BHP Group Ltd (ASX: BHP) shares are falling on Wednesday morning.
At the time of writing, the mining giant's shares are down over 1% to $42.85.
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Why are BHP shares falling?
Today's decline may have been driven by the release of the company's decarbonisation update this morning.
According to the release, the Big Australian is on track to reduce its operational greenhouse gas (GHG) emissions (Scopes 1 and 2 from operated assets) by at least 30% by FY 2030 from FY 2020 levels.
But management isn't resting on its laurels. It has a goal to achieve net zero operational GHG emissions by 2050.
It acknowledges that to succeed, its technology must advance rapidly. It also highlights that "the pathway to net zero will be non-linear" as it organically grows its business, and it is using its capital allocation framework to maximise the returns on its GHG emissions abatement.
To support its long-term goal of net zero Scope 3 emissions by 2050, management notes that it has made strong progress on its strategy in the areas of steelmaking and maritime decarbonisation via partnerships, trials, and pilots.
What's been happening?
Management points out that its haul trucks are the largest user of diesel at BHP globally.
Its preferred pathway to eliminate diesel is via electrification. BHP feels that operational trials and collaborations to accelerate development are critical to success. The good news is that it is working with a number of major players such as Caterpillar Inc. (NYSE: CAT) and Komatsu to make this a reality.
A trial with Caterpillar starts this year and with Komatsu in 2026. If everything goes to plan, these technologies will then be deployed in 2028.
The Big Australian is also collaborating with steelmakers to reduce GHG emissions in steelmaking. It notes that it has nine partnerships, representing ~20% of global steel production, to help tackle long-term steel transition through the decades to come. Management said:
We are progressing a diverse project portfolio to larger scale; covering routes we believe have greatest potential to support decarbonisation from use of our products.
One way to achieve this could be with its electric smelting pilot facility. A pilot plant is targeted for 2027 with widespread commercial deployment targeted post-2030.
Another area the mining giant is targeting is shipping. It has a 2030 goal of a 40% emission intensity reduction of BHP-chartered shipping of BHP products from a 2008 baseline. After which, it is aiming for net zero for the GHG emissions from all shipping of BHP products by 2050. It commented:
We see significant potential in the trial and adoption of low to zero-emissions alternatives such as ammonia. A promising future fuel with potential to drive a step change reduction in GHG emissions on a per voyage basis compared to conventional fuel.
It's fair to say that this is promising from BHP. However, one thing missing from the presentation is how much this all will cost. This uncertainty may be what is weighing on BHP shares today.
