BHP CEO Andrew Mackenzie
JOHANNESBURG (miningweekly.com) – Despite the rapid growth of the US shale gas industry, coal will remain the dominant global fuel source for years to come, the CEO of the world’s largest diversified mining company, BHP Billiton said this week.
In a speech delivered at the CERAWeek conference, in Houston, Andrew Mackenzie pointed out that cost and security of supply meant that most jurisdictions would favour the use of local resources to meet their energy requirements. Asian economies had easier access to large coal reserves, than they had to cheap gas and the cost of generating electricity from gas in Asia was more than double the cost of coal.
“The shale gas revolution is unlikely to go global quickly. Despite what many claim, we are unlikely to see gas replace coal globally at the scale and pace [it has] here in the US,” Mackenzie said.
BHP moved into US shale in 2011, spending about $20-billion (including debt) on assets, which made it one of the largest foreign investors in US shale.
The company, which supplies oil, gas, coal, uranium and the materials used in renewables and energy infrastructure, said over 70% of the world’s energy would still be met by oil, gas and coal by 2030.
Renewable-energy sources were expected to provide a growing source of electricity; however, Mackenzie stressed that genuine reliance on them would depend on the development of large-scale and cost-effective energy storage.
“Over the next few decades, fossil fuels will remain central to the energy mix given their affordability and [that] the scale of existing infrastructure make them hard to replace,” he stated.
Mackenzie said access to diverse sources of energy would be critical to continued economic growth in a world where one-fifth of population still lacked access to modern energy. “As economic growth transforms developing nations over the next 20 years, 1.7-billion people will gain access to electricity for the first time. More broadly, global energy demand will increase by over 30%, driven largely by China and India, with the fastest growth in Africa,” he said.
The BHP Billiton CEO further said that open market policies would improve energy security and would help developing nations transition into vibrant consumer economies.
“By diversifying the supply of resources and making technology more widely available, open markets will also help countries reduce their emissions and adapt to climate change over the long term. We must address energy poverty and climate change together. Any attempt to solve one without the other is destined to fail,” he said.
The resources industry had the responsibility to reduce its own emissions, contribute constructively to public policy debates and would play an important role in contributing technical and geological expertise to help inform solutions such as the development of large-scale carbon storage, Mackenzie added.
“Efficiency should be the priority for all of us, industry and consumer alike. It is by far the largest and lowest-cost driver of carbon dioxide reduction over the next two decades,” he added, reiterating that global growth was reliant on energy and that all energy sources would be important.
“With innovation, good governance and open markets, we can supply the resources the world needs, deliver returns to our owners, address energy poverty and improve the world’s ability to solve complex global issues like climate change,” he said.