Coal loses as Pearson leaves Minerals Council

We lost a valuable voice last week when Brendan Pearson was effectively shoved out of his job as boss of the Minerals Council of Australia by those who prefer feel-good corporate bromides and green myths over energy facts and figures.

Those with Australia’s best interests at heart and who know Pearson understand that there isn’t a surplus of sensible voices on energy such that we can afford to lose this one. Those who don’t know him ought to know he has worked tirelessly so that coal, a critical source of baseload power, is now part of a wider national debate about getting energy policy right.

Since taking over the Minerals Council’s reins in late 2013, Pearson has transformed a moribund conversation about energy into one that is evidence-based and devoid of emotion and ideology.

Pearson’s role in public debate means that more people understand that coal-fired baseload power is the key to our living standards and the competitiveness of our businesses, that coal provides about 80 per cent of electricity usage on Australia’s east coast every day of the week, and that coal power covers us when the sun doesn’t shine and when the wind doesn’t blow

Day in and day out, Pearson has confronted green emotion with cold, hard facts and figures.

He has gathered evidence from local and international bodies and injected it into policy formulations. He has pointed to the fact high-efficiency, low-emissions coal generation is being used in China and India, where it is the cheapest available energy option.

The same is true of Japan, where the government is building 45 more HELE coal-fired plants. Even the “poster person of renewable energy, Germany” is embracing new HELE units, as Pearson wrote earlier this year.

“How is it that these plants are the lowest cost option in dozens of coal-importing nations but not in Australia, which is the biggest exporter of high-quality coal in the world?” Pearson asked.

Malcolm Turnbull’s January statement that clean coal was needed to ensure baseload power because gas was too expensive and renewables were too intermittent was far from inevitable.

As Andrew Michelmore, a former director and chairman of the Minerals Council, tells The Australian, “Energy policy was all going in the wrong direction in terms of misinformation” until Pearson’s strong advocacy, based on what is happening in the rest of the world, and working with ministers behind the scenes to settle on an energy policy based on the national interest.

“That certainly influenced the government’s position and the Prime Minister’s position,” Michelmore says.

That influence has been snuffed out — Pearson departs next week — because BHP Billiton, a powerful member of the industry group, has adopted green politics in a way that works against Australia’s national interest in having secure, stable and cheap energy.

Earlier this month, an activist group called the Australasian Centre for Corporate Responsibility put forward a shareholder resolution to BHP asking the Big Australian to reconsider its membership of the Minerals Council. BHP has not abandoned the industry body yet, but has caved in by agreeing publish its differ­ences with the Minerals Council.

That wedge is the end of consensus-driven energy policy based on Australia’s national interest. BHP’s craven capitulation will embolden more activists to pick off other companies too, preventing industry consensus around sensible policy in the national interest.

As Michelmore says of these green activist groups: “They will go and find others, they will use BHP as an example. They will demand that others do the same.”

Writing in The Australian Financial Review in the lead-up to Pearson’s ouster from the Minerals Council, Matthew Stevens noted that “even people inside the council have decided that (the Council) is an evangelist for the past” and “this is no time for the MCA to entrench a reputation as a father of lost causes”.

BHP and green activists must have loved reading that baloney.

Pearson’s “problem”, says one industry insider, is that “he understands coal”, and that jars with the current crop of faith-driven green corporates.

Another industry insider tells The Australian that BHP didn’t like Pearson stating the bleeding obvious: that ill-conceived energy policy leads to “energy ­poverty”.

It’s a neat reminder of the deep disconnect between corporate bigwigs on multi-million-dollar salaries and Australians struggling to pay their power bills. Pearson also dared to challenge the quick fix of “certainty” that BHP wants by accepting the Finkel review holus bolus. He sought real reform of energy policy in the national interest.

In June, Pearson wrote that the Finkel review, which describes itself as a “once-in-a-generation” opportunity to develop a reliable, low-emissions energy system, studiously ignored the only zero-emissions baseload power source: nuclear power.

Moreover, Finkel’s report implies that HELE coal generation doesn’t qualify as “clean energy”. That may suit BHP’s green agenda but it doesn’t serve the nation’s need for reliable energy.

When the Big Australian is uncomfortable with an industry group boss who presents the facts about coal, you have to ask whether its corporate executives have forsaken both the national interest and shareholder value for feel-good green agendas.

It’s a virus that infects plenty of modern corporations, which, pushed by a few noisy activists, search for some illusory holy grail of stakeholder and community support, only to sacrifice shareholder value.

One industry heavyweight points to BHP’s recent “Think Big” advertisement that draws on the “seven ordinary men” who gathered on a small parched plot in Broken Hill 130 years ago to create the company.

“These men who founded BHP, like those who ran BHP in the 1930s, 40s and 50s, understood the national interest, could see the corporate interest, and were prepared to give and take, and to build what is now one of the world’s great companies and the world’s biggest minerals house,” he says.

This chap, who has also had a role in directing a fact-based energy debate, poses this question: “Do you clowns running BHP company today think that in 50 years somebody will have you in that picture?”

With Pearson’s voice snuffed out, who replaces him matters to this country. While BHP will want someone who parrots its internal green belief system by going quiet on the facts about coal, Michelmore says we need someone who has Australia’s interests for the long term locked in to their heart.

“We have to look at why is Australia, with (its) unbelievable energy-to-population ratio in the ground, has electricity costs double what they are in the US and 60 per cent higher than what they are in Canada.

“This is crazy. It should be the other way around. This has happened in the last 10 years … and it’s only going to get worse. Why are we going the wrong way?”

The former chemical engineer with a long career at resource companies suggests three possible replacements, all former resources ministers who understood what was at stake, though they were stifled by their respective parties in government: Liberal Ian Macfarlane and Labor’s Martin Ferguson and Gary Gray.

“They put Australia first, second and third. You need someone of that ilk, credibility and background to pick up these positions,” Michelmore says.

But given BHP’s strongarm tactics that precipitated Pearson’s early departure, you’d have to be a mug to put your hand up. The losers from this debacle are Australians who deserve cheap, reliable and stable energy in a country rich in precisely that.

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