A briefing document circulated to BHP investors has warned that the federal government’s fuel tax break is acting as a handbrake on the decarbonisation of the miner’s Australian operations.
Earlier this year, a leaked cache of documents obtained by Guardian Australia and the ABC’s Four Corners revealed BHP had halted or delayed key emissions reductions projects, just years after describing climate change as an “existential” threat that required the greatest mobilisation since the second world war.
The leaked documents showed how BHP, a major polluter and one of the world’s worst historic contributors to the climate crisis, had shelved massive renewables projects in Western Australia, pushed back the electrification of its highly polluting Pilbara diesel truck fleet, and scrapped a processing plant that would have significantly cut emissions for its steel making customers.
A briefing document distributed this week to BHP investors cited the Guardian and ABC revelations and said they posed serious questions about the transparency and accountability of the company’s decarbonisation program. The briefing document encouraged investors to ask BHP whether it would set a medium-term emissions reductions target, saying its absence meant “there is no clear imperative to decarbonise in the medium-term”.
The briefing, compiled by the Australian Centre for Corporate Responsibility, included analysis suggesting the federal government’s fuel tax break was hampering the company’s progress on decarbonisation.
The company’s vast fleet of diesel haul trucks is one of its biggest sources of emissions. But BHP’s costs for using the diesel fleet is offset by a federal tax break, which was worth $622m to the company last financial year. BHP is the single biggest recipient of the tax break.
The ACCR’s analysis suggests that the fuel tax credit was having a “material impact on the financial attractiveness of diesel abatement projects”. It found removing the tax break would cause four major decarbonisation projects – the electrification of its truck and rail fleets in inland WA, for example – to transform from neutral to positive returns on investment.
ACCR head of engagement and sector strategy Naomi Hogan said the removal of the tax credit would make “most of BHP’s fleet electrification projects become financially viable with just the removal of this policy”.
“Policymakers should be under no illusion: decarbonisation in the mining sector is likely being delayed because of the fuel tax rebate,” Hogan said. “The financial signals for decarbonisation would be much stronger with the removal of this policy.”
Labor faces internal pressure on the policy before the party’s national conference in Adelaide next week.
More than 270 local ALP branches across the country have passed motions supporting a Labor Environment Action Network (Lean) campaign to limit the credits to $50m per company.
Labor MP Jerome Laxale broke ranks in May, after the Guardian’s investigation, to publicly back the changes, saying it was “reasonable to expect more” from big miners.
Independent senator David Pocock has also backed calls for changes to the concession, saying BHP was “laughing” at Australia’s key climate policy, the safeguard mechanism, while pocketing hundreds of millions of dollars in tax breaks.
“BHP had [to pay] $8m for emissions [under the safeguard mechanism] last year while getting $379m in fuel tax credits … you have to admit that’s pretty ridiculous,” he said. “They are spending 2% [of what they receive in diesel tax credits]. That sounds like a joke to most Australians.”
The ACCR analysis also warned BHP investors that delays on decarbonisation would expose it to greater carbon costs. The company’s initial decarbonisation plan – outlined in a document to shareholders in 2024 – would cost it US$11.2bn to $19.3bn in forced and voluntary purchases of carbon credits by 2050, the analysis said. A 10-year delay to its plans would increase those costs to US$16.6bn to $28.5bn, an increase of 48%.
Hogan said BHP’s delays to decarbonisation posed “significant risks” for investors.
“BHP has built a reputation with its investors as a safe set of hands to navigate the transition, but trust has been tested in recent times as more evidence of decarbonisation delays and deprioritisation comes to light,” she said.
“There is strong investor interest and a growing disquiet around the lack of transparent information from the company on the potential costs of pushing back decarbonisation and what it means for BHP’s emissions reduction pathway.”
BHP set a target of 30% emissions reductions by 2030 and has a goal to reach net zero in 2050. It has achieved its 2030 target already, largely by buying renewable power at overseas operations and the 2024 suspension of its struggling Western Australian nickel operations.
The company has engaged in a public relations campaign to boost its decarbonisation credentials since the revelations in the Guardian and the ABC, flying media to the Pilbara in a bid to promote an ongoing trial of electric haul trucks. The company has blamed slow technological advancement in large battery-electric haul trucks for delaying its decarbonisation projects.
The ACCR briefing tells investors that only 4% of BHP’s emissions reductions have been from Australian operations. The briefing says BHP’s stalled progress cannot be explained simply by technology delays.
“BHP’s actions no longer appear consistent with its ambition to ‘lead the evolution of [the mining] industry’,” the briefing says.
“This change in ambition reflects more than technology delays. It has delayed, curtailed or stopped several of its key decarbonisation projects, and deferred 87.5% of planned operational decarbonisation spend this decade.”
BHP said it had reduced its emissions by 36% from 2020 levels and continued to hold a goal of hitting net zero by 2050.
A spokesperson said the company had been transparent about its plan to reach its goals with shareholders, and had indicated it was “reliant on third party technologies the industry needs to electrify equipment”.
The delays to its decarbonisation program had been explained publicly in its 2025 annual report and elsewhere, the spokesperson said.
“Our plans account for these challenges and we now expect to adopt diesel displacement technologies at scale in our operations post FY2030 and as indicated in our annual report 2025 that our continued decarbonisation efforts will result in spend of at least US$4bn in the 2030s,” the spokesperson said.
“We also continue to work with industry partners and equipment producers to accelerate solutions, including trials of two 240-tonne battery-electric haul trucks in the Pilbara, and four battery-electric locomotives in coming months.”
A spokesperson for the resources minister, Madeleine King, said the government was not considering any changes to the fuel tax credit arrangements.
“The fuel tax credit is not a subsidy, grant or handout. It ensures businesses are not taxed for fuel used off public roads, and fuel used on road and rail which those businesses themselves have paid to build and maintain,” the spokesperson said.
“The Safeguard Mechanism supports resources sector decarbonisation by setting clear incentives for companies to invest and reduce their emissions.”