BHP Wants Carbon To Be Priced: What Investors Need To Know

BHP Billiton

The energy, as well as climate policies, got rejected at Wentworth byelection, although the Morrison’s administration is working on the same policies. BHP Billiton Limited (ASX: BHP) is of the view that the pricing of carbon also needs to be included in the policy mix. As per the key personnel of BHP, the landmark Intergovernmental Panel on Climate Change report calls for the measures which would help the companies to decrease the harmful emissions with the help of changes with respect to technology, finance, lifestyle, the policy as well as international co-operation.

BHP Billiton is of the view that the world does need to move ahead with respect to limiting the climate change in regard to the current international agreements and also towards the access to affordable energy. The company also stated that there is no point in making either one a priority as they both are required in order to achieve sustainable development. It believes that fossil fuels would be the primary part in regard to the energy mix for the times to come. Therefore, the efforts need to be adopted which could boost energy efficiency as well as the development and deployment of the technology which gives out lower emissions. 

The company has also stated that the carbon needs to be priced at such a level which takes care of the competition as well as which gets the lowest cost emissions reduction. It has been placed as a leader in regard to the emissions reduction with respect to the resources industry. The company believes that it would be working to reduce the operational emissions to zero in the long term and it plans to the achieve that goal by working on the technologies which decrease the fugitive emissions, battery storage, carbon capture and storage, renewable energy as well as transportation which releases low emissions.

A quick look at BHP’s FY 2018 results 

In FY 2018, the increased prices coupled with the robust operating performance aided BHP Billiton in generating significant cash flows thus helping the company in the reduction of net debt as well as in increasing the dividends of the company. In the same period, the company’s attributable profit amounted to US$3.7 billion which consists of the exceptional loss amounting to US$5.2 billion (post-tax). This loss was witnessed because of the impairment in regard to Onshore US assets, Samarco dam failure as well as the US tax reform. The company also witnessed a rise in the underlying EBITDA on the YoY basis in FY 2018.

BHP Billiton generated underlying EBITDA amounting to US$23.2 billion in FY 2018 while in FY 2017 it was US$19.4 billion, and the line item got helped by the higher volumes, increased prices as well as one-off items. The particulars had partially offset the effects of unfavorable exchange rate fluctuations, increased costs, inflation as well as other net movements.

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At the time of writing, the stock price of BHP stood at A$33.250 per share implying a rise of A$0.150 per share or 0.453%.

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