Coal will make up 70 per cent of world energy mix: BHP

BHP Billiton chief executive Andrew Mackenzie says more than 70 per cent of the world’s energy will be supplied by fossil fuels in 2030 as countries boosted economic growth and pulled people out of “abject poverty”.

In a speech at a Houston energy convention, Mackenzie said world-wide demand for energy would increase by 30 per cent in the next twenty years, with much of this expected to come from China and India.

He said growing Asian economies would have easier access to large coal reserves than cheap gas and said fossil fuels would remain the main source of affordable energy.

Developing nations would require improved access to fuel in order to grow their economies and pull people out of poverty Mackenzie said.

He said switching to other fuel sources was simply not an option for some nations.

“I think many people who criticise fossil fuels – and crucified individual fossil fuels – assume that every country has a very easy choice to switch fuels,” he told The Australian.

“And that is not the case … If you say to many of those countries, and particularly a lot of countries in Asia and I would add Africa, ‘You have to reject fossil fuels and you have to simply survive or even reject coal, and you have to survive on just gas’, then I can tell you now, because of the high cost of those fuels, that those countries will almost certainly be condemned to a much longer phase before they can lift their citizens out of abject poverty. And I’m a great believer that poverty of that level ultimately is quite a serious polluter.”

It is estimated around 1.3 billion people have no access to electricity and 2.6 billion still cook and heat with dung or scavenged timber.

The industry has long argued there a very few commercially reliable and affordable solutions for base load energy supply without coal, and said calls by environmentalists to extinguish the industry lost site of the fact that a suite of energy solutions are required.

“We must address energy poverty and climate change together. Any attempt to solve one without the other is destined to fail,” Mackenzie said.

Mackenzie said a sensible policy mix was needed, stating he did give conditional support to carbon pricing mechanisms.

 “The geological record provides compelling evidence that substantial variation in CO2 and other greenhouse gases result in temperature changes with potentially significant implications for life on Earth," he said.

Calling for a four point approach, Mackenzie said constructive policies with appropriate carbon pricing mechanisms were required to ensure to industry could find cost-effective ways to lower emissions.

While Mackeznie sees gas as having the strongest growth, he watered down claims the US shale gas revolution would go global rapidly

““Despite what many claim, we are unlikely to see gas replace coal globally at the scale and pace seen here in the US,” Mackenzie said.

He said renewables would also grow quickly, but could only be relied on when energy storage was available.

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