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BHP may dump global group, but looks to forgive Australian coal lobby

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BHP has announced it wants to end its membership of the World Coal Association, has put the US Chamber of Commerce on notice but is in a forgiving mood when it comes to the climate and energy policy sins of the Minerals Council of Australia (MCA).

The MCA, BHP decided, has up to 12 months to lift its climate and energy policy game.

As for the New South Wales Minerals Council (NSWMC) and the Queensland Resources Council (QRC), which have been relentless champions for new coal power stations and for crackdowns on non-profit groups, BHP couldn’t find anything to cause it concern.

BHP’s review of the advocacy activities of the lobby groups it belongs to was only initiated after the Australasian Centre for Corporate Responsibility (ACCR) submitted a resolution to the company’s shareholders urging a review of direct and indirect advocacy on climate and energy policies.

The ACCR proposed the review cover the period between 2012 and 2017 and sought the termination of the membership of any industry lobby group promoting policies at odds with the company’s.

In particular, the ACCR’s resolution drew attention to BHP’s support for a price on carbon, its support for the Paris Agreement and the Finkel Review into Australia’s power sector and the need consider groups which were promoting new coal plants and public subsidies for them.

BHP opposed the resolution but conceded it would undertake a review of the advocacy activities of the industry associations it belonged to and publish a summary by December 31.

Concede a little, dodge a lot

In its review, which was released on Tuesday, BHP outlined that the strongest action would be taken over its membership of lobby groups where there are significant “material differences” over climate and energy policies and where there were limited downsides to leaving.

As the WCA provides “narrower activities of benefit to BHP”, the company has formed the “preliminary” view that “it will exit as a member”, though the lobby group has until early next year to plead its case.

BHP could have pinged the WCA for promoting new coal plants without carbon capture and storage as being inconsistent with the Paris Agreement’s target of keeping global temperature increase to between 1.5°C and 2°C, but it didn’t.

In BHP’s eyes, the WCA’s primary sins were to promote “technology specific” policies such as the abolition of Australia’s Clean Energy Target to increase the market opportunity for new coal plants. (James Palmer, BHP’s Asset President, is a member of the WCA’s Executive Committee.)

For its part the WCA stated that it was “disappointed” with BHP’s review and complained that “we do not feel that the report accurately reflects the views of the WCA.”

ACCR’s Executive Director, Brynn O’Brien, has welcomed BHP’s move to end its support for the WCA as an indication that “even organisations, like BHP, with large coal assets, do not value aggressive anti-climate lobbying.”

While BHP has publicly signalled its days of directly belonging to the WCA may be coming to an end, the association doesn’t end there.

BHP is a one-third owner of the Cerrejon Coal Company (CCC), which operates the notorious Cerrejon mine in Colombia. CCC is also a member of the WCA, though this is omitted from BHP’s schedule of industry associations it reviewed.

(CCC is also a member of the Colombian Mining Association, which in turn is also a member of the WCA.)

The US Chamber of Commerce was in trouble with BHP on far more fronts.

Having dismissed keeping global warming to 2°C or lower as “unattainable”, opposed a price on carbon, ridiculed the Paris Agreement as ineffective and opposed the establishment of US emissions reductions targets, the lobby group had huge and seemingly insurmountable differences with BHP.

BHP noted that while there were some benefits of membership – such as access to issue experts in specific topic areas – they were insufficient to offset the downsides of staying on as a member.

However, rather that quit immediately, BHP has given the US Chamber of Commerce until the end of March 2018 to argue its side of the story.

The odds are that the US Chamber of Commerce – which has a long history of hardline fossil fuel advocacy – won’t be too fussed if BHP jumps ship.

For the Minerals Council of Australia – arguably one of Australia’s most powerful lobby groups – the case was clearer: they have opposed the recommendations of the Finkel report, backed taxpayer funding for new coal plants in the Latrobe Valley in Victoria and promoted policies designed to specifically support new unabated coal plants.

They have also been a major driver of the campaign to cripple non-profit advocacy groups in Australia.

Those were the charges BHP noted in its review, but there were plenty more which don’t rate a mention.

For BHP, the other services the MCA provides – from health and safety programs, advocacy for free trade policies and hyping the economic benefits of an ever bigger mining industry – tipped the scales in favour of staying in the group.

While ACCR wanted the review to cover from 2012 to the present, BHP was mute on just far back they went. (Most of the specific references cited in reviewing the advocacy of specific lobby groups are from the 2015 to 2017 period.)

