World’s miners commit to net-zero emissions amid rising coal popularity

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Members of the International Council on Mining and Metals (ICMM) have pledged to reach net-zero emissions by 2050, even though some of them are raking in billions from coal production.


Large-scale producers such as Glencore PLC (LSE:GLEN), BHP plc, Anglo American PLC (LSE:AAL), Antofagasta plc and Rio Tinto PLC (LSE:RIO) said the current commitment is for Scope 1 and 2 greenhouse gas, with Scope 3 plans to be announced by 2023 at the latest.


READ: Glencore tipped for US$15bn dividend windfall from coal price surge


When corporations announce their environmental targets, they often categorise them in three scopes.


Scope 1 covers direct emissions from owned or controlled sources, Scope 2 is about purchased electricity and heat and Scope 3 includes all other indirect emissions that are part of the value chain.


Experts say Scope 3 pledges often show how committed a company is, because that’s what requires the most effort.


“I welcome the leadership and joint ambition of ICMM members to commit to a goal of net-zero scope 1 and 2 GHG emissions by 2050 or sooner, and I strongly encourage companies to set scope 3 GHG emissions reduction targets by the end of 2023,” said Gonzalo Munoz, ‘High Level Climate Action Champion’ at the United Nations Framework Convention on Climate Change.


“The High-Level Climate Action Champions encourage members to strive to set the most ambitious science-based targets possible in line with the criteria of the Race to Zero campaign.”


Meanwhile, a new study by Friends of the Earth Europe and the European Environmental Bureau suggested the EU must reduce extraction of natural resources by 65% “to prevent human and ecological disaster”.


Researchers said the European Green Deal plans to increase mining should be ditched and replaced by hard limits to mining activities.


“Recognising that we cannot mine our way out of the climate crisis means that we need to stop the growth frenzy. It is as if current policies were driving a bus toward a cliff edge and the passengers were arguing about whether the bus should run on electricity or fossil fuels, when the more urgent question we should be asking is how we can stop the bus from plummeting down the cliff in the first place,” noted Diego Marin, Associate Policy Officer for Environmental Justice at the European Environmental Bureau.


“End of pipe solutions alone no longer cut it, we need to tackle the many issues with the linear take-make-use-lose economy at the very source.”


Glencore has been enjoying a surge in coal prices recently, with analysts at Deutsche Bank (NYSE:DB) expecting dividends of US$15bn over the next two years, corresponding to 25% of the current market cap.


Consumption of coal, which is the most carbon-intensive form of energy, peaked between 2010 and 2015 though it came after a period of significant growth between 2000 and 2010 that saw consumption double.


“Both coal mining and coal-fired power generation companies have been shifting towards no, or lower coal exposure through various mechanisms. Some miners, such as Rio Tinto, have acted early by exiting coal altogether, while others are laying out a path to an eventual exit with some decisions looming,” analysts at Morgan Stanley (NYSE:MS) said.


“In some cases, thermal coal assets are integral to mining companies like Glencore, and a sale or exit could have substantial implications for group structure and capital allocation. For power generation, it might involve coal exits, with a transition to cleaner power generation (such as wind and solar), whilst for other companies their strategies might rely on CCS technologies.”


BHP’s thermal coal assets account for 3% of revenues, while its met coal assets represent 12%. The group committed last year to exit these operations and set itself a timeframe of 24 months.


Glencore’s management team have opined that selling coal assets does not make emissions disappear and rather just changes ownership from one company to another. Its plan is not to replace its coal resources when they deplete.


The question is whether this will happen by 2050, and whether it will be too late to go net-zero by then.


Shares in Glencore were trading 2% higher at 363.05p on Tuesday afternoon.

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