Andrew MacKenzie

This article is part of the Global Energy Monitor coverage of "clean coal."

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Carbon Capture and Storage Carbon Capture and Storage projects which have been abandoned Clean Coal Clean Coal Marketing Campaign Clean Coal Technology Clean coal - quotable quotes

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America's Power America's Power Army Americans for Balanced Energy Choices American Coalition for Clean Coal Electricity FutureGen U.S. coal politics

Andrew MacKenzie is the Chief Executive Officer of BHP Billiton.

Background

MacKenzie's biographical note on the BHP Billiton website states:

"Andrew was appointed Director of BHP Billiton Limited and BHP Billiton Plc in May 2013. He was appointed Chief Executive Officer on 10 May 2013. Andrew has over 30 years’ experience in oil and gas, petrochemicals and minerals. He joined BHP Billiton in November 2008 as Chief Executive Non-Ferrous and commenced as Chief Executive Officer in May 2013. Prior to BHP Billiton, Andrew worked at Rio Tinto, where he was Chief Executive of Diamonds and Minerals, and BP where he held a number of senior roles, including Group Vice President for Technology and Engineering, and Group Vice President for Chemicals."

It also states that he was "Non-Executive Director of Centrica plc (from September 2005 to May 2013)."

Comments on Coal, Climate and Carbon Capture and Storage

Dodging the issue in London and Melbourne

In his first speech since being appointed in May 2013 as CEO of BHP Billiton, MacKenzie made no mention of coal, or climate or the company's proposed response to the challenges it posed. Instead - in a June 6 2013 speech to the Melbourne Mining Club annual gathering in London - the day after World Environment Day - MacKenzie simply sought to proclaim that the mining industry and BHP Billiton in particular were essential to addressing poverty. "The noble purpose of our trade," he said, is "to supply the resources that enable economic growth and lift several billion people out of poverty."

"Popular opinion has it that our industry is fundamentally unsustainable because the world, they believe, is running out of resources. Popular opinion is wrong," he insisted. Later in his speech he insisted that "abundance gives us choice. And if we choose well, we can build our industry in a way that is sustainable. There is no inconsistency between sustainable business and shareholder value."

It was a speech critiqued by Bob Burton in RenewEconomy for seeking to obscure some of the key challenges over sustainability facing the mining industry:

"As one of the single biggest source of greenhouse gas emissions, coal is the epitome of unsustainability caused, not by scarcity, but by its very abundance. But that is hardly a point that Mackenzie is going to make. After all, BHP Billiton is one of the world’s largest exporters of thermal coal, which is used in power stations, and the world’s largest exporter of metallurgical coal, which is mostly used in steel making. All up, BHP Billiton’s direct share of coal produced from its mines is nudging up to a hundred million tonnes a year. ... So while it suits the PR purposes of BHP Billiton to try and hype a straw-man argument over resources ‘running out’, the reality is that coal has outlived its social utility. Mackenzie would do well to reflect on the fact that that the demise of asbestos mining in Australia was not because of its scarcity but because of its toxic effects and public opposition. So too it it is likely to be with coal."

In MacKenzie next general speech, just on two months later in August 2013 to the Asia Society in Melbourne, MacKenzie made only a passing mention of coal - and then only in the context of the prospects of large projected increases in demand in Asia. "As China moves through the economic cycle, from the investment-led growth that I have just described to a consumption-driven economy, we expect even stronger growth in the demand for commodities used in energy, energy transfer and food production, such as natural gas, coal, copper and potash. Only a handful of countries, of which Australia is one, can currently deliver the volume of resources required for Asia’s continued economic growth. Australia’s resources industry is worth backing. It is one of Australia’s true competitive advantages and a unique enabler of the broader relationship with Asia." It was an upbeat speech with no mention of the air pollution crisis affecting the Chinese population and the political class or the broader climate challenges.

Getting down and dirty in Houston

When MacKenzie spoke at a commodities conference in Houston in March 2014, he was happy to proselytise on behalf of coal, downplay the role of renewables and gas and hype fossil fuels as necessary to reduce poverty. MacKenzie said:

"The growth of our industry is fundamentally tied to the alleviation of abject poverty and the successful development of emerging economies. This process is likely to increase the demand for energy by over 30 per cent in the next 20 years , with two thirds of new demand from Asia and half from China and India. Africa will see the fastest growth – off a lower base. Every nation will choose a different mix which balances affordability and security of supply to fulfil their demand. But over the next few decades fossil fuels will remain central to the energy mix as their affordability and the scale of our existing infrastructure make them hard to replace."

"Renewables are likely to be a rapidly-growing source of energy as we strive to reduce carbon emissions,but we will only be able to rely on them when large-scale and cost effective energy storage becomes available. Nuclear can provide low carbon base load but in many countries, post-Fukushima, faces strong, public resistance which is likely to slow or even reverse its growth for some time."

"As we look to 2030 we anticipate over 70 per cent of the world’s energy will still be supplied by oil, gas and coal. Gas is expected to see the strongest growth through wider use in power and transportation. But the shale gas revolution is unlikely to go global quickly. And despite what many claim, we are unlikely to see gas replace coal globally at the scale and pace seen here in the US."

