Glencore asks Australia to focus on economy

SYDNEY • Australia may need to consider delaying its goals to combat global climate change in order to prioritise energy security and economic prosperity, according to a senior executive at Glencore plc.

The country’s emerging energy crisis, in conjunction with government-imposed clean-energy targets, has undermined investor confidence and may force businesses to shut or move offshore, the commodity giant’s global coal head, Peter Freyberg, said in a speech yesterday in Sydney.

“If that means Australia needs to consider a possible delay in meeting its emission reduction targets under the Paris Agreement in order to prioritise energy security and economic prosperity, then its worthy of further discussion,” he said, adding that Swiss-based Glencore has invested US$20 billion (RM85.71 billion) in its Australian assets and last year contributed more than US$12 billion to the economy.

Australia, one of the world’s biggest coal and natural gas exporters, was among more than 150 signatories to the November deal in Paris, aimed at lowering carbon dioxide emissions to limit a rise in global temperatures.

Meanwhile, rising power and gas prices in the past year, as well as occasional blackouts, have put the nation’s energy security under scrutiny, a situation Freyberg said stemmed from “a decade of poorly designed and uncoordinated energy policy”. “Renewable energy has a role to play in Australia’s energy mix, but not at any cost and not at the expense of grid stability, reliability or other energy options,” he said in his speech. Global coal consumption dropped 1.7% last year compared to an average 1.9% yearly rise from 2005 to 2015, BP plc said in its annual review of global energy trends. Use is falling as the world’s biggest energy companies promote cleaner-burning natural gas and as China, which accounted for about half of all coal burned, evolves to focus more on services than heavy manufacturing, while renewable energy like wind and solar becomes cheaper, according to BP’s analysis, published in June.

Outside of Australia, coal provides secure and reliable baseload energy for Asia’s developing economies, Freyberg said yesterday, which in turn provides Glencore with investment opportunities. That explains the company’s US$1.1 billion deal with Chinese miner Yancoal Australia Ltd last week for Rio Tinto Group’s Australian coal assets, he said.

Next-generation coal technology in a growing economy like India — including high-efficiency, low-emission plants and carbon capture and storage — can do more to reduce emissions than building new wind turbines in Europe or solar farms in Australia, Freyberg said. — Bloomberg