role for its “higher quality coal” in the steelmaking process.

“Metallurgical coal demand volumes may be lower than projected in our climate change scenarios due to higher penetration of alternative steelmaking processes,” BHP said.

“However, potential reduction in demand could be offset by expected increase in premiums for higher quality coal, which BHP would be well placed to capture.

“It is important to emphasise that we consider the likelihood of the Deep Green hypothetical to be much lower than our Central and Lower Carbon scenarios.”

 

The next wave of rooftop solar

Think rooftop solar installations are rising at a crazy pace? Think again. It’s going to get even bigger, according to new research from Bloomberg NEF and Schneider Electric.

They say as much as 2000GW of capacity will be installed on residential rooftops by 2050 around the world, along with a huge 1000GWh of battery storage.

As many as 167 million households and 23 million businesses worldwide will be hosting their own clean power generation by 2050.

Australia is leading the way with 2.5GW of new capacity installed in 2020, an increase of 28% year on year.

“Customer-sited solar is a huge opportunity that’s often completely overlooked. Thanks to falling costs and policy measures, it’s already being rapidly deployed in some markets. Its massive scale up is very likely,” said Vincent Petit, head of the Schneider Electric TM Sustainability Research Institute.

“This is vital for decarbonising the power sector and offers huge additional consumer benefits. It’s time to embrace this transformation.”

 

Uptake of solar a problem to solve for market operators

In Australia the rapid rate of take-up has come with its own challenges, with the introduction of new charges for rooftop solar owners to have the right to export power to the grid set to come from the middle of the decade.

The Australian Energy Market Commission has proposed the new rule, dubbed a sun tax by opponents, in response to the overloading of transmission infrastructure in the grid in the middle of the day when direct sunlight generates excess energy.

The Australian Energy Market Operator believes another 8.9GW of rooftop solar could be added by the middle of the decade in Australia alone, prompting one of its biggest challenges to maintain grid security as minimum operational demand drops to record lows.

BNEF says policies to support the uptake of energy storage systems, which don’t overheat or catch alight as often as some incidents would have you believe, could drive increased battery storage installations and mitigate grid connection issues.

“The evolution of customer-sited solar is to add some form of flexibility, which has the ability to unlock a much higher penetration of solar,” said BNEF head of decentralized energy Yayoi Sakine.

“The most obvious form of flexibility is batteries, but energy storage will come in many forms, including shifting demand and using electric vehicles.”

Bloomberg NEF said economic benefits for rooftop solar installations mean they can be paid back now in under 10 years, with installations in new build homes bringing an elevated IRR of 40%.

 

Pure Hydrogen stands out in mostly positive trading week for green energy stocks

ASX green energy stocks

Scroll or swipe to reveal table. Click headings to sort.

Code Company Price %Mth %SixMth %Wk %Yr MktCap
AST AusNet Services Ltd 1.995 4 14 0 7 $ 7,602,479,504.71
AVL Aust Vanadium Ltd 0.025 -19 25 14 79 $ 72,178,160.58
BSX Blackstone Ltd 0.545 20 22 15 25 $ 179,945,382.60
DEL Delorean Corporation 0.195 -22 -11 $ 36,711,047.40
ECT Env Clean Tech Ltd. 0.01 -9 -50 0 -33 $ 12,271,255.25
FMG Fortescue Metals Grp 17.25 -23 -15 -4 -3 $ 54,867,154,838.76
GEV Global Ene Ven Ltd 0.081 -13 -15 -5 88 $ 37,030,759.23
GNX Genex Power Ltd 0.225 -2 -8 0 22 $ 240,727,510.13
HXG Hexagon Energy 0.084 8 -27 5 45 $ 36,127,119.99
HZR Hazer Group Limited 0.965 -9 -25 -10 135 $ 145,334,802.00
IFT Infratil Limited 7.68 7 11 8 68 $ 5,474,523,544.56
IRD Iron Road Ltd 0.21 0 -24 5 93 $ 150,972,155.86
LIO Lion Energy Limited 0.046 0 77 2 171 $ 13,583,952.05
MEZ Meridian Energy 5.03 1 -8 1 11 $ 6,285,184,197.84
MPR Mpower Group Limited 0.059 -18 -62 -2 84 $ 12,900,936.81
NEW NEW Energy Solar 0.805 -4 13 0 0 $ 287,721,812.81
PGY Pilot Energy Ltd 0.06 -9 -27 -9 58 $ 31,098,366.10
PH2 Pure Hydrogen Corp 0.26 33 -30 27 313 $ 80,038,345.07
PRL Province Resources 0.16 -9 23 7 484 $ 186,393,868.82
PRM Prominence Energy 0.012 -8 0 9 71 $ 11,358,983.16
QEM QEM Limited 0.17 -8 3 10 91 $ 18,076,849.89
RFX Redflow Limited 0.064 3 -21 8 181 $ 86,610,923.37
SKI Spark Infrastructure 2.82 3 37 0 33 $ 4,948,971,069.60
VUL Vulcan Energy 14.62 1 129 2 1534 $ 1,729,782,687.60
Pure Hydrogen (ASX:PH2) was up 27% for the week to lead the stocks with green hydrogen, renewable energy or variants of in their back pocket.

It has brought former Arrow Energy and Santos engineer Andrew Thompson as its hydrogen production manager. It is looking to convert gas from its Venus well in Queensland as a feedstock for hydrogen fuel and “has been in discussions with a range of large industrial users for back to base operations that are considering using Hydrogen Trucks.”

Another gas player, Strike Energy (ASX:STX) announced yesterday plans to become a significant end user for the domestic green hydrogen market in Western Australia.

It wants to use green hydrogen in its supply chain at the proposed Project Haber urea plant in Geraldton, signing a non-binding MoU with gas supplier turned green hydrogen hopeful ATCO and unlisted Infinite Blue Energy, the developers of the Arrowsmith green hydrogen and renewable energy project on WA’s Mid West coast.

At Stockhead, we tell it like it is. While Pure Hydrogen is a Stockhead advertiser, it did not sponsor this article.