In this report, a summary of the issues that was provided in the article about BHP Chief Mr Mackenzie says coal is still the future. There are several issues that were identified such as economic issues. This covers the topic about the jobs from the coal mining and the quality way of living of people who are working in businesses that uses coal. Another issue is environmental, this is about how coal and coal mining impacts our environment and natural resources. Under globalisation and political this topics covers about free trade that if it would be a best solution for the world or is this just a strategy of BHP Billiton to gain an access to a bigger market share. All angles and arguments were considered in providing a critique in determining the worthiness of the arguments. Concepts that were learned on the class were used in providing an analysis on both arguments. Recommendations and my own opinion were also provided at the end of each topic
Summary of Article:
BHP Billiton is one of the world’s largest producers of major commodities such as coal, aluminum, copper, iron ore, nickel, silver and manganese. Part of the company’s vision is to explore opportunities that will meet the changing needs of its customers. This is the reason why BHP has a substantial interest in oil and gas. Being the world’s largest exporter of coal, Andrew Mackenzie BHP Billiton’s chief executive believes that coal will continue to be the central source of energy and will boost the quality of living of a billion people. According to Mr. Mackenzie, the growth in the production of gas in US will not be available elsewhere and coal will be needed to meet the 30 per cent increase in energy demand over the next two decades because of its affordability. BHP Billiton forecast that by 2030 more than 70 per cent of the world’s energy demand will be satisfied by oil, gas and coal because renewable sources of energy including solar power and wind are not cost effective. BHP has invested $US20 Billion in natural gas projects in the US because some manufacturers in US are against gas exports for the reason that there will be an increase in the price for domestic users. (Kehoe, 2014)
BHP forecast that Asia will contribute two-thirds of new energy demand on the next two decades and China and India will account for about half of the increase. Xiaojie Xu, the head of the world energy division at China’s Institute of world economics and politics said that China preferred gas over coal to minimize pollution. Mr. Mackenzie, a qualified geologist informed the audience of energy executives that human activities were the major cause of climate change. He also mentioned that it is not realistic that gas could replace coal as a major source of energy because the cost of generating electricity from gas in Asia is more than double the cost of coal and the wealth gap between the rich and the poor countries remains as wide. BHP’s Chief Executive encouraged the development of constructive policy which includes carbon pricing mechanism that allows the market to identify reasonable methods in cutting emissions. BHP says that there is an improvement of its greenhouse emission by 16 per cent from 2007 to 2012 and they are continuously working with the Abbot government on the design of its so called direct action policy which will provide financial incentives to polluters to reduce emissions (article, 2013). For the past week, Mr Mackenzie has been meeting with US investors after the company announced a 31 per cent increase of its original profit to $US7.8 billion for the half year. Mr. Mackenzie believes that increasing the volume of global trade on gas and coal will be beneficial for everyone as it will inspire innovation, there will be an increase in employment and it will bring confidence to investors because of the certainty of supply. (Kehoe, 2014)
Economic and Environmental Challenges
Coal is an abundant and affordable source of power. It is harvested through mining and is considered the second source of energy around the world next to oil. Coal provides almost 40 per cent of the world’s energy and like any other fossil fuel coal is considered finite resources. Using coal as source of energy has its advantage and disadvantage. Since coal is available in large amounts at least for now, we can say that it is cheaper to use coal compared to other fossil fuel such as gas, it can be easily transported to many areas in the world because it is inexpensive to buy in open market due to large reserves. Lastly, the mining industry provides thousands of jobs and make up a large portion of the economy in countries such as Australia and US. Unfortunately, there are also several disadvantages to coal. The burning and mining of coal contributes to global warming because of the greenhouse gas that it releases resulting to air pollution. According to studies, some of the chemicals such as sulphur dioxide, mercury and other airborne particles from coal plants may cause acid rain, respiratory diseases to human and animals and destroys our aquatic resources which are source of living to other people. Truly, because of the major impact both environmentally and economically, it is rather a tough decision on what to do with the issue of coal and coal mining.
