How the Minerals Council of Australia has govt’s ear on coal
Tony Abbott may be gone, but his fossil fuel industry-dictated rhetoric lives on. Coal is still “good for humanity” in the eyes of the Turnbull government.
Thus we saw the new minister for resources, Josh Frydenberg, last Sunday on the ABC’s Insiders program, defending on “moral” grounds Australia’s coal industry and in particular the Carmichael mega-mine in Queensland, proposed by the Indian conglomerate Adani.
“It will help lift hundreds of millions of people out of energy poverty not just in India but across the developing world,” he said.
“More than two billion people today are using wood and dung for their cooking. The World Health Organisation says that this leads to 4.3 million premature deaths.
“That’s more people dying through those sort of inefficient forms of energy than from malaria, from tuberculosis and HIV AIDS all combined. So there is a strong moral case,” he said.
Frydenberg’s recitation reflected quite closely a claim contained in a so-called “fact sheet” produced by the Minerals Council of Australia, which also blamed 4.3 million premature deaths each year on “household air pollution resulting from the inefficient use of traditional biomass such as wood, charcoal and animal waste”.
The Minerals Council also claimed to be quoting the World Health Organisation. But neither Frydenberg nor the Minerals Council quoted it accurately. They both omitted the word “coal”.
The WHO report did indeed say 4.3 million people die each year as a result of household emissions from indoor fires and leaky stoves. It also noted, in the very same sentence that enumerated the hazards of dung and wood, that many of the stoves are fuelled by coal.
Had the new minister done a little research on the plentiful literature from the World Health Organisation, he would have discovered about 800 million people worldwide rely for domestic heating and cooking on coal.
He would also have seen the WHO’s concerns that coal is in some ways worse for health than wood or dung.
When it came to the release of cancer-causing chemicals, the organisation said, “there is stronger evidence [for coal] than for biomass, on specific health issues related to coals intrinsically containing toxic elements” including arsenic, fluorine, selenium, mercury and lead.
Frydenberg mentioned none of this, however, which invites a question: was he misrepresenting the facts, or was he simply parroting the Minerals Council, which was misrepresenting the facts?
We sought clarification from the minister’s office, but none was forthcoming. However, there is strong reason to suspect the latter. The coal lobby has at its disposal vastly more resources to devote to research and misrepresentation than a mere ministerial office.
We’ll come back to the mythical moral case for coal exports, but first let’s go to the people who manufacture the rhetorical bullets fired by the likes of Abbott, Frydenberg and also Labor’s resources spokesman and former fossil fuel industry lobbyist Gary Gray.
Dominated by coal sector
There used to be a separate peak body for the coal industry, the Australian Coal Association, which was handsomely funded by its constituent miners to the tune of $36.5 million over a nine-year period from 2004. But there was also a much bigger lobby group that represented all mining sectors, the Minerals Council of Australia. Over the past decade it has raked in some $200 million.
In August 2013, the Australian Coal Association released a statement announcing it was to be subsumed into the Minerals Council. Actually, it was more like a reverse takeover. Big as the coalmining industry is in Australia, it accounts for only a bit more than 20 per cent of the value of our mineral exports. Yet now the Minerals Council has come to be dominated by just that one sector, coal.
Coal interests are hugely over-represented on the MCA board. There is Peter Freyberg, head of coal assets for Glencore; Phil Edmands, managing director of Rio Tinto; Mike Henry, president of BHP Billiton’s coal division; David Diamond, Australian head of Anglo American coal; and Charles Meintjes, Australian president of Peabody Energy. Representatives of the biggest polluters on the planet now run the show.
David Ritter, CEO of Greenpeace Australia, can’t understand how the rest of the industry let this happen.
“There are historic divisions within the minerals industry depending on what commodity they’re digging up – like fossil fuels versus precious metals,” says Ritter.
And the environment movement has long had different views of those different miners.
“We take the view that there’s good mining and there’s bad mining,” he says.
While they might have had their run-ins with various miners, it is only the fossil fuel industry, and particularly coal, the greenies are really gunning for.
When news broke that the Australian Coal Association was being wound up, says Ritter, “for a moment there was the feeling we’d triumphed over an adversary”.
Then came the realisation that the coal lobby had actually been pretty smart.
“When industry isn’t doing so well, that’s when you need a peak lobby to work for you,” he says. “They thought it better to inhabit the main peak body and run the show from there.”
With five times the budget.
But why on earth, he wonders, would the producers of resources that actually are good for humanity want to subsidise the defence of the indefensible?
An ‘irrational mindset’
It comes down to an irrational mindset still dominant among many in the top level of the Australian corporate world, says Ian Dunlop, who is in a position to know. Dunlop is a former oil, gas and coal industry executive and was CEO of the Australian Institute of Company Directors. A quarter-century ago, before he became convinced of the threat posed by climate change, he was chairman of the Australian Coal Association.
“At the top end of corporate Australia, among the ASX 200 companies, the Business Council, the Minerals Council, there is still enormous inertia.
“You have the likes of Maurice Newman and his cohorts, Dick Warburton, David Murray, Tony Shepherd, Graham Bradley, all well established in their denial mode, despite all the evidence.”
