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Climate Change

We are working on activities related to climate change risks and opportunities in a number of ways. These include reducing the greenhouse gas intensity of our operations in line with a target, requiring sites to develop greenhouse gas management and energy conservation plans, pricing carbon in investment decision-making, funding research and development activities and collaborating with customers.

Our target is to have greenhouse gas management programs and energy conservation plans at all of our sites with annual emissions greater than 100,000 tonnes of carbon dioxide equivalent.

In 1995, we were one of the first participants in the Australian Greenhouse Challenge program, which was designed to encourage reductions in greenhouse gas emissions. We started measuring our greenhouse gas emissions in 1993 and have publicly reported our greenhouse gas emissions data since then.

We exceeded our original target of 10 per cent reduction in greenhouse gas intensity between 1995 and 2000, and have again exceeded our current target of a further five per cent reduction between 2002 and 2007. Greenhouse gas intensity is measured by emissions per unit of production, including the purchase of electricity, at operated sites.

We capture energy consumption and costs at our operations to track the total financial and carbon impact of our current energy use. Together, these measures drive the business case for improved energy efficiency and greenhouse gas mitigation.

We have developed expertise in emissions trading in Europe to offer support to our customers in meeting their obligations arising from the European Union Emission Trading Scheme (EU ETS). From a strategic perspective this is also helping us to understand better the market dynamics of the emerging carbon market and how it interacts with markets for energy.

We are working with our customers to improve energy efficiency in the downstream consumption of our Energy Coal products, as well as promoting activities to help deliver low or zero-emission coal technologies. These activities include capture of methane in ventilation air, as well as support for external research such as the US FutureGen project, and the Australian COAL21, Cooperative Research Centre for Greenhouse Gas Technologies and the Cooperative Research Centre for Coal in Sustainable Development.

Carbon pricing sensitivity analysis is considered in our decisions on new projects and investments that would emit more than 100,000 tonnes of carbon dioxide equivalent per annum. This analysis includes a range of prices for developed and developing countries over an extended period of time. Our price series for carbon are revised annually and have appropriately high and low ranges to reflect the uncertainty associated with forecasting the price of carbon credits. The price series are also intended for use in strategy development.

In addition to controlling emissions associated with production at our sites and evaluating the potential impact of future regulation of carbon, we also undertake activities to address the current and future needs of our customers in regards to greenhouse gas emissions associated with the consumption of our products.

We have identified emissions trading as an area of opportunity. Our Energy Marketing group has commenced selling coal bundled with Certified Emission Reduction units (raised via clean development mechanism projects) to our coal customers in Europe. This is allowing us to develop knowledge and skills in emissions trading and is enabling us to continue to better package the fuel supply requirements of our customers. Our Energy Coal Customer Sector Group has also included the potential implications of greenhouse gas emissions regulation in its base case supply and demand forecasts and in its business strategy. This is due to the importance of such regulation in relation to the future demand for coal.

Read more:

• BHP Billiton Climate Change Position Statement for an overview of our climate change policy
• Climate Change Related Activities and Priorities
• Our Sustainability Challenge>Greenhouse Gas Emissions.
• Carbon Disclosure Project
• Address by Ian Wood, VP Sustainable Development, to the Greenhouse Challenge Plus Conference,15 September 2005 Canberra, Australia.