* Funding underlines focus on industrial CCS, shift to China
* Campaigners say funding is tiny, given scale of problem
* BHP says fossil fuels will remain part of the energy mix
By Barbara Lewis
BRUSSELS, June 6 (Reuters) - BHP Billiton BHP.AX BLT.L
on Monday announced a $7.4 million donation to Peking University
to develop technology to capture carbon emissions from the iron
and steel industries.
Analysts said the funding marked a shift, as North America
has so far led the way in development of carbon capture and
storage (CCS) and the focus has been on power plants rather than
industrial sector emissions.
BHP Billiton CEO Andrew Mackenzie said capturing carbon and
finding industrial uses for it had the potential to be a
significant industry for China if it can be proved to be
commercially viable.
China, the world's biggest emitter, last December was among
the nearly 200 parties that signed up to the first truly global
deal on tackling climate change, which sent shares in coal
mining firms tumbling.
BHP Billiton says it acknowledges the problem of global
warming, but that carbon-intensive industry will inevitably
increase as the population grows, and that fossil fuel will
remain essential for the foreseeable future.
"Debate that centres on making one fossil fuel appear more
climate-friendly than another misses the point," Mackenzie said,
according to a copy of his speech to Peking University.
BHP Billiton's funding, spread over three years, will
support research carried out by the university in collaboration
with China's National Centre for Climate Change Strategy. China
is the company's biggest customer.
BHP, whose portfolio is strongly weighted towards coal and
steel, has already invested in a venture with Canadian power
company Saskatchewan Power (SaskPower) SSPOW.UL , which opened
the world's first large-scale CCS project at a coal-fired plant
in 2014.
For the steel industry, for instance, BHP says there are no
immediate alternatives for replacing coking coal, which is an
ingredient as well as a fuel source.
Climate campaigners, however, say there should be more
emphasis on recycling, and coal can be substituted with gas as
the energy source for smelting steel.
Campaign group Bellona said any investment in CCS was
critical for a company such as BHP, which has huge coal assets,
but the amount pledged was tiny compared with the scale of the
problem.
The European Union has been trying to foster CCS for years
with little success as firms with limited spending power see no
advantage in being the first to work on technology that is only
likely to become affordable when developed on a large scale.
(Editing by Mark Trevelyan)