For its sins, the MCA has been placed on a watch list and given up to 12 months to refrain from public advocacy on the issues where BHP identifies it has “material differences” on key policies.

If this week is anything to go by, the MCA is going to find it hard.

On Tuesday the MCA’s Acting CEO, David Byers, wrote a column in The Australian extolling the virtues of new coal plants. What Byers didn’t address is why it is that no major power utilities proposing to build new coal plants.

Indeed, despite Byers glowing hype about the purported economics of new coal, the NSW National Party recognise the financial case for new coal plants is so weak that they are lobbying for taxpayers to cover the cost of a new plant.

While BHP’s historic affinity with the MCA is understandable, more puzzling is how the QRC and the NSWMC entirely escaped any detailed review, let alone reproach, even though their advocacy has been no less egregious than that of other lobby groups which the company frowned upon.

For example, the QRC has campaigned for Adani’s unbankable Carmichael mine and promoted public subsidies for an unneeded coal power station in north Queensland.

For its part, the NSWMC has moaned about AGL’s planned 2022 shutdown of the decrepit Liddell plant in New South Wales and backed the construction of a new 1000 MW coal fired power station even though no utility is proposing to build one.

BHP did not respond to a query from RenewEconomy on whether its review had determined there were no “material differences” with the two organisations.

Hidden funding

In the world of corporate PR, industry associations are just the tip of the lobbying iceberg.

While ACCR had wanted BHP to disclose all the payments it made for climate and energy lobbying, with details of who got what.

It wasn’t a big ask, as global companies such as Exxon have long provided a detail breakdown on donations to everything from health and social welfare charities though to think tanks and others trying to shape the public policy agenda.

However, BHP isn’t yet in a disclosing mood.

Aside from stating that its membership fee for the MCA was A$1.86 million in 2016 – similar to a figure which had already been bandied about in the media – BHP revealed none of the costs of belonging to the other 20 industry lobby groups.

In short, BHP is willing to disclose a figure which was more or less known but has opted for secrecy on the rest.

O’Brien is dismayed that BHP continues to withhold details of how much is spent on memberships of the lobby groups it belongs to.

BHP did not respond to a request from RenewEconomy on the membership costs of the World Coal Association, the US Chamber of Commerce, the NSW Minerals Council and the Queensland Resources Council.

In an initial assessment of BHP’s review, Influence Map – which tracks climate disclosure of major global companies – noted that the company “appears to have selectively applied its method, leaving out key trade associations with which it appears seriously misaligned.”

An example, it stated, is the American Petroleum Institute “which continues to suggest that there are ‘scientists on both sides of this debate’ a position clearly at odds with that of BHP.”

While BHP’s review is crafted to create the impression of a carefully considered stocktake of the advocacy of the lobby groups it belongs to, it is far from comprehensive.

The WCA, which is deemed to add little benefit to BHP’s global influence, may well be the sacrificial lamb offered up to create the illusion of decisive action while other lobby groups more useful to the company are kept out of the limelight.

As for other groups promoting climate-damaging policies – such as the NSWMC, QRC and API – BHP inexplicably seems to have turned a blind eye to their lobbying.

In the pre-Christmas wind-down, the company’s haphazard approach may escape much scrutiny for now, but the debate over the contradictions between company’s public pronouncements and indirect lobbying is set to drag on through 2018.

Bob Burton is the Editor of CoalWire, a weekly bulletin on global coal industry developments. (You can sign up for it here.) Bob’s Twitter feed is @BobBurtonoz.  

  • Joe

    Me thinks that this is just ‘Green Shielding’ by BHP. If they were fair dinkum they would cut the lot of them lose now.

    • Bill Gresham

      Of course it is mostlly Green Shielding – but not entirely. The trick is to build on the “not entirely” untill it becomes the “mostly” – and the ACCR is doing a great job on moving the needle.

    • Alastair Leith

      And why vote down the resolution if you’re going to act on it? To avoid accountability from your shareholders and/or legal action in the future?

  • Ken Dyer

    BHP wants a bet each way. We know that the MCA is almost totally coal orientated

    http://www.tai.org.au/content/what-does-mca-stand-mainly-coal-advocacy

    However, some of BHP’s largest shareholders have publicly repudiated coal, so BHP has to tread warily with those, as well as treading carefully with the MCA because they also represent the interests of Australia’s iron ore miners. BHP is also their largest contributor. That has to count for something.

  • Alastair Leith

    Agreed, Bob Burton. I thought the technology specific lines were complete horse pooh from BHP too.