But there are signs of change. National Australia Bank, for example, last month joined the dozen or so major international banks that have ruled out funding for the Adani project. We’re seeing a split even within the ranks of the energy sector. Australia’s biggest greenhouse gas polluter, AGL, has announced it will shut down its existing coal-fired generators and be out of coal by 2050 – hardly an ambitious timetable but significant. And just this week, Australia’s biggest energy retailer, Origin, announced its intent to embrace renewables over coal, although it is still heavily committed to gas.
Internationally, there has been a flurry of non-coal fossil fuel companies banding together for the Oil and Gas Climate Initiative. And the Energy Transitions Commission.
The industry sees the sea change coming and is preparing to chuck the ballast of coal overboard.
Even the International Energy Agency, hardly a greenie group, has long suggested the best solution to dirty Third World heating and cooking is the substitution of bottled gas for coal, twigs and dung.
No serious analysis suggests Australian coal exports will do much to ameliorate the health problems of the world’s poor.
“In India, where the Carmichael coal is set to go, most of those [400-odd-million people] who don’t have electricity, don’t have it because they don’t have access to the grid,” says the CEO of the Australian Conservation Foundation, Kelly O’Shanassy.
“Exporting coal is not going to help them. The best, cheapest way to get electricity to them is through solar. I was in India in February meeting the CEOs of the energy companies, and that’s what they say.”
Indeed, they don’t just say it, they’re acting on it. Over the past five years, India added extra capacity from renewable sources equivalent to almost half Australia’s current capacity. And China is moving vastly faster.
And no wonder. There has been considerable focus over recent years on air pollution in China. But India’s air is actually worse. Thirteen of the 20 most-polluted cities in the world are in India. Delhi is number one – another World Health Organisation finding not quoted by the Minerals Council or Josh Frydenberg.
Much of that is due to other factors, such as vehicle exhaust and dung-burning, but much is also down to India’s old and dirty coal-fired power stations.
A major study a couple of years ago attributed more than 100,000 annual deaths to them.
We could go on at length about the various effects of air pollution – the 30 per cent reduced lung function of the average Indian, the rates of other diseases, but the point is surely made: coal is part of the problem, not the solution to it, and talk of a moral imperative to send them more is mealy-mouthed. It’s about money. But even on that score, the experts tell us, coal fails. Not just in India; everywhere.
“Numerous studies show there are significant costs associated with coal at every stage,” says George Crisp, West Australian chairman of Doctors for the Environment Australia. “Most arise from climate change and air pollution. There are other occupational risks and things like mercury.”
When you add up all these so-called “externalities”, he says, “you find that the real cost makes coal uneconomic.”
Crisp cites one study by the eminent Yale University economist William Nordhaus.
“He found the externality costs of coal in the US are between 0.8 and 5.6 times the value added, meaning coal was actually uneconomic in the US.
“One done here in 2009, by the Australian Academy of Technological Sciences and Engineering, estimated the health costs resulting from pollutants emitted by coal-fired power stations at $2.6 billion per year.
“They calculated that per megawatt hour, the externalities added $42 per megawatt hour to black coal, $52 to brown coal and $19 for gas.”
So, he says, the true cost of fossil fuel generation was about double the wholesale price of it.
“There was a study done in greater metropolitan Sydney in 2005 looking at the air pollution costs, at about $4.7 billion per year in notional lost lives. About 50 per cent of that was attributed to coal-fired electricity.
“We know that people are being harmed by this industry. Yet we hear stories about the [alleged negative health effects of] wind power, which are just rubbish, when there are real significant effects to people’s health that we could do something about.”
But, says Crisp, it’s hard to get studies done here, in part because of the difficulty of getting funding from our coal-dependent governments.
Indeed it’s hard to get leadership from the government on any aspect of the problem. A conference sponsored by the ACF a couple of months ago, involving energy industry analysts, investors and suppliers, decried the lack of any workable plan to clean up Australia’s own antiquated and dirty electricity-generation fleet – even as the likes of AGL are looking for an orderly way out.
Under the Abbott–Turnbull climate policy, we are facing the perverse situation where dirtier but cheaper brown coal generation is driving out cleaner sources of power.
“The old [Labor] federal government’s policy put a price on carbon emissions that made it economically sensible to produce more electricity from the less-polluting source,” says Bruce Mountain, director of Carbon and Energy Markets, an economics consultancy focused on Australia’s energy and utility industries.
“The current government’s absence of a market signal makes it cheaper to produce from coal, which has no other use.”
The influence of the coal lobby on the government will end up costing Australia billions of dollars because of the delays in acting on climate change and pollution, says Ian Dunlop.
And their determination to export ever more coal would ensure “the world is toasted, and Australia is probably toasted earlier than most.”
Decisive action is what’s needed, he says. And instead we get moral homilies about the humanitarian benefits of coal, as dictated by the Minerals Council to a compliant government.
Literally and metaphorically, they talk dung.
This article was first published in the print edition of The Saturday Paper on Oct 24, 2015 as "Coal mission of the willing". Subscribe here.