Former BHP Economist Urges Carbon Price to Speed Mining Emissions Cuts

Former BHP chief economist Dr Huw McKay said stronger government climate policy is needed to incentivise decarbonisation at major resource companies. He stated that a carbon price calibrated to move the needle on hard-to-abate emissions would lead to swifter action when inserted into investment processes.

McKay, who left BHP in 2024 and is now a visiting fellow at Australian National University’s Crawford School of Public Policy, agreed with economist Ross Garnaut that voluntary company commitments are unstable.

Internal BHP documents leaked earlier this year showed the company delayed vast renewables projects in the Pilbara, scrapped a project that would have delivered significant global emissions cuts, and considered pushing electrification of diesel truck and train fleets into the next two decades.

BHP has set a target of cutting emissions to 30% below 2020 levels by 2030 and has already achieved it through power purchasing agreements, particularly in Chile, and the 2024 suspension of its Western Australian nickel operations. Its net zero goal requires further reductions from mining operations by transitioning away from its diesel fleet and transforming its inland power grid currently powered by gas and diesel.

The company’s first inland Pilbara decarbonisation project, a 50MW solar farm and 20MW battery at its Jimblebar mine, was shelved after board approval and funding. Another 500MW solar, wind and battery system was delayed. BHP has continued to acquire 62 polluting diesel haulage trucks despite pledging to electrify its fleet as early as 2027-2028.

It is trialling two 240-ton battery-electric haul trucks at a Pilbara site and plans to commence trialling four battery-electric locomotives in coming months. Climate Change Minister Chris Bowen said the safeguard mechanism mandates each large facility to cut emissions each year and reach net zero by 2050.