    VIC, ACT and QLD have all engaged in technology specific reverse auctions for wind and solar, and SA held one for low-carbon technology after pressure from gas industry to not make it renewables only to supply the SA govt energy needs. But the terms seem to have made the case next to impossible for gas and favorable to one very specific technology solarCST that has never been built in Australia at scale and has very few builds globaly. Without these technology specific reverse auctions we would have very much less utility scale RE going in around Australia and the LNC would be gloating about holding back the clean energy tide for another term of government and blood-money profits to their mates in coal and gas.

    And what of non-utility scale renewables? All FiTs and STCs are technology specific to solar and one of the factors revolutionizing the Australian energy grids and market (much to the ongoing displeasure of some unreconstructed network owners and gen-tailers).

    The good news is that shareholder activism can be effective in getting the ball rolling. Having sat through a few BHP and RioTinto AGMs this looks like a shining light of wisdom moment not to mention some vague cognition of the existential threat of climate change for those boards. And that we are way behind in getting control of a potentially runaway climate that will smite us all — humans and non-human, big and small.

  • heinbloed

    Germany:

    Minus 8 % coal power in 2017:

    https://www.platts.com/latest-news/coal/london/german-coal-drops-to-37-in-2017-power-mix-as-26860046

    referring to (in German language)

    https://www.bdew.de/presse/presseinformationen/starkes-wachstum-der-erneuerbaren-energien-stein-und-braunkohle-mit-deutlichem-rueckgang/

    According to the BDEW (an outspoken atom an fossil power lobby group) the coal exit is market-driven and had begun long time ago :

    ” “Marktgetriebener Ausstieg aus der Kohle-Verstromung hat längst begonnen”

    Charts:

    https://www.bdew.de/media/documents/20171220_PI_Anlage_Zahlen-Fakten.pdf

    The next neighbor Poland feels the market drivers as well (in English):

    https://energytransition.org/2017/12/silesian-coal-a-quiet-exit/

    • Steve_Ohr

      Yes, it will be interesting to what degree the German exit from coal will be market driven versus policy driven.

      • Hans the Elder

        In energy there is not a real free market anywhere in the world. It will therefore be very hard to see the difference.

    • Joe

      Hallo Heini. Whilst it is pleasing to see the drop in Deutschlands Kohleverbrauch there are still some hurdles to a quicker phaseout. Germany is a big user of Lignite ( that dirty Brown Coal ) and Hambach is one of the worst abominations that one could ever imagine. Hambach dare I say…eine Umweltkatastrophe. Germany is getting out of Nuclear by 2022 which would seem to flag heavy reliance on Coal use continuing for quite some time.

      • Hans the Elder

        German renewables more than make up for the nuclear power plants that have already closed. Germany could easily close down some lignite plants, but instead chooses to export the their dirty lignite power. Vested interest lobbies are strong.

        • Joe

          Hallo Hansi. The vested interests of Big Coal spread all over the world as they cast a ‘magic spell’ over governments. Here in Australia Big Coal is in the pockets and the ears of The COALition, I admire Germany’s ‘Energiewende’ and the getting out of Nuclear. But the getting out of Lignite seems to be a little too hard for the German Government. I mean, who can defend the continuation of forest destruction and tearing down of villages just so that Lignite / Hambach can continue and that is before we even talk about CO2 emissions and climate change….those vested interests in Germany must be very strong, yes.

          • Hans the Elder

            The problem in Germany is that the stocks of the coal/lignite mining operations and the coal/lignite power plants are for a large part in the hands of different levels of German government (e.g. municipalities, states), and that the coal miner unions have strong historic connection with the socialist party.

          • Joe

            Vielen dank Hansi.

          • Hans the Elder

            By the way: why do you add the “i” to my name. Such a “Verniedlichung”
            is reserved for relatives or lovers. Sorry to disappoint you,
            but you are neither to me.

          • Joe

            Hallo Hans ( ohne “i” ). My parents are German. I am born here in Australia. When I grew up adding the “i” was always as a meaning of affection for relatives, friends and also as a welcome to would be new friends. I like to think that we can be friends here in the pages of Renew Economy. I am not meaning to belittle or upset you in any way. Machen sie es gut und bis zum naechsten mal.

          • Hans the Elder

            OK, internet discussions always miss a lot of context. Because of the sometimes hostile atmosphere when discussing renewables I indeed interpreted the “i” as belittling.

          • Joe

            Alles gut