"Cost and security of supply mean most places will favour the use of local resources to meet their energy requirements. The fastest growing Asian economies have easier access to large coal reserves than they have to cheap gas. The cost of generating electricity from gas in Asia is more than double the cost of coal. Coal will remain the region’s primary source of affordable energy and the basis of its energy security."

Later in the speech he turned directly to the issue of rising greenhouse gas emissions and climate change. He said:

"Over the long term open markets will also help countries reduce their emissions and adapt to climate change, by diversifying the supply of resources and promoting innovation to make it easier to switch fuels and become more efficient. But more action is needed. As an industry we need to acknowledge that, unless we control emissions, the most likely energy mix will have negative consequences for the broader environment. Predicting the detail of the future climate is complex but the geological evidence record provides compelling evidence. Substantial variation in CO2 and other greenhouse gases results in temperature changes with potentially significant implications for life on Earth. Warming of the climate is real, human activity is the dominant cause of this warming and physical impacts are unavoidable."

"The solutions we choose must address energy poverty and climate change together. Any attempt to solve one without the other is destined to fail. While the wealth gap between rich and poor countries remains as wide, we will struggle to reach a comprehensive global climate agreement and hence regional action will be key in the medium term. The world will continue to rely on fossil fuels over the long term because their continued supply is vital to the development that will deliver huge reductions in abject poverty and improvements to all our living standards."

One of the ways MacKenzie said BHP Billiton "must contribute our technical and market expertise to find solutions. For example, our understanding of the earth’s geology will inform the development of large scale carbon storage. And finally we should encourage the development of constructive policy, including appropriate carbon pricing mechanisms, that enable the market to identify the most cost-effective methods of cutting emissions."

Off to Scotland

Just over a year later, MacKenzie spoke at the annual dinner of the Scottish Oil Club. In his speech MacKenzie insisted that "the long-term fundamentals that support global economic growth and the demand for energy are strong."

"... While greater efficiency, renewables, and nuclear will help meet growing energy demand, our industry will play a significant role in every plausible scenario. For example, the IEA has projected that conventional energy sources will still provide about three quarters of the world’s energy mix in 2040. This signals an increase in demand for our products over current levels and also the long-term opportunity before us," he said.

He then moved on to extol the virtues of Carbon Capture and Storage.

"The UK is also playing a major role in developing the technology the industry needs to effectively address the challenge of climate change. To achieve this, there must be a significant focus to develop and deploy low-emission technologies. I see no trade-off between the pursuit of efficiency, innovation and sustainability."

"The UK is the only country in the European Union that is seriously investing in Carbon Capture and Storage (CCS) with the Peterhead project in Scotland and White Rose in England. The UK has some of the foremost research institutions seeking to deepen our fundamental understanding of CCS with the skills required, very similar to those Scotland used to build the North Sea oil industry. Importantly, the UK is also creating a regulatory environment that supports the growth of a CCS industry. And when government works collaboratively with industry, a cost-effective step change can be made."

"CCS is an investment in the future of our industry and an example of how we can use our understanding of geology and technology to address environmental priorities. To give you some perspective, should CCS become commercially proven, it could become a significant industry for the UK on a scale to rival other parts of the energy industry. If fossil fuels continue to supply most of the world’s energy CCS could be as large as the oil and gas business, as the volume we store in the earth would match what we take from the earth. Investment in CCS is critical and should occur on the same scale as investment in renewables."

Articles and resources

Related GEM.wiki articles

• BHP Billiton's climate policy
• BHP Billiton's coal interests
• BHP Billiton Annual Reports and Carbon Capture and Storage
• Carbon Capture and Storage demonstration projects worldwide
• Carbon Capture and Storage projects which have been abandoned
• Carbon Capture and Storage in Australia
• Carbon Capture and Storage in Canada
• Carbon Capture and Storage in China
• Carbon Capture and Storage in India
• Carbon Capture and Storage in Norway
• Carbon Capture and Storage in South Africa
• Carbon Capture and Storage in the United Kingdom
• Carbon Capture and Storage in the United States
• Clean Development Mechanism and Carbon Capture and Storage
• Carbon Capture and Storage Demonstration Project (United Kingdom)
• Clean coal - quotable quotes
• Peterhead Carbon Capture and Storage project
• The Australian Coal Association's Proposed Carbon Capture and Storage Taskforce

External resources

Speeches & comments by BHP Executives on CCS

• Andrew MacKenzie, CEO of BHP Billiton,"Speech to the Melbourne Mining Club", June 6, 2013.
• Andrew MacKenzie, CEO of BHP Billiton, "Speech to the Asia Society, Business of Asia Luncheon in Melbourne, Australia", BHP Billiton, August 7, 2013.
• Andrew MacKenzie, CEO of BHP Billiton, CERAWeek 2014 - Energy, Commodities and the Global Economy, Houston", March 4, 2014.
• Andrew MacKenzie, CEO of BHP Billiton, Speech to the Annual Dinner of the Scottish Oil Club", BHP Billiton, March 20, 2015.