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Hogsback meets the new champions of coal

AT FIRST glance BHP Billiton boss Andrew Mackenzie and Russian president Vladimir Putin do not appear to have much in common. However, as <i>Hogsback</i> digested recent events he realised that they both deserve the title of Coal Champion.

Staff Reporter

In Houston, widely regarded as the world’s oil capital, Mackenzie praised the role of coal in helping elevate billions of people out of poverty by providing electricity when they would once have been forced to collect wood to heat their homes and burn candles for light.

In Crimea, epicentre of previous historic showdowns such as the Charge of the Light Brigade, Putin has forced 400 million people in Europe to recognise that they face a cold and dark future without coal.

Mackenzie first if only because he is less likely to change his position overnight and do something silly such as launch an invasion of Rio Tinto or any other rival mining company in the same way Putin has annexed a chunk of Ukraine.

In his Houston speech Mackenzie laid out a compelling case for the role of coal in the future, arguing there was room for all forms of fuel but that “more than 70% of the world’s energy will still be coming from fossil fuels in 2030”

Regular readers of commentary on energy will probably recognise that 70% estimate as coming straight from the handbook of the International Energy Agency, which late last year recognised the inevitability of fossil fuels continuing to dominate global energy use.

What the IEA said in December was that the expansion rate of coal consumption would probably slow to an annualised 2.3% but that coal, thanks to it being “abundant and geopolitically secure” was a fuel source “here to stay for a long time to come”

Mackenzie, while winning headlines with his Houston speech, was effectively parroting the IEA line, albeit with a touch of humanity that might be expected from a man who once chaired a left-wing British think tank called Demos.

“I think many people who criticise fossil fuels, and crucify individual fossil fuels, assume that every country has a very easy choice to switch fuels,” he said. “That is not the case.”

Mackenzie’s argument centred on an inconvenient truth, that most third world countries in Asia and Africa do not have a choice in switching from coal to gas or renewables because either they do not have them, or cannot afford them.

Without coal many countries would be condemned to a prolonged period of slow growth and abject poverty: “and I am a great believer that poverty of that level ultimately is quite a serious polluter”

It could, of course, be argued that Mackenzie is simply singing the BHP Billiton company song, which includes several verses in praise of coal both metallurgical and thermal.

The same cannot be said for the other Coal Champion, Vlad Putin, who has just performed a trick that comes straight from a comedy skit call “unintended consequences”. That is because his invasion of Ukraine has rung alarm bells across Europe, which is heavily dependent on Russian gas to power its industries and heat its homes.

Why Russia’s aggression has come as a surprise is another aspect to the Russian annexation of Crimea, just as it is a surprise to accept that European countries allowed themselves to become hooked on Russian gas as badly as a crack cocaine user with a heavy drug habit.

“Wakey-wakey!!” went the cry across Europe last weekend as governments were forced to consider the trap they had walked into with their plans to close coal-fired power stations and mothball nuclear reactors in the belief that wind, solar and Russian gas would make up the shortfall.

The inconvenient truth, said without an apology to former US vice-president Al Gore and his semi-documentary of the same name about climate change, is that all three of the coal and nuclear replacements have major flaws in their structure and are totally unsuited to a reliable supply of power.

Wind only works when the wind blows. Solar only works when the sun shines. Russian gas only works when Russia says it will work.

Perhaps of even greater importance, Russian gas only flows after Russia has extracted cash from its customers – sometimes at the barrel of a gun.

Little wonder Europe is taking a fresh and more friendly look at coal.

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