From a utilitarian stand point, wherein utilitarianism favors the greatest good for the greatest number of people under a given set of constraints (Luthans, 2012). We can say that coal and coal mining has a huge source of benefits because it provides numerous jobs that improve people’s quality way of living and good quality way of living would result to economic stability. However, we can also argue that if usage of coal and coal mining continues people will suffer from serious health problems and the money that the people earn from the jobs in coal mining to build a living will just be spent in paying health insurances and medical bills due the illness that came from coal. Now the question really becomes which is more important health or money? In my opinion, I would choose health, choosing health means we are considering the future of our children a future that they might not be able to see and enjoy if all our natural resources have been destroyed by pollution. I would also recommend that for this to be successful the people, especially our Government leaders would play an integral part for it to be successful and sustainable. Firstly, the Government should invest on livelihood training and development programs to provide options to its people. Government support and incentives should also be given to those people who would venture into putting up their own business. In this way, people will be encouraged to invest and the impact on the economy will be softened. The training and development program will be done gradually because we will also consider the businesses whose main source of income is coal. Secondly, for the businesses the government should implement a robust policy on corporate social responsibility. We have to take into consideration that we are not against coal mining but we are against the impact it does to our environment. For example if a coal mining may have an impact of a societies water supply, the government should make sure that this company will do its part in making sure that an option or a better water supply will be provided for the society. Lastly, Government should continue to provide support on research and development on finding a more efficient and environmental friendlier options in producing energy. Taking into consideration that new technologies are expensive, without government support businesses would just choose to close because return of investment will not be feasible.
Globalization and Political Challenges
Globalization is the process of social, political, economic, cultural, and technological integration among countries around the world (Luthans, 2012).In the above article Mr. Mackenzie mentioned that he encouraged free trade on gas to boost jobs, investment and provide a positive message to the world about free trade. In this statement of Mr. Mackenzie, I believe there is more to it although he mentioned gas because as we know gas is more environmental friendly since it produces 70 per cent lower greenhouse emissions compared to coal. There are also facts that most developing countries do not have the technology to produce gas because of high price. What I am saying is that Mr Mackenzie is covering its real purpose to increase its market for coal by promoting gas on free trade. In my opinion, Government officials and NGO’s should be careful on the underlying possibilities if there will be an open market on gas and coal. It is true that supply of coal will be available to developing countries that were mentioned in the article but we have to take into consideration if making coal available to developing countries would really help them because it might go the other way around and destroy the countries natural resources. If Mr. Mackenzie really wants to promote gas to be the source of energy around the world then BHP Billiton should support programs on putting up technologies on developing countries and not focusing its investment in the US in which the technology is already available.
Another statement that involves political challenges is that Prime Minister Tony Abbot is planning to dumb the carbon tax law which Mr. Mackenzie mentioned that this law favors paying big polluters to cut their emissions. Yes, it is true that the Government is giving support and incentive to businesses to but their emissions but the Chief Executive forgot to mention that this businesses are paying huge amount of money for every tons of carbon they consumed. My outlook on this statement is that if Tony Abbot will get the commitment of BHP Billiton it will be a win-win situation for both. One situation would be BHP Billiton will gain more profit if carbon tax law will be abolish. Another situation is As Chief Executive of BHP Billiton Mr. Mackenzie is in the position to encourage all his 128,000 employees to support Tony Abbot in the election because the company will benefit from Mr Abbot’s programs (Billiton, 2014). In my opinion, there is nothing wrong in making huge profit for your business. I mean this is the main reason why businesses exist is to make profit and have that security especially to BHP Billiton’s employees. People nowadays are competent and very resourceful they can gather data through the internet, newspaper and TV. If Mr. Mackenzie is saying that he wants to encourage free trade on gas and bring positive message to the world about free trade I would recommend that the company can be more involve in assisting or supporting developing countries for the needed skills and technology in producing an environmental friendlier source of energy in which they will be the one to provide the supply as well. This will not only help the people to build a healthier way of living but it will give BHP Billiton a good image and in a better position to attract more investors which means more sustainable profit for the company.